Peer review: Richard Threlfall
UK Head of Infrastructure, Building and Construction, KPMG
Two misconceptions underpin this article. The first is that the National Infrastructure Commission is only focused on three particular topics, to be solved by next March. The second is that the Government sees infrastructure only in terms of driving economic growth, and cares toffee about sustainability.
The National Infrastructure Commission’s remit is a broad and long-term one, very similar to the one proposed by Sir John Armitt for the Labour Party - indeed, remarkably similar. Just as the Chancellor performed a spectacular U-turn at the Autumn Statement on his proposed cuts to tax credits, so a few weeks earlier he had reversed what had been the Government’s total antipathy to having a long-term vision for infrastructure, by announcing that he had just appointed Lord Andrew Adonis to do that very job.
Bear in mind that not only is Sir John Armitt now one of the seven National Infrastructure Commissioners, but Andrew Adonis was one of the small group who worked with John to develop his proposals. So you might reasonably expect some continuity of thinking.
The confusion as to the role of the NIC exists because in today’s world, where few people have any patience, results have to be delivered fast. The one big criticism of the Armitt proposal was that it would take at least five years to deliver anything. The risk was that the NIC would disappear into the library of the House of Commons for years, and eventually emerge with a 10,000-page thesis on the future of Britain, only to get abolished a few days later following a change of government.
To avoid this fate, it was agreed that the NIC had to be able to show within its first six months that it mattered. It would therefore need to take on some seriously chunky questions. However, in my view, it has probably taken on too much. Connectivity across the Northern Powerhouse, London transport, and energy supply and demand are three really big questions to address in what is now only four months (or less, by the time you take out Christmas and the need to get buy-in to the proposed answers from the Chancellor and myriad other stakeholders before the Budget). But at least they give the NIC a sense of real urgency and purpose.
Of these three topics, the hardest is not London, it’s the North. London is a big topic, but much of the thinking (and concrete proposals) already exist - the NIC can fulfil its remit by a critical review of the London Infrastructure Plan and the proposals for Crossrail 2.
The North is much harder, because no proposal exists. Transport for the North has only recently been created – David Brown was appointed as chief executive only a few weeks ago, and John Cridland took up his post as chairman at the end of November. The cities of the North are only just starting to work out how they should talk to each other, let alone sign off on a 30-year investment plan that the Chancellor can announce early next year. So I would temper expectations about what can be achieved - I expect the NIC will set out some principles and options and suggestions for the governance necessary to develop those into solutions in due course.
The energy remit is there to balance what might otherwise appear to be an entirely transport-dominated agenda. It will apply some broad brush strokes to very difficult questions around the extent to which smart meters and retrofit can moderate energy demand, and batteries and interconnectors can boost supply.
But to return to where I started - these three topics are a sideshow. They are three immediate deliverables to prove a point. The real value of the NIC is its long-term remit. That will be further defined in legislation in due course.
It will look at the long-term infrastructure challenge holistically, as Anthony would like. It will consider a range of scenarios for population growth, climate change and technological developments, and it will advocate the infrastructure investments likely to deliver the best outcome for the country in the long-run.
In doing so, the NIC will need to grapple with what constitutes that best outcome. Anthony says that all policies should be “subordinated to the goal of decarbonisation”, but that is neither realistic nor desirable. There are multiple potential objectives that a rational society might seek, and these will often be interdependent. I don’t consider it unreasonable that the Government sets economic growth as a headline objective, because through economic growth will come the ability to invest in decarbonisation, in education, healthcare, recreational facilities, and whatever else we want. The Government is explicit in recognising these links - the whole of the opening of the Chancellor’s Autumn Statement speech was on this theme, ending with the statement “nothing is possible without the foundations of a strong economy”.
I agree.
And infrastructure is a key ingredient of that strong economy. Our infrastructure investments are for the long term, and if we make the right decisions our investments yield a return by increasing the country’s economic growth. The really difficult question is how much of today’s wealth do we invest for the benefit of our grandchildren. I am not sure if the NIC can reasonably be expected to answer that without some political steer.
Then there is the question of how to decide which infrastructure projects to prioritise. I agree with Anthony that this prioritisation needs to be underpinned by a social as well as an economic assessment framework – one that can cope with comparing not just one road scheme with another, but a road scheme with a new garden city or a new wind farm. And none of these investments exists in isolation. The new garden city needs new roads and sustainable power, as well as schools, hospitals, sewers and parks. It will demand not just an integrated transport policy, but an integrated infrastructure policy. But the inter-dependencies are of mind-boggling complexity - hence two of the NIC’s commissioners are distinguished economists.
The final big challenge for the NIC is the pace of technology change. For example, what assumptions should the NIC make about the development of driverless vehicles and their impact on our society? In that future world, I think no one will own cars. We won’t need garages. Taxis will no longer exist. Children, the elderly and disabled will be able to go anywhere, at any time. Road capacity will double (or triple) overnight. The distinction between vehicles and trains will gradually disappear. And goods will be delivered by drones. How is the NIC to deal with all this uncertainty? The only feasible approach will be to develop a series of scenarios and to favour infrastructure that is more flexible and adaptable.
So the NIC will, of necessity, think big and long-term. It will pose the questions and accumulate the evidence. It won’t be able to predict the future - but it could create the basis for better decision-making, increasing the chances that our politicians make the right choices.
This is a revolution in how we think about our country and its future.
