Britain to cut infrastructure costs by 15%
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The Treasury has said it will cut Britain’s infrastructure costs by 15% after identifying massive inefficiencies compared with other parts of Europe.
Infrastructure UK, the Treasury’s new infrastructure department, has been hoping to attract private investors by making Britain’s infrastructure regime more competitive.
In its National Infrastructure Plan, the body had revealed British infrastructure spending was 60% more inefficient than Germany’s. (article continues below)
Infrastructure UK intends to save £2-3 billion of the £15-20 billion spent each year, or £20-30 billion over the next decade.
Richard Lambert, the director-general of the Confederation of British Industry, welcomed the report, saying: “Investment in infrastructure will be essential for economic recovery in the UK.”
According to McKinsey, the consultancy, Britain must spend at least £17.5 billion a year on transport and £6-8.5 billion on energy simply to maintain capacity at current levels.
The figures are £3-11 billion above the amount Britain will spend on infrastructure as a whole every year for the next decade, judging by the estimates from Infrastructure UK.
The report identifies a number of key areas in which the efficiency of British infrastructure could be improved:-
- The UK over-specifies and applies unnecessary standards;
- Strategic investment is constrained because industry is fragmented;
- Blurring of decision-making roles make governance inefficient;
- Competitions are burdensome and stifle innovation;
- A lack of data limits capability to set challenging targets.
According to Infrastructure UK, the country could improve its infrastructure by:-
- Eliminating peaks and troughs in the infrastructure investment pipeline;
- Improving client leadership, streamlining project governance and procurement;
- Reducing unnecessary prescription, standards and third party requirements;
- Improving asset management and benchmark data;
- Developing smarter ways to use competition;
- Encouraging industry to invest more in innovation and skills.
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