Home » Infrastructure: Labour promises change, but will it deliver?

Infrastructure: Labour promises change, but will it deliver?

by Tim Clark
Costain to upgrade London Underground signalling infrastructure

Voters go to the polls on Thursday in an election widely expected to propel the Labour Party into government, so where will that leave the delivery of much-needed infrastructure? Tim Clark reports

Can the UK deliver major infrastructure projects up to 25% quicker, and save a fifth on the costs at the same time?

For those who work in construction, such promises can make people suspect that you have been tasting the kool aid, however according to the Labour Party, this goal is the ambition it has set itself for the next Parliament.

A review undertaken by former Siemens UK boss Juergen Maier into rail and urban transport infrastructure has stated that major project delivery can be overhauled if changes to how infrastructure delivery are made.

The problems are well known. The UK occupies a unique position as one of the most expensive places in the world to deliver new infrastructure. Some studies – such as one undertaken by Boston Consulting Group – found that road projects were twice as expensive as France – at £8.45m per lane km, compared to £4.22m in France.

The Infrastructure Project Authority’s own review into major infrastructure schemes found that the number, which it deems as unachievable, has doubled since 2020.

Promises, promises…

Maier, who is also vice chair of the Northern Powerhouse, stated that the North in particular has faced a decade of unfulfilled promises: “The North of England has borne the brunt of a series of broken promises on transport infrastructure and our economy is suffering as a result.

“It has been 10 years since a new rail line across the Pennines was promised, and we’re still waiting for construction to get underway. The uncertainty created by chronically over-promising and under-delivering is lethal for investor and passenger confidence.”

The Siemens’ head has a point. The last decade has seen reams of reports, studies, proposals and initiatives – many of which promise a lot, but never get off the ground.

The Northern Powerhouse itself was formed by former chancellor George Osborne to help bring further economic prosperity to Manchester – the plans mirrored by the Midland’s Engine which focussed on Birmingham and its region.

Both plans garnered glossy pamphlets and trips by ministers to international property fairs such as MIPIM; however much of the genuine long-term infrastructure plans have since gathered dust or been scaled back.

When it comes to transport the Integrated Rail Plan, published in 2021, was greeted with little enthusiasm when launched, having seen the bulk of funding taken up by the previously-announced second phase of HS2.

With the cancellation of large parts of the HS2 project, that funding hasn’t been re-allocated in full. A Union Connectivity Review undertaken by chair of Network Rail Sir Peter Hendy also made a slew of recommendations – many of which may not come to fruition.

Funds for projects is a major issue and the task which faces the next government, whoever is voted into power, is daunting. Public sector net debt stood at 89.9% of GDP as of April, standing at £2.4 trillion. Other calculations of public debt have those figures even higher.

Labour’s major infrastructure plans rely on the establishment of two new national companies – Great British Railways and Great British Energy. Both new bodies are being established to bring across nationalisation without the cost of buying out operators – in terms of licences for trains, and shareholders for energy firms.

How far these two bodies stray into direct capital project delivery is unknown. Great British Railways is however expected to take on a combined track and service operation, and oversee the role that Network Rail currently undertakes. It will, however, take the course of a Parliament to fully set up.

Great British Energy will have an anticipated budget of £8.3bn in any first Labour parliament. The party is hoping to be able to reap the profits from such bodies to help pay for some of the new infrastructure the country needs. It looks set to be simply one energy player in the existing market though, and it’s unclear what impact it will have.

Labour has also cast its net widely when seeking advice on how to deliver infrastructure ahead of the election.

In January the chief executive of Mace, Mark Reynolds and Skanska head Katy Dowding joined a group looking at how to advise the party on infrastructure policy. The Maier review also included input from former chair of HS2 Allan Cook, as well as Henri Murison, chief executive of the Northern Powerhouse Partnership.

The construction industry has broadly welcomed Labour’s plans.

“It is gratifying that the Labour Party has recognised that the best means of delivering economic growth is through infrastructure delivery, planning reform, and unlocking shovel-ready schemes in all parts of the UK,” said Alasdair Reisner, chief executive of the Civil Engineering Contractors Association (CECA).

“The Labour Party’s commitment to placing infrastructure at the heart of government decision-making, delivering a long-term transport strategy, and rolling out much-needed planning reforms all reflect CECA’s policy recommendations to an incoming government closely.”

According to CECA, for each £1bn increase in infrastructure investment, UK-wide GDP increases by a total of £1.299bn, and for every £1bn of infrastructure construction increases overall economic activity by £2.842bn. Overall investment makes sound economic sense; it is on an individual level where it may be harder to pin down Labour’s ambitions.

Wait and see approach

On a visit to Manchester earlier in the election campaign Labour leader Sir Keir Starmer was tight-lipped over whether any new government he forms would back an underground station at Manchester Piccadilly – a proposal which could cost £5bn but has been heavily backed by mayor of Greater Manchester Andy Burnham.

The improved station would be able to handle through-trains if any high speed line was built to the city, greatly increasing capacity and efficiency of any route.

Starmer declined to back the project explicitly, brushing off reporter’s with a ‘wait and see’ approach. The issue is indicative of dozens of projects across the UK, from the future of Euston to the Blackwall Tunnel, the Trans-Pennine route upgrade, and greater regional connectivity.

Question marks also remain over the plans to merge the National Infrastructure Commission (NIC) and the Infrastructure Projects Authority (IPA) into one new body titled the National Infrastructure and Service Transformation Authority (NISTA).

Speaking to Build in Digital one industry source stated that in their view, Labour has misunderstood the role of both current bodies.

“I don’t think they [Labour] understand what the IPA does, just because it has infrastructure in its name, but the IPA does Ministry of Defence procurement such as submarines. The NIC is particularly around the needs of the country in terms of construction, but we spend more on the MoD and nuclear [than construction].

“If you look at the merger through a construction lens it makes more sense than through a government portfolio lens. How is the NIC going to fit with that.”

According to management consultant and engineer Oliver Sander, NISTA needs to pass three “tests” if it is to prove effective.

These include being focused on collaboratively agreed “joined-up outcomes that feed government departmental objectives”, have the authority to provide longevity, stability and certainty for development, and should also support projects in their early stages – not simply police

“This will require a cultural shift from all stakeholders as a more active role from NISTA will be a shift from the more passive remit of existing organisations,” he adds.

A kind of devolution?

Sander advocates allowing NISTA to become a fully-fledged arms-length body, which would deliver infrastructure away from direct political control, similar in scope to the Bank of England. Whether any new government would be willing to part with that much oversight remains to be seen.

Boosting inward investment as a way to help tackle the UK’s debt mountain also relies – according to Labour – to a certain extent on delivering on long-term infrastructure goals.

NISTA will be overseen by the Treasury, with shadow secretary to the Treasury Darren Jones stating at its launch at property conference UKREiiF in May: “Our new National Infrastructure and Service Transformation Authority will be laser-focused on delivery and play a critical role in setting the path we need to drive growth.”

Linking economic prosperity of the nation directly to infrastructure investment is a positive step, and should justify both more certainty for private investors looking to back projects, or schemes close to major transport hubs. It may also allow greater public sector investment under the guise of “borrow to invest”, which was a favourite phrase of former prime minister Gordon Brown.

“If Britain could cut costs down to the European average, it’d mean we could build more of the transport links and clean power sources that are essential to getting the UK growing,” said Sam Dumitiu, head of policy at Britain Remade – a campaign group that aims to place economic growth at the heart of government policy. “It’s unsurprising that Labour have decided a new body to tackle this problem is desperately needed.”

Labour is riding high in the opinion polls with less than a week left until the election. The current government is, itself, mired in a betting scandal over the timing of the election it called.

Labour is hoping that the construction industry will consider it a safe bet when it comes to infrastructure delivery.

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