Incentives and ring-fenced funding under the spotlight for Northern Powerhouse investment

THE next Government could choose to ring fence public funds or come up with new incentives to attract private sector investment to help fund the potential infrastructure projects that could support the creation of a combined Northern economy.

 

Malcolm Bairstow, UK infrastructure sector leader at EY, believes that funding will increasingly be at “the heart of the ‘Northern Powerhouse’ debate”, particularly against a backdrop of continued public spending cuts.

 

Mr Bairstow said: “There is already significant appetite from domestic and overseas investors to back stable UK infrastructure projects. Public funds could either be ring-fenced or the Chancellor and HM Treasury may need to continue to court the industry, financing community and pension funds by developing incentives for private sector investment.

 

“Local control of local tax receipts might form part of the answer, but that debate hinges on the question of devolution for individual cities and regions, and the relative merits of local governance models.

 

“Irrespective of the financing sources chosen for these projects once plans are finalised, we should see more and more emphasis placed on funding over the coming months and years as public and private sector support builds around the ‘Northern Powerhouse’ vision.”

 

Mr Bairstow also pointed to recent successful UK infrastructure investments that have delivered value for money and noted that potential Northern projects, such as ‘HS3’, could follow their lead.

 

He said: “Effective delivery of capital projects is paramount to achieving value for money. The construction industry created a fantastic outcome on the London 2012 Olympics and much of this best practice is being carried forward on projects such as Crossrail, the early stages of Hinkley Point, and the recent highways and railway station enhancement projects.

 

“This best practice should be replicated in key infrastructure programmes in the North over the coming years if these projects are to help the region to contribute to rebalancing the UK economy.”

 

Mr Bairstow added: “If programme leaders can be incentivised to use local supply chains, companies and people in the procurement for Northern capital projects, this will help the region to also maximise economic benefit in the short to medium-term.”