POLITICS

Coalition's National Infrastructure Plan Under Fire From MPs

29/04/2013 07:16 BST

MPs have voiced doubts about the credibility of the coalition's £310 billion plan for boosting Britain's infrastructure.

The Public Accounts Committee said the Treasury had not properly prioritised 200 key projects, and urged ministers to be "realistic" about how much private and public investment can be raised as the economy stalls.

It also warned that consumers will shoulder the main burden of the costs through higher rail fares and utility bills.

margaret hodge

Margaret Hodge head of the PAC

The criticism came in a report into the National Infrastructure Plan, which was launched in 2010 and last updated in December.

It listed projects costing a total of £310 billion - with around £200 billion of that expected to be wholly funded by the private sector.

The committee stressed that investment in power generation facilities, roads, railways, airports, ports and communication systems is "crucial for stimulating economic growth".

But it added: "We are not convinced that a plan requiring £310 billion of investment in infrastructure is credible given the current economic climate, the cutbacks in public finances and the difficulty in raising private finance for projects on acceptable terms."

The Treasury says it has prioritised 40 programmes, but many of those cover broad areas and there are actually 200 individual projects "whose relative priority is not clear", according to the committee.

The cross-party group of MPs went on: "Given the financial constraints affecting both the government and consumers' ability to fund infrastructure expenditure on this scale, the Treasury should assess how much investment can realistically be financed and develop a coherent strategy using tightly defined criteria to identify and prioritise project."

The report cautioned that investors would be reluctant to come forward with money "until government policy is clear and consistent".

"The Treasury should work with departments to ensure that the consideration of policy proposals takes into account their potential impact on infrastructure investment and that unexpected changes are minimised to provide greater certainty to investors over government plans," it added.

PAC chair Margaret Hodge said: "The Treasury's Infrastructure Plan is simply a long list of projects requiring huge amounts of money, not a real plan with a strategic vision and clear priorities.

"Most of the £310 billion of investment needed will come from the private sector, with households shouldering the cost through higher energy bills and fares. Family budgets are already badly squeezed and inevitably those on the lowest incomes will be hit hardest. The Government needs to urgently assess the impact on consumers and how this can be contained."

Mrs Hodge said the government "may have to use taxpayers' money to attract investors through direct grants, guaranteed incomes or agreeing to bear certain risks".

She went on: "Many infrastructure projects impact on energy supply and are therefore particularly time critical. It is likely that the UK will have to buy ever more energy from overseas and at a higher price due to the failure to secure investment, partly a result of deferring decisions until after the Energy Bill."

A Treasury spokesman said: "We do not agree with the committee's depiction of the Government's infrastructure delivery plans. Planning and delivering vital long-term infrastructure is a central economic priority.

"That's why we launched the first ever National Infrastructure Plan, setting out a strategic approach that monitors the performance of our key infrastructure sectors and identifies the projects needed to build an economy fit for the future.

"Government regularly monitors progress and at the Budget published details of delivery of the top 40 infrastructure projects.

"As well as switching billions of pounds from current to capital spending, we are also using the Government's balance sheet to provide vital funding.

"Last week, Drax Power became the first recipient of a UK Guarantee, with the Treasury underwriting £75 million of investment in biomass energy."

Which? executive director Richard Lloyd said: "Investment in renewing inefficient and outdated infrastructure is obviously needed, but not at any cost to consumers, so there must be no blank cheques signed behind closed doors by the Government.

"Energy customers, for example, are already footing the bill for multibillion pound initiatives but are not seeing any early benefit in their bills.

"The Government must show that it is protecting the interests of consumers by getting a grip on costs, doing major deals transparently and demonstrating how investment will result in both a better service and affordable prices.

"In economic times like these it's all the more vital that ministers take into account the full impact on hard-pressed households, and avoid imposing any unnecessary extra financial pressure on those that foot the bill for Government-backed projects, as consumer spending will be central to economic recovery."