Can the UK ever embrace a long term plan for infrastructure investment?

The second phase of Sir John Armitt’s work for the Labour Party to review long term UK infrastructure planning kicked off last week with the start of work to create a draft White Paper and Bill in preparation for potential legislation.

Antony Oliver
27 January 2014

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The Armitt Review Nov 2013

Despite the recommendations in his report for the creation of a new Independent Infrastructure Commission to oversee a 30 year planning horizon for infrastructure being widely welcomed as a credible solution to UK infrastructure delivery, there is clealy some way to go before the idea becomes a reality.

In this interview with Infrastructure Intelligence editor Antony Oliver, Sir John highlights the challenge of navigating the pre-election political landscape and explains the critical factors still holding back investment in the UK’s vital infrastructure.  

Q: What difference would an Independent Infrastructure Commission make to the delivery of UK’s national infrastructure?

A: The objective was always to create something which significantly reduces the risk of political policy change – political flip flop as it is referred to. The Commission is there to take a 30 year view of the infrastructure needs of the country which Parliament then debates and agrees through an Act of Parliament.  It is all about giving more political certainty. Under the current arrangement [planning decisions] can change even between one Secretary of State and the next.

Q: Realistically what is the prospect of your recommendations being embraced by politicians?

A: They have been embraced by the Labour Party and we have been asked to produce a draft White Paper and Bill so that in the event of a Labour government after the next election they can introduce legislation to create an Infrastructure Commission very quickly. We started this work last week. However, the current government remains silent on it. But what I read into this silence is that they don’t think it is something that is easily attacked. I am encouraged they have not rubbished the idea and it is understandable in the current political situation that they are not going to rush out and support something promoted by the opposition. Generally it has received good levels of support.

Q: How might a Commission have helped to deliver HS2 more effectively?

A: One of the problems with HS2 is that there was no serious debate about the route, need or economics until government announced that it was going ahead with the project. All would have been identified by a commission. What you are trying to achieve is for politicians to vote on what is good for the country and not simply about what irritates their local constituents.

Q: Is there a risk that too much focus by government on controlling the cost to consumers overlooks the greater long term cost of not investing in decent modern infrastructure?

A: Yes. That is why in my review I say that the role of the regulators would need to be changed so that they were not only addressing the cost to the consumer but also the long term cost to the consumer arising from either under or over investment. The regulator would therefore be taking into account the long term need and how that long term need is best met as a key obligation. 

Q: What do you consider to be the critical factor in driving forward investment in infrastructure?

A: Policy is the most important factor because policy leads to people being able to invest. It enables the private sector, if it can see that there is going to be growth in a sector, to invest in technology, manufacturing capability and skills. It all flows from the ability to look forward with a degree of certainty and that comes from policy.

A fuller version of this interview with Sir John Armitt will feature in the forthcoming KPMG Focus on Infrastructure, Building and Construction digital magazine which will be published in late February.

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Also in this magazine will be interviews with HS2 commercial director Beth West, Green Investment Bank chief executive Shaun Kingsbury and Birmingham City Council leader Sir Albert Bore to discuss the progress of infrastructure delivery in the UK. 

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For further details visit: www.kpmg.com/uk/en/industry/buildingandconstruction

Background to the Armitt Review

In October 2012 the Labour Party commissioned Sir John Armitt, the Chairman of the Olympic Delivery Authority, to undertake an independent review of long term infrastructure planning in the UK, looking at:

• whether a new institutional structure can be established that better enables the long term decision making necessary for strategic infrastructure planning; and
• how political consensus can be forged around these decisions.

Key recommendations of the Armitt Review

1. A new independent National Infrastructure Commission to look 25-30 years ahead at the evidence for the UK’s future needs across all significant national infrastructure and set clear priorities, for example, nationwide flood prevention or energy supply.
2. This National Infrastructure Assessment would be carried out every 10 years and include extensive research and consultations with the public, local government, NGOs, regulators and other interested groups or individuals.
3. A Parliamentary vote on the evidence-based infrastructure priorities would have to take place within six months of their publication, to avoid delays.
4. Within 12 months of this vote government departments would have to form detailed 10 year Sector Plans of how they will deliver and fund work towards these priorities.
5. Parliament would then vote on these 10 year plans and the permanent National Infrastructure Commission would scrutinise the ability of these plans to meet the 25-30 year national priorities and report to Parliament annually on their delivery.