By Charlie Conchie
Public sector bodies must given greater powers to ease the impact of “short-term political disruption” if top investors are to pump up to £100bn into UK infrastructure projects, a new report has warned.
The Association of British Insurers (ABI), who authored the report, said that more long-term planning was required if the fresh investment was to be used effectively.
The calls come as the insurance market prepares for the introduction of the so-called Solvency UK regime, which will scale back the amount of cash that top insurance firms will need to hold on their balance sheet.
By reducing the buffer, top insurance firms claim they will be able to free up around £100bn to pump into the UK economy into so-called productive assets like green energy projects and transport projects.
However, the ABI said that “more long term strategies” were required and public sector bodies should be given greater powers to plan beyond a government’s horizon.
“Firms invest their customer’s money over decades, so need to be as sure as possible of the long-term horizon,” the ABI said.
Steps to resolve the issue could include national transition plans, sector strategies or empowering arm’s-length agencies like the National Infrastructure Commission to be “less at the mercy” of “short-term political disruption”, the ABI said in its report.
The use of a regulatory sandbox and asset ‘pre-identification’ could also speed up investment by identifying assets suitable for investment from insurance firms.
The report comes amid concerns over the structural issues holding back infrastructure development in the UK.
A recent report by Boston Consulting Group found that poorly defined objectives, changing priorities and narrow valuation criteria, were among the chief obstacles to UK infrastructure development.
Commenting on the ABI’s report today, the City minister Bim Afolami said it was “encouraging to see industry working together to deliver £100bn worth of investment to support UK infrastructure”.
“This interim report represents a significant milestone, and the government eagerly anticipates seeing these critical investments come to fruition,” he added.
