Government must go further, faster on infrastructure delivery – says NIC

Failure to go further, faster over the next five years on plans for infrastructure delivery could constrain economic growth and threaten climate targets, according to the government’s official infrastructure advisers.

The National Infrastructure Commission’s annual review charts a mixed picture of progress towards key infrastructure goals.

Its Infrastructure Progress Review 2024 says while the UK’s infrastructure performs well in some areas, in others there are “significant deficiencies”  that are “are holding back productivity and impacting quality of life”.

Commission chair Sir John Armitt says the next five years are “a critical period for making decisions on things that are of immediate concern to the public – the three Ps of prices, potholes and pollution”.

Recognising the UK has faced several years of disruption from Covid and the cost-of-living crisis, the NIC report shows a mixed picture of infrastructure progress. 

• Five-year funding settlements for local transport have been devolved to more city regions
• The share of electricity generated from renewable sources has grown to a record 47% in 2023plus moves to accelerate the rollout of transmission infrastructure to get electricity where it is needed - but changes to the planning system for onshore wind developments are not sufficient for this source to meet its potential
• Last minute changes to policy have created uncertainty and reduced the incentives to install a heat pump, which risks slowing the transition from fossil fuel heating. Government is currently off track to meet its target of 600,000 heat pump installations by 2028
• Demand for water has plateaued rather than fallen, compounding risks to future supply, while network leaks are not being fixed at the rates required to meet the industry’s own targets, with weather conditions leading to a rise in leakage levels for most companies during 2022/23
• Updated National Policy Statements for energy, national networks and water resources should ensure faster decision making on major projects, but opportunities remain to go further by expanding community benefits for hosting infrastructure and reducing duplicative environmental assessments. 

The report also includes new analysis on the railway network in the North and Midlands following the scrapping of the second leg of HS2 from Birmingham. 

And while diverted funding has been earmarked for local transport budgets, without a detailed replacement plan for improving train services in the North and Midlands the NIC says the decision risks future capacity challenges

The NIC says “existing infrastructure is a constraint on future passenger and freight growth. Capacity and connectivity cannot be materially improved north of Birmingham without further infrastructure investment”.

The report has called for a concerted catch up programme accelerating policy implementation and delivery to ensure the country’s infrastructure is fit for the future.

In its recent National Infrastructure Assessment, the NIC calculated public investment in infrastructure will need to reach around £30bn a year over the coming decades  - from around £20bn a year in the past decade - alongside an uplift in private investment to around £50bn a year.

Commission chair Sir John Armitt  said: “A window remains to ensure that practical delivery plans are in place, backed up by the necessary public and private funding, to help achieve economic and environmental goals that will improve life for British households. 

“But the window is closing, at least if we don’t want to delay those benefits and compound the disruption of recent years.”

The report has prompted reaction from across the infrastructure sector. 

Kate Jennings, chief executive officer for The Association for Consultancy and Engineering (ACE) and the Environmental Industries Commission (EIC), said: “The National Infrastructure Commission has given government a mixed report – and we agree. 

“Our members have called for an infrastructure minister so that ownership and delivery of a proactive infrastructure strategy can stimulate growth in the economy and instil investor confidence.  

"Progress on net zero commitments is needed to minimise climate risks. Progress on biodiversity net gain commitments is welcome but there is more to do to unlock the potential of nature-based solutions. 

“We all know investment is needed and that a long-term infrastructure strategy as proposed by the Infrastructure Needs Assessment will support the public and private investment in skills which is fundamental to success.”   

David Hawkes, interim associate director of policy at the Institution of Civil Engineers agreed the report presented a “mixed picture”, adding that faster decision making would reduce costs. 

"As the ICE stated at the Spring Budget, there are lots of questions about how the UK is going to pay for the infrastructure it needs and deliver positive outcomes for the public when, in real terms, capital spending for 2025/26 will not increase.

"If quick, decisive action is taken, costs will be lower. Inaction will mean the public will pay more in the long run, and these challenges aren’t going away.

"The ICE recommends the Treasury Select Committee holds a one-off evidence session so that ministers can respond to the recommendations made by the NIC."

The Railway Industry Association’s (RIA) chief executive, Darren Caplan, said the NIC’s findings fire a “warning shot” to both current and future governments about the need for more investment in rail capacity in the decades ahead.

“RIA has consistently warned that the absence of a strategy for north-south rail capacity and regional connectivity risks holding the country back, whether the economy, connectivity, local growth, or the UK’s ability to deliver net zero.

“The commission rightly calls out the lack of a coherent long-term plan for rail along with a steady and delivery pipeline.

"Its analysis shows how a visible long-term pipeline of rail renewals and enhancements is crucial for local authorities and the supply chain, to be able to plan and attract private investment.”

Tamsin Lishman, CEO of Kensa, echoed the NIC’s calls, weclcoming its assessment and recommendations.

"It sets out sensible and much-needed policy recommendations to tackle the inertia holding back the UK’s transition to clean heat," she said. 

“As a British manufacturer and heat network developer looking to invest heavily in the UK in the coming years, we see the policy recommendations as absolutely critical to unlocking that investment, creating jobs, growth and carbon reductions.  

“From ruling out hydrogen for home heating to long-term funding certainty for social housing and public sector decarbonisation to planning for the end of gas for heat, the NIC’s policy recommendations are all urgently required. We urge the government to take these to heart and fire up the transition to clean-heat and warm-homes." 

Click here to read the full report.