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Think tank criticises UK government's "short-sightedness" and lack of "forward-thinking" infrastructure strategy

Out-Law News | 19 Dec 2014 | 8:55 am | 3 min. read

Gaps in the UK's "institutional architecture" for coming to decisions on major infrastructure investment means that the process is not as efficient as it otherwise could be, according to a leading policy 'think tank'.

In a new report, the Institute for Government said that "short-sightedness and lack of forward-looking strategy" often led to "political procrastination" on public spending discussions and decisions. Failures to secure cross-party agreement and local community consent on major projects also led to a high risk of projects facing delays or cancellations due to the political process, leading to a lack of certainty that could discourage investment, he said.

The report recommended the creation of a new "forum" outside of the political process, where interested parties could discuss options and consequences of potential infrastructure policy. Although the UK tended to rely on the private sector more than most comparable countries, the government could learn from examples of innovative infrastructure decision-making processes in countries such as France and Australia, it said.

"Energy security, environmental regulation, replacement of existing infrastructure and increasing population are only a few examples from a wide range of pressures that will impact on UK infrastructure over the next couple of decades," said Miguel Coelho, a fellow of the Institute for Government and one of the authors of the report.

"Successfully addressing these challenges will require large-scale investment and significant shake-up of the way things are currently done. These findings should serve as a warning to government that poor policy-making processes could lock the economy into inadequate infrastructure systems for many years to come, placing a heavy burden on future prosperity," he said.

According to the Institute for Government, the UK "needs to make major strategic infrastructure decisions over the next few years" in order to deal with the effects of climate change, meet energy security requirements, maintain and replace existing infrastructure and cope with a rising population. One specific example it cited was the government's commitment to national high speed rail link HS2 and the creation of a 'Northern Powerhouse'; both of which would result in railway connections becoming even more important in the years to come.

Earlier this month, the government updated its National Infrastructure Plan; its 'pipeline' of planned projects in the energy, transport, flood defence, waste, water and communications sectors including the 40 major infrastructure projects seen as its highest priority. The updated plan contained a commitment to invest £2.3 billion in over 1,400 flood defence projects in England over a period of six years, a detailed roads improvement package worth £15bn and plans for the world's first tidal lagoon project. According to the plan, 65.6% of the investment needed to deliver the projects in the pipeline will need to come from the private sector.

In its report, the Institute for Government said that the UK was "rather unusual" among the world's advanced economies in the extent to which it relied on this level of private sector investment. However, a certain degree of government involvement was general necessary, depending on the sector, since "large infrastructure projects tend to have important land use implications and, therefore, involve securing planning permission, which is a matter for government policy", it said.

For this reason, the Institute for Government said that the UK could benefit from a more innovative approach to infrastructure decision-making. In particular, "adequate forums" were needed where politicians, experts, interest groups and representatives of local communities could "engage in structured, informed discussions about policy options for infrastructure investment", it said. This group would not be about "bypassing the political process but improving it", it said.

The report cited a number of international examples of this type of forum. In France, a state-funded 'commission for public debate' was set up to ensure that the public could participate effectively in decision-making processes on projects that have major effects on the environment or on land planning; while in Australia the Productivity Commission acts as an arm's-length advisory body to the government on matters of microeconomic policy and regulation.

"This report effectively adds weight to the Armitt Review's proposal for a National Infrastructure Commission; helping to build momentum towards that in advance of Sir John Armitt's response to a consultation on his proposals, due in early February, and then in the run-up to the general election," said Robbie Owen, a planning and government affairs expert at Pinsent Masons, the law firm behind Out-Law.com.

In a review commissioned by the Labour Party, the final report of which was published alongside draft legislation in July, former Olympic Delivery Authority chair Sir John Armitt recommended the creation of a new National Infrastructure Commission with statutory independence. This body, which would be set up by an act of parliament, would set clear long-term priorities for UK infrastructure investment and would produce a National Infrastructure Assessment to be presented to parliament for its approval once every 10 years.