January 16, 2013
Greater clarity required for UK infrastructure plan
The National Audit Office has called on the UK government to provide greater clarity to taxpayers and consumers on how it will meet its national infrastructure plan. The government expects £310 billion to be spent by 2015 and beyond on new infrastructure projects in sectors such as energy, rail, roads, water, waste, flood defences and digital communications. The government is looking to private companies to own and finance around 64 per cent of the £310 billion, with the burden of funding likely to shift towards the public as consumers rather than taxpayers.
According to the National Audit’s Office report, Planning for Economic Infrastructure, a key risk to achieving value for money is that forecasters might get wrong the need for infrastructure in the long term (demand forecasting for many years ahead is an inexact science). In addition, uncertainty over government policy might lead project sponsors, lenders and contractors to defer or abandon projects in the UK for opportunities elsewhere.
There is also the possibility of a failure to take into account the cumulative impact on consumers of funding those infrastructure projects.
Amyas Morse, head of the National Audit Office, said: “Economic infrastructure keeps the country running. Demand for infrastructure is set to increase, fuelled by population growth, technological progress, climate change and congestion.
“But there is a lot at stake in taking forward the national infrastructure plan in an environment of straitened resources, with real risks to value for money and uncertainty about the sustainability of piling costs on to consumers.”
Commenting on the report findings, Rhian Kelly, CBI Director for Business Environment, said: “Investing in rail, roads, energy, waste and digital infrastructure is a no-brainer. It creates thousands of construction jobs in the short term and generates growth in the long-run.
“With government spending severely squeezed, the private sector must step up to fill the gap. The NAO is right to call for greater clarity to taxpayer and consumers but the CBI wants the government to do much more to give investors certainty and confidence – to attract finance and drive down project costs.”
“Our creaking infrastructure still lags behind other countries and we cannot afford further delays in getting spades in the ground.”