Opinion

Grand plans but will we see any delivery?

The government has made a little money to take forward project assessments, but as yet there is limited hard and fast commitment to delivery, says Richard Abadie.

The Chancellor’s announcement to fund further analysis of the Trans-Pennine tunnel, HS3 and Crossrail 2 amongst others, is to be broadly welcomed and should help provide clarity around the commercial, technical and environmental feasibility of the projects. 

Nonetheless, there is still a long way to go on these projects and it would be misleading and premature for anyone to think they have either been approved or are proceeding. Like with any mega-projects, these three projects have significant hurdles to overcome and these will take time. 

We are in a strange place at the moment with Hinckley Point C, a new London runway and housing all stalled for various reasons.  Making new announcements while not clearing the backlog sends a confused message to the markets looking to build, finance and operate infrastructure.

And the announcement that the National Infrastructure Commission (NIC) needs to consider what the UK needs to do to become a world leader in 5G, for example, could be seen as amusing by many mobile users who find themselves struggling to get 4G currently due to inconsistent network coverage. Hopefully lessons have been learnt before we dive head long into another round of technology upgrades.

In recent years we’ve seen a growing trend towards complex mega projects which are expensive to procure, difficult to manage and govern and limit the ability to transfer risk away from the taxpayer and user to the suppliers. 

This shift also disadvantages small and medium enterprises (SMEs) who struggle to participate in these kind of mega projects. Properly managing the supply chain and affording proper competition is critical to broad based wealth creation and economic growth. 

The long lead time on mega projects also means announcements now don't lead to job creation and economic growth any time soon, nor does Treasury need to set aside substantial money to pay for the project in the current parliament. 

However, many hope that the NIC under Lord Andrew Adonis will be the catalyst to stop the cycle of re-announcements and to move projects forward. The challenge for Lord Adonis and his team will be that the Treasury, understandably from an affordability point of view, controls the purse strings and will manage the pace at which projects are funded and progress. 

Nevertheless the NIC's independence in assessing the prioritisation and relative benefit of projects will play a crucial role in properly informing the debate and in partly distancing the debate from political influence.

So, in the round, what we have is a little money to further project assessments, but limited hard and fast commitment to delivering the projects nor any significant near term economic impact.

Richard Abadie is transport and infrastructure partner at PwC.