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Infrastructure Challenges Adrian Coy Institution of Civil Engineers (ICE) & Local Authorities Director - URS
Infrastructure Challenges • 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) prioritiesfor the East Midlands • Challenges and Opportunities
Infrastructure and Growth • 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
Infrastructure and Growth • 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
Infrastructure and Growth • 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.
ICE thinking on improving UK’s infrastructure • 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’s ‘Defending Critical Infrastructure’ report identified squeezed capacity, loss of resilience and failure to manage interdependencies – factors in the formation ofInfrastructure UK (IUK).
ICE thinking on improving UK’s infrastructure • 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.
ICE thinking on improving UK’s infrastructure • 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 thinking on improving UK’s infrastructure • ICE Priorities - based on assessment of UK’s networks • Energy generation and distribution. • Local transport and particularly local road network.
ICE thinking on improving UK’s infrastructure • 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 thinking on improving UK’s infrastructure • 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 thinking on improving UK’s infrastructure • 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.
ICE thinking on improving UK’s infrastructure National Infrastructure Plan - priorities for the East Midlands
Challenges and Opportunities • Funding 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.
Infrastructure Challenges Adrian CoyInstitution of Civil Engineers (ICE)& Local Authorities Director - URS