According to David Cameron’s recent comments in the Sunday Times, France is not a country that the UK should be looking to emulate. But let’s not be too hasty. When it comes to forward-looking policies on public infrastructure spending, perhaps the UK would benefit from looking across the Channel.
UK infrastructure has suffered from historic under-investment with demand continually outstripping supply. While the commitment to spend on infrastructure remains at the heart of future economic growth plans, as we saw in last month’s Budget and since in party election manifestos, it does not come as a surprise to see recent figures from the National Audit Office suggesting that spending on infrastructure has shrunk by at least £15bn from its £57bn peak in 2010 to £42bn in 2014.
The need to increase infrastructure investment comes at a time when many governments are highly indebted and face competing draws on scarce resources. Difficult decisions have been made and in the UK we have consistently chosen to rely heavily on the private sector to fill the infrastructure gap. But in France this has not been the case. The French recognised the value of working collaboratively to establish the groundwork for private sector investment, identifying and leading new projects and regional masterplans.
As the owner-manager and developer of what we believe to be some of the most exciting retail property in Europe, our first-hand experience of the differing attitudes to infrastructure spending provides useful examples.
Take Les Terrasses du Port in Marseille. Our flagship shopping centre, which opened last year, introduced new international retailers to France and has already had 8m visitors. Key to its success is Euroméditerranée, a €7bn joint investment initiative between the French government and local authorities, focusing on infrastructure investment to help improve the commercial attractiveness of Marseille.
The largest urban regeneration programme in southern Europe, the French government contributed €1.4bn to Euroméditerranée as an incentive for private investment. And it worked. Global investors, including AXA Real Estate, BNP Paribas and ING, are among those capitalising on the favourable investment environment. In turn, this has led to an upswing in the local economy as projects such as ours create a real energy around the destination, encouraging greater investment and providing jobs.
In the UK, Hammerson has committed significant capital to our two major London developments, the Croydon Growth Zone and the regeneration of Brent Cross. While we welcomed the commitments made in the Budget to support the delivery of both, I believe there is more that could be done to create the right environment for investment in the UK’s future.
And I am not alone in thinking so. Industry bodies, including the Institution of Civil Engineers, are among those calling for the implementation of a long-term vision for infrastructure and a framework that facilitates cross-party support.
Real estate is one of the most important building blocks of national economic growth, but property investment decisions can be hindered by a lack of long-term political stability, weak pledges, a complex regulatory environment and inefficient tax regimes, including business rates. The UK needs to recognise that working with the private sector from the outset to identify and deliver projects would increase the volume and potential productivity of infrastructure investment.
Whoever takes power on 7 May, building a more competitive Britain requires government to reconsider what has become the accepted norm of under-investment and an overreliance on the public sector. Looking to the examples set by the French is a good place to start.
David Atkins is chief executive of Hammerson
