Why roadworks in the UK are so frustrating and how to benefit from the situation
At the time of writing this blog we are two weeks into the government’s lockdown due to the coronavirus. The news is totally dominated by this one subject so why should I choose a random subject such as roadworks? Well for a start there is more to life than just the coronavirus. Also life will return to normal in a few months’ time by when we will be getting worked up about more mundane subjects such as Brexit, the US/China trade war and, you guessed it, roadworks!
The sheer number of roadworks in the UK, it is now at record levels and the long timescales to complete the work, leave me and, I am sure, most people, highly frustrated. So I decided to conduct some research to find out just why we have such problems in the UK when our near neighbours, France, do not appear to have anything like the roadworks problems we have.
What I discovered was really illuminating and not what I expected. These are the main reasons;
1. Roads are dangerous.
2. Our roads are too busy.
3. Workers cannot always work at night.
4. You literally can’t get the right qualified and experienced staff.
5. Economies of scale.
6. Technical problems.
The truth is there are many dangerous drivers and no matter how many warning signs there are around roadworks, and no matter how prominent they are, drivers will still crash into roadworks and kill workers. Sad, but true.
Believe it or not but the reason there are so many cones is not to protect the road workers but the drivers themselves. Along with speed limits and speed cameras, cones are there to reduce drivers’ speeds in order to prevent deaths from dangerous drivers.
Health and safety standards are very high in the UK and there is public pressure to save any unnecessary deaths of road workers which inevitably slows the whole process down.
Above all else the reason why there are so many roadworks in the UK has been because successive governments have underspent on the roads’ infrastructure system over decades. Some of our near neighbours such as France have spent more money on their traffic infrastructure in the past so they have better roads and railways than us.
Who pays for roadworks? Well it is funded from the public purse of course.
So what is the potential opportunity for investors?
Well it’s quite simple really. Investment in infrastructure is not only a sound but also a reliable source of steady investment growth and income because it is government backed and guaranteed. Infrastructure investment funds typically aim to produce a steady return of about 5% or more a year and may be more are reliable because of the government guaranteed payments.*
So as a small element of an overall diversified portfolio of investments, infrastructure funds have an important role to play. When we launch our discretionary portfolio management service later this year, infrastructure funds will form part of it.
Just watch this space for further announcements. You know it makes sense.
*This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action.