Political hiatus will only exacerbate uncertainty and send a negative message to investors, says president of the Institution of Civil Engineers Sir John Armitt

 
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Armitt was chair of the Olympic Delivery Authority (Source: Getty)

The political hiatus currently engulfing the country will send a negative message to investors, president of the Institution of Civil Engineers Sir John Armitt has warned, as he said the government must reassert its commitment to infrastructure.

Armitt, a former chief executive of Network Rail, said the EU referendum outcome has left a cloud of uncertainty over the infrastructure and construction industry, made worse by the current political situation.

"Access to skills, foreign investment, use of codes, standards and regulations, and funding for research – the things which are core to delivering the infrastructure that forms the backbone of the UK economy, are hanging in the balance," Armitt said.

Armitt's comments come as Theresa May is to formally take up the role of prime minister, while Labour's turmoil continues as incumbent leader Jeremy Corbyn faces challenges from the Parliamentary Labour Party.

Read more: London's Crossrail and HS2 projects helps drive UK's attractiveness for infrastructure investors

A member of the National Infrastructure Commission, Armitt continued: "Political hiatus will only exacerbate the uncertainty and send a negative message to investors. The National Infrastructure Development Plan (NIDP) is clear on its reliance on private investment to deliver much of the UK’s future infrastructure, and the new government must continue to foster belief that the UK is a growing economy and a place which offers a good return on investments."

"This means it must visibly step up and reassert its commitment to infrastructure. It must progress core projects and programmes, drive the NIDP forwards, and not duck out of taking bold, strategic decisions on issues that are vital to the UK’s competitiveness and show we remain open for business. The airport expansion decision is a case in point."

David Leam, head of infrastructure at London First agreed that political hiatus is a risk.

Leam added: "Equally this risk is entirely in the new prime minister's hands. It's in May's ability to correct some of [this uncertainty] over the next couple of weeks. One of the big early tests is what she says on infrastructure and airports in particular."

However, this will largely depend on May's cabinet reshuffle, and if Patrick McLoughlin will continue with the transport brief.

Read more: Infrastructure improvements needed at the heart of devolution agenda to boost growth, according to research from the Institution of Civil Engineers

Armitt also raised concerns around the skills shortage and the employment of thousands of EU citizens in construction.

"UK infrastructure businesses employ many thousands of EU citizens and rely on the ability to bring in specialist skills. The construction sector also depends on a transitory EU workforce. We have some major projects in the future pipeline, but industry also needs to be confident that it can get hold of the skills needed for the work in the pipeline over the next few years. It needs this assurance now," he wrote.

Leam agreed big uncertainties about the extent to which companies will be able to move people around countries exist, as skill shortages can appear "in all sorts of places, from highly to low skilled labour. Less flexibility to move people around will have an effect on timeliness and delays of big projects".

However, Dan Lewis, senior advisor on infrastructure policy at the Institute of Directors said that stating skills and investment are "hanging in the balance" was "over the top".

"We share some concerns about skills, but it’s not really the end of the world if the situation means we have to start training up more people in the UK and nor is it the end of the world if we have a much more meritocratic immigration system," Lewis said.

He also pointed out that the report did not touch on broadband. "We think that it is the highest returning infrastructure there is. A survey of our members said it would make them more productive and profitable. This is something that could be done quite quickly," he added.

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