The first National Infrastructure Strategy – the UK Government’s bold plans for a renaissance

United KingdomScotland

In tandem with the Spending Review, the UK Government released the National Infrastructure Strategy (the “NIS”) setting out its plans to deliver “an infrastructure revolution”.

The NIS is the first of its kind and the government’s response to the National Infrastructure Assessment (“NIA”) published in 2018 by the National Infrastructure Commission whose remit is to make recommendations for economic infrastructure investment over the next 30 years. The NIS is expected to be updated every five years in response to future NIAs (the next due to be published in 2023). A raft of other documents was published with the NIS including the Response to the Infrastructure Finance Review, Response to the NIA and revised Green Book with more to follow in 2021.

What does it aim to do?

The NIS sets out how the government will deliver on its commitments to:

  • ‘level up’ the country and strengthen the Union;
  • ensure the UK is on the path to net zero emissions by 2050;
  • support private investment; and
  • accelerate and improve delivery of infrastructure.

Infrastructure is the “backbone of the economy”. In recognition of the pandemic’s impact on the way people use infrastructure – trains and planes may have been empty for the majority of 2020 but digital infrastructure has been crucial for communication and in keeping people connected, the NIS aims to put innovation and technology at the heart of the government’s approach. Plus it will support the UK in meeting its target of net zero emissions by 2050 by decarbonising heat, power and transport networks.

How will it be implemented?

The government plans to deliver the highest sustained levels of public sector net investment as a proportion of GDP since the 1970s by investing over £600 billion over the next 5 years; £27 billion of which will be spent next year on economic infrastructure sectors such as transport, energy and digital communications. Plans for investment (including schools, hospitals and defence) were set out in the Spending Review 2020 taking total investment in 2021/2022 to £100 billion to support economic recovery.

A key area of focus is delivering on the government’s commitment to ‘level up’ the whole of the UK and create a stronger union among England, Scotland, Wales and Northern Ireland. Great nations depend on great infrastructure and the NIS aims to benefit the whole of the UK:

  • Where policy is devolved to the Scottish Government for example, Scotland will receive funding through the Barnett formula in line with investment decisions taken by the UK government. Where policy is reserved, such as in the case of digital infrastructure, the UK government intends to improve connectivity for the whole of the UK. The £5 billion UK Gigabit Programme will subsidise the roll-out of gigabit capable broadband to the 20% of areas which are uncommercial for private sector investment. This will particularly benefit rural areas in Scotland, Wales and Northern Ireland where coverage is very low.
  • A new £4 billion cross departmental Levelling Up Fund will invest in local infrastructure and will attract funding for Scotland in the usual way. It also notes that there are 20 City and Growth Deals in Scotland, Wales and Northern Ireland (either agreed or in negotiation) committing almost £3 billion of UK Government investment.
  • The ambitious Freeports programme aims to bring jobs, investment and prosperity to some of the most deprived communities across the four nations of the UK.
  • Major policy interventions will be considered UK-wide. If passed, the UK Internal Market (UKIM) Bill will change the government’s powers to act in Scotland, Wales and Northern Ireland giving the UK Government concurrent powers to invest in infrastructure and economic development. There are also plans to bring forward a white paper expanding devolution in England.

Opportunities for private sector investment

Both public and private investment in infrastructure is crucial for the UK’s economic recovery. The NIS recognises that approximately half of all infrastructure spending is private (especially in energy, water and telecoms) and with this in mind, the government intends to support private sector investment by creating a new National Infrastructure Bank which will operate UK-wide to co-invest with private-sector partners. It is re-confirmed that the retired private finance initiative model (PFI/PF2) will not be utilised going forward. Rather, the government will focus on developing new revenue support models and consider how existing models such as regulated asset base and contracts for difference can be applied in new areas.

Vision for building faster, better and greener

The effective delivery of infrastructure is critical to the NIS. ‘Project Speed’ was launched by the government in the summer to review every part of the infrastructure project life cycle with the aim of accelerating and improving delivery. Areas such as planning, procurement and streamlining decision making are highlighted as areas for reform. The government wants to deliver the UK’s future key infrastructure - including schools, hospitals and transport – faster, better and greener. All promising steps forward with the NIS concluding by confirming the government’s commitment to fundamentally change the way it considers and deliver infrastructure.

The NIS is to be followed by a series of publications setting out further details on key areas of infrastructure policy, including the Construction Playbook, white papers on energy, English devolution and local recovery, a refreshed Industrial Strategy, union connectivity review and an updated national infrastructure and construction pipeline.