Regional devolution unlikely to boost growth, warns IUK boss Geoffrey Spence

The UK’s post Scottish referendum drive for regional devolution is unlikely to accelerate economic growth across the nation, according to Infrastructure UK chief executive Geoffrey Spence.

Geoffrey Spence

Devolution, Spence told delegates at the ACE’s recent European CEO conference last week, is “a political debate” not a driver of growth in its own right.

“I am not saying that there aren’t benefits to devolution at all but if people say to me that if we devolve we will get an extra 2% on growth I would say that there is no evidence for that,” he said. “Devolution has to go with the power to deliver and with good leadership and competence.”

“The funding commitments that have been made [by government] are real and the money has actually been committed. So I don’t think any of this is a wish list, but is, in fact, what government intends to deliver."

However, Spence was confident that greater local and regional autonomy would prompt better decision making and locally informed choices, with regions taking more responsibility for schemes and so work together better to draw greater benefit from national infrastructure investment. 

 “High Speed 2 is a major investment and that investment will drive growth,” he said. “The north and Manchester would like greater decision making as to where the money is spent to enhance their infrastructure but I don’t think that we have seen any evidence that suggests that will lead to greater growth.” 

Spence’s comment came in a wide ranging presentation to consultancy bosses at the conference in London during which he updated progress ahead of  publication of the 2014 National Infrastructure Plan due to be published in December with the Chancellor’s Autumn Statement.

Speaking to Infrastructure Intelligence after the conference Spence emphasised the value of the National Infrastructure Plan since it was introduced in 2010 in terms of enabling the industry to plan more efficient workload and rejected accusations that it was ever simply a wish list. 

“The funding commitments that have been made [by government] are real and the money has actually been committed,” he said. “So I don’t think any of this is a wish list, but is, in fact, what government intends to deliver. That is why, if decisions have not been made, those projects are not in the plan.”

The next step, he said, was to turn those budgets into real projects, progress towards which he added, should be seen in the next Autumn Statement.

Geoffrey Spence - interview by Antony Oliver

Should the industry be worried about David Cameron’s recent warning over global economic conditions? 

“The significance of what the Prime Minister is trying to say is that if you look at the latest Eurozone figures it reminds everyone that, although the UK has one of the highest growth rates among our nearest competitors, we are not immune [from economic difficulty]. But I don’t think that, at this point, it is a problem in terms of delivering our pipeline.”

Could a shortage of resource across the infrastructure sector impact on ability to deliver the NIP? 

The issue of resources is more about what it is going to cost. It is about people but it does not cause me concern about achieving this plan. We have to manage it in a way that we don’t see avoidable cost escalation and that people who are born and educated here actually have a chance of participating in this infrastructure. That is all about skills and we are doing work at the moment to identify what skills are needed and when, compared to what skills are available.

Does the public sector have the skills and culture needed to effectively collaborate with the commercially driven private sector?

“We do have a problem in this country in that private and public sectors do live in a parallel universes. Each is completely valid but they don’t really understand each other because most people in the public sector have not had experience of working in the private sector and vice versa. What you have to do is find opportunities to collaborate but not at the expense of competitiveness when it comes to placing an order. The public sector cannot get sucked into cronyism when it comes to the award of contracts. It has to collaborate on the big issues that set the framework for delivery.”

You say that building high speed railway is still cheaper in France compared to the UK. Should we operate more like the French?

We are not French so we will never be like France. But I do think that there are some lessons there – we can do better – and we should look abroad. We do things that are the envy of the world and they all come to have a look at what we do here. There should be some return trade.

Should major public clients like the Highways Agency and Network Rail shift focus outputs to outcomes – from infrastructure to customer focus?

Yes. Some of the policies that we develop have to take more account of where the customer is, to get it right. I welcome the Highways Agency looking to its customers in the same way that airports have become more sensitive to that. After all, the use of assets is all about how to get the customer to use them more efficiently.

Do you support Sir John Armitt’s proposal for an independent Infrastructure Commission to set out a long term programme for the UK?

There is a case to be made for an Infrastructure Commission but I am not going to comment on whether we do or don’t need it. But I think we should be realistic about what even John Armitt expects - he is not thinking that he will take politics out and he doesn’t want to. But he doesn’t want to replace the NIP it is more about the delivery of longer term needs. What it is not going to do is rewrite all the government’s spending plans in the short term so even with a change of government there is stability.


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