Grant Klein: Transport is the key enabler of almost everything we do, that’s why there’s a focus on improving transport services and building new infrastructure in particular.
I’m Grant Klein and I advise many of our public sector transport clients. I’m joined today by Charlie Johnson-Ferguson who leads on Infrastructure, Funding and Financing and Cara Haffey who advises many private sector companies in the supply chain and we want to explore the funding and financing implications of decisions to invest in transport infrastructure.
So Charlie given this focus on big infrastructure how do we fund them and can we afford them?
Charlie Johnson-Ferguson: Well Grant I think that’s the right question to ask. In the national infrastructure plan we have infrastructure projects of £483 billion between now and 2021, however, there’s only £100 billion of committed capital. Traditionally, the user and the tax payer has paid for infrastructure projects. Over the last few years we’ve seen the emergence of a few alternative funding sources such as business rates supplements, such as the community infrastructure levy and such as contributions from property developers. But in addition much more recently project sponsors have been very overt in saying that they will require additional third party sources of funding for their projects if they are to prioritise them. So my advice for clients is – think early about how you’re going to include third party funding sources in your projects.
Grant Klein: Thanks Charlie.
And Cara if we can get the funding sorted do we have the right mechanisms in place for the supply chain to deliver on them?
Cara Haffey: I firmly believe that we have the capability in the UK to deliver on the transport infrastructure projects in the supply chain. However, really focussing on being able to finance those, either from equity and debt; making sure that the companies are allowed to grow into the right places; making sure they’re in the right part of the country for where the project is. And really being able to plan ahead - because it’s really difficult for the private sector to understand when it’s coming - are the timetables going to be met? And can we have the financing in place that’s going to work?
Grant Klein: Thanks Cara.
So given these new projects that are coming on-stream what are the key things that we should be looking out for and how can we get round those to solve those?
Charlie Johnson-Ferguson: Transport projects are increasingly of a large scale. Third party funding will be important. Existing sources are relatively finite. The challenge for the industry is to be more innovative in thinking about what are alternative sources of third party funding. So for example how do we capture value from the increasing price of residential properties from improved transport links? So you know industry needs to get its head round this and I think if it can do that then the prizes could be significant.
Cara Haffey: And then once that’s happened it would be great to understand how we can work together more to make sure that the private sector can benefit from what the public sectors thinking, where the funding is and how quickly it’s coming down the pipe.
Grant Klein: Thanks Cara.
So there’s a few key messages there. First there are options on how to secure funding for new infrastructure projects and critically it’s important to give the supplier market clear visibility of the pipeline so they can make the right preparations. There’s clearly both complexity and opportunity for funding and financing big transport projects. Please get in touch if you would like advice on getting through these challenges, thank you.