Public partner - interview with chief secretary to the Treasury Danny Alexander

Danny Alexander is uniquely placed in government to understand the pressures on the recovering economy and role that investment in infrastructure can play in driving growth. He discusses the challenges with Infrastructure Intelligence. 

Danny Alexander

The task of driving the UK’s strategy around investment in infrastructure is complex and multifaceted and, frankly, not an easy or universally popular job.

As the government battles to balance the books following the greatest economic downturn in living memory, finding the vast quantities of funding needed the revamp the nation’s aging infrastructure remains a daunting prospect.

Chief secretary to the Treasury Danny Alexander is more aware than most of the trade-offs and difficult decisions needed square the investment circle which is increasingly seen across the political spectrum as vital to the UK’s return to growth.

The National Infrastructure Plan, now in its fourth incarnation, highlights the scale of opportunity with projects worth some £375bn currently slated to be delivered over the next decade or so. 

But as highlighted by the recent NIP update, published alongside the Budget earlier this month, around 70% of this funding is expected to be drawn from the private sector. And the challenge of providing the stable environment and market confidence to secure this level of investment cannot be underestimated. 

One key to delivering this level of investment is the NIP Strategic Engagement Forum which Alexander jointly chairs with ACE chief executive Nelson Ogunshakin. The forum is intended to promote discussion across the multiple stakeholders that are vital to the successful delivery of nation’s infrastructure needs so as to remove barriers and accelerate delivery.

Progress is being made. However, it is clear that when it comes to smoothing the planning process, mitigating the on-going short-term political risks around long term infrastructure delivery and creating an environment that encourages global investors to back UK projects, we still have some way to go if the NIP’s ambitious plans are to be met.

And with just over a year to go before the General Election, Alexander and his cabinet colleagues will be keen to demonstrate the benefits and successes of the Coalition.

Yet challenges and opportunities lie ahead. Controlling the cost of UK infrastructure and reducing the carbon; dealing with a changing climate and pressure it places on vital infrastructure; reforming and preparing the public sector for the challenge ahead; and finding new sources of financing to drive the nation’s ambition.

All of which provides much to discuss. Infrastructure Intelligence editor Antony Oliver puts the questions to Alexander:

With the election only 15 months away how can you prevent the discussions around infrastructure becoming less strategic and more party political?

In June the government set out our long term plan for infrastructure, as part of the Spending Round, committing £100bn to specific projects over this and the next Parliament (up to 2021) giving investors long term security and helping them plan. All parties should sign up to these plans.

In what way has the Liberal Democrat influence in the coalition influenced investment priorities around infrastructure?

I chair the Infrastructure Cabinet Committee and take a very personal interest in keeping in touch with the industry and with investors.  I regularly attend a number of key industry events and oversee the production and maintenance of the national infrastructure plan. Liberal Democrats have long championed the need for long-term investment in transport, broadband, and energy, and I have made sure funding is available in these areas.

How do you sum up your thoughts on the following issues: 

...On prioritising infrastructure and getting costs down:

Infrastructure remains at the heart of the Government’s long term economic plan. To demonstrate our commitment we published the National Infrastructure Plan 2013 which sets out an updated infrastructure pipeline of investment worth over £375 billion over the next decade. This is the most robust, forward-looking account of government infrastructure plans to date, which clearly identifies key projects and future delivery milestones. 

Given the long term nature of infrastructure planning, we are diligent about the potential impact of cost inflation, however Infrastructure UK is currently working with the Construction Leadership Council to analyse the and opportunities to mitigate these impacts.

…On balancing the private sector’s need to invest in vital infrastructure with ensuring affordability for consumers:

We are making the necessary investment to get the UK back on track – but we’re also ensuring that this is affordable for consumers and sustainable for taxpayers through a strong regulatory regime.

Additionally, we have measures such as the Infrastructure Cost Review programme; a collaboration between the public and private sector to identify ways of reducing construction costs by 15 per cent.

…On the benefits of NIPSEF to the delivery of critically important national infrastructure projects? 

NIPSEF is an extremely valuable forum. It has ensured that industry experience and expertise from across the sector can be fed directly into the heart of Government, in doing so it has helped shape the direction of the National Infrastructure Plan and driven forward the infrastructure agenda.

…On John Manzoni’s appointment to the Major Projects Authority:

I am very pleased John has joined us, to focus on a range of imperatives relating to world class project management, including rigorous assessment, accountability and openness about challenges. I think the biggest changes we will see will be around leadership. I recently visited the MPA’s Leadership Academy, which is helping to make sure we have the right people with the right skills to deliver big projects on time and on budget. It’s now standard practice that all senior leaders will need to take this course before the Treasury gives the green light for any major project, which is a significant measure and great news.

…On the extreme weather :

We’ve had the wettest winter for over 200 years and the government remains committed to supporting households and businesses affected by the devastating flooding.  We’ve announced £130 million and a package of measures specifically for the recovery effort and will continue working with affected communities over the coming months. We will be making record levels of investment in capital improvement projects; £370m in 2015/16 and then the same in real terms each year, rising to over £400m in 2020/21: - that means more than £2.3 billion invested in capital alone over a 6 years period.

…On cost benefit analysis following the floods in Somerset.

Many factors have to be borne in mind when decisions on the best use of public money are being made and the use of cost benefit analysis techniques helps decision makers to compare alternative ways of responding to public need. But I would be clear that the existing process does take account of costs and benefits in the very long term.

…On the timetable for HS2 Royal Assent :

The speed of HS2 Royal Assent is in the hands of Parliament not the Government, which is as it should be. But I am confident. As we’ve seen there is a significant majority in Parliament in favour of the bill and if Parliament want to secure Royal Assent for the Bill before the next General Election then it is well within their powers to achieve this.

…On the Green Investment Bank :

The GIB is an ambitious and central part of our vision for low carbon infrastructure. The £750m of government money invested will leverage £3.2bn from the private sector. Where financing issues do remain we are creating a fiscal and regulatory regime that provides more certainty for investors and which we hope will accelerate commitments.

...On Scottish infrastructure and the referendum:

As part of the UK, Scotland receives stable and secure funding which, according to the Scottish Government’s own figures for 2011-12, is around £1,200 per person higher than the UK average and £7.6bn more than total Scottish taxes (including North Sea revenues).  Furthermore, devolution also provides the Scottish Government with powers over many of the key areas of spending policy in Scotland.  

Much of infrastructure is devolved in Scotland, but the UK government is also supporting Scottish infrastructure projects such as the Offshore Renewable Energy Catapult, and has announced that Neart Na Gaoithe windfarm in the Forth Estuary is in the first stages of the UK Guarantees process, alongside several other Scottish projects. We’ve set out over £100m for rural broadband rollout, and we are making Aberdeen, Edinburgh and Perth Super-Connected Cities. Scotland is benefitting from UK wide schemes that will boost growth and create jobs, showing that we’re better together. 

After 4 years in Government what is the thing that you are most proud of and what would you have liked to achieve that you haven’t been able to?

Raising the personal allowance to £10,500 that will deliver an £800 tax cut to over 25 million working people and lift 2.7 million out of paying tax completely. I am extremely proud of the priority we have given to rail and broadband investment in particular. In the next Parliament, I would like to make sure all rural households have access to superfast broadband, and that HS2 is delivered as quickly as possible.

If you would like to contact Antony Oliver about this, or any other story, please email