On 7 January 2015, a consultation into the governance, structure and operation of the National Infrastructure Commission (“NIC”) was published. All relevant stakeholders, from infrastructure experts to investors, are encouraged to share their views on how this important new organisation will be structured and governed. The consultation itself will run for 10 weeks, closing on 17 March 2016, after which the government will consider the responses and provide a further update.
What is the NIC?
The NIC is an independent body which was launched in October 2015 by Chancellor George Osborne to address Britain’s long term infrastructure needs. The NIC, which has been working in shadow form since its announcement, will oversee £100bn of spending by 2020 on infrastructure projects in areas such as transport, energy and flood defence improvements.
The main purpose of the NIC is to identify the UK’s strategic infrastructure needs over the next 10 to 30 years and to publish a National Infrastructure Assessment (“NIA”) every Parliament setting out its analysis, the production of which will be enshrined in legislation. As part of the NIA, the NIC will also produce a high-level commentary on how those needs may be met and identify key strategic projects, and priorities for the next 5 to 10 year period as needed.
The NIC, whose interim chair is former transport secretary Lord Adonis, has been tasked with reporting on three initial projects by Budget 2016, namely connections between the big northern cities, especially east-west across the Pennines; large-scale investment in London’s transport infrastructure, including Crossrail 2; and ensuring investment in energy infrastructure can meet future demand in the most efficient way.
Why is the NIC needed?
According to George Osborne, the failure of successive governments to invest in long term infrastructure has led to longer commutes, higher energy bills and barriers to becoming homeowners for people living in the UK. This is largely due to the provision of new infrastructure in the UK historically suffering political changes of direction and a lack of certainty, with Osborne overseeing a 5.4% fall in infrastructure investment since he took office in 2010.
It is hoped that the work of the commission will fill a significant void by helping to make planning policy more responsive and effective, supporting efficient decision-making and delivery. The independent status of the commission is intended to promote a more consensual approach to policy making and create a co-ordinated structure for an ongoing dialogue between politicians, government, industry and the public.
The NIC consultation
The published consultation sets out the key design specifications of a new NIC, as well as outlining some practical suggestions for the governance, structure and operation of the NIC, and its interactions with various government and public sector stakeholders.
The NIC will have a wide-ranging mandate to examine all sectors of economic infrastructure – including energy, transport (roads, rail, ports and airports), water and sewerage, waste, flood defences, and digital communications. Whilst the NIC should not disrupt well-functioning, competitive markets that are delivering high levels of private investment in infrastructure, it may advise the government on improving the ways in which markets deliver private infrastructure investment.
It will be part of the NIC’s duties to consider all areas of infrastructure that involve input from the UK government, even where these cross borders. For example, in some circumstances there is a degree of shared responsibility between a devolved administration and the UK government, such as water between Wales and England. Where this is the case, the NIC will consult with the devolved administrations as part of its duties.
The consultation document states that within its economic remit, the NIC will work closely with economic regulators in other sectors, such as water and energy, to protect consumer bills from unaffordable increases. This is particularly interesting in light of the ongoing need for large-scale capital investment in electricity, water and sewerage infrastructure, given the UK’s need for much greater resilience in utility services to cope with more frequent, severe weather events. It remains to be seen which sectors will become the focus of the NIC’s early work, with a number of transport initiatives already lined up for review. In the meantime we await the results of the consultation to see whether any significant changes are to be made.