Business leaders have said today that the UK must invest in £500bn of infrastructure by 2020 in order to stay competitive.

In a report published today, the Institute of Directors says that the £434bn infrastructure target set by think-tank Policy Exchange falls short of the investment needed.

It says the IoD has used the same calculations but found that £66bn more is needed for energy, transport, water and technological infrastructure.

One of its proposals for raising this finance is to ring-fence future proceeds from bank privatisation and use them solely for infrastructure investment, potentially earning more than £50bn.

Miles Templeman, director general of the IoD (pictured), said cutting infrastructure spending would be politically easier than reducing other areas of public expenditure, but damaging.

“The consequences for the UK’s already creaking infrastructure will be with us for years to come.

“For the sake of the UK’s long-term growth prospects, I urge the Government to reconsider its decision to halve infrastructure spending over the next four years, and to use the proceeds from bank privatisation to invest in our roads, railways and energy networks.”

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