John Laing’s return to the stock market has highlighted the UK’s short-term approach to infrastructure
The return of one of the industry’s oldest names, John Laing, to the stock market, under plans unveiled this week, looks on the face of it like a further encouraging step in the sector’s recovery.
The firm as it is now - specialising in infrastructure management and investment - is a very different proposition from the one that sold its construction arm to Ray O’Rourke for £1 back in 2001.
But although the firm has moved away from contracting, its confidence in the markets it does operate in - PPP infrastructure and renewable energy schemes - can be taken as a barometer in these sectors of the likely prospects for work further down the line - and these areas provide construction with its largest scale schemes.
So, the fact that John Laing has chosen to re-list after a record year for new investment, with chief executive Olivier Brousse saying the firm needs more cash to respond to a “significant increase in demand for new infrastructure”, will be welcome news for the wider sector.
Less welcome will be the fact that Brousse currently sees the major infrastructure opportunities for his London-based company lying overseas - currently there are projects in Australia and New Zealand, and potential future growth in the US.
John Laing has a long-established presence in the UK PPP market. But despite its capability, the company’s prospects here have been constrained by the government’s approach to infrastructure projects, notably the time taken to develop the revamped PFI model, PF2, and its subsequent failure to gain widespread traction.
Nonetheless, John Laing has been at the forefront of exploring new forms of private and public financing partnerships, including the Scottish not-for-profit distribution model, to get schemes off the ground. Against this backdrop, it appears it is the lack of political commitment to a long-term pipeline and consequent deterrence of investors, rather than the failure of any one specific funding model, which is limiting the sector.
Despite the progress made with the publication of the government’s National Infrastructure Pipeline, this will surprise no one who has noted the gap between touted spend and projects awarded on the ground, even with some recent improvements in outlook. But John Laing highlighting prospects overseas, rather than the UK, is indicative of the continued damage that a short-term approach to infrastructure is doing to the UK - and the future damage it threatens to wreak on both the country’s economic competitiveness and its ability to support its society.
The population growth and climate change pressures that John Laing says are driving infrastructure demand are no less applicable to the UK than to the overseas markets the company identifies as hot prospects. Arguably, they may be even more so, given some of the UK’s infrastructure dates back to the 1800s - the century John Laing was founded. So the fact that, despite this, the turning of an economic corner does not yet appear to have been accompanied by a new appetite for infrastructure investment highlights the need for further reform of the way long-term infrastructure schemes are planned and managed at the highest levels of government.
Our Agenda 15 campaign, which highlights a series of proposed changes in this area, has, after two weeks, received backing from companies with a combined global turnover of £34bn. We urge you to add your support by visiting www.building.co.uk/agenda15, to help make issues such as long-term infrastructure planning a priority heading into this May’s election.
Sarah Richardson, editor