Infrastructure Challenges

Infrastructure Challenges

Adrian CoyInstitution of Civil Engineers (ICE)& Local Authorities Director - URS


Presentation contents

• Infrastructure and Growth• short and mid-long term impact on growth

• ICE thinking on improving UK’s infrastructure• networks not assets• ICE priorities• National Infrastructure Plan (NIP) priorities

for the East Midlands

• Challenges and Opportunities

Short Term Impacts on Growth

• Infrastructure investment’s direct potential to deliver growth.

• Decline in construction cited as a major contributor to double-dip recession earlier in the year.

• Autumn statement announcement – reallocation of £5bn to infrastructure capital expenditure.

Infrastructure and Growth

Short Term Impacts on Growth

• Construction spending multiplier £1 spent : £2.84 of economic activity.

• Construction activity is ‘employment intensive’ (c 60% employed coming from lower skill groups).

• Activities such as highway repair & maintenance can be mobilised quickly.

• Little investment ‘leaks’ out of UK to wider global economy.

• Prolonged downturn could lead to permanent loss of capacity (critical in sectors such as electricity generation).

Ref: UK Contractors Group (2009) Construction in the UK Economy – The Benefits of Investment



Mid-Long Term Impacts on Growth

• Most substantive benefits from infrastructure investment realised in the long-term.

• Infrastructure investment to improve quality of life and the economy's capacity to grow:

- enabling cities and major towns to act as a driver for growth- improving connections to international markets- enabling inherent advantages/resources to be exploited


Mid-Long Term Impacts on Growth

• Well-developed infrastructure reduces the effect of distance between regions - integrating and connecting.

• UK has historically underinvested – particularly in transport and telecoms – leading to lower productivity rates than many competitors.


Networks not Assets

• Focus on condition and performance of networks – not just series on inputs.

• Political and media focus on individual projects – but ICE believes network view reflected in the NIP.

ICE thinking on improving UK’s infrastructure

• ICE’s ‘Defending Critical Infrastructure’ report identified squeezed capacity, loss of resilience and failure to manage interdependencies – factors in the formation ofInfrastructure UK (IUK).

Networks not Assets

• Autumn statement update to the National Infrastructure Plan (NIP) includes set of performance measures for all main networks and managing their interdependencies.

• At sectorial level (e.g. strategic highways, rail, water and energy) government producing output specifications.

• Investment priorities must avoid trap of focussing purely on prestige mega-projects.


Networks not Assets

• First NIP (2010) included useful ‘investment hierarchy’:

• Maintenance and smarter use of assets.

• Targeted action plan to tackle network stress and develop networks.

• Transformational large scale capital projects.

• Even if focussed on short-term benefits in a ‘typical’ period only 15% of infrastructure output is derived from major projects.


ICE Priorities - based on assessment of UK’s networks

• Energy generation and distribution.

• Local transport and particularly local road network.


ICE Priorities - East Midlands supplement (2010)

• Energy and transport graded as ‘requiring attention’.

• Imbalance in investment between local roads and strategic network.

• Need to improve surface transport capacity around East Midlands airport.

• Reliving rail pinch points andelectrification of Midlands Main Line.

• Medium-term some forms of demandmanagement likely to be requiredon region’s roads.


ICE Priorities – State of the Nation: Water (2012)

• Significant concern over long-term security and sustainability of water supply – to both domestic customers and industry.

• Large scale, long distance water supply not a viable solution.

• Small scale transfer between catchments may be appropriate response to supply/demand imbalance.

• Needs to be part of integrated solution.

• Including demand management.

• Water resources need a range of other uses e.g. hydropower and flood control.


ICE Priorities• Consistent with investment hierarchy some “transformational

mega projects” needed - which will inevitably impact on the East Midlands:

• HS2: ICE supports but only with full commitment to the ‘Y’ route. Main benefit releasing capacity on “classic network”.

• Airport Capacity: Hub Airport is a nationally significant asset. We support market intervention to maintain slots for feeder flights to the hub. Point-point services remain vital for regional connectivity.


National Infrastructure Plan - priorities for the East Midlands


Challenges and OpportunitiesFunding streams

• General agreement - needs shared vision and priorities for EM in making more effective case to government when funding opportunities arise.

• Needs to include all stakeholders from public, private and third sectors.

• Direct beneficiary contributions also an opportunity e.g. EA securing in £21m in contributions – rising to £60m next year.

• Some opportunities for LAs/LEPs re: innovative approaches to taxation, fees/tolls and packages of funding from local beneficiaries.

Challenges and Opportunities

Reducing cost of delivery

Infrastructure UK Costs Study:

pipeline visibility improving commissioning smarter procurement supply chain integration securing private investment

Challenges and Opportunities

Exploiting the pipeline

• Stable, visible, long-term investment programme creates opportunities throughout the supply chain.

• Treasury/Cabinet Office keen to develop local pipelines to reduce cost/increase value through:

• strategic partnerships• managing peaks and troughs of demand• and encouraging investment in skills and innovation

• Local Universities have nationally renowned research capabilities e.g. pavement/transportation engineering, GNSS, energy technologies (Midland Energy Consortium/ETI), and collaborative construction engineering.


Adrian CoyInstitution of Civil Engineers (ICE)& Local Authorities Director - URS

Documents

Infrastructure Challenges