Analysis

Investment in smart infrastructure requires shift towards “disruptive” business models.

Smart infrastructure

More fiscal devolution to move tax and spending powers away from central government is vital to drive innovation into infrastructure, EY Smart Infrastructure panel hears.

New models of financing and funding are vital if the UK is to drive its economy into the future with investment in smart infrastructure. 

According to Arup transport director Alex Jan the current centralised model of investment controlled by silos of government departments is holding back the adoption of new thinking and new investment.

“Government needs to embrace a more disruptive business models,” he told delegates at a round table discussion on smart infrastructure organised by management consultant EY.

“There is a disconnect between where money comes from and where it is spent. We need to give local authorities the ability to borrow and then the ability to raise taxes to pay for that borrowing.” Alex Jan, Arup

“We need more horizontal thinking. We need to link human nature with politics - if I invest what is in it for me?” he added. “If you can get decision making at the right level you will get accelerated delivery.

Jan was speaking as part of a panel chaired by Infrastructure UK head of infrastructure Stephen Dance, tackled the challenges around the delivery of economic growth through innovation and funding and procurement of the next generation of smart technologies. 

He pointed out that the existing planning and procurement systems were holding back investment and highlighted the way that investment in the nation’s infrastructure had fallen over recent decades.

“We are just not spending enough on infrastructure in the UK. In 1950 we spent £1 in every £8 (of public expenditure) on infrastructure. Today it is £1 in every £30. We have to make a choice over how we spend money,” he said.

Jan argued that under the current highly centralised UK government with the overwhelming majority of taxation and public spending controlled by Whitehall, it was increasingly difficult to drive innovative thinking into infrastructure investment. 

“We now also have a more centralised economy than ever,” he said. “There is a disconnect between where money comes from and where it is spent. We need to give local authorities the ability to borrow and then the ability to raise taxes to pay for that borrowing.”

The round table panel speakers included Alex Burrows of Atkins, Charbel Aoun of Schneider Electric,  Jo Baker of Mott MacDonald, Elaine Stewart of Atos, Damian McHale of DfT, Chris Perry of Centro and Davin Sweet-Crowley of Network Rail.