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Dithering over infrastructure costs UK “£48,500 a minute”, report says

A report by Dutch engineer Arcadis has made the claim that a one-month interruption in the UK’s pipeline of transport infrastructure project costs the UK £2bn of investment-related GDP over the following five years – a figure it dramatises as £48,500 a minute.

The Spiralling Cost of Indecision report, written by Arcadis and the Centre for Economics and Business Research, estimates the effect on projects and investment caused by delays and cancellations to transport schemes.

Now as we enter uncertain times once again as a result of leaving the EU, our nation needs the same commitment – perhaps more so than at any other time in a generation– Chris Pike, Arcadis

An analysis of the 2015 and 2016 National Infrastructure Pipeline datasets suggests that over the next five years, the cumulative losses caused by stalled projects will add up to £35bn of investment-related GDP.

The report also calculates that, as a result of a one-month delay, the costs involved in delivering transport projects would rise by £241 million over five years – equivalent to around £8m for every single day of delay.  

Chris Pike, Arcadis’ infrastructure client development director, says in the introduction to the report’s findings: "Following the global crash in 2008, the government invested heavily in infrastructure, and it was this that contributed to the UK weathering the storm and remaining relatively strong.

"Now as we enter uncertain times once again as a result of leaving the EU, our nation needs the same commitment – perhaps more so than at any other time in a generation."

The authors of the report arrived at their estimates by taking the value of projects identified in the datasets as delayed or cancelled and applying a 130% multiplier to give the amount of forfeited GDP.

They do take into account the effect of inflation on delayed schemes, which means that projects costing £91bn would rise by £241m over five years. However, they do not consider the delayed benefits from completed projects and the effect of those on the UK’s productivity relative to its competitors in Europe and elsewhere, so the true cost may be higher than the estimates.

The area that has been most affected by delays and cancellations is rail transport. The report says these will cause a £1.1bn loss in GDP over the next five years. Among these are a number of stalled electrification projects in the north of England and Scotland.

In July this year the Office of Rail and Road said in its annual report on Network Rail that it had concerns "regarding the ability of key projects to meet their obligations and regulatory milestones".

A copy of the Arcadis report can be viewed here.

Image: Delayed rail schemes will cost the UK £1.1bn between now and 2020 (Adambro/Creative Commons)

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