The Government’s latest refresh of its National Infrastructure Plan has been welcomed by MCA Think Tank Director, Paul Connolly. However, Connolly expressed some disappointment at the lack of ambition in some of the recommendations.
“The Government’s focus on infrastructure after decades of neglect is very welcome. Yet since publishing its Plan for the first time in 2010, the Treasury has had to relaunch it several times. There have been concerns that its ambitions have translated into too few real projects and have even been contradicted by early Coalition spending decisions. To date, none of the relaunches has fully addressed the fundamental paradox of UK infrastructure: that we have some of the best experts in the world at financing, planning and delivering infrastructure, sought after across the globe, but a lamentable records of delivering projects. Our fear is that the scale of reform and new spend that the Government is announcing will scarcely impact some of our deep-seated problems.”
The Coalition’s relaunch of its infrastructure plan comes on the heels of evidence from the Office for National Statistics that despite the topic rising up the political agenda infrastructure spend actually fell last year.
Earlier this year, the MCA produced a report, Building Blocks: How Britain can get infrastructure right. The report is based on the insights of firms working at all points in the infrastructure supply chain. Many of them were central to the most recent major UK infrastructure success, the Olympics, and are at the heart of major projects, such as Crossrail. The report made over twenty recommendations on how government could improve the planning, financing and delivery of infrastructure.
Funding
The MCA welcomed Government announcements of additional cash for infrastructure projects, in particular from the insurance sector, but noted that this still left a huge infrastructure “gap”. Connolly: “Even if we take the programme of £375bn over a period beyond 2020 at face value, this is significantly shy of what commentators estimate is needed. We are currently estimated to be £500bn below the highest European standards. We will continue to lag behind that position at today’s rate of investment.”
Strategy
Connolly welcomed the more strategic approach to infrastructure that the latest report. “The move to describe the contribution of the Top 40 infrastructure priorities to wider government objectives is welcome and something we have called for. However, it is still some way shy of a developed analysis of the benefits projects will bring and how projects will interact. To be completely robust, the rationale for projects needs to be tested using the best analytic techniques and assessed against the full range of alternatives. We are sure that some of this kind of rigour has been applied, within the limits of producing a refreshed plan in time for the Autumn Statement. Indeed, we welcome the involvement of members of our industry in some of the benefits analysis of infrastructure projects. But we remain convinced that an independent, expert advisory body, sourcing and using the most rigorous analysis, would help to ensure that the National Infrastructure Plan has long-term credibility and comprises projects that produce real value. Decisions on which project to back should ultimately remain political. But those decisions should be based on the best possible information.”
Delivery
The MCA acknowledged the steps government was taking to improve infrastructure delivery, but called for much more radicalism. “We welcome the creation of an infrastructure innovation fund, in line with our recommendations. Additional incentives for localities to approve new projects are also much needed, although these fall well short of our recommendation in Building Blocks to extend the business rate incentives that Enterprise Zones enjoy more widely. But the government’s assessments of departmental capability to commission and deliver projects may ultimately prove too inward-looking. We need projects to start now and to be in competent hands. Improvements in capability, as efforts to reform government procurement show, can take time. And they may not be the obvious answer. The message of the Olympics and Crossrail is that arms-length bodies, specifically recruited to run major projects provide transparency, accountability, and they deliver. They should become the norm.
“The Government’s focus on infrastructure is welcomed by the experts in our industry. These internationally sought-after specialists are already helping to plan many of the projects in the Government pipeline. They also have the capability to help Government ensure those projects genuinely bear fruit. We will be happy to share our ideas with Government on how it can make its ambitions a reality – between now and the next relaunch of the Plan.”
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