Infrastructure Challenges - PowerPoint Presentation

Slide1

Infrastructure Challenges

Adrian

Coy

Institution

of Civil Engineers (ICE

)

&

Local Authorities Director - URSSlide2

Infrastructure Challenges

Presentation contents

Infrastructure and Growth

short and mid-long term impact on growthICE thinking on improving UK’s infrastructurenetworks not assetsICE prioritiesNational Infrastructure Plan (NIP) prioritiesfor the East MidlandsChallenges and OpportunitiesSlide3

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 GrowthSlide4

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 InvestmentInfrastructure and GrowthSlide5

Infrastructure and GrowthSlide6

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 exploitedInfrastructure and GrowthSlide7

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.

Infrastructure and GrowthSlide8

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 of

Infrastructure UK (IUK

).Slide9

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 infrastructureSlide10

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 infrastructureSlide11

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 infrastructureSlide12

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 and

electrification of Midlands Main Line.

Medium-term some forms of demand

management likely to be required

on region’s roads.

ICE thinking on improving UK’s infrastructureSlide13

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 infrastructureSlide14

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 infrastructureSlide15

National Infrastructure Plan - priorities for the East Midlands

ICE thinking on improving UK’s infrastructureSlide16

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.Slide17

Challenges and Opportunities

Reducing cost of delivery

Infrastructure UK Costs Study:

pipeline visibilityimproving commissioningsmarter procurementsupply chain integrationsecuring private investmentSlide18

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 partnershipsmanaging peaks and troughs of demandand encouraging investment in skills and innovationLocal Universities have nationally renowned research capabilities e.g. pavement/transportation engineering, GNSS, energy technologies (Midland Energy Consortium/ETI), and collaborative construction engineering. Slide19

Infrastructure Challenges

Adrian Coy

Institution of Civil Engineers (ICE)

& Local Authorities Director - URS