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Infrastructure blog

Budget fails to set out a strategic plan for infrastructure investment

12 March 2020

In a Budget understandably dominated by the coronavirus pandemic, there were some major investment announcements made on infrastructure. But the wait for the National Infrastructure Strategy goes on says ICE Lead Policy Manager Ben Goodwin.

Budget fails to set out a strategic plan for infrastructure investment
National Infrastructure Strategy delayed in the Budget. Image credit: Shutterstock

In the lead into the Budget there was lots of hype that the Chancellor would splash the cash on the UK’s infrastructure with promises of £600bn in gross capital investment over the course of the next five years.

A new £5.2bn funding settlement for flood defences was welcome in this context as was the confirmation of £5bn for delivering rural broadband connections.

There were also additional funds for England’s motorways bringing total investment up to £27bn for the period 2020-25, whilst manifesto pledges for tackling potholes were brought forward with £2.5bn set aside for repairs.

The last iteration of the National Construction and Infrastructure Pipeline put combined private and public investment in all infrastructure (social as well as economic) at over £600bn.

On a pipeline that is balanced pretty evenly between public and private investment this would suggest that the Chancellor’s spending plans, which are thought to be £460bn as a net figure, do represent a genuine increase in ambition that could see overall investment in infrastructure increase to 3% of GDP. Something that the ICE would of course welcome.

Further details around the scale and direction of investment are expected to be unveiled at the Spending Review later this year, so a closer examination of what exactly the £600bn covers in terms of infrastructure vs. broader capital investment beyond this, can be carried out then.

This is important because like many fiscal statements that have come before, a number of the funding commitments that were made yesterday were tweaks to previous announcements.

Investment alone is not enough

Investment in infrastructure is undoubtedly important. Without it the transport and utilities networks that sustain our communities and underpin the success of our businesses would simply not exist.

However, investment in roads, rail, power and water supplies is not enough by itself to achieve these outcomes. It must be channelled in a strategic way that draws together disparate infrastructure projects and policies.

On the projects side this includes joined-up thinking on High Speed Two, Northern Powerhouse Rail, the third runway at Heathrow (should it go ahead) and other capital investment directed towards the railways, roads and utilities more broadly.

In terms of policy there continue to be question marks in relation to the inter-dependencies between the outcomes of consultations like the Williams Review, the Infrastructure Finance Review, the Energy White Paper and many more.

It was over 18 months ago that the National Infrastructure Commission published its independent assessment of the UK’s infrastructure need to 2050 and still we wait for the Government to unveil its long-term infrastructure strategy. A strategy that is desperately needed.

Completing the infrastructure puzzle through the publication of the National Infrastructure Strategy

To capitalise on the investment that the Chancellor has promised for the infrastructure sector and to ensure that it actually improves the quality of key services to the public, it must be channelled through a National Infrastructure Strategy that:

  • Adopts the recommendations set out in the National Infrastructure Assessment
  • Provides a clear plan for funding and financing the UK’s infrastructure
  • Strengthens the opportunities that devolution creates for infrastructure
  • Supports new infrastructure delivery models
  • Sets out a vision for harnessing data and emerging technologies to transform infrastructure delivery and operations

There was confirmation in the Budget documentation that the strategy will be published in Spring. It is imperative that Spring doesn’t become Summer. Read the ICE’s full position on the strategy

A final word on the 2050 net-zero emissions target

The Budget did set out a range of promising measures in relation to the net-zero emissions target, including plans to freeze the Climate Change Levy on electricity and to raise it on gas, alongside the doubling of investment in R&D for the energy innovation programme to £1bn.

There was also £800million for Carbon Capture and Storage over the next ten years, which is certainly a step in the right direction. Whether or not this is this enough for a technology that the Committee on Climate Change heavily predicates the realisation of the 2050 target on is unclear.

Do we require more ambition on the development of nascent technologies?

This is a question that ICE’s annual State of the Nation report is seeking to answer. It will be published on Wednesday, 1 July. Some background on the 2050 emissions target and the ICE’s report is included in this insight paper.

  • Ben Goodwin, lead policy manager at ICE