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Bill payers rightly throw their hands up when vital infrastructure fails. So it proved this week when 13,000 people south of London did not have running water.
A Thames Water treatment works was hit by storms. The incident unleashed a gush of concern about infrastructure upgrades to improve climate resilience and support economic growth. And, crucially, who will stump up the cash.
It is not just water. Money also needs to be pumped into energy, waste management, broadband networks and transport, according to the National Infrastructure Commission. To meet net zero emissions and improve productivity, investment in infrastructure will need to rise from an average of £55bn a year in the past decade to £70bn-£80bn per annum in the 2030s. Two-thirds will have to come from private investors, who recover costs via bills. Government investment will be largely focused on transport.
Once built, new infrastructure should lead to lower costs. Take energy. Gas-fired power stations have higher operating costs than wind farms. By 2055, household spending on infrastructure services should drop from today’s £7,300 to between £5,100 to £6,100 in 2022 prices, says the NIC. That is despite a sustained rise in water bills.
But Britain is out of favour with infrastructure investors. Its attractiveness as a destination for private capital is at an all-time low, warns the Global Infrastructure Investor Association, whose members include Brookfield and Macquarie.
Generous subsidies in the US and the EU do not help comparisons. Yet some wounds are self-inflicted, such as a recent bungled offshore wind auction.
Tackling long-running gripes such as planning delays would help woo back frustrated investors. In future there will be a lot more at risk than several thousand people temporarily without water.
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