Transport Needs Political Certainty to Deliver Investment

With the transportation industry looking like a strong growth area for UK consultancies in 2013, Moorhouse’s survey of transport companies’ board members and their directors reports, “Navigating Uncertainty”, sheds light on the growing needs of the UK transport industry.

The UK’s transport policy has come under greater scrutiny as people look at ways of kick-starting the economy. The last KPMG CBI Infrastructure survey of business owners showed that only a third of businesses believed that the UK’s infrastructure policies would have a positive impact on investment. The benefits of High Speed 2, new runways and a second crossing over the Thames as ways of regenerating the economy have been debated and cited as potential examples of Keynesian economics in action.

But while Government waits for businesses to fund these needed infrastructure projects, businesses are waiting for clarity on the priority of projects in the pipeline from government.

The lack of clarity around the government’s infrastructure plan is often cited as a block on future economic growth. Last year’s expected announcement of opening PFI to pension funds is still overdue, leaving a cloud hanging over infrastructure funding. And with little clarity over methods of future funding, the investment being made by transportation companies themselves is more vital than ever before.

Respondents to Moorhouse’s survey (who spend an average of £24m on major transport initiatives a year), showed that the lack of clarity around government policy is as poor in the transport industry as it is in the general business community. Only 18% rated the government’s vision for the transport network as very clear or extremely clear, and 88% suggested that this affected their investment decisions. As the report suggests, the lack of clarity is the result of a serious conflict between five year parliaments and the need to make decisions around projects that have an asset lifetime of 30+ years.

Given the debate around a third runway at Heathrow and the benefits of high speed railway, it is unsurprising that these two industries reported particularly low levels of clarity around government policy. Navigating Uncertainty makes it clear that collaboration with government is key for transportation firms to feel confident about future of their industry and their investment decisions and those firms with more certainty are investing more in their initiatives.

It is certain that we’ll see our infrastructure and transport providers under pressure to cut costs, improve their IT and services, and lead major investments in our infrastructure in the future. Major decisions and changes have been made to ensure the UK transportation industry meets the growing demand and needs of our population. To do this transportation companies will be using management consultancies and other external providers to deliver change. Rather than develop internal talent, 49% of firms surveyed said that their change delivery capability will be entirely or mostly recruited externally. This tallies with the growth in change management and financial consultancy that member firms saw last year.

You can download your free copy of Moorhouse’s white paper ‘Navigating Uncertainty’ via their website. The full performance of consulting industry in 2013 will be explored by the MCA further in May.