Alistair Darling has pledged to invest in infrastructure decades into the future, by setting up Infrastructure UK to focus the government’s planning to prioritise and fund infrastructure over the coming 50 years.
Darling said he wanted to: “Build on the unprecedented investment in infrastructure over the last decade and ensure the UK is ready to face the challenges of the transition to a lowcarbon economy by creating Infrastructure UK, which will help facilitate private sector investment in infrastructure, and help ensure that publicly funded infrastructure is effectively prioritised and delivered.”
Infrastructure UK will be chaired by ex Rio Tinto chairman Paul Skinner and James Stewart has been appointed as Chief Executive, who will move on secondment from Partnerships UK where he was chief executive..
One of the body’s tasks will be to identify new revenue streams for major infrastructure, and manage the government’s money earmarked for the 2020 European Fund for Energy, Climate Change and Infrastructure.
It will also guide the Treasury in its infrastructure investment.
Finally, the body will actively support the development and construction of major infrastructure, reporting to the Department for Energy and Climate Change (DECC) and the Treasury on pushing the transition to a low-carbon economy.
Infrastructure UK will amalgamate several independent bodies - The Infrastructure Finance Unit, the Treasury’s PPP policy team, and parts of Partnerships UK.
Newly appointed chair Paul Skinner said: “Effective infrastructure planning and delivery will be an important determinant of the future economic growth, particularly given the need to develop a low carbon trajectory for the UK economy.
“Substantial investment in infrastructure will be required to achieve this and Infrastructure UK will aim to achieve global best practice in the identification, prioritisation, development, funding and operation of major infrastructure programmes. These will support growth and inward investment,” he said.
Infrastructure UK will also advise the Treasury and DECC on a low-carbon electricity market, and how to deliver it cost-effectively. £90M will go towards the 2020 European Fund for Energy, Climate Change and Infrastructure, which will be jointly administered by Infrastructure UK and the European Investment Bank.
This fund is designed to act as a model for introducing new private sector money into sectors such as wind, biomass, gas storage, transmission and CCS. The Fund plans to attract up to £1.36 billion of equity from a range of investors and has up to £4.5bn of associated debt co-financing waiting to be deployed.
Economic secretary to the Treasury, Ian Pearson said: “We have seen significant investment in infrastructure over the last decade. However the challenge now is to raise the bar and embrace a low carbon future.
“To meet this challenge, we require increased private sector investment and improved value for money. Infrastructure UK will act as a focal point for investors, developing the UK’s first strategy for national infrastructure, attracting new sources of private sector investment and advising Government on a more efficient prioritisation of public spending.”
ICE Director General Tom Foulkes said: “Well-planned and strategically prioritised infrastructure investment in the UK in the coming years will be crucial for our economic recovery, and in achieving a low carbon economy. However Infrastructure UK’s immediate focus must be on how vital infrastructure projects, which will underpin any recovery, can be funded in the long-term.
“I-UK will urgently need to find new and innovative ways to fund much-needed infrastructure as well as address ongoing barriers to private investment. A National Infrastructure Investment Bank, which has gained widespread political and academic support, could offer both a predictable source of funding and help infrastructure projects to attract private finance.
“It is important also that the focus is not only on building new infrastructure – there is little point in investing in the very best, most up to date infrastructure if the entire, inter-dependent network is not adequately protected from cascading system failure. Infrastructure UK will need to coordinate the various regulatory bodies and agencies responsible for protecting infrastructure to ensure a strategic joined up approach. We have seen the domino effect vulnerable infrastructure networks can have recently in Cumbria.”