Summary

Lack of funding for infrastructure projects is harming growth prospects in many developed nations across the globe, but with pension funds ready to offer long-term, patient capital to reinvigorate infrastructure, the time for Pension-Public Partnerships has come.

The most recent report card from the UK’s Institution of Civil Engineers (ICE) gives the UK between a B and D- for its infrastructure, ranging from local transport being assessed as ‘at risk’ and in need of greater maintenance, to both the country’s water and strategic transport network passing and deemed able to cope with current demand. However, ICE’s assessment across even the highest-scoring sectors says these require further investment to keep pace with the growing pressures placed on infrastructure. The UK government estimates the public and private sector will need to invest £600 billion to 2027 to meet its self-imposed target of 1.2% of GDP spent on infrastructure, with those projects contained within 2017’s National Infrastructure and Construction Pipeline only amounting to £460 billion.

Careful stewardship of infrastructure can improve opportunities and employment outcomes for the wider community, equating to a social, as well as an economic good, created by the long-term, patient pension capital invested

Duncan Symonds

These staggering figures are needed to repair and improve the UK’s roads, rail and digital highways. The need for investment is apparent in two of these three areas – rail and roads – where the UK’s rating for each sector lags behind its overall infrastructure ranking. At present, the country’s infrastructure comes 11th out of 137 countries, as assessed by the World Economic Forum’s Global Competitiveness Report 2017-18. Decades of underfunding means much of the UK’s essential infrastructure is in need of significant investment and curbing economic growth.

While there is widespread agreement that trillions of pounds are needed to invest and fix UK infrastructure, greater involvement from the private sector is needed to address the shortfall. Part of the answer on how to achieve this may come from Australia, which is progressively closing its own infrastructure funding gap by tapping the huge pool of funds tied up in its system of compulsory retirement savings.