National Infrastructure Strategy
On November 25, the Chancellor set out the government’s Spending Review for the next twelve months (see the RTPI’s press release). While this largely focused on short-term measures to help the economy recover from Covid-19, it was also accompanied by the publication of the long-delayed National Infrastructure Strategy (NIS).
This is an important moment. Historic infrastructure decisions in the UK have been sub-optimal, due to the ad-hoc nature of project justification, a lack of mechanisms for considering cumulative impact, and a failure to properly consider the transformative nature of infrastructure investment. Successive infrastructure policies and strategies from government have often failed to account for their impacts on different parts of the country, or combined to produce unintended spatial consequences.
This NIS reflects the evidence provided by the National Infrastructure Commission (NIC), including the first National Infrastructure Assessment in 2018 and subsequent thematic reports. It maintains a commitment to invest 1-1.2% of GDP on infrastructure each year, providing some certainty in the face of Brexit and Covid-19. And it sets four goals: levelling up and strengthening the Union, decarbonising the economy and adapting to climate change, supporting private investment in infrastructure, and accelerating and improving delivery. With these in place, it should make it easier to see how individual spending commitments from government contribute (or conflict) with the nation’s long-term objectives.
A shift in emphasis
The rhetoric of the NIS contains a welcome shift in emphasis away from a reliance on individual mega-projects, and towards place-based programmes of infrastructure investment. In the foreword from Boris Johnson, he states that “…a multitude of smaller, local projects - better buses, and bypasses, and new stations, and cycle lanes - will do at least as much good as the megaschemes, and help more people.” A new £4bn cross-departmental ‘Levelling Up’ fund is focused on local schemes, while a £7.1bn National Home Building Fund promises appears to extend the existing Housing Infrastructure Fund (HIF) with support for land remediation, land assembly and infrastructure investment.
The NIS also reflects a renewed focus on outcomes, with an updated Public Value Framework and Project Scorecard to better link the spending proposals of different government departments with agreed outcomes. This reflects related work by the RTPI, and supported by the government, to provide a common toolkit for measuring the outcomes of planning. The government has also published an updated Green Book following a comprehensive review process (see below).
But this change in emphasis does not fully translate into investment priorities. There is little in the NIS on the value of planning urban green infrastructure and sustainable drainage systems to manage climate risks, nor on the challenges of building resilience to cascading failure in interconnected systems. The impact of Covid-19 on transport appears to manifest in increased medium-term funding for buses and cycling, with the NIS mentioning the pledge to spend £5bn on buses and cycling over the course of this Parliament. However, the immediate spending commitments in the CSR provided less for active travel than would be assumed from this summer’s Walking and Cycling Strategy, and were followed by a £1bn cut to Network Rail’s budget. And spending on public and active travel remains dwarfed by the £27bn Road Investment Strategy 2. This is referenced in the NIS with no indication of how the changes to travel demand caused by Covid-19, or the risks of exacerbating carbon-intensive patterns of behaviour and land use, will be addressed. Other critical issues, like building retrofit and embodied energy, are either lacking or deferred to subsequent strategies.
Focus on delivery
RTPI research has shown that local authorities face a number of barriers when planning to meet their infrastructure needs, and when coordinating the delivery of infrastructure with development and place-making. Getting this right is critical, with many of the objectives referenced in the NIS blurring the traditional lines between infrastructure sectors, and requiring delivery within complex urban environments. In this context, the NIS contains a welcome focus on delivery, announcing:
- A National Infrastructure Planning Reform Programme to refresh how the NSIP regime operates.
- A new academy to work on the standards and skills needed in government to deliver major infrastructure projects, including project leaders from local authorities
- A review of economic regulation, which could help to align infrastructure investment to better support local and strategic plans
- Developing a national digital twin of the UK’s infrastructure systems and built environment, making it easier to exchange data and develop cross-cutting solutions
- Developing a National Underground Assets Register to enable utility asset owners to share their data
Certain parts of the country stand to benefit from a more strategic and integrated approach to infrastructure planning, especially for transport. Alongside the Transforming Cities Fund, the Spending Review confirmed that eight city regions would benefit from a £4.2 billion government investment in year funding settlements for local transport starting in 2022-23, with £50 million in 21/22 to support preparations for settlements. This NIS also reiterates the government’s commitment to develop a spatial framework for growth in the Oxford Cambridge Arc, and the upcoming Integrated Rail Plan for the Midlands and North of England.
The governance challenge
While these are positive steps, there is still much more to be done. The NIS contains little detail on how the complex and fragmented landscape of infrastructure governance might be resolved to enable a more efficient, place-based approach across the UK. For England, the RTPI has recommended that new Green Growth Boards (GGBs) be created to provide the strategic context for Local Plans, aligning them to economic, infrastructure and environmental strategies that span multiple local authorities. However, outside of combined authorities and the Arc, the NIS is silent on the question of strategic governance, with no mention of the future role of Sub-National Transport Bodies, or details of how National Policy Statements could better address the spatial implications of investment. The delayed Local Government and Devolution White Paper, now expected early 2021, will need to hold more of the answers.
Revised Green Book
The Green Book is the government’s technical guidance for considering the benefits of government investment, and is used to inform decision making and demonstrate value for money. It helps the Treasury manage the spending of different Whitehall departments, and shapes how they respond to funding bids from local government.
The RTPI, and many others, have longstanding concerns about the methodology and culture surrounding project appraisal. The Treasury have now recognised many of these in a review of the Green Book, which found that current practice risks undermining the Government’s objectives by failing to properly engage with issue of:
- How interventions can help to meet strategic objectives, such as achieving net zero carbon or levelling up
- How interventions affects the place in which they are located, including through interactions with other strategies, programmes and projects
The review found that these weaknesses undermined how Green Book users longlisted potential interventions for investment. These weaknesses were then baked into the appraisal process, with a heavy reliance on using the Benefit-Cost Appraisal (BCR) process to focus on outcomes which were easily monetisable, and incentives to artificially inflate the BCR despite weak evidence. These in turn led the appraisal process to resemble a ‘black box’, which is not transparent or easily understandable to wider audiences. The review also found that central government departments frequently failed to work in collaboration to develop, appraise and deliver holistic, place-based strategies.
To address these weaknesses, the Green Book review announced a number of changes, including:
- A greater emphasis on the strategic case, which requires business cases for investment to be better aligned with relevant local strategies and major place-based interventions, and ending the allowance for proposals to be ‘place-blind’. There is coupled with a greater support and skills for those developing and reviewing businesses cases, with more focus on evaluating the impacts of past interventions
- A stronger focus on requiring proposals to provide a comprehensive picture of costs and benefits, including non-monetisable social and environmental impacts, and impacts on different places so as to reflect both local and national outcomes. Options which fail to provide these will not be considered value-for-money, and so not progress to the shortlisting stage
- New guidance on appraising projects which have a transformational impact
An expert review into the application of the discount rate for environmental impacts, where changes could help to better quantify outcomes related to carbon, air quality and biodiversity
- More support for Green Book users, including local government
The RTPI welcomes changes which place a greater emphasis on the place-based strategic case for interventions, improve transparency, and focus on wider challenges such as levelling up and decarbonisation. But these will only provide part of the solution. Achieving these strategic objectives will firstly require more overall investment, as well as more equitable distribution. A clear set of definitions and targets for complex issues, like levelling up and decarbonisation, will also help to reduce the risk of undue political influence and make it easier to track progress. And devolution of powers and resources to strategic authorities, like mayoral combined authorities, will help to overcome the barriers to genuine collaboration that plague Whitehall departments.
The RTPI is currently working with other professional bodies to discuss Transport Analysis Guidance (TAG) and its application with the Treasury and the Department for Transport.