The UK faces a “mammoth” £615bn infrastructure funding challenge to meet its energy, transport, and housing needs through to 2030, according to a report.
The research, commissioned by the Investment Delivery Forum, highlights the urgent need for increased investment, particularly from private sources. By 2030, public and private sources are expected to provide around £700 billion, leaving a shortfall of £615 billion.
Of this shortfall, approximately £350 billion will need to come from private sources. This means that insurers will need to play a key role in closing the infrastructure investment gap.
Similar to pension funds, insurance companies invest premiums collected from policyholders to generate returns on their assets and contribute to offsetting the expenses associated with providing insurance coverage. However, they face certain restrictions on where they can invest.
The Association of British Insurers (ABI), who established the Investment Delivery Forum, is calling on the government to push through its ‘Solvency UK’ regulatory reforms, which will allow insurers to invest in a wider range of assets and could unlock around £100 billion in additional infrastructure investment from insurers.
“Our research shows there is a mammoth infrastructure investment challenge facing the UK. The ongoing ‘Solvency UK’ reforms are crucial in helping us to channel around £100bn into green and good infrastructure and narrow this investment gap,” said Clare Bousfield, deputy president of the ABI and sub-chair of the Investment Delivery Forum.
The report comes just weeks after the National Infrastructure Commission (NIC) claimed that around £40-50bn of investment will be required from the private sector in the 2030s and 2040s if the UK is to rebalance its economic geography, meet climate obligations, improve resilience and enhance the natural environment.
Elsewhere, the International Energy Agency (IEA) has estimated that globally, investment in electricity grid infrastructure must double to more than $600bn (£487bn) per year by 2030 to avoid stalling the clean energy transition and putting the 1.5 °C climate goal “out of reach.”
About the Investment Delivery Forum
The Investment Delivery Forum serves as a catalyst for collaboration among major insurance and long-term savings providers, fostering streamlined infrastructure investment processes. Established by the ABI in July 2023, the Forum proactively addresses regulatory changes (Solvency UK), ensuring industry readiness to leverage approximately £100bn for green and beneficial projects.
