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National Infrastructure Plan 2010

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National Infrastructure Plan 2010 Infrastructure UK National Infrastructure Plan 2010 October 2010 Infrastructure UK National Infrastructure Plan 2010 October 2010 Official versions of this document are printed on 100% recycled paper. When you have finished with it please recycle it again. If using an electronic version of the document, please consider the environment and only print the pages which you need and recycle them when you have finished. © Crown copyright 2010 You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http://www.nationalarchives.gov.uk/doc/open- government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or e-mail: [email protected]. ISBN 978-1-84532-785-9 PU1054 Contents Page Foreword 3 Chapter 1 The UK’s infrastructure need 5 Chapter 2 The infrastructure challenge 9 Chapter 3 Enabling infrastructure development 13 Chapter 4 Plan for infrastructure investment 21 (a) Energy infrastructure 25 (b) Transport infrastructure 29 (c) Digital communications 32 (d) Flood management, water and waste 34 (e) Intellectual capital 37 Chapter 5 Next steps 39 Annex A Ownership models and cost of capital 43 Annex B Infrastructure UK 47 National Infrastructure Plan 2010 1 Foreword For the economy to flourish, people, goods and information must move freely. Businesses across all regions and industries need the right conditions to grow. Reliable infrastructure: energy, water, transport, digital communications and waste disposal networks and facilities, are essential to achieve this. Ensuring these networks are integrated and resilient is vital. Failure to make the right choices at the right time, or pausing investment, risks not only growth but also the UK’s international competitiveness. Over the centuries, the UK has had a great record of investing in world class infrastructure to underpin economic growth. From the earliest days, infrastructure has been built by a combination of private and public money, in ventures involving business and both national and local government. Private capital was given the incentive to invest in often cutting-edge technology by the prospect of earning proper returns. By contrast, for several decades the UK’s approach to infrastructure investment has in general been timid, uncoordinated, incremental, wasteful in its procurement and insufficiently targeted to supporting balanced and sustainable growth in the economy, both economically and environmentally. The result is that our infrastructure is ageing, plans are unclear and costs are too high. In 2010 we face an unprecedented series of challenges. Stretching carbon reduction targets and the need to ensure long term energy security require a revolution in our energy generation mix. We need digital communications networks that transmit information at high speed to all parts of the UK. We need to maintain our transport, water and waste systems in the face of growing demand and the impact of climate change and of other threats and hazards. We need a clear analysis of the increasing interdependencies between networks and of the resulting opportunities for innovation. We need to maintain and grow the national intellectual capital for the UK to be a winner in the global knowledge economy. All this must be delivered against an inherited legacy of overstretched UK public finances and with many countries embarking on programmes of a similar scale, competing for a finite pool of investment funds. The immediate challenge is to rebuild the economy, creating the conditions for enterprise to flourish based on an expansion of the private sector. The infrastructure investment programme will help rebalance the economy across all regions and give industries the right conditions in which to grow, as well as itself providing a stimulus to short term growth. So the Government is setting out, for the first time, a broad vision of the infrastructure investment required to underpin the UK’s growth. And, just as the UK made bold choices in the past, we need to embrace the options opened up by new technology – for example, in the roll out of superfast broadband, in offshore wind arrays and in high speed rail. The role of the Government in this work is clear. It is to specify what infrastructure we need, identify the key barriers to achieving investment and mobilise the resources, both public and private, to make it happen. We plan for UK infrastructure investment to be some £200 billion over the next five years. We will help make that happen through smarter use of public funding, improving private sector National Infrastructure Plan 2010 3 investment models, encouraging new sources of private capital and addressing the regulatory failures that stand in the way of greater private sector investment in our country’s infrastructure. The Government has identified a new hierarchy for infrastructure investment, prioritising the maintenance and smarter use of assets, followed by targeted action to tackle network stress points and network development and, finally, delivering transformational, large scale projects that are part of a clear, long term strategy. Today, the UK is one of the most expensive countries in which to build infrastructure. For example, civil engineering works cost some sixty per cent more than in Germany. To address this issue, we will improve the UK planning system, bring down construction costs, improve the quality of data to inform decision taking, and initiate programmes to look at cross-sectoral independencies, resilience and engineering innovation. We will work to ensure that we develop the skill and knowledge base of British people to match the challenges of this infrastructure programme. If we were only to reduce public sector construction costs by 15 per cent that would result in annual savings, or additional investment, of £1 billion; and independent studies have suggested a one per cent reduction in the average cost of capital would result in an annual saving of £5 billion. The Government is targeting its own investment in a series of bold and critical projects that go to the heart of this vision. In the Spending Review we committed to invest over £40 billion in supporting project investments including new high value road schemes, one of the world’s first carbon capture and storage projects, a high-speed rail network, Crossrail, two of the world’s leading medical and engineering research facilities and the Green Investment Bank. This is an ambitious plan. To make it happen, the Economic Affairs Committee of the Cabinet, chaired by the Chancellor of the Exchequer and supported by Infrastructure UK, will take a new role coordinating infrastructure planning, prioritisation and policy development across Government. This work will only be driven through with sustained commitment right across Government – which it has and will continue to have. Lord Sassoon Commercial Secretary to the Treasury October 2010 4 National Infrastructure Plan 2010 The UK's infrastructure 1 need 1.1 Prosperity comes from the effective accumulation and efficient use of capital – financial, human, intellectual, natural and physical capital. This document focuses on economic infrastructure: the networks and systems in energy, transport, digital communication, flood protection, water and waste management. These are all critical to support economic growth through the expansion of private sector businesses across all regions and industries, to enable competiveness and to improve the quality of life of everyone in the UK. Government’s key role is to specify what infrastructure is needed, to identify the key barriers to achieving that investment and to mobilise the resources, both public and private, to make it happen. 1.2 This chapter sets out the Government’s vision for major infrastructure investment in the UK: • maximising the potential of existing road and rail networks; • transforming energy and transport systems to deliver a low carbon economy; • transforming the UK’s strategic rail infrastructure; • meeting future challenges in providing sustainable access to water for everyone; • protecting the economy from the current and growing risk of floods and coastal erosion; • reducing waste and improving the way it is treated; • providing the best superfast broadband in Europe; and • ensuring that the UK remains a world leader in science, research and innovation. Energy infrastructure 1.3 The Government aims to provide an endowment for future generations by building the foundations of a growing, low carbon economy. The UK must meet ambitious targets to reduce greenhouse gas emissions by 34 per cent relative to 1990 levels, with 15 per cent of energy from renewable sources by 2020. With the right energy infrastructure, the UK can achieve: • a step-change in energy efficiency; • a supply of secure, affordable, low carbon energy, with a long-term reduction in the UK’s dependence on imported hydrocarbons; and • increased security of supply. Transport infrastructure 1.4 Transport provides the crucial links that allow people and businesses to prosper. The Government is committed to delivering an effective, sustainable, transport network for the UK. With the right transport infrastructure the Government can: • contribute to the fiscal consolidation whilst supporting a competitive economy – by effectively prioritising public spending and vigorously pursuing efficiency in the National Infrastructure Plan 2010 5 transport sector. This will ensure
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