The National Infrastructure Commission has recently published its latest Infrastructure Progress Review. This article summarises the key findings.
The Commission was established in 2017 as an executive agency of HM Treasury with its purpose to provide impartial, expert advice on the UK’s major long term infrastructure challenges.
It has four objectives:
- Support sustainable economic growth across all regions of the UK;
- Improve competitiveness;
- Improve quality of life;
- Support climate resilience and the transition to net zero carbon emissions by 2050.
In fulfilling its purpose and objective the Commission strives to set a long term agenda, develop fresh approaches and ideas and focus on driving change, primarily through independent policy and delivery analysis.
There are nine commissioners drawn from industry, government and academia, and it is currently chaired by Sir John Armitt.
2023 Progress Review
The review is clear that while the Government has ambitious goals for infrastructure in many areas it is simply not delivering quickly enough. The UK faces long term challenges from slow economic growth to delivering net zero and to meet these the Government needs long term infrastructure policy that it consistently delivers on. Economic infrastructure can play an important role in overcoming these challenges. The review states that if 2021 saw slow progress 2022 witnessed “stuttering further progress” and that a change of gear is required.
It is not all doom and gloom as the review does highlight some successes; for example in the roll out of gigabit broadband, the increasing the amount of renewable electricity generation taking place and plans to increase water supply.
However, the list of areas where the Government is off track to meet targets is lengthy and includes:
- Uncertainty regarding the timeline for delivery of HS2;
- Energy efficiency installations are low;
- Policy is not in place to meet the target on decarbonising heating;
- Waste recycling rates continue to plateau;
- Per capita water consumptions remains too high.
The review proposes that Government embed four key principles which the Commission advocates in establishing policy in the next year:
- Develop staying power to achieve long term goals;
- Fewer but bigger and better interventions from central government;
- Devolve funding and decision making to local areas;
- Remove barriers to delivery on the ground.
A selection of the review’s more detailed comments and findings are as follows:
The Commission published the first National Infrastructure Assessment in 2018 following which the National Infrastructure Strategy was issued by the Government. The 2021 and 2022 Government Spending Reviews first committed and then affirmed the figure of £100 billion to support the economic infrastructure set in the strategy for the period 2022 to 2025. However, the review notes that over the last two decades the government has under delivered on spending commitments and that this must change so that if follows through. Private sector investment is critical and the UK needs to remain a competitive place to invest, especially given the US Inflation Reduction Act and the Net-Zero Industry Act in the EU.
Transport remains too carbon intensive but the decarbonisation of the sector is too slow. The Government aims for 300,000 public electric charge points and near 100 percent electric car and vans sales by 2030 but only 37,000 public charge points are currently installed. A rapid increase is now needed to support the adoption of zero emission vehicles.
In Energy, the UK remains too reliant on natural gas which it states is a “high cost, high carbon and insecure source of energy”. The consequence of the Ukraine invasion by Russia has increased gas costs and jeopardised supply and Government has had to step in to subsidise the energy consumption domestically and for business. One positive aspect is the level of renewable electricity generation which has increased from 10% of the UK’s supply in 2010 to 40% in 2022, partly as a consequence of the contracts for difference policy which provides revenue certainty. However, there are only 12 years until the target date for a decarbonised electricity system and barriers such as securing transmission grid connections must be overcome.
In the water sector, the 2022 summer drought demonstrated the risk of water shortages due to climate change and population growth. The Commission had recommended demand reduction and supply increase through leakage reduction, smart metering, supply increase and a national water transfer network. Again, some progress is reported with leakage falling from 3085 mega litres per day to 2755 from 2017/18 to 2021/22. However, there is still a long way to go to meet the consumption target of 110 litres of water per person per day by 2050. Twelve national significant projects need to be consented by 2030 in order to achieve the target.
Later this year the Commission will publish its second National Infrastructure Assessment which will contain a series of further recommendations.
If you have any questions regarding any of the above, please do not hesitate to contact Patrick Bell, Partner in our Banking and Finance team.