As we approach election year infrastructure is high on the agenda of all the main political parties, but the public need to be won over
For the infrastructure community, 2010 still weighs heavily on the mind. As the next election looms, the question everyone is asking is whether it will herald another period of infrastructure austerity.
Everyone remembers the cancellation of the Building Schools for the Future programme, but worse was the suspension of work on pretty much every infrastructure project in development. Some good projects, Mersey Gateway, for example, eventually survived, but the damage had been done by the six months and more of delay to so many schemes.
Now, I am about to try to cheer you up. I do not believe in May 2015 we will wake up to anything like the destruction that was wrought in May 2010. Indeed I do not think the next election represents any material threat to the infrastructure pipeline or the construction industry. That is not to say the industry is without political challenges, but they are more subtle than five years ago.
My optimism is based on the substantial shift over the last five years in three areas.
The current compensation regime, by paying as little as possible, ensures the strident opposition of all those nearby, draws in wider opposition groups, and throws fuel onto the fire of controversial schemes
First, infrastructure remains high on the agenda of all the main political parties. In some ways this is a surprise to us all. There is a formal hierarchy in the UK Cabinet which is evident in the order of listing of Cabinet posts. Our main infrastructure departments, the Department for Energy and Climate Change (DECC) and the Department for Transport (DfT), occupy positions 15 and 16 out of 22 current Cabinet positions, and their secretaries of state sit down the far ends of the Cabinet table in No 10 Downing Street, where it takes a voice like Patrick McLoughlin’s to get the attention of the centre of the table.
But despite this, infrastructure has become and remains a big political issue. And while Labour is more keen than the Conservatives to focus on social infrastructure, there is no suggestion that would be at the expense of economic infrastructure.
Second, the link between infrastructure investment and economic growth has been repeatedly made and now seems to be accepted by all our political parties. So we are not just building infrastructure for the sake of it - we are doing it for the future of our country.
Third, we have an increasingly strong pipeline, evident in the £45bn per annum recently estimated by KPMG to be the overall infrastructure spend from 2016, and also in the government’sconstruction pipeline, researched and published every six months by Barbour ABI, now showing a total of £116bn of spend over nearly 2,000 projects.
Given this political consensus, the focus of the industry’s attention should be directed, I would argue, not to the government but to the population at large. The key challenge for the industry in the next decade is winning the hearts and minds of the public. Affordability, fairness, and the image of the industry are the key issues.
On affordability, regulators are already on the case. Increasingly they are keen not to be piggy in the middle between the interests of customers and monopolies, but rather to create incentive structures that encourage the companies they regulate to do the right thing. That includes companies taking responsibility for justifying to their customers the cost of bills. But it would be an error in my view for the construction industry to regard this as only their clients’ problem. It is in the whole industry’s interest that customers accept the cost from their pockets of improving our infrastructure and built environment.
By “fairness” I mean how individuals affected by developments are compensated. Buried in the 2013 Autumn Statement was a reference to trials of local compensation schemes. If followed through, it would abolish the current compensation regime which, by paying as little as possible, ensures the strident opposition of all those nearby, draws in wider opposition groups, and throws fuel onto the fire of controversial schemes. But the industry would be unwise to wait for comprehensive action by government. Already shrewd clients are going out of their
way to help local communities in the vicinity of major projects.
Finally comes the image of the industry itself, which is an issue not just for support for schemes, but also for the flow of young talent into the industry. Time and again I find myself in a discussion about the way the industry is represented in our schools. But it is lazy to blame teachers; the wider issue is a fragmented industry that fails to sell itself.
Or so I thought until a few weeks ago. Then I saw Sir John Armitt, Nick Baveystock and others, cavorting along to Pharrell Williams’ Happy in a YouTube video titled Engineering Happiness. This is precisely the positive PR that the industry needs. We are an industry that is the foundation of our civilisation, building Britain’s economy, creating sustainable communities, at the forefront of technology. Believe it, and spread the word.
Richard Threlfall is head of infrastructure, building and construction at KPMG