Archive for the ‘Infrastructure’ Category

The Transport Secretary, Philip Hammond, has today announced further details of the government’s planned investment in rail infrastructure in the UK. There will be an £8 billion investment in new rolling stock that includes 1200 new vehicles for the National Rail Network. Other allocations have not been announced due to commercial negotiations still taking place, but Crossrail can expect to receive about 300 vehicles. Siemens and Bombardier have been short listed for the Thameslink fleet work, with the final result to be announced next year.

In order to tackle the over crowding problems in the national rail network, there are plans for further electrification on some sections. This includes the Great Western Main Line from Oxford to Newbury and some lines in the North West including Liverpool and Manchester to Blackpool. Unfortunately for the East Midlands, there are still no plans to electrify the Midland Main Line, which has come as a disappointment to some.

Further work on the Thameslink scheme has also been given the go-ahead, although there will be a two year delay on the planned completion date in order to cut costs. Once the scheme reaches completion, it is hoped that the extra capacity on the Bedford to Brighton line will significantly ease existing congestion problems.

Once the new vehicles have been introduced, existing trains from the Thameslink fleet will be cascaded out to the Great Western Line as well as the planned new-electrified lines in the North West.

Network Rail believe that rail infrastructure is key to future economic growth in the UK and are very happy with the decision, but the RMT Union is less happy about it as it feels that the infrastructure and upgrade works are not taking place soon enough. However, the government has defended the delay and says the overcrowding should be eased within a few months at the latest.

News of the government’s new National Infrastructure plan has hit the headlines this morning in the wake of an announcement by David Cameron at the CBI conference in London. The plan seems to indicate a shift towards maintenance and better use of existing assets rather than out with the old and in with the new.

However, despite the desire to move away from major investment in expensive new projects, the government has indicated that important projects such as Crossrail will be exempt as long as they are required to meet future needs that cannot be met by maintenance of existing projects and are part of a long-term strategy, but investment will only made in such projects as long as they are affordable.

The Regulatory Asset model that is currently used in the utilities industry is also being considered by the government as a way forward for managing infrastructure assets. This will be good news for contractors as they will be able to secure funding more easily as well as hedging their risks over a longer period of time, but the review will not be finalised until 2011.

There is currently a pipeline of projects worth between £400 billion and £500 billion set for completion over the next ten years. Following the announcement about the National Infrastructure plan at this morning’s CBI conference, David Cameron went on to explain how the government intends to unlock over £200 billion of public and private sector investment over the next five years.

This is intended to help to drive the UK forward as it flourishes and competes with the rest of the world, by ensuring that existing infrastructure projects such as transport, water, waste management, energy, and communications are reliable. As such, the National Infrastructure plan is being seen as a strong step in the right direction.

The country’s top business leaders at the CBI have made their submission ahead of the 2010 Treasury Spending Review and have called upon the government to prioritise their spending on existing major transport projects and infrastructure. The CBI believes this is possible if big cuts can be made in the welfare budget as well as making a change to ‘public service delivery’.

Continuing investment in important transport infrastructure projects such as Crossrail is crucial to maintaining and furthering economic growth in the UK. High profile projects like Crossrail look certain to boost domestic and international trade in the UK, and since transport infrastructure investment represents a high return, it should be protected from cuts in the government spending budgets at all costs.

However, the CBI does state that whilst investment in Crossrail and other important existing transport assets should be protected, there is scope for savings to be made in other transport areas, for example concessionary bus fares, as well as a possible reduction in the number of current and planned Highways Agency projects. Efforts should also be made to attract more funding from the private sector as well as increasing the level of direct user payments and tax increment funding.

If ‘un-funded liabilities’ such as public sector pensions, plus the welfare budget, are targeted, there will be further scope for increased investment in knowledge and skills, both of which can only serve to boost the UK’s competitiveness. Ian McCafferty, the chief economic advisor for the CBI, thinks that public sector capital investment should be reduced to 2.25% of GDP, preferably as fast as possible. He states that, “…efficiency of government should be improved across the board.” He is certain that this is just what the UK public finances need to make a welcome return to a more sustainable level.