The UK House of Commons’ Committee of Public Accounts – set up to ensure transparency and accountability in government finances – has claimed that the Treasury’s £310 billion (€368 billion; $481 billion) National Infrastructure Plan is “not a real plan with strategic vision and clear priorities”.
The Committee says it is “not convinced” that a plan requiring such a large amount of investment is credible “given the current economic climate, the cutbacks in public finances and the difficulty in raising private finance for projects on acceptable terms”.
It goes on to say that the “relative priority” given to some 200 projects forming the plan is “not clear”. It recommends that the Treasury assess how much investment can realistically be financed and develop a “coherent strategy using tightly defined criteria” to identify and prioritise projects.
Aside from the Plan’s overall lack of credibility, the Committee arrives at four other key conclusions:
1. Uncertainty over policy can deter or delay investment and lead to additional costs. This refers to “unexpected changes” in policy which lead to unecessary investor uncertainty, such as the removal of the exemption from the 2009 Climate Change Levy for some combined heat and power plants in the 2012 Budget. Investors had been assured the exemption would last until 2023.
2. It is not clear what level of government support will be required to ensure that projects proceed. To attract private finance, the government may need to offer forms of support including grants, guaranteed prices for outputs and bearing certain risks. The Treasury should “identify the support that will be required and the costs involved”.
3. Investors must accept some degree of transparency over their costs, risks and rewards in delivering infrastructure projects “given that the costs of government support will ultimately fall on taxpayers and consumers”. Investors should provide sufficient information to show that “their returns are reasonable and that any government support is justified”.
4. Consumers will bear the brunt of the costs of projects through higher charges but the burden they face has not been quantified. The report says the Treasury “should identify the impact of planned infrastructure expenditure on the disposable incomes of different types of households”.
The National Infrastructure Plan came from the Treasury advisory unit Infrastructure UK in 2010 and was updated in December 2012. It meant to identify and facilitate the key economic infrastructure required by the UK, and covers some 500 prospective programmes and projects.
The cross-party Committee of Public Accounts is chaired by the Labour party’s Margaret Hodge with a current membership of eight Conservative MPs, five from Labour and one from the Liberal Democrats.