Mind the [rural] infrastructure gap

Is the government putting [rural] infrastructure at the centre of its economic policy and industrial strategy? Jessica Sellick investigates.

From the invention of the steam engine and World Wide Web, to splitting an atom and making a jet engine; for centuries we have been pioneers in infrastructure. But in a challenging fiscal and economic environment is the Government putting [rural] infrastructure at the centre of economic policy and industrial strategy? Jessica Sellick investigates.

Back in 2010 the Government published its first National Infrastructure Plan. With the intention of tackling the “timid, uncoordinated, incremental, wasteful in its procurement and insufficiently targeted” approach to infrastructure investment that had gone before, this Plan was expected to provide a more strategic approach: specifying what infrastructure was needed and mobilising resources (both public and private) to make it happen. The Government’s vision for major infrastructure investment concentrated on six areas: (i) road and rail, (ii) energy and transport, (iii) water, flooding and coastal erosion, (iv) waste, (v) superfast broadband and (vi) ensuring the UK remains a world leader in science, research and innovation. How has Government supported the delivery of key infrastructure projects and programmes since then, and what has this meant for rural communities? I offer three points.

Firstly, a Government focus on determining what needs to be done (now and in the future) to meet our infrastructure requirements.

In June 2013, HM Treasury published ‘investing in Britain’s future’. This document - listed four investment priorities: (1) public investment in infrastructure worth over £100 billion to 2020 comprising £70 billion for transport, £20 billion for schools and £10 billion for housing and flood defences; (2) policy reforms to stimulate private sector investment in energy generation; (3) financing major projects through a further roll out of the UK guarantees scheme; and (4) strengthened public sector delivery of major projects. Since then, Government has established two bodies to guide infrastructure investment: the National Infrastructure Commission (NIC) and the Infrastructure and Projects Authority (IPA).

To provide policy advice, in October 2015 the Government established the National Infrastructure Commission (NIC); providing it with a fiscal remit letter and charter in November 2016 and supplementing this with a framework document in January 2017. The NIC is ‘a permanent body which will provide government with impartial, expert advice on major long-term infrastructure challenges.’

The objectives of the NIC are to: (a) support sustainable economic growth across all regions of the UK, (b) improve competitiveness and (c) improve quality of life. To do this, Government is tasking the NIC with carrying out in-depth studies of the UK’s most pressing infrastructure challenges and monitoring the Government’s progress in delivering infrastructure projects and programmes. In all recommendations that it makes the NIC must ensure that what it proposes can be accommodated within 1-1.2% of GDP [so as to think about the impact on the taxpayer] as well as being certain where the costs of projects ultimately lie [considering consumers, businesses and bill-payers].

Since its formation, the NIC has produced four reports covering high speed north (rail and road in the northern powerhouse), connected future (mobile and 5G technology), smart power (interconnection, storage and demand flexibility) and transport for a world city (transport in London). The NIC has also published three technical papers covering economic growth; the impact of population change; and the impact of technological change. The NIC is currently developing a set of priorities over the next 30 years through its National Infrastructure Assessment. The Government has tasked the NIC to carry out a national assessment over the course of each parliament.

To provide delivery oversight, the Infrastructure and Projects Authority (IPA) was formed in 2016 through the merger of Infrastructure UK with the Major Projects Authority. The purpose of the IPA is to provide early project initiation support and robust assurance processes. It publishes an annual report on major projects, with the 2015-2016 report examining some 143 projects comprising the Government Major Projects Portfolio (GMPP). GMPP’s require HM Treasury approval, and the 143 projects collectively are worth some £405 billion over the next 25 years. The individual projects range from the Thames Tideway Tunnel (Defra) to the National Proton Beam Therapy Service Development Programme (Department of Health) and Crossrail (Department for Transport).

The IPA divides projects into four main categories: (1) Government transformation and service delivery projects, (2) ICT projects, (3) infrastructure and construction projects and (4) defence capability projects. For each project the IPA undertakes a delivery confidence assessment (DCA). The DCA analyses a project’s likelihood of achieving its aims and objectives on time and on budget. The assessment also takes into account the project’s expected total lifespan (typically 5-10 years) and whole life cost. 70% of the projects in the 2015-2016 report are expected to complete by 2020. Detailed analysis of 138 projects in the report ranked 6 as red (meaning fundamental aspects of the project need to be addressed), 38 as amber/red, 55 as amber, 29 as amber/green and 10 as green. The IPA describes how the DCA of projects fluctuates during their life cycle and how those rated red or amber/red do not generally remain so.

More recently, in January 2017 the Government published its Industrial Strategy Green Paper. Citing the strategy as a ‘critical part of our plan for post-Brexit Britain’, better infrastructure is one of ten pillars in the Paper which states how ‘we must upgrade our standards of performance on digital, energy, transport, water and flood defence…and better align central government infrastructure investment with local growth priorities.’ The Industrial Strategy is intended to build on the NIC and IPA’s portfolio of work in confirming £23 billion in high value investment from 2017-2018 until 2021-2022. This includes £2.6 billion for transport projects and £740 million to support the roll out of fibre broadband and 5G mobile technologies. Other announcements include a £2.4 billion Housing Infrastructure Fund, a £1.7 billion Accelerated Construction Programme, and £1.1 billion for local roads and transport networks.

This policy context is framed around Government providing long-term commitment to infrastructure – with millions and billions of pounds allocated towards big ticket projects and programmes. Through the NIA and IPA it also involves a ‘zero based review of the economic returns of every central Government capital programme.’ In other words, undertaking a repeatable process of reviewing every pound going into the infrastructure pot, managing financial performance and building a culture of cost management.

Secondly, and in practice what do we mean by ‘infrastructure’ and how does this relate to rural places?

The policy documents above refer to physical and virtual assets and facilities (e.g. road, rail, flood, energy, broadband) and focuses on economic infrastructure improvements leading to productivity, jobs and growth.

With no agreed upon list of infrastructure across Government – and the NIA not due to publish its infrastructure assessment until 2018 – this opens up a dialogue around finding out what (rural) infrastructure is important to rural communities: are some types of infrastructure more essential than others? What should the minimum infrastructure requirements for rural areas be?

This also means considering where rural residents fit in determining the infrastructure requirements for their local area – and how this links to national infrastructure needs. In the preparation of emergency plans, for example, building community resilience is encouraged, with Government guidance suggesting policy makers should not assume they know what is needed or wanted, and how they should work with existing groups to get traction and avoid the risk of duplication and fatigue.

Existing discussions on rural infrastructure often focus on broadband, where demand for digital services often outstrips many urban places but the task of connecting residents and businesses up remains great due to lower population densities and geography which combine to make the commercial case for investment more challenging. There are debates over whether having a broadband internet ‘service’ should be treated as a basic ‘utility’ much like electricity, water or the traditional telephone or seen as a luxury item. And whether rural residents and businesses expect the same or comparable levels of connectivity as their urban counterparts? Other discussions have focused on transport: rural residents tend to travel longer distances, have higher costs, greater reliance on car use and increasingly limited access to public transport. These issues are incredibly important to rural communities and while they should not be overlooked there is a tendency to consider them individually and in isolation rather than collectively. Going forward, we need to monitor whether, how and when existing Government infrastructure projects and programmes are benefitting rural areas. We also need to be mindful of a gap opening up between whether we should update / improve existing infrastructure or provide brand new infrastructure.

Thirdly, how should the infrastructure projects and programmes that rural communities would like to see be funded and delivered? And how can we future proof what is delivered?

Back in September 2014, the OECD published a review of Government support to promote long-term investments in infrastructure. The review lists the main instruments and incentives available to boost financial resources for infrastructure, describing a situation in which ‘the infrastructure gap’ is relevant globally yet the capital available to fill in the gap seems not enough. In OECD countries, the review found public procurement and spending on infrastructure was becoming unfeasible because of budgetary constraints; with the solution seen as creating institutional and market conditions to attract private capital from investors (new investors, traditional bank lenders and industrial developers). The review identified three trade-offs: (i) a balance between protective versus restrictive regulations; (ii) the share of returns between the public and private sectors; and (iii) providing a stable macro political investment environment versus providing financial incentives for deals. The review seems to signal a reduction in public capital for infrastructure in favour of a project-by-project approach so as to attract private capital. This is interesting in a rural context where market failure often leads communities to take action and do things on their own account.

In March 2017 CPRE published Landlines, a pamphlet bringing together a number of experts to argue for greater national coordination on land use. Andrew Wescott, from the Institution of Civil Engineers (ICE), presented two considerations for the NIC in its National Infrastructure Assessment: firstly, that the NIC should undertake a comprehensive review of public land available for housing; and secondly, housing should be considered as part of the Nationally Significant Infrastructure Planning (NSIP) regime to enable opportunities to be brought forward with new infrastructure schemes in the right locations.

ICE has explored the opportunities to be gained in delivering sub-national infrastructure amid ongoing austerity and the devolution agenda. ‘State of the Nation 2016’ explored the role of devolution in providing for people’s needs by understanding what infrastructure is required, where and when. ICE suggests developing regional infrastructure strategies alongside local devolution, the creation of regional infrastructure pipelines and a focus on sustainability and enriching people’s lives by improving their living environments.

IPPR, on the other hand, argues that we are failing to identify the correct diagnosis of our problems and so wave after wave of industrial and regional policy tends to treat the symptoms (education, skills, transport, innovation, industrial location) rather than the more fundamental problem: our weak subnational institutions. IPPR is calling for a ‘council of the north’ built around genuinely devolved powers and a reimagination of cultural and historical identity.

Within the devolution agenda, and dialogues around sub-national devo infrastructure, how can we rural is part of this agenda rather than left behind as ‘white space’?

Finally, the National Audit Office (NAO) has identified a number of existing challenges in delivering Government projects. These are around timescales (which can be long or ambitious), the sheer size of individual programmes (with Crossrail one of the largest infrastructure projects currently under construction in Europe), the complexity of projects that aim to achieve multiple policy objectives and cross-departmental boundaries, and the volume of projects be delivered. In a challenging fiscal and economic environment, how can we improve infrastructure delivery?

Some of the Governments largest infrastructure investments are (or will) impact on rural communities. How can we ensure that national infrastructure improvements actually benefit rural communities too by focussing on what rural communities want to see rather than what has already been committed?

Jessica is a researcher/project manager at Rose Regeneration; an economic development business working with communities, Government and business to help them achieve their full potential.

Her current work includes supporting a Lottery programme to help people into paid work; research for the NHS on rural workforce recruitment and retention issues and an EU wide project on agricultural innovation.

Jessica can be contacted by email at jessica.sellick@roseregeneration.co.uk mail or telephone 01522 521211. Website: www.roseregeneration.co.uk


Sign up to our newsletter to receive all the latest news and updates.