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UK to lean on private sector for digital infra investment

The government’s intention to mobilize private funds builds on money earmarked for the digital infrastructure investment program announced in the Autumn Statement.

UK Chancellor Philip Hammond has announced plans to leverage private sector investment in broadband and digital infrastructure as he signalled his intent to make Britain a “world leader” in 5G technology.

Outlining his Spring Budget, the Chancellor provided additional detail on the £1 billion ($1.2 billion; €1.1 billion) set aside for digital infrastructure investment in his Autumn Statement in November.

This includes the reiteration of the £740 million to be spent through to 2020/21 on the deployment of full-fibre broadband across the country as part of the £23 billion National Productivity Investment Fund unveiled in November. Hammond also confirmed that the previously announced Digital Infrastructure Investment Fund will be launched this spring, for which the government expects its £400 million investment to be at least matched by the private sector.

The government also revealed it will invest £200 million to fund local broadband projects, an injection designed to leverage private sector investment in full-fibre broadband networks and test news ways of accelerating delivery to the market.

The Budget repeated Hammond’s stated ambition from November to grow the UK into a leading hub for the roll-out of 5G technology and he announced £16 million of funding to trial and demonstrate the deployment of 5G networks. However, the government acknowledged deployment at a commercial scale is “still some way off” and that the business case for investing in 5G is not fully established. It said it will be working with Ofcom over the next few months to remove barriers to 5G infrastructure.

“The vast majority of the capital investment required for both full-fibre and 5G rollout will need to come from the private sector,” the government’s 5G strategy said.

The announcements were welcomed by Lord Adonis, chair of the National Infrastructure Commission, although he stressed the strategy must be followed up with greater detail.

“A clear roadmap is required so that the proposed spending on fibre and connectivity pilots reflects the Commission’s conclusions and delivers tangible benefits to consumers and businesses,” he said.

However, commenting on the government’s plans to facilitate private sector investment in digital infrastructure, Fiona Krasniqi, digital spokesperson at the British Chambers of Commerce, warned this would not be followed by a blank cheque.

“The private sector will invest where there is a demonstrable return on investment and we would urge that the scheme is communicated effectively to the business community and providers,” she said.

The Budget also included further details about the £1.1 billion funding promised for transport infrastructure in the Autumn Statement, including the launch of a £690 million competition for local authorities across England to improve congestion, some £490 million of which will be made available by this autumn. The move though was criticised for its failure to mention the Crossrail 2 project, with Sir Merrick Cockell, chairman of the London Pensions Fund Authority, saying progress on the scheme is vital for the UK’s international competitiveness.

While the Budget provided little detail on Britain’s energy industry, the government said a replacement for its Levy Control Framework, used to set the budget for support to renewable energy projects, will be set out later this year. The Chancellor also said tax incentives will be considered to prop up the UK’s oil and gas fields.