the big plan

Capita Symonds’ John Southgate analyses the government’s National Infrastructure Plan and its importance in 2012…

The new National Infrastructure Plan, which was announced at the tail end of last year, was a welcome recognition of the important role infrastructure plays in driving and supporting UK growth, as well as being a clear indicator of how the government would like its commitment to the sector to be perceived by the wider market.

The plan is certainly a step in the right direction, and it certainly highlights many of the areas which I myself have raised as being fundamental to the successful delivery of the UK’s infrastructure - the prioritisation of trans-modal and cross sector projects; a revamp of the planning process (especially the time it takes for projects to move through the consultation period); and the identification of new sources of funding, including ways to make the UK’s infrastructure attractive to investors.  It also provides us with the prospect of being able to put an end to the scatter gun approach that has characterised previous governments’ approach to infrastructure.

Nevertheless, the plan could be accused of lacking any radically new ideas while it also leaves some questions unanswered.

For example, the creation of a pipeline of projects was lauded as one of the plan highlights; yet in my view this is not a true pipeline, merely a list of projects with no confirmed start dates. Furthermore, the vast majority of schemes are already operational or underway. The fact that Crossrail is confirmed as a scheme is hardly a shock and awe moment - anyone walking around central London can see for themselves the major work underway at multiple locations including Tottenham Court Road and Farringdon stations.

As I have stated on many occasions, identifying sources of funding for schemes will be a critical part of driving any infrastructure plan forward in 2012. The government's moves to engage with the major pension funds and overseas sovereign wealth funds are a positive move towards ensuring that the UK is able to attract the investment it needs. However, it is unclear as to where the funding for the 500 projects listed in the pipeline will come from. The government states that it will put in an initial £6 billion and estimates that the pension funds it is working with will provide a further £20 billion, but this leaves a short fall of £224 billion to be found. Many will be sceptical about our ability to fund such schemes and will remain so, until we really see cash flowing into them.

There needs to be a framework in place to help investors evaluate projects and their benefits/ risks so I was pleased to read that the government will be working with the National Association of Pension Funds (NAPF) to develop such a framework. I would, however, strongly advocate that the group be expanded to include industry wide experts who can add valuable input into how we can measure the performance of projects and returns - particularly across the triple bottom line. We have to get this right from the outset as there will be no second chances.

We also need to be providing support to the government in its ongoing discussions on alternatives to PFI (such as tolling or tax incremental financing) so that we identify solutions that enable us to finance projects today without creating a substantial financial burden for the future.

The current planning and consent system provides one of the major barriers to the delivery of infrastructure projects in the UK and I am delighted that the government is seeking to reform the process to tackle the issues we face, while also ensuring that sustainable development is at the heart of all projects. However, with so many new pieces of planning legislation due for publication over the next 12 months it is not yet clear as to how many of the proposed changes referred to in plan will actually be implemented. As always "The devil is in the details" and I will be awaiting the publication of these policies and guidance over the next couple of months.

John Southgate is Executive Director – Design & Infrastructure, at Capita Symonds