New Civil Engineer has been sceptical of calls for bodies such as the National Infrastructure Commission (NIC) to be given statutory footings in the past; politics is politics and engineers must learn to work with it has been the view.
But chancellor Philip Hammond’s move to use the Autumn Budget to scrap private finance initiatives – PFIs and PF2s – in any form really does raise questions.
The £1.6bn A303 Stonehenge tunnel and parts of the £6bn Lower Thames Crossing were in the early stages of being procured using the PF2 model and Hammond’s populist call has thrown both into jeopardy. It threatens another disruption to the major projects pipeline that the NIC – and others – have worked so hard to create – and throws yet more uncertainty into the business plans of civil engineering firms and the careers of civil engineers.
Highways England chief executive Jim O’Sullivan responded admirably rapidly to the news, telling New Civil Engineer that both schemes will now likely have to be publicly funded, under a traditional contracting model, before admitting that just how that will be done “has yet to be worked out”.
Stonehenge tunnel designs February 2018 - grassed over canopy with ventilation outlets
Because, of course, there is no magic money tree, and the £3bn Highways England was expecting to come from private finance to pay for Stonehenge and the Lower Thames Crossing’s approach roads will now, presumably, have to come from its coffers.
Something, one assumes, will have to give, whether it is the schedule to the projects themselves, or other projects in Highways England’s 112 project pipeline. So that might be grim news for advocates of the A27 Chichester bypass, the M53 junctions 5 to 11 or the A47 upgrade, to take just three examples.
“It would be good for the market if we have some sort of decision by January,” says O’Sullivan. It certainly would.
As it is, of course, not just Highways England that is battling uncertainty, despite all the high-level rhetoric.
Incoming HS2 Ltd chair Terry Morgan has, this month, been busy urging our industry to stand up and start shouting about the benefits of his new project more, or risk the second phase north of Birmingham becoming permanently mothballed.
High Speed 2’s (HS2’s) cost pressures are well known. And with the physical assets pretty much set in stone by an Act of Parliament getting costs down is less value engineering and more “engineering of value” in the form of keener pricing from its civils contractors. New Civil Engineer understands that that might be enough to get phase one to the next phase, but the rest? Who knows.
And then what of Transport for London, which is gamely battling on, proposing and developing high-value schemes for stations such as Holborn and Camden when even the most limited economics student could tell that the finances are just not there to deliver? Politically laudable but financially constraining policies have completely removed any certainty from that particular pipeline.
The NIC was established to provide direction and stability to the industry and to investors. But as an executive agency of the Treasury, it does lack independence and authority. The ICE, in its recent State of the Nation report, calls for it to be given that independence and authority by putting it on a statutory footing, reducing the impact of changing governments on major project planning.
The industry has broadly supported the call; yet at the State of the Nation launch itself, the government, in the form of Infrastructure Projects Authority director of strategy and policy Hala Audi, dismissed the idea as “completely unnecessary” before adding: “I think the system works fine as it is and it is a case of ‘if it ain’t broke, don’t fix it’.” It’s not feeling like a great system right now and so maybe it is time for change.
- Mark Hansford is New Civil Engineer’s editor