Some notes about Infrastructure

Infrastructure is the in-word for public policy across the world. Its re-emergence comes as a result of three separate by related topics: the economic crisis and the need to stimulate demand; the poor state of much infrastructure; and the link between infrastructure, productivity and economic growth.

In Britain, there has been a continuing flow of initiatives, policies and announcements. The National Infrastructure Plan, and the planning law reforms, were supposed to give an overall cohesion and set sectoral priorities at the national level. As with most such plans, it has come to be dominated by a small number of very large projects, each with a strong political edge. These are: HS2, Crossrail 1 & 2, a new runway in the Southeast, Hinkley nuclear power station and the Thames Tideway.

The enthusiasm has not been matched with delivery, and there has been little harmonisation of the contracts and the financial approaches. Each project has had it’s own structure. Much of the design has been driven by the political imperative of keeping as much as possible off the government’s balance sheet, and to attract foreign investment. Much less thought has been given to the combined financial burden on future customers, and their ability to pay. Savings now are not equal to investment. No longer is the public sector pay-as-you-go translating current savings into current investment. Instead we have pay-when-delivered and usually well beyond the life of the current governments. 

The challenge is to develop smart ways to use the government’s much lower borrowing costs, and to assign risk between the state and the market on the basis of the ability to manage and control it. The next steps involve the creation and development of proper national balance sheets, with assets and liabilities clearly set out.

 

Latest Publication

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June 22, 2016

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Publications

  • Publication Infrastructure Meeting the infrastructure challenge
    May 30, 2008

    Infrastructure matters in a way that most investments do not: it is complementary to the rest of the economy; and competitiveness depends upon it. This article examines the scale of the infrastructure challenge and the roles of governments and the privat
  • Publication Infrastructure Utility regulation and critical national infrastructure
    April 15, 2008

    Paper in a publication released to coincide with the RUSI conference on Protecting the Critical National Infrastructure
  • Publication Infrastructure It's not over yet: the implications of the credit crunch
    October 29, 2007

    2007 will go down in economic history as a roller-coaster – it’s not often that we see a global credit crunch which requires over half a trillion dollars to stabilise, and a run on a major London bank. The former occurs roughly every quarter of a century,
  • Publication Infrastructure The Future of Infrastructure Regulation
    July 31, 2005

    Edited by Dieter Helm, published July 2005 by Oxera. Based on the speeches of regulators and companies in the infrastructure and utilities industries, presented at the Oxera conference, The Future of Infrastructure Regulation, on March 1st 2005, this volu
  • Publication Infrastructure Comments on "A fair deal for consumers: Modernising the Framework for utility regulation"
    May 25, 2000

    Paper for the DTI. This brief paper focuses on the scope of the draft guidance and the impact on the cost of capital. It does not address the detailed components.

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