Analysis

Fear not for the Infrastructure Commission, for now

Omission of the National Infrastructure Commission from the Neighbourhood Panning Bill gives an untimely negative message. But for the time being, a pause in progression to a legislative footing does nothing to reduce the scope, status or importance of the NIC's work, says Tom Eldridge

Tom Eldridge

To the surprise of most, and the dismay of many within the infrastructure world, the Neighbourhood Planning Bill was published last week without any reference to the National Infrastructure Commission (NIC).

 The NIC was established by the chancellor of the exchequer in October 2015 as a complimentary body to the newly-formed Infrastructure and Projects Authority (from the merger of Infrastructure UK and Major Projects Authority)

Part of the organisational framework for UK infrastructure, the NIC, despite its interim status as a commission, had a very clear purpose - to identify the UK's strategic infrastructure needs over the next ten to 30 years and to propose solutions to the most immediate issues.  Ambitious, challenging, even daunting, but considered by most as essential.

Following the well-received consultation earlier this year on the governance, structure and operation of the NIC and the Queen's speech to parliament in May, the industry had expected to see (in what was to be the Neighbourhood Planning and Infrastructure Bill) the much anticipated form of primary legislation to establish the NIC as a non-departmental public body.

As a public body created by statute with the approval of Parliament, the NIC would be established as a corporate entity separate from government and the crown. Arguably, it is only in this form that the NIC could be considered genuinely independent. It is this independence that most commentators consider vital to the authority and long-term effectiveness of the NIC and the implementation of its objectives.



It follows that, distanced, legally and structurally, from the tribalism of government departments and capable of surviving a change in government (primary legislation can only be changed by more primarily legislation), the NIC will have the legitimacy to look at the UK's infrastructure requirements and most pressing challenges on a full 360 degree basis. And in doing so, it will be better able to both inform and challenge government, and ultimately hold government to account as the UK enters the most pivotal period in infrastructure planning and delivery. Importantly, as a public body, it too would be accountable to both Treasury and parliament for its outputs.


So what does the NIC's absence from last week's Neighbourhood Planning Bill really mean? Most obviously, it means that its status as a commission will remain the same for at least this parliamentary term.  

But there has been no suggestion that the NIC will be scrapped. There has been no suggestion that its purpose and objectives will be changed and that its intended composition and form will be altered. Further, there appears to be no indication that its proposed interaction with Treasury, Government departments, the executive and the Infrastructure and Projects Authority will be redefined.  

There are certain accepted limitations of the NIC that should not be ignored in this analysis. It has never been intended that the NIC will have executive powers. It can make recommendations to government. Its assessments (annual National Infrastructure Assessments) will be laid before Treasury and parliament. It is intended that legislation will confirm that government will be obliged formally to respond to these assessments. But government will not be obliged to accept them. Government, not the NIC, will continue to be responsible for infrastructure delivery through its approval of the projects to be built. The NIC will not be self-funding. Instead, it will rely on the Treasury for grant-in-aid funding provided on a rolling basis subject to parliamentary approval. And, if the legislation follows the consultation, the chair and commissions of the board of the NIC will be appointed by the chancellor.      

A number of key issues do not actually fall within the ambit of the NIC. For example, it is proposed that the NIC will have no involvement with government decisions on airport expansion or pricing arrangements in regulated utilities such as energy and water. The NIC will not look at decision-making processes for current programmes such as those dealing with smart metering, road investment and the Control Period 5 in rail. Further, it is not intended that the NIC will make any recommendations at all on social infrastructure, such as hospitals, schools and prisons.

Setting aside the arguments as to the legal status of the NIC, there can be little doubt that the timing of its absence from this parliamentary term is bad. Notwithstanding current Brexit-related arguments, there has long been a call for a clear roadmap and an independent body to oversee it.

This has been voiced within and outside of the industry in part as a response to the discrediting from various quarters of the PFI/PPP models overseen by administrations since the mid-1990s as the way of delivering the UK's infrastructure needs.

 But much more recently there have been separate events which, taken together, have given weight to an argument that the UK has an inconsistent and, to some degree, a politically and policy-influenced approach to infrastructure planning and delivery.

The view of some is that this manifests itself in a lack of consensus creating an uncertainty into which the necessary investment cannot be committed and delivered. Take, for example, the review of Hinkley Point, the ongoing debate surrounding HS2 and Heathrow Airport, the reversal of the Northern Powerhouse project (indeed the perceived and actual reversal of much of the Osborne/Cameron focus on UK infrastructure) and the reduction and closure of incentive regimes for certain forms of solar and wind power generation projects.

There has also been some recent criticism of financing and contractual structures, and the affordability implications of these, for large-scale UK infrastructure projects such as the Thames Tideway Tunnel and the Sellafield clean-up and decommissioning project.

It would be fanciful to suggest that the NIC, as an independent public body or a parliamentary commission, could address and solve these issues in itself.  As highlighted above, there are limitations as to the scope of the NIC's influence within the infrastructure world and its ability to set policy in those areas that do fall within its defined scope. But given the way in which infrastructure policy is perceived in some quarters, and particularly in today's context, a formally legalised NIC would have been a positive step forward. Arguably, a clear, early statement from those sponsoring the bill explaining why it had been excluded would have been helpful.  This should have allayed substantive concerns, the likes of which have questioned, yet again, the UK's priorities in terms of infrastructure planning and delivery.  


However, we are where we are. Without ignoring or dismissing the importance of it becoming a public body, and the context within which it is operating, it seems that, for the time being, the same excellent people within the NIC will continue working within the same structure and towards the same goals as detailed in the earlier consultation. Currently, the NIC is overseeing three distinct studies: transport connectivity between cities in the north of England, transport infrastructure in London and UK electricity interconnection and storage. Earlier in the year it also took on two further reviews: one focused on infrastructure growth in the Cambridge, Milton Keynes and Oxford corridor, the second dealing with the UK's requirements to become a world leader in 5G telecommunications systems.


Essentially, it has also launched a consultation on the process and methodology for the first National Infrastructure Assessment. Charged with reporting to parliament in the summer of next year and then delivering the first National Infrastructure Assessment in 2018, this is where the success of the NIC will be truly tested.  

The IPA has recently published its fourth annual report on the UK's "Major Projects" and new content for the Project Initiation Routemap as part of the National Infrastructure Delivery Plan (2016-2021). The ability of the NIC, in whatever form, to work effectively with the IPA, Treasury and relevant government departments to deliver this plan and subsequent assessment is vital.

These institutions must operate individually and collectively to set the plan for current and future infrastructure planning and delivery. And working with the likes of the UK Guarantees Scheme, Private Finance 2 and others such as the European Investment Bank, the European Fund for Strategic Investment (each, of course, subject to current Brexit considerations) and the Pensions Infrastructure Platform, they must create the necessary policy consensus and certainty to unlock both the public and private capital required to fund the UK's infrastructure programme. The role of NIC will be crucial to this.            

Tom Eldridge is a partner at law firm Mayer Brown.

If you would like to contact Jon Masters about this, or any other story, please email jmasters@infrastructure-intelligence.com.

Comments

Sorry, but I can't say that I find this especially convincing. After an odd period of 'nothing much happening' (other than quite a bit of profile raising for the chair) still an impression of the Commission now falling down the policy agenda?