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What does the Infrastructure Bill mean for construction?

The Infrastructure Bill will set the tone for the coalition’s construction industry legacy, as it looks to convince voters it can deliver the programmes of work needed to upgrade the UK’s creaking energy, road and social infrastructure.

Announced in the Queen’s Speech, the bill will look to “bolster investment” in UK infrastructure by legislating on policies across multiple government departments to “get Britain building… and compete in the global race”.

This includes legislating for policy within the transport, communities and local government, and energy and climate change departments.

How will the bill affect the industry and what hurdles stand in the way of it being passed before the 2015 general election?

Among the headline reforms created by the bill is the Highways Agency being turned into a government-owned, contractor-operated company [Go-Co], managed by the Department for Transport.

The government also wants to continue its assault on red tape and planning, but this time for major infrastructure projects, by simplifying the process for making changes to Development Consent Orders on nationally significant infrastructure projects.

Highways Agency turns Go-Co

Legislation for Highways Agency reform came as no surprise after a series of announcements in the months running up to the bill.

Pinsent Masons partner Jon Hart says there are “interesting parallels” to draw with the Defence Reform Bill, announced in the Queen’s Speech in 2013.

The government had proposed a Go-Co structure to give the private sector power over its £14bn annual spending on military equipment.

“The changes should prevent the stop/start nature of investment in the network and enable industry to invest with certainty on labour and materials”

Noble Francis, Construction Products Association

Defence secretary Philip Hammond then announced the plans had been axed in December after just one bidder was left in procurement and more than £7m had been spent on the process.

Mr Hart warns this could be a concern in relation to Highways Agency reform.

EC Harris head of highways Brian Fitzpatrick says a government department does not usually have the in-house skills and experience to make reforms on its own.

It is “critical” to draft in private sector expertise to help the agency, he adds, and that more information is needed about its future structure.

Long-term gains of reform

If successful, there are long-term benefits to reform, however, according to Construction Products Association economics director Noble Francis.

The changes “should prevent the stop/start nature of investment in the network and enable industry to invest with certainty on labour and materials”, he says.

Perhaps the most controversial part of the Infrastructure Bill could see the inclusion of changed trespassing laws which, subject to consultation, would give fracking companies the right to drill horizontally for shale gas under private land.

“They will make the parliamentary time to get it through in this final session because there are quite a lot of things bound up in it which are central to its final 11 months in power”

Jeremy Black, RICS

The Department of Energy and Climate Change’s Underground Drilling Access consultation began in May and included the granting of underground access to land 300 m below the surface, as well as a £20,000 one-off payment in return for access. The consultation period ends on 15 August.

The proposal has been met with opposition. A recent YouGov poll for Greenpeace showed that out of 1,898 people surveyed, 74 per cent felt energy companies should have to get permission from the landowner or resident first before drilling.

Fracking controversy impact?

Royal Institution of Chartered Surveyors head of policy Jeremy Black says this is likely to be the most controversial part of the bill, but is confident it will pass before the election.

“Infrastructure is central to the government’s agenda,” he says. “They will make the parliamentary time to get it through in this final session because there are quite a lot of things bound up in it that are central to its final 11 months [in power].”

Speeding up infrastructure

As well as fracking, roads and zero- carbon housing, the government has used its Infrastructure Bill to try to speed up planning decisions and land release. Measures include:

  • Allowing for certain types of planning conditions to be waived upon application if a local planning authority has not notified the developer of their decision within a prescribed time period.
  • Permitting land to be transferred directly from arms-length bodies to the Homes and Communities Agency.
  • Future purchasers of land owned by the HCA and the Greater London Authority will be able to develop and use land without being affected by easements and other rights and restrictions suspended by the agency.
  • The bill would allow an examining authority to be appointed immediately after an application has been accepted to rule on consent for nationally significant infrastructure projects. Panels would comprise two inspectors, speeding up the process and saving money.

The government also intends to create a new energy regulator funded by the industry through a levy, which Mr Black says would have the potential to oversee fracking reforms.

He says RICS is urging the government to focus the new “beefed-up energy regulator” on fracking to reassure the property market and the public on how it will be governed.

The trespassing law will also apply to the exploration of geothermal energy, which environmental law expert Angus Evers at King & Wood Mallesons SJ Berwin says could streamline the controversial fracking elements of the policy.

He says there would be less resistance to accepting the exploration of geothermal energy in principle, which could work in favour of fracking reforms.

Clyde & Co partner Ian Ginbey cautionsthat it is important to look at the UK’s national infrastructure regime and past delays on major projects. “The only way to get fracking through” is to take the decision “out of the hands” of local communities, he says.

Housing reform

Mr Ginbey says the principle also applies to housing, when asked whether the sector should be considered as economic infrastructure.  

He warns there is a danger that housebuilding could be hindered if it is bracketed as infrastructure, since local authorities could become even more involved in schemes.  

The bill will also exclude small sites from having to meet zero-carbon standards to help reduce barriers for SME housebuilders operating in the sector.

“The bill has a couple of controversial elements, not least fracking, so you might have wanted the Commons to give its assent in principle”

Parliamentary source

UK Green Building Council chief executive Paul King says the government was “letting small developments…off the hook,” but the Federation of Master Builders backs the move, as it says the policy would “deluge smaller housebuilders in a tsunami of costs that hinder their ability to build”.

The Zero Carbon Homes standard will be set at Level 5 of the Code for Sustainable Homes, which is due to be scrapped, but the legislation will allow developers to build to Level 4 if they offset through Allowable Solutions to achieve Code 5.

Allowable Solutions enable housebuilders to meet zero-carbon targets through cost-effective carbon-reduction measures.

Race to 2015 election

With parts of the bill, most notably fracking, already stirring up opposition, will the government be able to push it through before the election?

A source close the parliamentary process tells Construction News that most bills starting in the House of Lords, such as this one, are “relatively non-controversial, [allowing the HoL] to get on with its role of being an ‘improving’ chamber without its efforts being undermined in due course by fun and games in the Commons as the second chamber”.

“But in the case of the Infrastructure Bill – it has a couple of controversial elements, not least fracking, [so] you might have wanted the Commons to give its assent in principle…to allow parliament to get on with the topics without an in-principle issue still hanging over the bill until it reached the Commons.”

The government has set out its stall, but 11 months before the election, time will tell whether its reforms deliver a long-lasting legacy or end up a damp squib.

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