Infrastructure is at the heart of the government’s new industrial strategy. And in the Autumn Budget, the chancellor promised billions for trains, roads and broadband to create an “economy fit for the future”. But the chancellor needs to count numbers in the division lobby as well as those in spreadsheets – because whatever the virtues of individual projects, politics is never far away.
And nor should it be. Infrastructure is inherently political. Questions about where to invest limited state resources are as much about values as they are about evidence. That is why funding for infrastructure isn’t simply allocated to Manchester and Birmingham. Rather, it is packaged as part of the Northern Powerhouse and the Midlands Engine, with a name check given to Andy Street, the new Conservative mayor of the West Midlands.
The question for the government is how to balance political imperatives with analysis, so it can build the critical infrastructure that the country needs. Both ministerial decision making, and the evidence that supports it, must improve.
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UK infrastructure policy is constantly changing
New projects are proposed, scrapped and reinvented with seemingly little consideration for long term policy objectives. That is somewhat inevitable: governments of different stripes will have different priorities. They also need to get re-elected and that requires keeping a close eye on the short-term implications of decisions.
But projects, particularly big ones like HS2 and Hinkley Point C, can take more than a decade to build and often have lifetimes several times that. This requires long-term planning that is easily disrupted by regular policy changes. That disruption often results in higher costs, delays and poorly coordinated projects.
The creation of the National Infrastructure Commission is an important step in dealing with these tricky issues. The independent organisation will develop an evidence-based assessment of the UK’s infrastructure needs over the coming 30 years, which should help to establish a more stable approach to infrastructure decision making.
As argued in the Institute for Government’s new report, How to design an infrastructure strategy for the UK, the NIC has been commendably independent. It has set out a clear agenda quite distinct from that of its parent department, the Treasury. This, though, has been based on its personnel rather than its institutional form. And as the sacking of Lord Heseltine as a commissioner after his Brexit rebellion in the House of Lords demonstrates, personnel can change. The long-term future of the NIC would be better secured if it were a non-departmental public body rather than an executive agency, since the former has more operational freedom.
The NIC’s recommendations will influence where resources are invested. It must therefore ensure that all its public pronouncements are based on clear evidence. And while the current crop of commissioners are all experts in their fields, the NIC’s legitimacy would benefit from the appointment of commissioners based outside of London and from a wider range of professional backgrounds.
Ministers, of course, will have the final say
Getting the most out of the NIC requires an effective government response, particularly to the first National Infrastructure Assessment which will be published next year. To overcome the short-termism and departmentalism that often characterises infrastructure decision making, the government should develop a cross-government National Infrastructure Strategy. This should provide a framework for better coordination and collaboration within Whitehall, as well as between central government and the various tiers of local government, particularly combined authorities, local authorities and the soon-to-be established subnational transport bodies.
This will need to be closely integrated with the recently published industrial strategy, but it should go further. It must define clear objectives, prioritise and offer details on how implementation will be monitored. Government also needs to improve the evidence base for individual infrastructure projects. One way to do this – as outlined in our report How to value infrastructure: improving cost benefit analysis – is by consistently evaluating infrastructure projects. By systematically collecting data on the costs, timescales and outcomes of past successes and failures, government could greatly improve the accuracy of forecasts for future projects.
In addition, departments could do further research into the dynamic effects – such as increasing growth, boosting productivity or rebalancing the economy – of infrastructure projects. These are the issues that ministers (and the public) often care about but current models can struggle to properly account for them. It’s welcome that this has been recognised in the industrial strategy.
Even with improved models, there is no right answer. Ministerial judgement will always be important for setting objectives and balancing competing priorities. But by strengthening the NIC, developing a coherent cross-government strategy, and building the evidence base, government can ensure that it makes better decisions, more often.