New report identifies potential for infrastructure to support U.K.'s leveling up, net zero, and energy security agendas
- The U.K. government has identified how important infrastructure is to leveling up, tackling the cost of living crisis longer-term through the delivery of new domestic energy generation capacity, and reaching Net Zero by 2050.
- New modeling and research released today by the Northern Policy Foundation (NPF) shows that unless the U.K. radically improves infrastructure delivery taxpayers will face an annual bill of £45bn every year for the next five years.
- Additionally, modeling about one of our recommendations - adding a "leveling up component" to the assessments of high-value tenders - suggests it could result in a £550m boost for the North and Midlands and could support or create between 19,000 jobs.
- Today more than 80% of large infrastructure projects globally are delivered late and over budget.
- On average, large infrastructure projects will also continue to be delivered 3.5 years late, delaying the realization of their benefits to local people and the country.
- Initiatives like Project Speed, the Construction Playbook, civil service reform, and various "acceleration units" are all potentially steps in the right direction but are yet to deliver any meaningful results and have potentially lost some momentum.
Boris Johnson, in particular, is rightly a fan of investment in larger infrastructure projects that have been shown - on average - to provide a return on investment of 2.2 times the initial outlay. It has been placed at the heart of the government’s leveling up, net zero, and "energy security" agendas.
Leveling up - on a range of measures including productivity, skill levels, health and wellbeing, employment opportunities, and connectivity - the North and Midlands continue to significantly underperform not only London but also the U.K. averages. The productivity gap is so wide that analysis from the OECD and Eurostat shows that the U.K. is one of the most geographically imbalanced economies in the developed world. In Europe, only Poland and Romania are more unequal than the U.K.
Between 2007-2008 and 2018-2019, capital spending on transport in London was around £6,600 per head compared to £1,880 in the East Midlands, £1,980 in the South West, and three times the spend for Yorkshire and the Humber and the North East (£2,200 per person).
Net Zero - the Prime Minister’s "ten-point plan" specifically cites the need to: "transform our energy system…and network infrastructure," deliver "modern, integrated portside infrastructure," "produce low carbon hydrogen at scale," "accelerate the rollout of EV charging infrastructure," and the development of "carbon capture and storage infrastructure."
Energy security - the war in Ukraine has particularly focused minds on how and where our energy comes from. In particular, the Government has committed to building new nuclear - both traditional and small modular reactors - to help improve our resilience and provide a more predictable, reliable source of energy.
Addressing each of these three challenges will require a step change in how infrastructure is delivered in the U.K.
Sponsored by Bechtel, the NPF interviewed 26 experts from across the industry, highlighting the issues major projects often face, which they found fit into three broad categories:
- Poor planning and project set-up: including misunderstanding cost-estimates and what they can be used for, lack of incentives for those involved early to provide “honest” estimates, lack of the right expertise at the right time, and the introduction of processes that restrict the project later in its lifecycle.
- Loss of control and accountability: meaning a lack of change control over timescales, costs and scope, poor visibility of data, and information throughout the levels of a project.
- The wrong people providing the wrong sort of scrutiny: there is a widely reported mismatch within the civil service of people with the wrong expertise in sponsor or client roles. This means the wrong questions being asked, which both takes up project time and provides a false impression of project progress.
The NPF's report, "Getting the basics right - how the U.K. government can 'build back better' and level up post-COVID," makes 18 practical policy and industry recommendations aimed at radically improving delivery - from the upskilling of Ministers and leaner more experienced sponsor teams to creating a fair dispute resolution mechanism and a better approach to forecasting project costs.
John Williams, U.K. & Ireland Managing Director at Bechtel said:
“We’re very pleased to support this important research. ‘Leveling up’ demands a massive improvement in the U.K.’s capabilities to deliver transport, energy, and digital infrastructure faster, more affordably, and better for the communities they serve.’’
Tom Lees, Director of the NPF said:
“The government has set out some ambitious and potentially transformative plans that all require the effective delivery of good quality infrastructure.
Infrastructure spending has historically been more than three times as much per person in London compared to the North of England. Thankfully, that is now changing, but my fellow Northerners can't afford projects to be significantly delayed or to run over budget - we need a radical improvement in delivery so that we can see the benefits as soon as possible and close the North/South divide.”
A copy of the full report can be found here:
About the Northern Policy Foundation
The NPF was created after the 2019 General Election, which saw many seats in the North of England vote Conservative.
Over the last hundred years, a U.K. North-South divide on a number of measures has existed despite the interventions of many different governments. In the last 30 years, that divide has increased. Leveling up our country will be a significant challenge - especially as we recover from the impacts of COVID-19.
NPF's research and work focuses on developing pragmatic and impactful policy interventions and analysis that will help the North to flourish and lives to be improved. NPF is not part of any political party and avoid falling into ideological traps.