Brexit vote means uncertainty for transport investment, industry leaders warn
27 June 2016 | Author: David Fowler, Editor, Transport Times
The referendum vote in favour of the UK leaving the European Union puts the economy, the nation and the continent into uncharted waters.
With confusion surrounding the question of how negotiations to leave the EU would be taken forward, industry leaders warned of the risks to transport investment – and business in general – of a prolonged period of uncertainty. And with the future of chancellor George Osborne in doubt, there was concern that policies of which he was the principal architect, notably the Government's commitment to long-term infrastructure investment plans and the devolution agenda, could also be in jeopardy.
Following Mr Osborne's statement this morning, British Chambers of Commerce acting director general Dr Adam Marshall said: "So far, the priority for the chancellor and the governor of the Bank of England has rightly been the question of stability.
"However, attention swiftly needs to turn to delivering clarity. Firms want a clear timetable, and simultaneous action to support the wider economy. The big decisions – on airports, energy generation, HS2, housebuilding and more – need to be followed through. The decision to delay a post-referendum budget must not be a convenient excuse for ministers to duck these important choices. Action and momentum over the coming months are vital to stoking the embers of business confidence."
The political implications of the vote were "very worrying for our industry" said Dr Nelson Ogunshakin, chief executive of ACE. "Travelling up and down the country I was made aware by our members that the stability provided the UK's membership of the EU was vital to the investment decisions needed to build the infrastructure network in our country. ACE has advocated hard and long to provide stability to our industry through the creation of a National Infrastructure Commission, a National Infrastructure Delivery Plan and an Infrastructure and Projects Authority, but this vote will challenge all we have achieved."
RAC Foundation director Steve Gooding said: "Market confidence and investor uncertainty could be major issues for Government in the coming weeks and months. That could put at risk all the good work that has gone into the development of the Road Investment Strategy, seeking to give Highways England and its supply chain longer-term confidence in there being a high and sustained programme. One way that ministers could act to bolster confidence would be to get on with publishing its Modern Transport Bill, including the provisions needed to establish the Road Fund, cementing in law the promises made to harness all the income from vehicle excise duty for road spending."
A number of figures stressed the importance of maintaining or increasing the UK's competitiveness, and the importance of infrastructure projects from that viewpoint.
AECOM UK & Ireland chief executive Patrick Flaherty said: "No nation has ever left the EU, so the long-term impact cannot be accurately forecast. These are uncharted waters made even more uncertain by the prime minister's announced resignation. Business inevitably now faces a period of disruption.
"It is critical that the domestic agenda is not sidelined as the UK faces a minimum of two years of negotiations to leave the EU. Focus must remain on progressing the UK's ambitious infrastructure pipeline. Schemes such as HS2, Crossrail 2 and the Northern Powerhouse programme are vital to the country's ability to compete on a global stage, which is more crucial than ever due to this referendum result."
Malcolm Bairstow, EY UK infrastructure leader, said: "With infrastructure crucial to the UK's growth ambitions, there will now be nervousness. There is likely to be a period of uncertainty which may impact decision-making around projects and overseas investment while details are thrashed out between the EU and the UK government.
"The industry may face challenges in exporting skills and expertise in engineering and consulting services if the pound weakens and if there are barriers to the European market."
He stressed the importance of overseas labour to the construction industry. "A significant proportion of the UK's builders and construction labour is sourced from Europe and there will be uncertainty over what happens next. If we start to see a movement of these workers out of the UK, this would inevitably cause a slowdown in construction and housebuilding which could also have a significant impact on development across the country."
Campaign for Better Transport chief executive Stephen Joseph said the implications for investment were "potentially profound". "One immediate result is that the decision on airport expansion in the South East is likely to be postponed. The commitment to HS2 could also become an issue during the Conservative leadership contest now starting."
But he added that there were even more profound implications for local communities.
"The vote for leave to an extent represented anger from 'left behind Britain', who have seen no benefits for their communities from recent economic growth. Transport is a part of this – many of these communities have seen cuts and fares rises on their bus services, and little investment in local transport generally. So one result of the vote ought to be a refocusing of transport priorities on improving 'everyday transport', on revenue funding and smaller local projects rather than big national capital projects.
IPPR North director Ed Cox said the result made the Northern Powerhouse even more important: "Few can deny that our trading relationships with our EU partners matter much more to northern businesses than they do to the City of London. We need to define the kind of economy we want to become. Our obsession with the big cities and aggregate growth must take a new turn and wake up to the cries of those on the margins who are busy manufacturing the goods we will now struggle harder to sell overseas.
"Calls for an East-West freight supercorridor linking Atlantic shipping to Liverpool with the European continent via Hull, and broader investment in international connectivity, should grow louder. We need a Global North now like never before."
He added that the commitment to devolution should be intensified. "Politically, we should let devolution rip. Both major political parties must reinvent themselves from the bottom up with more plural local political systems that bring people closer to power."
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