Report – the UK “consistently makes poor decisions about infrastructure”

SUMMARY:

Think tank The Institute for Government has today published a report assessing how the government can make better infrastructure decisions.

The British government isn’t making the most of its long term infrastructure investments, with a new report out today urging it to distance infrastructure decision making from politics and to establish new mechanisms for public engagement.

Influential think tank The Institute for Government (IfG) states in its report that the UK “consistently makes poor decisions about infrastructure” and that it would do better if investments were “evidence-based, long term and stable”.

The report pulls together a year’s worth of research, looking at policymaking across areas that include digital communication, transport, energy, flood defences, waste and water. It looks at the competing needs that influence these decisions and outlines how infrastructure policy making can improve in three “vital” areas: time, quality and cost.

This is an important discussion given the challenges posed by Brexit and the uncertain economic outlook. Strategic infrastructure investments that have the backing of the public and cross-party political support could go some way to negating negative shocks felt by exiting the EU.

Time

The IfG argues that the government does not have a long term approach to infrastructure and often fails to make timely decisions on projects. To fix this, the government needs a more structured approach to resolving conflict and tensions over infrastructure decisions.

To do this, the government should strengthen the National Infrastructure Commission (NIC), the report notes. The NIC should be given greater independence as an executive non-departmental public body, draw its commissioners from a more diverse range of professional and geographical backgrounds, engage the public more widely and have its remit extended.

More interestingly, however, the IfG recommends creating a Commission for Public Engagement – modeled on France’s Nationale du Débat Public (CNDP). It argues that if communities do not feel that they have had a genuine say on projects that will have an impact on them, they often oppose them entirely. This can result in costly delays and slow the delivery of much-needed infrastructure. The report notes:

Despite this, the UK Government has a poor track record of public engagement in major infrastructure projects.

The French Commission Nationale du Débat Public (CNDP) provides a particularly good model for how this can work in practice. The CNDP was founded in the late 1980s in a similar context to that facing the UK now: declining central state power and well organised local opposition to strategically important rail projects. In response, the French Government set up the CNDP to ensure ‘public participation in the decision making processes of major infrastructure projects of national interest that present important socio-economic stakes’.

To do this, the CNDP hosts local public debates on contentious major projects as early as possible in their development. All participants – for or against a project – are given equal resources to make their cases. The CNDP then summarises these views in a report, to which project sponsors must respond.

Quality

The IfG also argues that the UK’s infrastructure is not as good as it could or should be. The government must pick better projects, both individually and collectively, as a portfolio. The report makes the following recommendations:

  • The Government needs a cross-government infrastructure strategy. This should articulate a vision for how the policies and projects of individual departments will interact to achieve infrastructure objectives and explain how the capacity of subnational authorities will be built. In doing so, it must identify the geographic impacts of its recommendations and be written in an accessible way to help facilitate public engagement.
  • The Government must improve cost benefit analysis. To improve project appraisal, we recommend that the Government:
    – updates cost benefit analysis so that it can better capture the ‘dynamic effects’ of projects
    – improves the accuracy of project cost and time estimates
    – takes a more consistent approach to assessing projects
    – communicates cost benefit analysis results within Whitehall and to the public better.
  • Parliament must scrutinise infrastructure decisions made by the Government better. In the House of Commons, the Treasury Committee should lead this, working closely with other relevant committees. In the House of Lords, a new infrastructure committee should be established, initially for a year.

Cost

The IfG rightly notes that the UK needs to invest more in economic infrastructure, but that this investment cannot come at any cost. Picking the most cost effective options at every stage – from project selection to finance option – is important. The report recommends that:

  • Individual departments must learn from past projects as this will help the Government to make better investments in the future. Departments must consistently evaluate infrastructure projects, systematically collecting data on:
    – cost outturns against estimates
    – delivery times against estimates
    – the size of project teams
    – project length.
  • To ensure that data are collected and used, the Infrastructure and Projects Authority should collate this information centrally and mandate that it is used by departments to enhance cost estimates.
  • The Government must improve its approach to accounting, appraisal and budgeting to increase the odds of picking the best finance options. This is particularly important in light of the recent collapse of Carillion and the questions it has raised about private finance deals. Government must not let arbitrary accounting rules and narrow fiscal targets drive financing decisions, it must implement a more robust appraisal process and it must change the way that the Treasury handles capital investment.
  • The Government “needs to up its game” in terms of private finance if it is to meet its objective of securing more private investment in infrastructure at a good price. The Government must ensure that civil servants have access to sufficient in-house commercial skills. Ministers need to understand investor perspectives better before making policy. And the Infrastructure and Projects Authority must outline a clear infrastructure project pipeline that provides investors with clarity on which projects will require private finance, how much investment is needed, and how the deals will be structured.

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