The new UK infrastructure investment pipeline leaves concerns whether certainty and investment are high enough to meet national challenges.
The UK’s updated National Infrastructure and Construction Pipeline (NICP) was finally published in early February.
There are 660 public and private sector infrastructure projects in the investment pipeline – up from 528 in 2021, when the last version of the pipeline was published.
Alongside it, the Infrastructure Projects Authority (IPA) set out its deepest pipeline analysis to date.
Here are three key takeaways.
1. Energy and transport set for largest investment
According to the IPA’s analysis:
- Overall economic and social infrastructure investment is forecast to be between £700-775bn over the next 10 years.
- Of this, £379bn is confirmed with £164bn to be spent by the end of 2024/25.
- Energy (£36bn a year) and transport (£19bn a year) will receive the largest share of investment in the next two years.
The IPA calls this a ‘strong’ commitment to infrastructure investment in key sectors, despite the challenging economic backdrop.
But the level of investment will require a further step up to achieve net zero, adapt to climate change and deliver better social and economic outcomes for the public.
The National Infrastructure Commission (NIC) says overall public and private investment in economic infrastructure needs to rise significantly to £70-80bn per year in the 2030s.
This would include around £28bn public spending per year in transport and £20-35bn of private investment in energy.
Current water sector investment is also below the £12bn annual figure the NIC recommends for 2025-2030.
The IPA says it expects to see ‘growth’ in water and sewerage investment as well as broadband and communications.
Deeper regional analysis
For the first time, the IPA has broken down regional allocations of expected investment.
The pipeline largely relates to England, due to devolved infrastructure spending in Scotland, Wales and Northern Ireland.
And while the regional analysis provides a useful snapshot of investment, it’s based on limited data and asset location rather than where the benefits will be realised.
2. Inflation adds to uncertainties – but other risks need addressing
The impact of several years of high inflation on UK and global construction is the main cause for concern.
Material prices are over 40% higher than in January 2020, forcing project sponsors to reset expectations.
The headline investment forecast of £700-775bn over 10 years is merely in line with the 2021 forecast (£650 billion) when adjusted for inflation.
But inflation isn’t the only risk to delivery.
The IPA highlights planning delays – but welcomes the government’s ongoing work to address this.
It also says sustainability, innovation and productivity are ‘more important than ever’.
The increasing uptake of modern methods of construction (MMC) is one positive.
Around £64 billion of the planned pipeline to 2024/25 features MMC delivery – including 75% of transport investment and 51% in energy.
The suggestion that the government is driving the use of MMC through its procurement power is a boost for Construction Playbook compliance.
Workforce concerns
The rise in the number of projects in the pipeline means workforce demand will grow significantly – adding to the delivery challenge.
The IPA says an annual average of 543-600,000 workers will be needed over the next two years.
This is a significant increase from the 2021 estimate of 425,000 workers a year.
The majority (approximately 60%) are construction jobs and demand is largest for social infrastructure.
But an ageing population, migration patterns and labour movements away from construction will drive high competition for skills.
3. Where’s the certainty?
The IPA also highlighted ‘low investor confidence’ as further risk to delivery.
The pipeline aims to give investors and the supply chain an overarching view of planned UK infrastructure.
Of course, the IPA caveats that it’s neither a statement of need nor a commitment to undertake specific projects.
Some uncertainty is unavoidable. Investment plans can change through future spending reviews and election outcomes.
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But a lot of details are still missing.
Across economic infrastructure sectors, only broadband and communications have ‘a clear delivery profile in most cases’, according to the IPA’s analysis.
For instance, the £36bn allocated to Network North (from HS2) is included. But, there’s no further clarity on how or when this money will be spent.
It means this latest version falls short of setting out the scale of infrastructure investment and transformation expected and needed in the coming decades.
The ICE’s view
The updated pipeline is welcome. But the IPA’s analysis makes clear the delivery risks that need addressing.
These challenges are not unique to the UK.
But inflation has highlighted longstanding issues in how the UK delivers infrastructure.
Fixing them is urgent because the government’s decision to maintain capital budgets in cash terms from 2025/26 effectively means a cut in spending due to inflation.
The stop/start approach to major infrastructure projects is driving up costs and making it harder to maintain a workforce.
HM Treasury should provide details on the forthcoming spending review to reduce uncertainty about whether the UK’s infrastructure ambitions will be met.
The NIC is clear that investment in infrastructure can solve many of the UK’s challenges and reduce households costs by the mid-2030s.
This requires more investment – but short-term costs will deliver long-term benefits.
The private sector needs more certainty to invest at the levels called for by the NIC.
And the public need the confidence they will get the benefits from the infrastructure they have been promised.
Providing a more coherent, robust pipeline by addressing some of the gaps would be a start.
