L&G to support northern transport schemes

THE largest institutional investor in UK plc wants to see greater spending on transport connections between the major cities of the North of England.
Dr Nigel Wilson, Group Chief Executive at Legal and GeneralDr Nigel Wilson, Group Chief Executive at Legal and General
Dr Nigel Wilson, Group Chief Executive at Legal and General

Legal & General said it will consider investing in road and rail schemes to improve infrastructure outside of the capital.

Nigel Wilson, chief executive, told the BBC: “London is actually doing a great job, but Liverpool, Manchester, Leeds, Newcastle, they need stronger linkages and we would be happy to support more investment in that.”

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A spokesman for L&G told the Yorkshire Post that the insurer is ready to spend between £5bn and £15bn on infrastructure projects covering transport as well as housing, education, energy and health.

“If the projects are there, the structure is right and the appetite is there, we will invest up to £15bn,” he said.

But he warned that the figure could drop significantly depending on the political and economic environment.

L&G yesterday reported a 10 per cent jump in pre-tax profits to £1.13bn in 2013, boosted by recent acquisitions and a surge in workplace pensions business thanks to the Government’s scheme to automatically place employees onto retirement schemes.

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The insurer spent nearly £3bn on infrastructure and housing projects last year.

Mr Wilson said: “We are the UK’s largest institutional investor and as a consequence of that we think the UK is a great place for people to invest and we are short of infrastructure in many areas, in housing, education, energy, transport, health services, and we are happy to invest in all areas across the UK.

“There’s a shortage of supply of these and we have a huge amount of money and as we explained to the Government on many, many occasions, there is not a shortage of liquidity or money in the world, there is a shortage of oven-ready projects.”

He said L&G is not a supporter of HS2, the controversial high-speed rail project linking London and the North. He has previously said the £50bn scheme has “little economic benefit”.

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Mr Wilson said: “We are a great fan of the Northern Hub project, which links together the major cities of the North and we would like to see greater focus on developing cities outside of London.”

The Northern Hub is a programme of targeted upgrades to the railway in the North, which will allow up to 700 more trains to run each day and provide space for 44m more passengers a year by 2019. Network Rail said the services and economic benefits will run as far as Newcastle and Hull in the east to Chester and Liverpool in the west.

Infrastructure assets are attractive to insurers since they offer steady, inflation-linked returns, matching long-term liabilities to retirees.

The insurance industry plans to invest £25bn in infrastructure over the next five years as part of what Danny Alexander, Chief Secretary to the Treasury, has described as the Government’s “blueprint... for long-term sustainable growth”.

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L&G increased its direct investment portfolio during the year to £2.9bn from £1.4bn, adding a further £300m since the start of 2014.

The company expects to announce further investments across the UK during the year.

In an interview on the Today programme, Mr Wilson said the five-year period of ultra-low interest rates has been “divisive” for Britain.

“There has been lots of financial repression over the last few years,” he said. “The rich have tended to get richer during this period and other people have struggled with real wages declining over the last five to six years.”

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He added: “That’s why we would like to see more investment in the UK. We are again having a consumption-led and housing-led boom and we have got to increase investment and exports. We are having lots of containers coming into this country with goods and lots of empty containers leaving this country.”

Mr Wilson grew up in Newton Aycliffe, County Durham.