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Lord Andrew Adonis, Shadow Infrastructure Minister


Speech on improving in and planning for the UKs national infrastructure
House of Lords, Thursday 22nd January 2015
My Lords, the case for improving investment in and planning for the countrys national
infrastructure is compelling and I hope that todays debate will promote consensus in
working towards this goal from all sides of the House. Although the value of investing in
infrastructure is increasingly understood and supported by politicians and the public alike,
we have got to make it happen and my argument is that it wont happen on the scale
required unless it is better planned, better led, and better financed.
I want to look to the future, but an understanding of past failures is essential to preparing
for a better future. So let me highlight three key areas of failure.
First, as a country we have significantly underinvested in infrastructure, and there has been
far too much stop:go in public investment, which is just as bad. This has been a problem for
the entire post-war period, but the present coalition government has provided a
masterclass. Public sector net investment more than halved between 2010 and 2014 from
53bn to 25bn in constant prices a decline from 3.3% of GDP to 1.5% and the OBR
projects that as a share of GDP, public sector net investment will fall further to just 1.2% by
2017 under the present governments forward spending plans; and it will stay at just 1.2%
for the rest of the next parliament. To put this in context; across the EU, public sector net
investment has declined much less: from 3.6% to 2.9% since 2009. Yet even within this fast
shrinking total, there has been damaging and expensive stop:go, particularly in the roads
programme which was slashed in 2010 only for a large number of schemes, including the
A14, A21 and the A27, to be reinstated last year.
On top of public investment in public infrastructure there is privately-financed investment.
In some of the privatised utilities, notably telecoms and water, and in port and airports,
there have been significant investment programmes. But here too there are serious
deficiencies. Where is the superfast broadband in rural areas that has been promised for
years? What happened to the super-connected cities programme, only a fraction of which
has been implemented? The electricity generation sector, although privately financed, is in a
highly precarious position because of serious underinvestment in new generating capacity.
It has proved notoriously hard to forge long-term consensus on key infrastructure priorities
and projects. This is not universally true even of big, initially controversial projects. Crossrail,
HS2, the Thames Tideway Tunnel, the Silvertown Tunnel and the nuclear power programme,
are all progressing with broad consensus. But - in all these cases they are progressing
years, if not decades later than they should have. I hope it will be possible to reach a
consensus much more rapidly on HS3, linking the major cities of the north with much faster
and higher capacity trains, and we look forward to the governments plan to be published in
March. However, in many vital areas, controversial projects have been stalled, for years if
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not decades. Airport expansion in the South East of England, vitally needed bridges across
the East Thames, many major new housing developments, and much of the green energy
agenda have been stymied not just by understandable differences of opinion, but by a
protracted inability to resolve these differences at the political level. Heathrow, the Thames
Gateway Bridge, onshore wind farms, ecotowns and swathes of undeveloped brownfield
land in areas of high housing need are all by-words for years if not decades of indecision and
inability to build consensus.
The third clear failure of recent decades is the failure to regard homebuilding as an
overriding national and local infrastructure priority, in the face of an escalating housing
crisis. There is a consensus that we need to be completing between 200,000 and 250,000
new homes a year to meet Englands population and household growth. When housing was
a major national priority in the 1950s, 60s and 70s, this level of housebuilding was achieved
in most years, reaching a peak of 437,000 new homes in 1968, which also happens to be the
year after the state last designated a major new town Milton Keynes. But it is now 25
years since the figure of 250,000 of new home completions was achieved in any year. Under
this government the provision of new homes has barely exceeded 100,000 a year, which is
not only a policy failure, but a cause of acute anxiety and stress to families nationwide,
particularly in London and the South East, where population is booming.
How should we tackle these weaknesses? Partly it is a question of priorities and leadership.
To govern is to choose; we need political leaders and governments, national and local, to
choose to give a higher priority to housing and infrastructure, prioritising funding and being
prepared to take controversial decisions where they cant or shouldnt be ducked. These
will be key issues in the next Parliament.
I am particularly glad to see my noble friend Lord Rogers of Riverside in his place, who has
long been making the case for systematic planning of the huge number of available
brownfield sites to tackle housing need, particularly in London. The result could be a new
generation of city villages. But this simply wont happen without a strong lead, and
systematic support, from central government developing its own landholdings, notable in
defence and the NHS, and mobilising local government too in a new national drive to
transform housebuilding.
My Lords, institutions have a key role to play in promoting better decision-making in respect
of infrastructure, and I want to set out two worthwhile institutional changes which between
them could transform our national and regional infrastructure planning and delivery:
devolution to city and county regions, and an independent national infrastructure
commission.
As a policy maker, I have long believed that R+D often stands for rob and duplicate. On
devolution, hardly anyone would now dispute that the establishment of the Mayor of
London and the Greater London Authority, with a particular brief to manage London
transport and promote better transport infrastructure, has been a notable success. We now
need similar institutions in Englands other city regions. As a former Transport Secretary, I
can say with near certainty that without the Mayor of London there would be no Crossrail,
no Overground, nowhere near so much upgrading of the tube and bus infrastructure, and,
although this is not the direct responsibility of the Mayor, there would also have been less
commercial and even less new housing development in the capital. Indeed, a good part of
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the reason why we are stuck on airports is largely because the Mayor and central
government have been at loggerheads on the way forward. It is also notable that the next
most effectively led and cohesive of the city regions after Greater London Greater
Manchester has been the next most effective in terms of transport infrastructure planning
and implementation. Witness the growth of the Manchester Metro and Manchester Airport,
thanks to significant investment and effective regional planning.
We need bold devolution to other city and county regions, to enable them to promote
infrastructure improvements in a similar fashion. Lord Heseltine said this in his excellent
report published two years ago; I urged it too in a report for my party last year. The
challenge is to create fit for purpose institutions, which means more and more powerful
Combined Authorities on the Greater Manchester model, and devolving to them serious
budgets, tax income and infrastructure planning powers. And for London itself, there needs
to be more devolution to the Mayor and the boroughs, particularly in respect of housing.
Turning to national institutions: it is essential that we have better institutional machinery for
assessing medium and long-term requirements for national infrastructure in a non-party
fashion not - and let me stress this not to replace government and parliament as
decision-takers, but to support and strengthen them, and to help build consensus. That is
the purpose behind my partys proposal for a National Infrastructure Commission, as
recommended by an independent review led by Sir John Armitt, who along with Lord
Deighton played a key leadership role in the planning and delivery of the Olympics. The
Commission would span a 25 to 30 year planning horizon, updated at least once a decade.
At the report stage of the Infrastructure Bill in November last year, I moved an amendment
to establish a national infrastructure commission, an idea supported by most infrastructure
analysts and providers. I hoped the government would rob and duplicate the idea,
particularly given the consensual way Lord Deighton has gone about his job as Infrastructure
Minister.
Unfortunately this did not happen, perhaps because the noble Lord was not himself
responding for the government so I am more hopeful today. In responding for the
government last November, Lord Ahmad didnt address the key arguments for a commission
to promote independent analysis of medium and long-term national infrastructure
requirements in energy, transport, telecoms, water, waste, flood defences, and possibly also
social infrastructure and major urban extensions.
Instead, Lord Ahmad retreated into an argument about the cost of a commission, although
of course the government already employs armies of civil servants within Whitehall to work
on infrastructure planning; it just isnt sufficiently co-ordinated, expert, long-term, or
independently led. He also said it would detract from the business of providing the
infrastructure that the country needs now and in the future. Well, it can hardly distract
from the future, since it is all about the future; and it is stark staring obvious that
governments and the state need the capacity both to deliver in the present and to plan for
the future they arent either/or. Indeed, the present government accepts this in principle:
which is why it now publishes an annual National Infrastructure Plan; the problem is that
the plan isnt really a plan it is a catalogue of some projects already under construction,
and many hundreds more in the ether with little overarching needs analysis, rationale or
prioritisation. I know this from bitter experience. When I became Transport Minister in
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2009, the nations forward plan for rail modernisation stopped in 2014, which is why we
had no national plan for mainline rail electrification or high-speed rail, both of which take
somewhat longer than 5 years to plan and deliver, and which relate to national needs over
the next generation, not the next decade.
No surprise then that the World Economic Forum 2014-15 Global Competitiveness Report
ranks Britain 27th for overall quality of infrastructure. 27th, for a country with the 5th largest
GDP in the world. No surprise either that the view of business leaders is that future growth
and prosperity prospects are being undermined by weaknesses in planning and delivering
major infrastructure. A CBI survey of 443 senior business leaders in November last year
showed that 96% felt political uncertainty to be discouraging investment and 89% were
supportive of an independent infrastructure commission.
Let me stress too that an independent infrastructure commission is not a dangerous
innovation: Australia has a successful one, Infrastructure Australia. It applies to
infrastructure the principle of systematic, impartial advice and analysis which is taken for
granted in other spheres. It is precisely the principle behind the present governments
decision to establish the Office for Budget Responsibility in 2010 to bring independent
analysis and advice to bear on fiscal policy, although of course decisions on taxes and
spending are a matter for government and Parliament. My party has endorsed the OBR, and
it is here to stay. The last Labour government also set up the National Institute for Health
and Care Excellence (NICE) to make recommendations on the funding of NHS medicines and
treatments based on evidence of clinical and cost effectiveness. NICE has been sustained by
the present government, and it is also here to stay. A National Infrastructure Commission
would play an analogous role; indeed, the Davies Commission, set up by the Government to
recommend a strategy for extra airport runway capacity in South East England, is precisely
such a commission, but with a single issue remit. So I hope we hear a more positive
response from the government today.
Let me end on an optimistic note. London 2012, the greatest infrastructure project in Britain
since the Victorians, was a model of national purpose, successful planning and effective
delivery. If we can make an outstanding success of the Olympics, there is no good reason
why we cant do the same in modernising our transport systems, our utilities, and our
housing. 2012 was Britain at its best: lets make it the model for the future.

ENDS

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