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Government launches National Infrastructure Plan

The government has released the UK’s first ever infrastructure plan, signaling a shift in the focus of investment towards maintenance and the smarter use of assets, while projects to tackle network stress points will be given higher priority.

The report states significant investment in new or replacement infrastructure ‘should only be considered where it is a part of a clear long term strategy, is affordable and where maintenance or small scale investment will not meet future need.’

The government will also review the Regulatory Asset Base model, used extensively in the utilities sector, to see if a similar model could be used in other infrastructure assets.

By guaranteeing a regulated return, infrastructure providers could secure access to finance more easily and be able to reduce their financing risks through hedging over a longer time period.

Such a scheme could be good for contractors as work otherwise unfunded could go ahead, but one area of concern is that the model can restrict competition as only one firm will own and gain income from the completed asset. The review will report in spring 2011.

Speaking at a CBI conference in London this morning, David Cameron said: “I can announce today the UK’s first ever national infrastructure plan setting out the infrastructure Britain needs and how we will unlock some £200 billion worth of public and private sector investment over the next five years to deliver it.

“This is incredibly exciting, and it shows how, together, we can help create the right framework for growth in which British business can thrive and compete with the rest of the world.”

In the spending review the government committed over £40 billion to infrastructure projects, £30 billion of which will be invested in major transport projects.

Chairman of Infrastructure UK, Paul Skinner said: “Infrastructure UK will play an active role in driving forward this agenda across Government.

“This initial phase of Infrastructure UK’s work has validated the proposition that infrastructure development can be an important driver of the UK’s future growth and competitiveness and that there is real value in taking an integrated, cross-sector approach.”

The Civil Engineering Contractors Association (CECA) welcomed the report. CECA national director Rosemary Beales, said:

“We are extremely encouraged by the National Infrastructure Plan, which sets out the scale of the UK’s requirements in energy, transport, digital communications, flood protection, water and waste management. CECA has lobbied long and hard for Government to take a long term and holistic view of infrastructure and the  investment needed to maintain a competitive economy.

“Despite the recent cuts to road schemes and the fact that contractors are undoubtedly facing a difficult few years, there appears to be a new level of commitment to infrastructure. It is vital we work with Government to put in place the funding and other conditions to unlock major projects.

“This is an ambitious plan that links strategic and local infrastructure  in the context of economic growth and sets out a comprehensive overview of next steps including the Green Investment Bank, National Policy Statements for planning in areas of major infrastructure and the costs of civil engineering study.

“As the report acknowledges, there is a need for a new approach to investing in the UK’s infrastructure, one that provides clarity and consistency over greater periods than we have had in the past. The National Infrastructure Plan is a strong step in that direction.”