Institutional Investors have welcomed the UK Labour Party鈥檚 manifesto pledge to immediately update the National Policy Planning Framework, aiming to reverse previous changes by reinstating mandatory housing targets and advancing plans for new roads, railways, reservoirs and other key infrastructure.
But they are eager to see the commitments translate into concrete reforms and secure funding, with a long-term perspective considered essential to address the issues.
Lizzy Galbraith, political economist at Abrdn, said: 鈥淧lanning reform is clearly a key part of Labour鈥檚 growth strategy. We鈥檝e already heard that they intend to focus on planning reform in their first 100 days in office, with a pledge to build 1.5m homes over the next parliament and with a potential view to redesignate greenbelt areas to facilitate such developments, as well as overruling councils deemed to be persistently blocking new developments.
鈥淣evertheless, housing targets like that are very ambitious 鈥� even with planning reform 鈥� so it will be interesting to see if such a target will be made mandatory.鈥�
Jon Phillips, chief executive of the Global Infrastructure Investor Association, said: 鈥淥ur latest pulse survey of global investors clearly shows that the next government faces a considerable challenge to restore confidence in the UK as an attractive investment destination. The country is at the bottom of the list of major European economies in terms of investor sentiment, with political instability and an unattractive regulatory regime being the two biggest barriers.
鈥淭he proposed creation of a National Infrastructure and Service Transformation Authority reflects our longstanding call for the role of the National Infrastructure Commission to be strengthened, and a 10-year investment strategy would indicate a new focus on infrastructure within government, helping to restore investor faith.鈥�
James Dunne, head of operational real estate at Abrdn, said: 鈥淎s a long-term investor and provider of professionally managed, affordable rental homes across Europe, Abrdn welcomes all initiatives to unlock the blockages in the delivery of UK housing.
鈥淭he planning system needs reform and investment to allow appropriate and sustainable development which addresses the critical need for new housing across all tenures and geographies whilst enhancing local communities and respecting our environment.鈥�
The Kier Starmer-led opposition party plans to take a 鈥�, prioritising the development of previously used land wherever possible, and fast-tracking approval of urban brownfield sites鈥�.
It expects to 鈥渕ake the changes we need to forge ahead with new roads, railways, reservoirs, and other nationally significant infrastructure鈥�.
鈥淲e will set out new national policy statements, make major projects faster and cheaper by slashing red tape, and build support for developments by ensuring communities directly benefit,鈥� the party said in the manifesto.
Phillips said the pledge to deliver new national policy statements and overhaul the planning system are further steps that would speed up the delivery of major infrastructure projects, helping the UK meet its ambitious net zero goals.
鈥淲e welcome proposals for greater alignment across government, which is very much in line with our call for a 鈥榞olden thread鈥� that links departments to foster a more comprehensive and coordinated approach to crowding in the investment the UK clearly needs,鈥� Phillips added.
Galbraith said: 鈥淭he notable shift in Labour鈥檚 strategy is an enhanced role of the private sector in the financing and delivery of infrastructure projects compared with their plans a few years ago. Now, Labour has shifted to a vision in which the state aims to direct investments towards high-value projects and restore investor confidence through a combination of clearer planning documents, fewer fiscal events and in some cases, joint financing.
鈥淟abour believes they can rectify the current challenges of fluctuating government policies and inconsistency, which have previously undermined private investor trust.鈥�
Dunne said: 鈥淚t is encouraging to see the issue at the heart of political parties鈥� policy priorities for the next parliament and we hope this translates into swift, tangible reform and funding not only in the short term but with a long term vision and stability that is desperately needed to address these ongoing deep rooted issues.
Phillips said the next government faces some tough economic conditions and infrastructure-related issues, most immediately the water regulator Ofwat鈥檚 draft determinations of how much water companies can invest over the next five years.
鈥淗ow a Labour government responds to the challenges facing the water sector could go a long way to rebuilding confidence amongst investors that the UK is creating the right conditions to drive investment and growth.
鈥淚t鈥檚 vital that the next government recognises that most of the infrastructure investment required over the next 20 years will have to come from the private sector. A new 鈥榗ompact鈥� between government, investors and regulators that faces up to the challenge of achieving net zero goals would create an environment more likely to attract the investment the UK clearly needs,鈥� Phillips added.
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