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Taking a look at which ICE recommendations have helped to set the agenda in infrastructure policy, and where more progress is needed.
The UK has undergone five years of unprecedented change while facing up to long-term challenges, such as reducing regional inequalities and mitigating the impact of climate change.
Over that period, ICE’s annual State of the Nation reports have set out a range of policy interventions aimed at ensuring the UK has the high-performing infrastructure needed to meet those challenges. Each report has focused on major cross-cutting infrastructure issues, including devolution and reaching net-zero greenhouse gas emissions.
ICE has advocated for the establishment of a UK Infrastructure Bank since 2017, and it was a key recommendation in State of the Nation 2018, which focused on infrastructure investment.
State of the Nation 2020, which looked specifically at achieving the 2050 net-zero target, developed this further, recommending that an infrastructure bank should have an explicit “sustainability mandate”.
In March, the government announced a new UK Infrastructure Bank, with £12 billion of initial capital and £10 billion in government guarantees over the next five years, and a mandate to support achieving net-zero and other long-term priorities such as levelling-up.
In 2020, we also called for Green Book reform so that infrastructure interventions to support the net-zero target are appraised and assessed primarily in relation to that objective.
The Treasury’s own Green Book Review, published in November, concluded that “current appraisal practice risks undermining” government’s ability to achieve strategic objectives such as net-zero.
As a result the Treasury introduced a range of changes to the Green Book, including a stronger requirement to establish clear objectives that will drive the appraisal process, and a strengthened chapter on environmental appraisal.
Our net-zero work is ongoing, for example the Carbon Project is conducting work to help implement our recommendation that better “collection, sharing and use of data on infrastructure assets” is needed to improve decision-making.
Most importantly, in 2020 we called for “a coherent plan for how the infrastructure sector can contribute to reaching net-zero emissions”. The government is expected to publish its Net Zero Strategy later this year, and ICE will assess its proposals against the recommendations made in State of the Nation.
Almost half of the UK’s infrastructure is financed and delivered by the private sector and paid for by consumers under the regulated asset base (RAB) model, which was examined in the 2018 and 2019 State of the Nation reports.
The reports revealed a growing consensus that short-term regulatory periods are preventing strategic, long-term planning and delivery of some of the UK’s core economic infrastructure networks.
In 2018 we recommended that Water Asset Management Periods should be flexible enough to enable the planning and delivery of long-term programmes.
We followed this up in 2019 by looking at the role of utilities in long-term housing development. The report recommended that regulators build greater flexibility into the RAB model so appropriate consideration can be given to providing infrastructure for permitted new housing developments outside of price control periods.
Last year we looked at the issue further in a policy paper, which recommended that direct procurement models that deliver large-scale infrastructure projects should be explored and utilised. This would allow for strategic investment, outside of price control periods, that delivers improved economic, social and environmental outcomes.
The government now appears to recognise that regulation models will need to change in order to achieve its long-term strategic objectives, such as net zero and levelling up.
Following a request from the Treasury, the National Infrastructure Commission (NIC) undertook a study on economic regulation. The Treasury’s initial response, published in November, was largely supportive of the NIC’s recommendations and a further policy document is expected in 2021.
State of the Nation 2016 looked at how devolution to the UK’s nations, cities and regions can “positively transform infrastructure strategy and delivery”.
We recommended developing regional infrastructure strategies “to decide priorities for economic growth and realise wider social and environmental improvements”, which was later expanded upon in our 2019 State of the Nation report into infrastructure and housing.
The government has made levelling up the UK's regions a key strategic goal, but its National Infrastructure Strategy, published in 2020, lacked detail on the frameworks and governance arrangements required for regions to better plan and deliver sub-national infrastructure provision.
In its latest monitoring report, the NIC called on the government to make the development of “a long-term, strategic approach to transport investment and devolution in cities and regions” a priority.
The English Devolution and Local Recovery White Paper, due to be published later this year, should provide further detail and strategic direction on how levelling-up will be achieved.
Developments such as the UK Infrastructure Bank demonstrate the value of State of the Nation’s expert analysis and policy recommendations in building a framework capable of delivering the UK’s infrastructure requirements.
Nevertheless, there are key areas that remain undefined and under-developed, compromising efforts to achieve long-term goals such as net zero and levelling up. ICE will continue to advocate on those issues through our policy work.
Read about the focus of our upcoming 2021 State of the Nation report and how members can share their views here.