I lead Arup’s transaction advice team for...
There is much to agree with in the Institution of Civil Engineers’ State of the Nation report on UK transport, published a week or two ago. I would argue that the key challenge for the UK is reforming the machinery of government to unlock financing and funding, and maximise the contribution of transport to sustainable growth, competitiveness and employment.
To me it’s clear that powers and fundraising should be further devolved to local government, particularly for our core urban areas. An integrated transport network that delivers lasting value for the nation will remain elusive while transport powers continue to be over-centralised and focused too much on the details of delivery rather than getting the framework right.
City regions need to be encouraged to take on responsibility for transport improvements and procuring services (such as commuter rail) if they are to achieve their aims for growth and employment. Indeed, this has successfully happened in London and Manchester.
In France, Germany, Australia, Canada and the US, strong regional government has shown itself to be effective at delivering infrastructure. France, for example, has a regionalised strategic road network. There is no reason why the UK cannot also benefit from this approach.
Inextricably linked to this is the question of funding. There is a compelling case for the government to shift borrowing from day-to-day spending to investment. And the simpler the government can make funding arrangements, the greater the likelihood of getting value for money.
Involving the private sector over the right investment horizons will be crucial if we are to achieve a balance between capital investment and maintenance spending that will ensure transport systems are financially sustainable. The regulated asset based (RAB) model provides an excellent platform for reforming the strategic road network.
Getting the right mechanisms, such as locking in local tax growth for councils to retain, is also essential. City regions must be able to retain this revenue along with other taxation and be free to borrow funds to further enhance their infrastructure.
Thinking about central government’s role, I think a Department for Infrastructure is needed. It could form a coherent vision as well as consolidating specialist resources and talent. It should also oversee the development of effective frameworks to generate private sector investment. Crucially, forming a specialist department recognises that most, if not all, major infrastructure decisions are ultimately political and cannot be taken in isolation by technocratic institutions.
Other Commonwealth countries take this approach. Australia’s Department of Infrastructure and Transport has a national strategic function advising regional governments and coordinates construction timing and investment decisions under a cabinet-level minister. In Canada, which has an enviable track record of securing private sector investment, there is a Minister of Transport, Infrastructure and Communities.
The UK’s Chancellor, George Osborne’s, spending review of last week went some way to responding to the call from the ICE and others for a much longer-term, strategic approach to sorting out the funding and governance of UK infrastructure. There is still much work to do.