long on ambition but light on detail – Inside track

Last week’s spending review (see our briefing) was good for the environment, in particular because the government pledged to splash an awful lot of cash – £120 billion over the rest of the parliament – on raising the UK’s pitiful level of capital spending on buildings and infrastructure. As well as investment in health and defence, many billions were pledged for the infrastructure and kit needed to revitalise public transport, improve and decarbonise housing and hit climate targets.

This is important and long overdue. The UK has underinvested in all types of physical assets for decades which has been a massive drag on growth and productivity and hampered our ability to decarbonise.

Almost as bad has been our tendency to mishandle and squander the investment we do make. The vast overspend with HS2, and delays and cost overruns with nuclear power stations, call into question our ability to effectively and sustainably deliver major capital projects.

Long term infrastructure spending has been set out In an encouraging sign that it recognises these difficulties, the government has launched a ten year Infrastructure Strategy, which aims to provide more long term certainty for investors and contractors by setting out a programme for capital spending to 2034-35.

The review sets out a total investment envelope of £725 billion to be spent on capital projects over the ten years and establishes an institution – the snappily titled National Infrastructure and Service Transformation Authority (NISTA) – to oversee the projects and seek value for money. Included in the above figure is a separate budget (£9 billion) for asset maintenance and the creation of an online infrastructure pipeline tool to streamline bidding.

Among many announcements (and even more numerous re-announcements), the strategy reaffirms the government’s commitment to the Clean Power Action Plan for wind power. Attention is also devoted to the importance of nature restoration in planning infrastructure projects, including those to be overseen by the National Wealth Fund, together with an overdue acknowledgment of the colossal and cascading damage to the economy from nature’s degradation.

What’s not included, though, is much detail on the new projects the government intends to push ahead with under the umbrella of the strategy, beyond what we already know from the spending review. The £3.3 billion TransPennine railway upgrade, for example, is mentioned yet again, but the full project pipeline is presumably still to be announced.

Some of the other projects detailed in the strategy are less welcome. There is confirmation of the Lower Thames Crossing, to be funded through a regulated asset base model to encourage private sector investment and management (payback for which will likely come through road tolls for users).

Long term thinking encourages innovation One advantage of a long term strategy in all sorts of areas is the ability it affords policy makers to innovate in developing new funding models and think more deeply about the economic structures and supply chains needed to build a more sustainable economy.

Unfortunately, the infrastructure strategy is quite cautious here. For example, it recognises the importance of the circular economy. But it still mainly equates it with reducing waste through reducing or recycling packaging. This is a missed opportunity to think more deeply about the use of resources in infrastructure itself and how that can be minimised, not least given the clear link to climate and nature impacts. The built environment (buildings and infrastructure) is directly responsible for 25 per cent of the UK’s carbon footprint.

By 2035, techniques and technologies already available could cut the use of raw materials by over a third. Reducing the amount of steel and cement wasted in construction could lower emissions considerably and it would be good to see monitoring of materials used in construction included in the remit of NISTA.

The infrastructure strategy sheds no more light than the spending review did on the status of Great British Energy (GBE). Labour, in opposition, touted this as a publicly owned energy company to invest in and operate new renewable technologies. The strategy merely repeats that GBE will be a ‘public financial institution’ (PFI) tasked with making equity investments, loans, guarantees or other activities intended to generate a financial return. However, it is still unclear how this sits alongside other PFIs (such as NWF, British Business Bank, UK Export Finance).

It is good that the government attaches so much importance to rebuilding infrastructure, which has been left to wither for a generation. It is even better to see evidence of serious thought about how to do things better. Recent history is littered with long term strategies that went nowhere, so it will be good to see more detail of that thinking than we have been given so far.