The Burnham Effect: Can infrastructure drive economic growth in the UK?

Simon Heath, Partner Corporate Finance at Heligan Group believes the “Burnham Effect” could see infrastructure emerge as one of the biggest beneficiaries of the new government’s growth agenda. The new campaign pledges could inject capital into the economy and reshape the UK’s infrastructure pipeline

With nominations for the Labour leadership closing on 16 July and no challenger having emerged, Andy Burnham is likely to be the Prime Minister and with it comes his vision for the UK and the economy. Launching his leadership campaign in Manchester this week, he promised “decent infrastructure” across the UK, a mass council house-building drive – pledges that have could lead to significant growth for the infrastructure sector.

“24,927 voters on the outskirts of Wigan have chosen the new economic policy for the UK Government,” said Simon Heath, Partner Corporate Finance at Heligan Group. “While the result was decided in a single constituency, its implications will be felt across the country. The new PM will be juggling an increasingly fractious society, record levels of taxation, immigration concerns and a faltering economy. The focus is likely to be on government investment and the infrastructure sector could be one of the biggest beneficiaries of increased government spending.”

Burnham has previously stated that he is a believer of ‘business-friendly socialism’. Rather than waiting for the free market to deliver, Heath explains the heart of this strategy is strategic intervention and local devolution to encourage economic growth and hyper-focus investment.

“At the heart of policy will be infrastructure investment, as long as the new PM has sufficient time to make these long-term investments,” said Heath. “Devolution will involve a shift of economic and planning powers away from central government to the regions to target local investment and growth.

“Coupled with increased spending on utilities, transport, social housing and large-scale infrastructure such as hospitals and prisons, this strategy is designed to be a catalyst for growth, injecting capital into the supply chain to update existing or create new infrastructure to support the economy.”

The National Infrastructure and Service Transformation Authority (NISTA), established in 2025, focuses on implementing a ten-year infrastructure strategy, unlocking private investment and speeding up delivery. Heath believes this is most likely the vehicle that will be used to accelerate infrastructure investment strategy 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.”

The increasing volume of acquisitions of Infrastructure Services businesses by foreign buyers reflects the value in the opportunity, but Heath argues that this near-term export facilitates longer-term imports.

“With profits disappearing overseas for the foreseeable, transformation must be delivered from within. 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 co-operation which has become more expensive on the back of Brexit.

“Paradoxically, there are fears that the UK’s supply of labour is insufficient to cope with the requirements of NISTA’s pipeline. Investment in the supply chains behind UK infrastructure is critical and the demographics for infrastructure labour suggest apprenticeships and workforce diversity could contribute to closing the future shortfall.”

Heath concluded, “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, it should be focused and strategic investment which should be implemented before the halo effect of being PM diminishes, when reality of being PM bites.”

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