The nation’s 2030 infrastructure ambitions on energy, transport and housing face “mammoth” challenges, says the Association of British Insurers (ABI).
According to a report by the ABI, the UK will need around £1.3tn to meet its infrastructure goals, but only £700bn in funding is currently secured from a mixture of public and private sources, leaving a £615bn shortfall.
The areas most in need of additional investment include onshore and offshore wind, carbon capture and storage (CCS) projects, electric vehicle charging infrastructure, rail electrification, new homes and retrofitting insulation to existing housing stock.
Housing is where the UK faces “the biggest challenge”, the ABI said, with housing retrofit and new property development representing most of the projected shortfall.
The government has long faced criticism over its efforts to support the installation of more insulation in British homes.
Last year, an analysis by the Energy and Climate Intelligence Unit found that the 2013 decision by former Prime Minister David Cameron to slash support for home efficiency measures caused consumers to lose around £1.5bn annually in unnecessary energy costs.
Meanwhile, the Offshore Wind Industry Council has warned of a serious skills shortage in the sector, estimating that over 100,000 extra people will be needed by 2030 to maintain and run offshore wind infrastructure as installations ramp up.
In addition, a mere 10 per cent of British freight trains are currently hauled by electric locomotives, while a handful of short unelectrified sections force freight trains to be diesel-hauled for long distances ‘under the wires’.
To solve these issues and others, the ABI estimates that around £350bn of the spending shortfall will need to come from private sources, but at the current rate of investment, the extra funds needed could increase to around £1.5tn by 2050.
Clare Bousfield, deputy president of the ABI, said: “Our research shows there is a mammoth infrastructure investment challenge facing the UK. The ongoing Solvency UK reforms are crucial in helping us to channel around £100bn into green and good infrastructure and narrow this investment gap.
“We have established the Investment Delivery Forum to ensure that, once unlocked, these funds can be deployed swiftly. We are working hard to lay this groundwork, but we want to hear from project owners as part of this process, as well as telling the infrastructure community what makes projects investable for the insurance and long-term savings industry.”
