Experts criticise UK's institutional framework for infrastructure
The UK government is unlikely to relinquish full control over infrastructure planning to an independent infrastructure commission, according to senior managers at Heathrow Airport and the UK’s high-speed rail management company.
Beth West, commercial director at HS2 Limited, said she thought the idea of an independent commission – proposed last month in a report by the former chairman of the London Olympic Delivery Authority – was a sound one.
But she said it would nonetheless be “challenging” to completely de-politicise the construction of large-scale infrastructure projects.
John Holland-Kaye, development director at London’s Heathrow Airport, added that he could envisage a role for an independent body, and pointed to the current Davies Commission’s deliberations on the expansion of the airport capacity in the UK as such an undertaking, if on a smaller scale.
Speaking at the inaugural IPE/Stirling Capital Partners infrastructure conference in London, West, however, noted that funding issues on government projects, such as the £17.1bn (€20.4bn) state-funded first phase of the rail line, would ultimately be linked to “various” political issues.
“It’s a good idea to have a good cross-government or independent body that can look across infrastructure to make those advisory kind of statements, but it would be challenging to truly remove it from a political process,” she said.
Holland-Kaye agreed with her, citing HS2 as a prime example for why politicians would never surrender control.
“Look at HS2,” he said. “The size of the funding is so enormous politicians are going to want to control that.
“In practice, anybody will play the part of acting as an independent evaluator on behalf of the country.”
James Wardlaw, a partner at Campbell Lutyens, meanwhile noted that comparisons with Australia’s independent advisory body Infrastructure Australia neglected the fact the country had dedicated infrastructure ministers on Commonwealth and State level.
“What they are therefore able to do is bring together the various elements of infrastructure and decide on the priorities,” he said, “whereas in [the UK], you have about six different departments involved in infrastructure decisions, and the way in which that comes together and [they] decide public spending priorities happens once every three years.”
He said the current institutional framework was “definitely sub-optimal” and pointed towards the UK energy market as an example of the problems faced in the country.
“We have effectively two energy ministries, the DECC and the Treasury, which are pursuing completely different policies,” Wardlaw said of the Department of Energy & Climate Change and the UK department in charge of government spending.
While the Liberal Democrat-controlled DECC is in favour of renewable energy, Conservative chancellor George Osborne is a proponent of fracking for shale gas as a means of strengthening the UK’s energy independence.
Zoltan Bognar, managing director of renewables investor Capital Stage, said it was therefore more important for a market to have reliability over an independent body advising on development.
“Investor trust and confidence relies very much on our commitments being met,” he said. “Are they being delivered over 20 years or longer?”
His firm, investing in Italy and Germany after chancellor Angela Merkel introduced her policy of Energiewende in the wake of the Fukushima disaster, could potentially invest in other countries “where solar or wind makes a lot of sense from a geographic or even macroeconomic perspective”.
But he added that issues of corruption and political reliability weighed heavily on investors’ minds.