Burnham-mania: an infrastructure transformation?

24,927 voters on the outskirts of Wigan have chosen the new economic policy for the UK Government. The self-proclaimed King of the North, Andy Burnham, is likely to be the Prime Minister as soon as 17 July, and with it his vision for the UK and, importantly for business and the economy. No one knows his policies, just over two weeks from his presumed election to PM, but there is his track record as Mayor of Manchester that can be used as a proxy.

Burnham has previously stated that he is a believer of ‘business-friendly socialism’. At the heart of this strategy is that, rather than waiting for the free-market to deliver, the government uses strategic intervention and local devolution to encourage economic growth. So, let’s try and break that down:

• Devolution:  Shift economic and planning powers away from central government to the regions to target local investment and growth.  The theory is that local administrators have a better understanding of local economy and needs, so investment can be hyper-focused on what actually is required. 
• Infrastructure investment:  Increased spending on utilities, transport, social housing and large-scale infrastructure such as hospitals and prisons. By increasing government expenditure on infrastructure, this is designed to act as a catalyst for growth, injecting capital into the supply chain to update existing infrastructure or create new assets to support the economy.
• Nationalisation of key assets:  Taking public ownership of critical national infrastructure, such as water or rail to maintain value for money for consumers and a continuity of supply.   Countries such as the Netherlands have legal bans on private ownership of water utilities for example. 

At the heart of policy will be infrastructure investment, as long as the new PM has sufficient time to make these long-term investments. The National Infrastructure and Service Transformation Authority (NISTA) was established in 2025, focused on the following priorities: 

• Develop and implement a ten-year infrastructure strategy
• Unlock private investment
• Streamline planning (speed up delivery)

It is likely to be the vehicle used to accelerate infrastructure investment in the UK. Transformation is a key word within the acronym; the objectives here are bold and the £718 billion pipeline could be the catalyst that shifts the UK towards prosperity. The multiplier effect on the spend could translate to over £1 trillion of economic activity and the upgraded infrastructure could deliver inflation-muting productivity improvements. 

NISTA’s objectives are strategic

Much of the investment is in energy transition and grid modernisation projects key to supporting shifting demands and reducing exposure to volatile global market prices. Water infrastructure is also in desperate need of enhancement. Excessive sewage overflow presents real risks to foundational layers of UK infrastructure, predominantly through the environment, food production and health. Highways, rail, telecoms, education, defence and health infrastructure also require substantial enhancements.

Transformation must come from within

The increasing volume of acquisitions of infrastructure services businesses by foreign buyers reflects the value in the opportunity, but this near-term export facilitates longer-term imports. With profits disappearing overseas for the foreseeable future, the multiplier effect is dampened, and our projects are already heavily dependent on foreign technology. For example, our nuclear facilities are heavily reliant upon French reactor technology, a cooperation that has become more expensive on the back of Brexit. Delivering from within the UK is critical, as outsourcing abroad drives an import of services which could widen our budgetary deficit.

Paradoxically, whilst the UK is a significant exporter of engineering services, there are fears the UK’s labour supply may be insufficient to meet the requirements of NISTA’s pipeline. Investment in the supply chains behind UK infrastructure is therefore critical and the demographics for infrastructure labour suggest apprenticeships and greater workforce diversity could help to close the future shortfall. Transformation is not simply a case of funding and labour, and the wastewater sector is a good example. The replacement of Ofwat and the potential nationalisation of Thames Water are testament to the idea that broader organisational change may be needed to drive alignment and focus on the end goals.

Summary

The (likely) new PM will have a lot on his plate; juggling an increasingly fractious society, record levels of taxation, immigration concerns and a faltering economy that may well be in recession, albeit not technically based on the two negative growth quarters test. A left-leaning government often focuses on intervention and ultimately government expenditure or investment to catalyse an economy. The infrastructure sector is likely to be one of the biggest beneficiaries of increased government spending, injecting capital into the economy to generate activity. That said, investment should be focused and strategic if it is to benefit the UK economy as a whole to mitigate some of the points above and implemented before the halo effect of becoming PM diminishes and the reality of being PM bites.