Last week the National Infrastructure Commission (the NIC) published its Infrastructure Progress Review 2023 (the Review). The NIC monitors the UK's major infrastructure needs across all sectors of the economy. The aim of the Review is to assess the UK Government's progress towards implementing past recommendations of the NIC.

In his foreword, the NIC Chair, Sir John Armit, sets the Review in the context of the Government's wider objectives of creating a net zero economy by 2050 and of promoting economic growth. This places the Review squarely within the NIC's remit and provides some consistency of approach with, for example, the recent British Business Bank Small Business Finance Markets Report 2023 (the Report) and on which I wrote here. That focused on the need for SMEs to prioritise innovation as a means of creating growth and of contributing to the just transition to a green economy.

So, the background to the Review contains many similarities to the Report. And, unsurprisingly, many of the same macro-economic factors are noted in the Review as being drags on economic growth, notably the war in Ukraine and its impact on gas and wider energy costs. Given that one of the key areas of focus for the NIC is energy infrastructure and its role in reaching net zero, this is understandable.

Headline Findings and Responses

How, then, does the NIC consider that the UK Government is faring on infrastructure policy delivery? In short, not well. A selection of quotations from the Review include:

"if the Commission saw 2021 as a year of slow progress in many areas, in 2022 movement has stuttered further"

"Government's progress on implementing the Commission's recommendations this year has been too slow"

"Progress on delivering the ambitions set out in the Levelling Up White Paper is currently too slow"

"Little progress has been made on energy efficiency or heat this year"

"Unless clear rollout plans are now put in place, these recycling targets will be missed"

Industry has not been slow in picking up on these findings. The Institution of Civil Engineers was forthright in its critique of the pace of progress:

"Last year when the NIC issued its progress report the Institution of Civil Engineers observed that the lack of progress toward meeting long term net-zero and levelling up objectives was ‘concerning’.

This year, the lack of progress can best be described as ‘alarming’. The need for action to meet the challenge of climate change has never been clearer, and we seem to be going backwards."

And the Association for Project Management also took a robust line when commenting on the findings in the Review:

"Projects need greater stability and planning to succeed. We urge the Government to seriously consider the need for a longer term plan, and to address our own calls to action, to ensure future projects have the best chance of success."

The Railway Industry Association noted, with a pertinent reference to recently-announced further delays to HS2:

"To maximise the return on the investment these projects require, it is also important for the Government to complete them in full. Delaying construction or scaling back projects often leads to the worst of all worlds, with higher costs in the long term, and delayed benefits and reduced connectivity. This NIC report therefore is a timely reminder."

Two steps forward, one step back

Although it can be difficult to see beyond these negative findings and responses, the Review does contain some causes for optimism. It is important to remember that the Review and NIC's role is concerned with economic, rather than social, infrastructure. This is a broad sector and covers areas as diverse as digital infrastructure, transport, energy, flood defence and resilience, water and waste.

Of these, the Government's progress on extending and improving digital connectivity comes out of the Review particularly well. The Review notes that a genuine and long-term commitment to improving digital infrastructure is progressing rapidly and is on track to achieve nationwide coverage of gigabit connectivity by 2030.

The Review also notes positively work done on transferring responsibility to City Regions, though goes on to point out that this must go further and go beyond just the major city regions.

Similarly, the Review found some good progress on certain transport projects, with the Integrated Rail Plan for the North and Midlands being singled out for praise. Set against this, though, are the HS2 delays and the lack of speedy progress on the Cambridge-Milton-Keynes-Oxford Arc. Poor progress on public EV charge points (only 37,000 out of a 300,000 target by 2030 have been delivered) is also a cause for concern.

In the energy field, the benefits of a more stable renewable energy policy, particularly through the contracts for difference regime and its extension to onshore wind and solar projects for the first time since 2015, are cited as key to the continued upwards trend of renewable energy generation as a percentage of energy generation as a whole. The Review also considers, in opposition to that, the lack of pace in the energy efficiency sphere, and the constraints of both the planning system and grid connectivity issues as being barriers that may, without intervention, frustrate further progress in decarbonising the energy sector.

The outlook for the energy market

My colleague, Michael Stoneham, recently wrote about barriers to delivering net zero in the energy market. In that blog he noted particularly the issues posed by:

  • grid connection constraints;
  • the requirements and timescales of the planning and consenting processes; and
  • the increasing costs of developments and constraints on development capacity.

The Review is alive to these issues and also identifies them as having the potential to derail progress that has been made in the energy sector. The Review found that, to decarbonise the energy system, seventeen transmission projects need to be consented in the next four years: this is a fivefold increase on current consenting rates. This one requirement encapsulates elements from each of the three barriers mentioned above. And a fivefold increase of projects that must progress through a consenting system that is already slowing infrastructure development does not seem likely to have the reverse effect. The Review expresses real concern that Government reforms to speed up build times and to update National Policy Statements in this area have still not been brought forward. This may cause a blocking of future energy generation and transmission projects, with the knock effect of missed targets for the Government.

Also striking is the finding in the Review and that Government targets for installation of heat pumps will not be met. Although the target year is 2028 and for 60,000 installations to be achieved per year by then, the NIC is clear now that, even with a 30% increase year on year, this target will be missed, and by some margin. In addition, other energy efficiency schemes such as the Boiler Upgrade Scheme are not sufficient in terms of time and money to bring progress to targets back on track.

It is these concerns that have attracted the most comment in the wake of the Review.

This is not to say that there are no causes for optimism. While achieving net zero targets without addressing the potential sticking points may be difficult, this should not stop those projects which are already in the pipeline nor those which can already navigate their way through that pipeline. The "quick wins" that Michael Stoneham wrote about are important and, crucially, fundable, as proven technology. Facilitating progress on these kinds of projects should therefore remain a priority not just for the UK Government, but the devolved administrations, too.

Review Recommendations

The Review recommends that Government embeds four key principles in infrastructure policy-making over the coming years:

  • develop staying power to achieve long term goals;
  • fewer, but bigger and "better" interventions from central government;
  • devolve funding and decision making to local areas; and
  • remove barriers to delivery on the ground.

These are clearly all laudable aims. They do, however, throw up some fundamental questions:

  • how to ensure that these, of necessity long-term, principles survive the political cycle? There are at least two UK general elections between now and 2030, possibly more given recent experience of the longevity of parliaments and prime ministers. In Scotland, the next Holyrood elections are due in 2026, but how will energy policy be impacted by a possible fracturing of the SNP/Green alliance?
  • how can creating "staying power" be guaranteed within a changing political landscape? There is no doubt that consistent policy, as the Review shows with reference to the contracts for difference regime, makes project delivery more stable and affordable, yet a stable policy alone is not always enough to bind one administration to the approach taken by its predecessor.
  • how are fewer interventions compatible with increased devolution? How can devolved administrations avoid duplication where, understandably, they will wish to consider, scope and test any new powers before implementing them?
  • what other levers can the NIC, and others pull to remove barriers to delivery? The Review contains a table scoring Government policy areas on a "Met", "Partly Met", "Not Met" basis: under the "planning" head – which considers whether clear goals and plans to achieve the policy are in place – only 1 out of 14 is scored as "Met", hardly indicative of success to date in removing barriers to entry.

At the time of writing, Grant Shapps, the current Energy Security Secretary, has just delivered the UK Government's "Powering Up Britain" plan. Outside the somewhat vague "Building a stable environment" statements, and the broad commitments to "Speeding up the planning process", this plan does extend both the Heat Pump Investment Accelerator and the Boiler Upgrade Scheme, as well as committing to increased investment (£380m) in EV charging points.

The NIC serves a vital role in offering impartial advice to Government on infrastructure policy. If net zero is to be achieved, it has to be hoped that the Government heeds it, and perhaps this is a sign that they are….


Ben Powell

Legal Director