Window closing to deliver infrastructure that will improve lives, advisers warn

The National Infrastructure Commission (NIC) said there are “significant deficiencies” in the UK’s infrastructure, including a failure to build reservoirs, too many homes at risk of flooding and under-investment in regional transport.

Commission chairman Sir John Armitt said it is a critical period for making decisions on things that are of immediate concern to the public, which he characterised as the three Ps of “prices, potholes and pollution”.

The Government will need to increase public investment in infrastructure and boost private investment – which in a globally competitive market requires stable policy to attract investors, the commission argued.

The Government must make faster decisions and commit to them in the long term, with robust implementation plans and action to remove barriers that slow down delivery and increase the costs of infrastructure.

It has warned public funding will need to reach around £30 billion a year over the coming decades, from around £20 billion a year in the past decade, while private investment will need to rise to around £50 billion a year.

In an annual review of progress, the advisory body said the Government had faced several years of disruption from shocks such as the pandemic and the energy crisis.

It now needs to accelerate planning and delivery to catch up and ensure the country’s infrastructure is fit for purpose, to cut emissions to net zero, boost regional growth and make the UK more resilient to climate change.

Sir John 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 commission said there are still unacceptably high levels of water pollution, and investment decisions are needed to enable “transformational change” in the sector – that would require some bill increases – to address sewage and drainage problems.

It called for action to enable new reservoirs, tackle too-high levels of leaks and reduce water demand, warning they are the only ways of reducing the risk of severe drought and avoiding consumers having to pay for emergency supply measures.

On flooding, the commission warned current funding is not being strategically directed, with no long-term targets to measure progress against.

Flood risk is worsening due to poor planning for new development and “unmanaged” growth in hard surfacing that stops water draining away.

The report also warned the UK remains “too reliant” on high cost, high carbon natural gas, but it could move away from fossil fuels and have decarbonised and secure energy.

Moving away from gas heating will be essential for reducing carbon emissions in homes, as well as improving air quality and permanently reducing heating costs for households, the report said.

The solution for cutting emissions from most homes is heat pumps, but the Government is not on track to roll out 600,000 of the clean heating systems a year by 2028, it said.

Last minute policy changes on heating have reduced the incentives for people to install heat pumps, while uncertainty over the role of hydrogen has also contributed to slow progress away from fossil fuel heating.

The Government should rule out supporting hydrogen for heating and set out long-term funding and 0% financing to support deployment of heat pumps and heat networks, it argued.

The cost of electricity has to be rebalanced to make electric heating more cost effective, and there should also be further moves to boost renewables such as onshore wind projects.

On transport infrastructure, the NIC found Government plans for schemes to boost connectivity using money saved from scrapping HS2 north of Birmingham need “greater specificity” regarding their “scope, cost, benefits and schedule”.

The commission’s analysis also suggested there are “key corridors which will remain poorly served”, such as from Birmingham to Manchester and the rest of north-west England.

Capacity and connectivity north of Birmingham “cannot be materially improved” without further infrastructure investment, the report added.

Devolution needs to be expanded to give all local authorities with responsibility for local transport five-year funding settlements to enable more stable planning for road maintenance and other priorities

In a “mixed” report which highlighted good progress on the rollout of digital networks, there is also a warning that recycling rates have stagnated and emissions from waste remains too high, with a call for implementing reforms to meet the target to recycle 65% of rubbish by 2035.

James Heath, NIC chief executive, said the report reiterates a package of measures outlined in the commission’s second assessment last year for the next five years which is “deliverable and affordable”.

He added: “It’s the package that is necessary to close the gap in the UK between the infrastructure assets we have today and those we’re going to need in the future.”

A Government spokesperson said: “We’re making sure we have the infrastructure we need to grow the economy, improve people’s lives, and tackle climate change – having already increased electricity generated from renewable sources to nearly half in 2023, giving more powers to cities to build the transport they need, and providing billions to tackle potholes up and down the country.

“And we’re building on this by setting out our long-term plan for transport through our £36 billion Network North plan, while putting billions more investment into the low carbon transition, including through our Boiler Upgrade Scheme – which is one of the most generous in Europe.”