One-third of infrastructure investors think the government is “unlikely to succeed” in attracting £20 billion (€25 billion; $32 billion) of pension capital into infrastructure, 65 percent feel the Pension Infrastructure Platform “won’t make much difference”, and two-thirds feel criticism of the Private Finance Initiative (PFI) has been “mostly wrong”.
These were among the key findings of a survey conducted by Infrastructure Investor for our UK Infrastructure Report 2012, which accompanies the September 2012 issue of Infrastructure Investor. The survey gathered the opinions of over 200 members of the infrastructure investment community.
One of the key findings is that almost 60 percent of respondents believe “lack of clarity from the government” is “the one thing that gives the most discouragement to infrastructure investors in the UK”. As well as the lack of clarity around PFI, infrastructure investors are probably thinking of other initiatives for which the role of private capital is unclear. Ministers have talked about attracting institutional investment, but there are still question marks over how exactly this will happen.
Feelings are mixed among the infrastructure investment community as to whether the UK government is being realistic with its target of attracting £20 billion of pension fund money into UK infrastructure projects. Around 60 percent said this “might” succeed, but more than 31 percent thought it “unlikely” and less than 7 percent “likely”.
Overall, the survey does not contain much encouragement for the government. If they were hoping that some of the headline-grabbing initiatives they have announced recently would be greeted with unbridled enthusiasm by infrastructure asset class professionals, they will be disappointed.
There are crumbs of comfort, however. For all the scepticism regarding government actions and plans, the current administration is still seen to be making a better fist of things than its New Labour predecessor. More than 53 percent said the current government’s approach to private investment in infrastructure is better.
The survey also revealed that two-thirds of respondents (66 percent) view criticism of PFI as being “mostly wrong – there have been a few missteps, but considerable good has been done”.
Of course, most of the respondents are from the private sector, so this is arguably the result that you would expect. However, it also highlights the extent of the divide over the issue between investors and some members of government. The flipside of this is that a quarter (26.6 percent) of those in the infrastructure business feel that the criticism is either mostly or completely right.
In February last year, Cabinet Office minister Francis Maude said private parties benefitting from existing PFI contracts must have been “laughing all the way to the bank”.
*To read the roundtable in full, be sure to read our special UK Infrastructure Report 2012, to be published alongside the September 2012 issue of Infrastructure Investor magazine.