UK falling behind on new infrastructure investment

The Institute and Faculty of Actuaries (IFoA) has today (29 April 2016) released a report on the widening gap in infrastructure investment that states the UK is falling behind other G7 countries.

• UK risks becoming globally uncompetitive
• Pipeline of infrastructure projects should be more robust
• National Infrastructure Commission is a major opportunity to address decades of underinvestment

In its report, ‘Infrastructure investment – mind the gap?’, the IFoA analyses some of the issues that underlie the investment gap in three sectors: renewable energy, transport and housing.  The IFoA is calling on Government to consider the following key priorities to encourage new sustainable investment in the UK’s infrastructure:

• Develop a sustainable pipeline of infrastructure projects that fit into a coherent, long term strategy.
• Ensure policy recognises that institutional investors differ from the public sector in how risks and returns are perceived.
• Address that different types of investment call for different approaches to issues such as financing, regulation and risk management.
• Funding models should recognise that investors with greater risk appetites will tend to get involved in projects at an earlier stage than more cautious investors.
• The National Infrastructure Commission represents a major opportunity to reverse decades of underinvestment.
• The Government and the Prudential Regulation Authority should take full advantage of EU regulatory changes such as Solvency II to promote more infrastructure investment by insurance companies.

Brandon Horwitz, Chair of the IFoA’s Finance and Investment Board, comments,

“There is a global backlog of infrastructure projects that are critical in driving growth.  According to the World Bank $3.7tn of global infrastructure investment is needed annually, however actual investment levels are only $2.7tn.  There is a similar investment gap here in the UK, and with the UK’s existing infrastructure becoming older, we risk not being to support our growing, and ageing, population in coming years.

“The IFoA report states that addressing the infrastructure gap is critical to drive the UK’s growth and competitiveness.  Innovative models of public-private financing should be developed to attract new investors into the sector.

“The creation of the National Infrastructure Commission last year creates a major opportunity for the UK to reverse decades of underinvestment, and will help to reduce uncertainty for investors.  The Commission will need to attack deep-set issues driving investor behavior and build confidence in what is a new sector to many.”

~ENDS~

A full copy of the report can be found here: Infrastructure investment - mind the gap?

Editorial notes:

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest. 

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.

The IFoA is available to provide independent expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.