What does the Budget mean for UK infrastructure?

Today’s Budget was designed to demonstrate economic responsibility, delivering some of the Government’s key manifesto commitments. But what does this Budget mean for UK infrastructure?

At work on London's Crossrail. Government's 'productivity plan' should help to reduce regional skills and infrastructure disparities and see more investment outside of London.
At work on London's Crossrail. Government's 'productivity plan' should help to reduce regional skills and infrastructure disparities and see more investment outside of London.

Economic good news

The raft of positive economic figures is good news for infrastructure, given that so much of the future of our networks relies on attracting inward investment into the UK. Official figures showed the UK economy grew more strongly than previously predicted. Business investment has surged – up by 31.9% since 2010.

Most encouraging of all, the Government declared they will be ‘bold in delivering infrastructure’.

The Government plans to do this through a ‘productivity plan’: a plan to tackle the productivity gap in skills, infrastructure and regional imbalance in the UK economy. Further details of the plan will be announced on Friday, but for now we can expect greater investment in transport infrastructure in Wales, the Midlands and South West.

Northern Powerhouse

The Northern Powerhouse initiative also gets a boost today.

After set-backs such as the delays to the electrification of the Trans Pennine rail line and delays to a decision on Britain’s airport capacity, more funding for the Northern Powerhouse and additional initiatives are much needed.

The Government took a step in the right direction by:

  • establishing TfN as a statutory body with statutory duties;
  • appointing an interim Chief Executive and executive team for TfN by the autumn and a Chair by the end of the year, to accelerate TfN’s work programme;
  • working with TfN to advance the introduction of Oyster-style smart and integrated ticketing across bus, tram, metro and rail services throughout the region;
  • working with TfN to push forward plans to transform east-west rail and road connections via TransNorth and options for a new Trans Pennine Tunnel.

There are still many challenges and opportunities presented by the Northern Powerhouse. But ICE’s regional network will do it’s very best to shape the initiative, helping to boost growth across all regions and devolved nations in the UK.

Continuity

In our submission to the Budget, ICE set out two clear objectives for infrastructure policy, including:

  • Maximise infrastructure’s contribution to improved productivity and higher economic growth.
  • Build resilience into the UK’s infrastructure networks so that they are fit to face future challenges.

In order to achieve these objectives by 2020, we suggested that Government and industry need to:

  • Create a long-term infrastructure decision-making framework.
  • Secure a world class engineering workforce that can drive innovation and productivity.
  • Develop Infrastructure Network Performance Metrics.
  • Accelerate the devolution of power and resources for developing high performing infrastructure.

In particular, ICE President David Balmforth highlighted the importance of flood risk management and its impact on resilience.

Specific cuts to Government departments to be set out in the upcoming Spending Review and protecting the six year £2.3bn capital investment for new flood infrastructure will be a step in the right direction.

The same can be said for vital investment in transport infrastructure.

ICE was keen to see the Government commit to the delivery of the six year capital roads investment package, provide additional investment to clear the local roads maintenance backlog and move to a ‘preventative maintenance approach’. Whilst details of the announced ‘roads fund’ are still be analysed (it will not be available for another five years for example), it is a positive sign that the much needed investment in our roads is on the Government’s radar.

When considering the impact of the Budget on our energy infrastructure, however, the picture looks a little murkier.

There were few announcements on energy infrastructure in the Budget but some changes spotted in the small print could have a significant impact. A decision not to follow the planned increase in environmental taxes such as the Energy Company Obligation may slow industry moves towards greater energy efficiency and the removal of renewable energy generators exemption from the Climate Change Levy is particularly worrying. Given the recent subsidy cuts to the Renewables Obligation scheme, which ICE demonstrated will cause significant damage, any further changes affecting renewables’ economic viability for the next decade will hit developers – and general investment into our energy networks - particularly hard.

Our main message ahead of the Budget was one of continuity – building on the success of the last five years to deliver real improvements in UK infrastructure.

I am pleased to see that by and large, the Government has listened.

Nonetheless, ICE will provide its views to the Spending Review to ensure infrastructure is at the centre of productivity and growth.

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