Delivery, growth and the ‘Valley of Death’: Why budget offers chance to strengthen infrastructure’s future

UK chancellor Rachel Reeves will set out her Autumn Budget on 26 November. This year’s will be arguably the most important fiscal event in recent years, given the limited fiscal headroom enjoyed by the chancellor and the political pressure the government finds itself under.

Reeves has pre-warned that the Budget will be “difficult”. However, the Office for Budget Responsibility’s revised forecasts of public finances have provided the chancellor with more headroom than expected, allowing her to abandon plans to break the Labour Party’s manifesto commitment not to increase income tax rates. Instead, the chancellor will pursue a range of other tax-raising measures aimed at filling a £20 billion fiscal black hole.

More importantly though, the chancellor must look to seize the opportunity presented by this Budget to begin delivering on the UK government’s economic strategy, despite the economy shrinking in September and business investment declining by 0.3% on the quarter.

Investment in infrastructure is expected to feature prominently within the Budget as a key pillar of the government’s growth strategy, building on the publication of the 10 Year Infrastructure Strategy, multi-year capital investment plans set through the Spending Review, and the establishment of the National Infrastructure and Service Transformation Authority (NISTA).

This is the right approach; however, the reality remains that problems persist with infrastructure delivery that, unless addressed, are likely to inhibit the chancellor’s ability to deliver economic growth.

Delivering on the future

Various reports have been published in the last year, each containing implementable recommendations for the government to match infrastructure ambition with delivery.

These include the Major transport projects governance and assurance review commissioned by the Department for Transport and led by James Stewart; the Independent review into legal challenges against Nationally Significant Infrastructure Projects led by Lord Charles Banner KC; and the All-Party Parliamentary Group for Project Delivery’s recently published report, Calling for a Radical Shift in Government’s Approach to Infrastructure Delivery.

Among these recommendations were calls for:

• The government to use the 10-year infrastructure plan and NISTA to embed delivery discipline as a permanent feature of government and end the so-called "valley of death" between policy and delivery. This would require that targets are set early, resources and accountability are clarified, and major projects are protected from short-term politics and delivered consistently across Parliaments.
• Project management training being made mandatory for senior civil servants and anyone managing a government project over £10 million. Incorporating an accountable chief project officer into government would ensure all involved understood how complex, long-term projects are delivered.
• The creation of a National Infrastructure Delivery Skills Roadmap, which would allow them to lock in a consistent talent pipeline aligned with long-term national infrastructure priorities. Alongside this, ringfencing funding from routes such as the Growth and Skills Levy should be considered to support training and apprenticeships in project management .
• A major shift in procurement to ensure early supplier involvement, the inclusion of project professionals throughout the process and lessons learned from other countries.
• The empowering of NISTA to oversee national infrastructure projects from policy to completion, ensuring consistency, accountability and effective delivery across Government.
• And for the government to lead in communicating the benefits and public value of national infrastructure projects by requiring major projects to set clear public value statements.

A common thread woven through these and other publications’ findings was that the UK’s current infrastructure delivery process is too slow, too costly, and too susceptible to both political churn and legal obstacles.

Some limited action has been taken, particularly in the form of the current Planning and Infrastructure Bill which is expected to be passed by parliament in the next few weeks. But nevertheless, these will all still be issues that the chancellor will have to reconcile when delivering the Budget, to build investor confidence and provide a sense of stability and certainty, not just for the business community but also in response to the messaging on display ahead of the last election. Establishing a stable pipeline for projects will help underline that.

Restoring direction

With the budget closing in, this will be the government’s real chance to calm some of the concerns around delivery the last year has generated.

This government began its time in office investing a significant amount of its political capital into making the argument that simplifying infrastructure delivery and attracting investment into schemes would deliver on its key priority - for economic growth.

Infrastructure project delivery remains one of the primary levers government has for driving that growth – but there is a risk that expended capital has not been sufficient for both developers and the reformers within government, who both believe that the administration has to go further and faster, for example with bolder planning reforms.

Using the budget, and the announcements around it, to answer this may present an opportunity to get infrastructure projects onto a much-needed faster delivery track.