Is infrastructure as easy as ABC?

Mark Leftly
11 July 2016

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Infrastructure politics

Can it really be efficient to have so many different infrastructure bodies jostling for position? Or is their work genuinely complementary? asks Mark Leftly.

George Osborne’s preferred photo opportunity is the chancellor donning a hi-vis jacket and “getting Britain building” has been something of a rallying cry.

Those were the words Osborne used to launch the National Infrastructure Commission last October, an independent organisation that he said would offer “unbiased analysis of the UK’s long-term infrastructure needs”. The idea was pilfered from the Labour Party, so it’s apt that the first chairman is Lord Adonis, transport secretary under Gordon Brown.

Worthy though this body might be, the NIC is yet another acronym in an industry crammed with them. The alphabetti spaghetti also includes the IPA (Infrastructure and Projects Authority), itself a merger of IUK (Infrastructure UK) and the MPA [Major Projects Authority) at the start of the year, and the ICG [Infrastructure Client Group). Below this there are regional bodies, such as Transport for London (TfL) and Transport for the North (TfN), with more to follow as the government’s devolution of powers gets underway.

Infrastructure experts think it likely, for example, that the West Midlands Combined Authority, which will receive £36m a year from government to spend as it sees fit after its first directly elected mayor takes office next year, will set up an infrastructure arm. For industry, the list is exhausting and confusing, while, with the NIC and IPA just starting, it is also unclear whether Osborne’s pledge can be met under these structures.

The driver

The NIC is arguably the most important new organisation, with the ambition to take the politics out of long-term infrastructure decisions that don’t fit the rigid political confines and expediency of a five-year fixed-term parliament. Sir John Armitt, the former chairman at the Olympic Delivery Authority and ex-chief executive at Network Rail, led Labour’s review, concluding in 2013 that warring politicians should be exorcised from infrastructure planning.

As much as Osborne has been accused of nabbing this idea, critics believe he has missed out one important detail: that the Treasury should be subservient to the commission. Instead, the Treasury still has the final say over which projects should go ahead, meaning that it could still veto infrastructure in the long-term good so as to not put a strain on public finances in the year of an election. There is an expectation too that the NIC will only report and investigate on what the Treasury asks it to. Its scope and power will become much clearer once the Bill is published which is needed to create the non-departmental public body (NDPB).

“What is the NIC meant to do? Armitt and Labour’s plan was to determine whatinfrastructure is needed and force the government to do it”, says a leading infrastructure consultant. “The Treasury doesn’t like the idea of being forced into doing anything. The NIC is useless if it reports to the Treasury, because it is effectively second guessing other people’s [officials’ and ministers’] decisions on the likes of Crossrail Two, High Speed Three. The NIC is a total waste of time.”

"The NIC is useless if it reports to Treasury, because it is effectively second guessing other people's (officials' and ministers') decisions on the likes of Crossrail 2 ancd HS3."
- Leadiing infrastructure consultant

Strong words, but Julian Francis, director of policy at the Association for Consultancy and Engineering, points to the number of consultations that the NIC has undertaken about its structure, governance and remit as “a good thing”. One of these established broad support for the NIC to be a non-departmental public body, and there is a determination in government to do this through primary legislation. But its status, and therefore independence, will ultimately be subject to the Office for National Statistics and accountancy criteria, while the chancellor will appoint commissioners in consultation with Adonis rather than his say so.

Francis adds: “We’re still trying to figure things out – the NIC is still in nascent form. If it works the way it’s supposed to on paper then it will create a project pipeline, the government approves them and then it’s the IPA.”

The IPA is charged with “financing, delivery, and assurance of projects”: these were previously the work of two units within Treasury. The government hopes this streamlined structure will help it meet a target of spending more than £100bn on infrastructure by 2020-21. “Both [the NIC and IPA] say that they’re independent of Treasury, but are they?” says Francis. “That’s the ultimate test.”

Co-ordination

Richard Threlfall, UK head of infrastructure, building and construction at ‘Big Four’ accountant KPMG, is more relaxed about the number of government infrastructure bodies. He says: “The important thing is understanding the hierarchy of these organisations – subject to that, the more people driving infrastructure in this country, the better. “The NIC should drive this as the overall lead, drawing on the work of the others, and then work with these organisations that fall behind them. They have got to be coordinated, not several different plans repeating the same things being produced.”

Constructing Excellence chairman Murray Rowden also praises the IPA since it was at least a merger, while also arguing that the NIC being in Treasury at least means it has the support of Whitehall’s most powerful, all-encompassing department. He also argues that industry cannot keep being critical of all the government bodies, given the sheer number of trade associations that exist under the broad umbrellas of construction and infrastructure. “We’re all looking up at government, but we should all be putting a mirror oourselves,” argues Rowden.

And there is an argument that the industry is duplicating government’s work. For example, an Institution of Civil Engineers-led group consulted on a ‘national needs assessment’ for UK infrastructure’s needs to 2050 at workshops in Edinburgh, Manchester, Birmingham and London, with the findings to be published in October.

The ICE says this work will be “shared” with the NIC, which would then be able to include the report as part of its own needs assessment. To complicate matters further, last month the NIC launched a consultation into the methodology of the National Infrastructure Assessment. A leading engineering contractor sighs: “This is a total waste of time – there’s huge amounts of replication in the industry, with one glorified meeting after another.”

But Andrew Crudgington, ICE director of external affairs and strategy, says the work is complementary and will not duplicate the work of the Infrastructure Commission’s own analysis. “The NNA is being developed independently by industry, business and academic bodies – led by ICE – and over 400 organisations and individuals from across industry, business, environment, economic, and academic communities have contributed evidence. This breadth of support and independent expertise can only strengthen the Commission’s evidence base and help it understand the challenges the country faces.

"The breadth of support and independent expertise can only strengthen the Commission's evidence base and help it understand the challenges the country faces."
- Andrew Crudgington, ICE

“The NNA, due to its nature, has also been able to progress quickly and its findings will be published and provided to the NIC and other stakeholders this autumn. NIC chair Lord Adonis has welcomed the NNA as a real asset to the Commission’s work. Sir John Armitt – also a member of the Commission – is leading the NNA group and acting as the interface to ensure it enhances and support the Commission’s goals.”

There is also some confusion around the role of the Infrastructure Client Group, which is made up of senior figures from major projects like HS2 and Crossrail, as well as the likes of Highways England and the Nuclear Decommissioning Authority.

Established by the ICE in the last parliament, this cross-industry body seeks to improve collaboration, which one derided as an “industry talking shop”. However, this work has included a new code of practice to help infrastructure companies avoid disputes when working together on major projects, which was published last year.

The future

On the plus side, the sheer volume of organisations and structural changes within government mean that infrastructure is at the forefront of ministerial thinking as, arguably, never before. Many of these organisations have only just been established, so need to be given time to come together and form a completed picture. The real test will be whether the pieces of the puzzle properly fit together.

Those infrastructure bodies explained

National Infrastructure Commission
Launched with great fanfare last year, the NIC is, in theory at least, independent of the Treasury and will tell chancellors which infrastructure projects should be prioritised over the coming years. It has so far been credited with securing £430m of government funding for smart power, Northern rail and London transport projects.

Infrastructure and Projects Authority
Established on 1 January this year, the IPA will make sure of the financing and delivery of projects. It reports to both the Treasury and the Cabinet Office and as well as huge infrastructure projects like High Speed 3, is responsible for delivering universal credit welfare reforms.

National Infrastructure Delivery Plan
Not a body as such, the NIDP was produced by the IPA and collates the government’s plans for large-scale housing, regeneration, schools, hospitals and prisons over the course of the current parliament in the National Infrastructure Delivery Plan – or another acronym, NIDP. This incorporates the latest version of the National Infrastructure Pipeline, which outlines £425bn of investment for more than 600 projects, the majority of which are beyond 2020.

Infrastructure Client Group
The ICG exists to support the implementation of government’s Infrastructure Cost Review – it works with client organisations and helps to address supply chain issues to drive innovation and efficiency. Its work has focussed on improving the commissioning, procurement and delivery of projects by sharing best practice through a series of tools – the latest of which an updated version of the Project Initiation Routemap is being updated mid-June.

Transport for London
This body comes under the control of the London mayor, which is now Labour’s Sadiq Khan. TfL has five funding sources, including the congestion charge and fares London Underground fares, with a total income of £11.5bn in 2015-16.

Transport for the North
Local transport authorities, combined authorities and Local Enterprise Partnerships from across the north of England to, as it puts it, “allow the north to speak with a single voice to government”.