Latest Rail News

21.07.16

Rail projects likely to lose staff and investment following Brexit – Balfour Beatty

The EU referendum result is likely to lead to a prolonged period of uncertainty for UK infrastructure projects, Balfour Beatty has warned.

A new paper from the company, ‘Infrastructure 2050: Future Infrastructure Need’, says that uncertainty around the movement of free labour as the UK withdraws from the EU is likely to make the shortage of staff needed to deliver projects like HS2 worse.

It says that the government must develop an “early and integrated” policy to encourage existing talented immigrants to stay in the UK and more to come, as well as developing its home-grown workforce.

The company also says that the political uncertainty following the UK’s withdrawal from the EU will make private investors, who contribute 69% (£260bn) of infrastructure, nervous of investing more.

It says that HS2, HS3, Crossrail 2 and the Northern Powerhouse have all attracted foreign investment to the UK in recent years because they were perceived as relatively low-risk and stable.

This has led to the country moving from 13th place in the Arcadis Global Infrastructure Investment Index in 2012 to ninth place in 2016.

However, it says: “With the current political and policy uncertainty, any gains we have made in these rankings over the past few years are likely to be lost in the next few.”

The Balfour Beatty/Vinci consortium is currently bidding for the contract for HS2 Phase 1 civils work.

In his keynote speech at Infrarail in April, Sir Peter Hendy, the chair of Network Rail, said that private sector finance was the “obvious way” to deliver rail upgrades.

Other sources of infrastructure funding that the report highlights as being at risk include public sector funding from the newly created Department for Business, Energy and Industrial Strategy and the Skills Funding Agency, which could be diverted to compensate for funding shortages at other government departments.

In addition, Balfour Beatty says the UK will have to give up its position as the joint largest shareholder in the European Investment Bank, meaning that it will lose billions of pounds of funding for projects such as Crossrail 2 and the London Underground upgrades.

It says it is unlikely that the Treasury will be able to make up the funding.

Balfour Beatty said an “urgent debate” is needed on the financing of infrastructure.

It added that now is an “ideal time” for the government to borrow money to finance infrastructure projects because of the historically low interest rates, saying this is far from “an irresponsible course of action” because of the long-term benefits.

Clive Heaphy, HS2’s director of finance and operations, admitted recently that he is “worried” about the impact of the referendum result, despite rail industry leaders saying major projects are “more crucial than ever” following the referendum result.

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Comments

Jb   21/07/2016 at 22:38

There should be plenty of opportunities for development and enhancement of our existing railway system for civil engineering firms to tender for, which would provide increased capacity and connectivity without building HS2 - saving a huge amount of money into the bargain. That such development is urgently needed is not in doubt but not by building HS2. There are several closed or under utilised lines which could be re-instated to provide this extra capacity and connectivity which is surely to be preferred by all but the high speed enthusiasts. If the Prime Minister wants to help everybody to travel conveniently, such a policy would fit the bill nicely.

Sonning Cutting   25/07/2016 at 15:11

Yet another HS2 critic who obviously never travels by train or even reads the newspapers. Has he not heard of the problems and costs incurred in trying to upgrade existing lines. Recent experiences at London Bridge, West Coast Mainline and currently also on GWR for example show that open-heart surgery on an active railway is over expensive and not the way to go. We are short of capacity, full-stop!! Ask the commuters of Coventry, Northampton & Milton Keynes about their situation. Putting 2 more lines parallel to the West Coast Route through Wembley, Watford, Hemel Hempstead is a piece of cake, of course?

Jb   08/09/2016 at 18:37

'Sonning Cutting' misses the point. I am suggesting that pressure on the WCML could be relieved by reverting some of its traffic to its original routes over GC and MR lifted lines. Reinstatement would not overly affect present flows as the work would be carried out away from existing tracks. Reverting some Birmingham - London traffic back to Paddington could also help WCML capacity issues if there is space there.

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