Governing ‘new’ infrastructure financing

Pike, A. and O’Brien, P.

The governance of infrastructure financing at the city and city-region scales is critical to the search for new and innovative funding mechanisms for infrastructure systems. The changing context has rendered the issues acute. The global financial crisis and economic downturn have focused attention on the role of infrastructure renewal and development in economic recovery and stimulus. Austerity and the fiscal consolidation of public finances have reinforced government efforts to reduce expenditure and debt and secure private sector engagement and resources. Local actors in cities and city-regions have been compelled into finding new sources of private and even international capital, developing innovative business models for infrastructure provision and establishing new institutional and governance arrangements. The context of faltering economic growth and severe funding constraints has challenged public and private actors operating across and within local, national and supranational scales internationally. Profound questions are being asked about the most effective way for governments at different levels to fund and finance future growth and economic development.

This new and emergent context is raising significant questions, and highlighting gaps in our interpretation and explanation. Innovative new practices are evident that demonstrate the impacts of ‘financialisation’ and the growing role of financial actors and interests upon local and urban economic development and governance. Infrastructure and the services it provides are being reframed as a distinct financial asset class in the context of the international financial system and worldwide investment landscape. Actors at the city and city-regional levels are (re)configuring their institutional, governance and leadership arrangements in new ways to cope with the rapidly changing and uncertain context.

Attempts at governing the ‘new’ infrastructure funding and financing in the emergent context are especially evident in the UK and its cities and city-regions. The UK has substantial infrastructure development and renewal demands. The UK Government estimates that £310bn of investment is planned over the next decade and beyond – and it has developed a National Infrastructure Plan against the backdrop of uncertain economic recovery, government austerity and fiscal consolidation. At the sub-national level within England, local government is facing unprecedented fiscal stress, cities are the focus of the local economic growth agenda and demands for greater fiscal decentralisation to cities and city regions have strengthened to enable local actors with the powers and resources to lead and deliver economic recovery. Infrastructure funding and financing and the relations between central and local government occupy pivotal roles in this context.

Governing ‘new’ infrastructure financing (pdf, 5 MB). The future of national infrastructure systems & economic prosperity conference, Cambridge, UK, March 27–28.