The Government has announced the UK's 'first ever' National Infrastructure Plan, which aims to outline the scale of the challenge facing UK infrastructure and the major investment that is needed to underpin sustainable growth in the UK.
The plan is provided by Infrastructure UK (IUK), a body within the Treasury which is responsible for advising the government on the UK's long-term infrastructure needs. The Chancellor established the body during the June budget with a major element of its remit being to promote greater private sector involvement in infrastructure development. This involved the creation of an Advisory Council composed of private sector industry leaders, with the major energy representative being the current Chief Executive of National Grid.
The plan can be assessed as having two main elements. The first aspect consists of an in depth breakdown of the infrastructure problems and challenges faced by UK infrastructure development, with a particular focus on energy networks as well as transport, intellectual capital, digital communications and flood prevention, water and waste. Accordingly, the second aspect of the Plan is an identification of the investment required for sustainable growth in these areas, and Government policy statements clarifying their vision to this effect.
In assessing required investment, IUK notes the impact of independent economic regulation in the utilities sector. As IUK has been tasked with encouraging private sector involvement, it falls to be seen whether the existing regime remains compatible with this evolving model of infrastructure development. The plan acknowledges that economic regulation is generally limited only to the 'pipes and wires' or networks themselves and that the current regime has 'supported significantly higher levels of investment' compared with the period before privatisation.
The plan then moves on to identify three main issue headings posted by the Government for regulation: (i) the duties of regulators; (ii) clarity of long-term strategy; and (iii) dialogue between regulators. From an energy perspective, a clear example of these concerns being addressed can be seen in the current DECC review of Ofgem's role and function expected to be reported by Spring 2011. As well as this, IUK in conjunction with the Department for Business, Innovation and Skills (BIS) is to publish a common set of principles for economic regulation by the end of the year.
An updated plan is due by the end of 2011.
Click here for the full text of the National Infrastructure Plan.
For more information please contact James Saunders or Kyle McAra.