Why slowing down infrastructure work would be bad news for the UK

The media has recently been full of gloomy prospects for the UK economy and what it could mean for future public investment. There are also new pressures for increasing defence spending.

It all challenges the government’s welcome emphasis on investing in infrastructure – which was at the centre of the chancellor’s recent speech on growth.

The outcome of the spending review – when those public spending questions will be answered – is several months away.

By then this year’s GCSE and A- and T-level students will have chosen what to study for their future careers.

Without a steady programme of work, the UK’s construction sector could lose existing skills – and miss out on the chance to develop a generation of new talent entries.

Developing a credible project pipeline

That risk means government departments shouldn’t sit by fearing bad news from the spending review.

There’s more to infrastructure planning than just finding capital in a difficult market.

Important, low-cost work is also needed to develop key new strategic infrastructure projects.

That work helps prepare projects that are attractive investors. They will be looking to see realistic budgets, sound technical assessments and designs advanced enough to secure rapid planning consents.

And on the supply side, the construction industry, where many ICE members work, won’t build up their skilled workforces unless they see projects approaching delivery.

So that work can also help the supply chain get through this period of economic uncertainty.

And it will create opportunities for new young professionals to start developing the engineering skills the UK needs in all sectors.

How much infrastructure does the UK need to build

The National Infrastructure Commission (NIC) said overall infrastructure investment needs to not only to recover from the COVID dip. It must surge to around £70-80 billion per year in the 2030s.

The government’s hope is that much of this will come from increasing private sector investment – from around £30bn per year to £50bn in the 2030s and 2040s.

The ICE has launched a programme looking at how the government can attract that investment.

Key sectors identified by the NIC for growth include energy, waste and water.

What would a slowdown mean

The risk is that government departments will simply put everything on hold until the outcome of the spending review is known.

Only then will they be able to agree with the Treasury about what infrastructure projects will be affordable from public spending.

That caution is understandable. But it risks returning the construction sector to the slumps and loss of capability that characterised the austerity era.

Companies will be forced to make lay-offs. The most highly qualified engineers will join the flood to massive schemes in developing economies.

Future workforce risks

Interrupting the flow of higher-level apprentices and new graduates because of the lack of opportunities would be most damaging.

These new professionals are necessary to ensure the UK develops the skills needed to deliver the government’s ambitious missions over the coming decades.

A similar interruption happened in 2011 and the effect is clear today.

Skills shortages in key technical areas have impacted projects like High Speed 2 and the use of emerging technologies such as AI to help with complex integration challenges.

What should the government do

The government can avoid repeating the rapid dip and slow rebuild phenomenon seen post-2008.

First, it should visibly press ahead with building the funded and approved portfolio of infrastructure programmes not at risk in the spending review.

And second, it must continue the relatively low cost “thinking work” to get potential new projects ready for delivery.

This includes land-use planning, route surveys, technical design, and risk assessment work.

At the same time, it can support the planning inspectorate (for Nationally Significant Infrastructure Projects) and local authorities to prioritise land-use planning decisions on any key priority projects.

Securing the pipeline

This will create opportunities for trainees – the college and school leavers who will be looking for jobs as soon as their exams are done this summer.

Otherwise there’s a risk the sector will lose a year’s intake of engineers and other key skills to different careers or countries.

This work will also greatly help the government choose the right set of infrastructure projects to take forward.

And, equally crucial, it will provide the data on which the private sector, pension funds and international partners can make good decisions on where to invest.

Working with the supply chain

Giving the supply chain some visibility of this early phase work would send a signal about what capacity and resources are likely to be needed for future projects.

This would help companies make the right decisions about which staff and suppliers to keep until projects take off after the public spending review is done.

In return, ministers should face less lobbying to give their departments space to complete these project evaluations.

And if anyone tried, they would receive a ready answer about a rational, data-driven selection process for new infrastructure.

In short, economic uncertainty shouldn’t mean paralysis in infrastructure development.

Investment in project preparation and skills development should continue until the autumn.

If it is, better investment decisions can be taken then by the government and private investors. And the construction sector helped to attract vital skills and expertise.

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