This report prepared by Tim Pugh of BLP for The Infrastructure Forum looks at means of unlocking projects across a wide range of areas which have been developed so far and the possibilities for the future in the infrastructure sphere.
RBPG has been looking at some of the issues arising from current policy challenges in the energy sector. One of these, which has relevance across economic regulation, is the issue of regulators seeking to reduce the number of tariffs offered by retail suppliers in the market.
A lively debate on this subject is underway to which Professor Stephen Littlechild, amongst others, has contributed. The question is important because in a number of regulatory arenas there have been concerns on the one hand that customers may be confused by a multiplicity of tariffs; and on the other about the consequences of seeking to narrow these choices. For this reason the Forum asked Professor Catherine Waddams from the University of East Anglia to produce some thoughts for us.
It is a stimulating assessment, looking at the behavioural economics which have triggered some of these developments and at customer behaviour in switching. The paper examines the arguments for fairness and carefully assesses the winners and losers from reduction in tariff choice: Switchers will be less well-off than they previously were, whilst those who do not switch should see lower prices depending on how fierce the companies compete with each other.
This paper sets out the need for enhanced commercial capability within Government. It recommends a hub and spoke approach which establishes a lean central resource, challenges and targets Departments to up skill with commercial talent, and sets up a one-stop-shop recruitment arm which could be outsourced to private sector experts.
Investment in new energy infrastructure remains very limited, and continuing delays will impact on the long-term costs of energy to households and businesses. TIF's Energy working group tell the Chancellor that regulatory stability to provide the confidence needed for private sector investment, and an honest conversation with the public to help take the politics out of long-term decision making, are required.
Submission to the Chancellor of the Exchequer on the need for Capital Allowances
This study by The Infrastructure Forum, in partnership with UCL, shows that privately provided hospital services, including cleaning and catering, are overall better and cheaper, when provided by the private sector. The study is based on performance and cost data for 2008 and provides insight into the impact of alternative procurement options on the operational performance of public service infrastructure. It looks at comparatively new hospitals using data from a range of sources, including an NAO survey of PFI hospital contracts undertaken in 2010. Findings show that where services are either provided as part of an integrated PFI contract, or separately outsourced to the private sector, a higher proportion of the facilities achieve an 'excellent' patient environment rating as assessed under the Patient Environment Action Team assessment method. The report also brings out the differences in cost. It is found that privately provided cleaning services do seem to cost somewhat more at on average around 9% more when compared to publicly provided cleaning service. However, privately provided catering services are identified as significantly cheaper on average, at around 25% less per patient meal day than that of facilities where catering services are provided in-house.
A Vision for UK Infrastucture
December 2012 By Marcus Corry, Graham Mather and Dorothy Smith
This report offers a strategic vision for the development of the UK’s national infrastructure. The vision reflects an apolitical perspective from the industry of the level of ambition that Government needs to set out, sector by sector, if business is to have the confidence to invest in our infrastructure over the decades ahead and drive the UK’s economic competitiveness. What is needed is a framework for the efficient stewardship by successive Governments of the UK’s economic future. When budgets are tight, we need to be even smarter and more efficient in our procurement. That requires a clear and compelling articulation from the Government of the UK’s infrastructure needs in the medium term and a proper strategy for how to get there. Only with such clarity can we avoid the huge cost to the UK economy of major infrastructure schemes being developed by one Government only to be cancelled by another, the lost economic opportunity of schemes postponed by politics and delivered years too late and the inefficiency of schemes promoted in isolation without regard to their interdependencies.
In light of the growing trend of nimbyism within the UK planning system, The Infrastructure Forum conducted a study on ways in which local residents could be incentivised to support development. There needs to be a fairer balance between the development of housing and infrastructure on the one hand, and the concerns of local communities on the other hand. Interviews with leading industry figures have identified a number of shortcomings with the UK model. These shortcoming and potential solutions were discussed with leading planning academics and officials from Ministries and a number of jurisdictions. The international study allowed a comparative approach to addressing this entrenched hurdle within the British planning system. It is evident that the existing council-level incentives have led to a misalignment of incentives, with the disadvantaged residents currently overlooked. TIF has therefore advocated the Dutch approach of individual incentives to ensure those detrimentally impeded by planning have a fair share of the benefits only by resolving this misalignment can nimbyism, which stems from the current economic incentives to oppose development, be addressed.
A report produced by The Infrastructure Forum states that the Government should establish an “Infrastructure Ombudsman” to increase transparency and solve disputes for future private finance schemes. It should tighten the rules on traditional public sector procurement by publishing a green book to ensure that traditionally-procured and private finance schemes have the same rules on transparency, audit and supervision. The costs of private finance have risen substantially since the financial crisis. Public sector capital budgets saw significant cuts in last year’s spending review. This has severely constrained investment in infrastructure at a time when this could offer a vital short-term stimulus to the economy and be the engine of long run growth.