Every time we turn on a tap, switch on a light or drive to the shops we are relying on the infrastructures that make our modern economy work. These infrastructures are being developed to meet new challenges we face, such as climate change. However, the constituent parts are not always moving ahead together or with sufficient urgency.
The UK’s National Infrastructure Plan, which has been updated this week, is an illustration that government now takes this agenda seriously. Last year’s iteration of the plan recognised that infrastructures are interdependent – for example, the uninterrupted supply of good-quality water requires energy for pumping and treatment as well as control systems reliant on information and telecommunications technologies.
However, the UK is still a long way from the plan’s aspiration for a cross-cutting and strategic approach to infrastructure planning, funding, financing and delivery.
The latest version will need to be complemented by more ambitious and concrete mechanisms for getting a governance system which support a more joined-up approach. It is also worth acknowledging that sustainability is not yet embedded fully in the commissioning of key projects. The 2013 edition of the plan did include a number of high-profile, low-carbon electricity projects, but it also prioritised road schemes and airports – which at best have ambiguous implications for targets to reduce greenhouse gas emissions.
There are at least three different rationales for delivering a more co-ordinated approach which takes seriously the links between infrastructures.
First, co-ordination can provide immediate economic benefits by combining activities, perhaps upgrading urban areas such as the West End in London while building and maintaining large new office buildings.
Second, interdependencies have led to new risks to services. The pervasiveness of new technologies means that more attention needs to be paid to cybersecurity within other infrastructure sectors such as electricity.
Third, and perhaps most challenging, there is a need to reduce the incidence of conflicting demands on infrastructure providers by government or regulators. Our research for the UK Infrastructure Transitions Research Consortium (ITRC) on the water and electricity sectors has highlighted the problems that water companies have faced in meeting higher water quality standards while reducing the carbon emissions associated with their operations. For example, some water companies invested in renewable energy but were not always permitted to pass on the cost of these investments to consumers or use them towards carbon-reduction obligations.
This year has seen the creation of UK Regulators Network (UKRN) which has been addressing co-ordination issues across infrastructure sectors. Other government bodies have been actively addressing the second area of cross-sectoral risks. For example, the Centre for Critical National Infrastructure provides advice to infrastructure providers about risks to security, including cross-sectoral risks. However, more will be required to achieve a genuinely cross-cutting approach.
A top-down solution?
To do this, it is tempting to think that the solution may be simply to break down governance barriers between sectors. There could be mergers between regulators so that water, energy and transport sectors are managed in an integrated way. Alternatively, the UK Regulators Network and the Treasury could have significantly enhanced powers to co-ordinate and direct sector regulators to address interdependencies where they arise.
But there are problems and risks associated with these kinds of top-down solutions. Merging regulatory bodies could mean a loss of transparency and would increase the potential impacts of poor regulatory decisions. It could also mean a loss of focus on the particular characteristics and policy goals for each sector.
They operate in very different ways and have different mixes of competition and regulation, different technological and investment challenges, different environmental impacts and different degrees of decentralisation. Furthermore, such mergers would not deal with the tensions that can arise when policies from more than one government department affect the same sector.
A more plural approach?
By contrast, efforts to promote co-ordination should start by recognising that infrastructure governance involves a large number of interests. Governance has moved outwards from government departments into economic and environmental regulators. Some powers have also moved upwards to international bodies, particularly the European Commission. In some cases, the role of local authorities is also strong – for example in governing road networks and waste management – and some are looking to broaden their role to include the development of energy infrastructures.
This spread of governance responsibility suggests that a plural approach to infrastructure co-ordination may be required. This would focus on understanding the specific nature of the interdependencies themselves while strengthening institutions which can bring together regulators and government departments to identify and resolve significant problems.
This kind of bottom-up co-ordination could build on existing initiatives such as Local Resilience Forums. Examples include Lincolnshire’s Critical Infrastructure and Essential Services Group. These forums already bring together infrastructure providers and public sector agencies to identify risks to services. Their remit could be extended to include joint investment and identifying where policies impose conflicting obligations.
We would see stronger top-down incentives for better co-ordination, combined with bottom-up processes that build on local synergies between infrastructure sectors and institutions. That might give us a chance to take on the challenge of moving towards more sustainable infrastructure sectors, where significant incentives are required for the innovation, demonstration and deployment of new technologies and business models.
This will be an essential change which can cut across traditional sector boundaries. An example of this in action can be seen in the projects across electricity, telecommunications and transport taking place through the Ofgem Low Carbon Networks Fund. And as our colleague Mariana Mazzucato has pointed out, there is significant scope for government to take a more entrepreneurial approach to economic development and to innovation. If it is successful, the state can then share any benefits and reinvest them. The need to get infrastructure provision right has never been more pressing.