The UK’s “infrastructure problem” has been misdiagnosed as one of delayed, inadequate and costly infrastructure planning holding back improvements in national productivity. Long term centralised decision making is seen as the solution. But rigid, central planning risks a generation of misallocated investment and depressed economic performance. There is an alternative.
Whitehall departments struggle to accurately predict future demand. Planning to a “best guess” of future demand is doomed to failure in a future where demand and technological change will be predictably disruptive. A rigid “predict and provide” approach to individual infrastructure projects risks costly over-investment and a failure to incentivise new, cheaper solutions.
Technology, demographics and environmental constraints are reshaping what constitutes best-value infrastructure for Britain. It is no longer possible to design transport, energy, housing, water and flood protection systems in separate Whitehall silos and expect sustained economic performance. Investments in UK infrastructure need to ensure more productive, resilient and sustainable systems over the lifetime of the assets.
Infrastructure-UK estimated maximum cost savings of 15% from streamlining UK infrastructure processes. Far larger savings are possible from transformational shifts to smarter, more integrated infrastructure.
Empower cities to deliver smart infrastructure
Decisions on infrastructure investment should be shifted nearer to those who can control the level of demand. This will deliver value for money for taxpayers and consumers and ensure that investment can respond to “known unknowns”, which requires an ability to understand and manage demand, integrate across infrastructure systems, build-in flexibility and preserve optionality.
Though devolution should not be seen as a panacea, it is a necessary component of delivering modern infrastructure systems. Taking advantage of digital smart technologies and the opportunities of convergence of infrastructure systems requires careful integration at the local level of consumer markets, supply chains, physical systems and planning choices. In many cases, the local level will be the optimal place to manage infrastructure as this is where demand for services, infrastructure systems and use of public finance can be combined.
The current English City devolution process is an opportunity to empower local authorities to deliver smart infrastructure projects but current proposals are much less ambitious than the infrastructure devolution settlement to the Scottish and Welsh Administrations. Government should:
- Deliver full infrastructure devolution to cities and regions by 2025;
- Drive regulatory and market innovation through smart infrastructure zones in 2-3 city regions;
- Broaden the scope of existing Core City devolution packages;
- Give citizens greater democratic control over infrastructure choices.
Reform the management of UK infrastructure systems
The UK must avoid a false choice between driving quality, quantity and resilience in its infrastructure systems. Delivering world-class performance on all objectives requires significant governance reforms.
- Define infrastructure to include housing/buildings, energy efficiency, and “green” infrastructure;
- Collaborate on integrated demand and risk scenarios;
- Establish a National Resilience Office;
- Create a requirement in Government Departments and cities for strategic risk management;
- Conduct a post-Paris climate risk assessment.
Improve public oversight and value for money
The UK infrastructure system lacks public trust. Surveys suggest the public would prefer more investment in areas like energy efficiency and less on flagship projects such as HS2. Alignment with public priorities could be improved with stronger Parliamentary oversight and more transparency over public value cases.
- Create a parliamentary Joint Committee on Infrastructure;
- Conduct a zero-base review of the UK infrastructure portfolio;
- Improve transparency of spending and business cases.
Incentivise infrastructure innovation and integration
- Establish an infrastructure innovation fund;
- Reform public procurement incentives for innovative resource efficient and low carbon infrastructure.