National Infrastructure Commission calls for urgent modernisation

The National Infrastructure Commission's Second National Infrastructure Assessment (five yearly review) has set out the urgent need to modernise infrastructure to support economic growth and climate action.

The Commission believes that if the right policy steps are taken now, economic growth across the UK and meeting climate goals is both achievable and affordable, but attracting this investment to the UK in the face of global competition will require a new approach.

The Second National Infrastructure Assessment sets out a programme of transformation for the country’s energy, transport and other key networks over the next 30 years. Its recommendations include:

Backing electrification as the only viable option for decarbonising buildings at scale, to reduce reliance on volatile fossil fuels, lower energy bills over the long term and to meet the UK’s climate targets, with government fully subsidising the costs of installing a heat pump for one third of households – based on income – and offering £7,000 support to all others to switch to a heat pump or heat network

Adding low carbon, flexible technologies to the electricity system to ensure a highly renewable energy system remains reliable, and creating a new strategic energy reserve to boost Great Britain’s economic security

Major public transport upgrades in England’s most congested cities to unlock economic growth, and an urgent and comprehensive review of rail priorities for the North and the Midlands following government’s recent decision on High Speed 2

Better maintenance of existing roads and targeted enhancements to speed up journeys on underperforming parts of the national road network

Building additional water supply infrastructure and reducing leakage, while introducing compulsory water metering as part of efforts to reduce water demandUrgently implementing reforms to meet a 65 per cent recycling target by 2035 and phasing out energy from waste plants that do not include carbon capture facilities..

The Commission calculates that government’s commitment to a sharp increase in public sector investment in infrastructure to around £30 billion per year will need to be sustained until 2040. This sits at the top of the funding envelope set by HM Treasury for the Commission’s recommendations of up to 1.3% GDP a year. Meanwhile, private sector investment will need to increase from around £30-40 billion over the last decade to £40-50 billion in the 2030s and 2040s.

The report draws on two years of analysis, expert engagement and public research, resulting in what Commission Chair Sir John Armitt labels “probably the most comprehensive assessment yet of the infrastructure costs associated with supporting regional growth and reaching net zero”.

Energy and net zero
Alongside other recommendations, the Assessment makes the case for heat pumps and heat networks as the solution for switching buildings from gas for heating. Noting that 7 million buildings in England will need to make this transition by 2035 to meet the Sixth Carbon Budget, the Commission sets out a bold, comprehensive and fully costed programme of government support for households to make the switch, including:

Around £1.3bn per year to 2035 to cover the full cost of heat pump installations for lower income households, with additional support for energy efficiency improvements and devolution to local authorities to manage local energy efficiency programmes

Around £1.9bn per year to 2035 for an initial upfront subsidy of £7,000 to households installing a heat pump or connecting to heat networks, tapered over time as costs fall, in addition to zero per cent financing for the remaining cost

Around £3.2bn per year to 2035 to improve energy efficiency and install heat pumps across the public sector estate and social housing.

In addition, it calls on government to rule out the use of hydrogen for heating and focus hydrogen on power generation and industrial decarbonisation.

New networks will need to be up and running by 2035 for the storage and transmission of hydrogen and carbon, to serve these needs and ensure heavy industry has the means to decarbonise and remain competitive in global markets. The Assessment sets out proposals for encouraging the private sector to build these networks, and an indicative map of core initial pipelines connecting key industrial hubs across Britain.

The Assessment also proposes significant additional electricity storage capacity and demand side response – tools to reduce or reschedule energy usage at times of peak demand – to increase the short term flexibility of the power grid. The Commission calculates 60GW of this capacity will be needed by 2035 (up from around 15GW today).

To ensure resilience during extended calm or cloudy periods, the Commission also calls for effective business models to incentivise private investment in power plants driven by hydrogen, or gas with carbon capture and storage. The Commission suggests 30TWh of long term flexibility provided by such plants will be needed by 2035 – about 6 per cent of projected total electricity demand in that year.

Economic growth across regions
The Commission calls for action to tackle road congestion and improve public transport, calling for investment of £22bn in mass transit schemes in the cities outside London with the greatest likely need for increased passenger demand, beginning with Birmingham, Bristol, Leeds and Manchester and their city regions.

To increase capacity sufficiently to meet future demand, the Assessment indicates that city regions benefiting from major new public transport schemes will also need to identify ways to reduce the volume of car journeys into city centres, especially at peak times. The Commission is clear that the design and sequencing of such demand management schemes should be for local leaders to decide and are only likely to be appropriate once public transport options offer passengers a viable alternative to using private cars.

Following government’s recent decision on the northern legs of HS2, “a new comprehensive and long term strategy that sets out how rail improvements will address the capacity and connectivity challenges facing city regions in the North and Midlands is needed,” says the Commission. Such a review, undertaken in partnership with local leaders, should lead to “a rigorously costed portfolio of schemes with clear delivery timescales.”

Increased funding for the maintenance of road and rail networks is also proposed, with targeted enhancements to networks to improve underperforming routes between key locations. The Commission offers initial analysis on where such routes lie, as a starting point for a future integrated transport strategy.

The Assessment repeats the Commission’s call for gigabit broadband coverage across the country by 2030 and makes additional recommendations on a market led approach to rolling out 5G.

Among a range of cross-cutting recommendations, the Commission also recommends that public spending frameworks for infrastructure are reformed to encourage more effective project management.

Writing in the report’s foreword, Sir John Armitt, Chair of the National Infrastructure Commission, said:

“The good news is that modern, reliable infrastructure can support economic growth, help tackle climate change and enhance the natural environment.

“We stand at a pivotal moment in time, with the opportunity to make a major difference to this country’s future. But we need to get on with it.

“People often talk about infrastructure as the backbone of our economy: what our infrastructure needs now is the collective mettle to turn commitments into action that will reap rewards for decades to come.”

The Government is expected to respond formally to the Assessment within 12 months.