Report by Institute of Directors says this is amount that is needed over the next 10 years to keep the country competitive

At least £500bn needs to be spent on infrastructure in the next 10 years in order for the UK to remain competitive, according to the Institute of Directors (IoD).

A report by the IoD said that despite the fiscal deficit, public spending on energy, transport, water and ICT infrastructure should be ring-fenced because it is vital to economic growth.

The group of company bosses suggested that the proceeds from re-privatising the banks, which could be over £50bn, should be spent on new infrastructure. In 2009 the infrastructure spend was £7.8bn, according to the Construction Products Association.

The IoD said that at least £130bn should be spent on transport projects and that £300bn is needed for energy infrastructure, including investments in energy efficiency measures for housing.

Miles Templeton, director-general of the IoD, said: “Cutting infrastructure spending may be politically easier than reducing other areas of public expenditure, but the consequences for the UK’s already creaking infrastructure will be with us for years to come.”

The IoD also recommended that an Infrastructure Planning Commission be set up to remove public policy barriers in the planning process which, it says, discourage private investment.

The Association for Consultancy and Engineering (ACE) said it has also called for infrastructure investment to be consistent. Nelson Ogunshakin, ACE chief executive, said: “The ACE accepts that the next government will have to look at all areas of expenditure, but when it does we have suggested that cuts are not made to existing projects. ACE has also stressed the return that infrastructure investment gives: for every £1 invested the economy has a return of approximately £2.50. Therefore, any funding channelled to infrastructure will yield appropriate returns on the capital invested.”