Give Nimbys an incentive to back infrastructure projects, says new report by consultants

A new report called “Building Blocks: How Britain Can Get Infrastructure Right” produced by the Management Consultancies Association puts forward recommendations on how the UK should build more infrastructure. Such as airports. One of their proposals is that “Nimbys” (people who, for whatever reason, don’t want new building or infrastructure in their area) would have less to protest about if local communities were given a cut of increased business rates ensuing from infrastructure projects.  They want to change the situation at Heathrow with opposition to a third runway, or the HS2 rail link. They hope that giving a share of tax proceeds to the people most directly affected would stop them opposing schemes.  Head of transport at Arup, said: “Imagine how the relationships between the local authorities around Heathrow Airport and the debate over a third runway would have played out if the tens of million in business rates that the airport pays every year had gone directly to them.”

 

Give Nimbys an incentive to back infrastructure projects, says new report

Nimbys would have less to protest about if local communities were given a cut of increased business rates ensuing from infrastructure projects, a new report will argue on Thursday.

British           Airways first Airbus A380 Superjumbo flies over Hatton Cross           as it is delivered to London Heathrow airport
British Airways first Airbus A380 Superjumbo flies over Hatton Cross as it is delivered to London Heathrow airport Photo: REX FEATURES

By Alistair Osborne, Business Editor (Telegraph)
19 Sept 2013

The proposal is one of 21 recommendations from the Management Consultancies Association, whose members include the major accountancy firms and infrastructure specialists, such as EC Harris and Arup, which advise on large transport, energy and telecoms schemes.

Seeking to incentivise local communities to back projects, rather than protest against them as has been the case with the Heathrow third runway or the HS2 rail link, the MCA calls for a share of tax proceeds to flow to the people most directly affected.

“A devolution of economic benefits through the tax system would far exceed the institutionalised ‘bribery’ of Section 106 agreements or ad hoc incentives such as those for fracking or nuclear power,” the report suggests.

“It would start to alleviate localities’ perception that they have all of the pain of infrastructure with little of the gain.”

Currently section 106 agreements allow for a supermarket chain, for example, to offer to build a local community facility in return for permission for a new store.

But Paul Connolly, author of the report, said that was only a “one-off” benefit. “If communities were given a larger share of the increased business rates that flowed from a new infrastructure project, they would have a continuing benefit. They could use the proceeds to build new social infrastructure that might compensate for any environmental damage from a project or to cut future council tax.”

Alexander Jan, head of transport at Arup, said: “Imagine how the relationships between the local authorities around Heathrow Airport and the debate over a third runway would have played out if the tens of million in business rates that the airport pays every year had gone directly to them.”

The MCA report is also the latest to back an independent infrastructure office, free from the political cycle to take long-term decisions – along the lines of the commission proposed earlier this month by former Olympic Delivery Authority chairman Sir John Armitt.

It also calls for an extension to the Government’s £40bn guarantee scheme and for the National Infrastructure Plan to detail precisely how each scheme should be financed, including what the state is not willing to fund.

Mr Connolly said the Government needed to improve how it presented projects to potential investors. “If you wanted to borrow money from your bank manager, you would put on your best suit and bring a business plan,” he said. “You wouldn’t turn up half-cut and rambling. But that’s how projects tend to be faced off to investors.”

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The report says:
Government should define what infrastructure is for first, then determine what projects to back. It should focus on projects likely to reap the greatest benefits, using experts to investigate and determine those benefits. This approach would bring clear principles to otherwise contentious matters like the future of UK airports. It would help government produce better infrastructure business cases.
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Think Tank report urges government to up its game on infrastructure

Infrastructure consultants say government needs to go further and faster to bring UK infrastructure up to scratch…

A new MCA Think Tank report published 19th September 2013 welcomes the government’s current focus on infrastructure, but urges it to do more to close the UK’s infrastructure gap.[1] It calls for clear thinking about what infrastructure is for and better use of the UK’s world-class infrastructure expertise. It also argues that a powerful independent Office for Infrastructure to advise and guide government on infrastructure policy and priorities is an idea whose time has come.

The Think Tank gathered the views and insights of many of the UK’s leading infrastructure experts and firms. It hosted an expert roundtable, attended by Paul Skinner, Chairman of Infrastructure UK, the Treasury body in charge of UK infrastructure. The Think Tank distilled these expert insights into its report, Building Blocks: How Britain Can Get Infrastructure Right.[2]

The report makes 21 recommendations to achieve better infrastructure planning, funding and delivery. It also shows where infrastructure advisory experts already provide world-class support to initiatives like the Olympics and Crossrail, and how government and industry can make better use of them.

Key recommendations include:

Better Planning – A new independent Office for Infrastructure should be established.

Infrastructure is not an end in itself. It is an enabler of growth. Government should define what infrastructure is for first, then determine what projects to back. It should focus on projects likely to reap the greatest benefits, using experts to investigate and determine those benefits. This approach would bring clear principles to otherwise contentious matters like the future of UK airports. It would help government produce better infrastructure business cases. Currently, government struggles to win public support for major projects, like HS2, because it doesn’t focus early and clearly enough on outcomes: what infrastructure changes for the better in the real world. Public bodies sometimes spend money late in the day on experts who help refocus or rescue badly designed projects. By getting these experts in at the outset, including specialist infrastructure consultants, government would save money and promote infrastructure success.

Better Funding – The Treasury Guarantees Scheme to support investors should be extended. Government should also make clear what the funding model is for each project in the National Infrastructure Plan.

Private investment is needed to close the UK’s infrastructure gap. But investors are not coming forward in the required numbers. They need clarity and certainty. This clarity should include how long-term service revenues from assets – and thus investor returns – will be generated. If those revenues are likely to depend on public spending, Government should make clear what it will fund – and what it will not. Crossrail has succeeded to date because of exactly this sort of clarity. Infrastructure experts can also help government’s ambition to get more pension funding into infrastructure by advising funds, who may be new to this terrain, on how to target their investments.

Better Delivery – To help reduce tensions and delays in the planning system, communities affected by infrastructure projects should get a greater share of the benefits, including a larger slice of business rate income.

There should be specific, designated delivery structures for major infrastructure projects within departments, agencies and local authorities. They should be appropriately resourced. The Olympics and Crossrail show the benefits of these sorts of structures, where experts are specifically recruited and rewarded to deliver projects. The model should be extended to the devising and commissioning of projects, to avoid errors in project design that are expensive to eradicate.

Paul Connolly, Director of the MCA Think Tank said: “By focusing clearly on what infrastructure is for, Government can prioritise the projects it backs. New build will be needed. A shift of just 1% in government’s revenue spend towards new investment will realise £70bn extra for new projects over 10 years. But getting the best from existing infrastructure also matters. 1% more output from Government’s existing assets each year over the same period would be equivalent to £30bn of new investment. Taken together, these measures would double the Government’s investment programme.”

……… and it continues …………..

About the report

MCA member firms which contributed to the analysis and recommendations in this MCA Think Tank report included Accenture, AECOM, Arup, BDO, Boxwood, Concerto, Deloitte, EC Harris, EY, KPMG, LCP Consulting and Mott Macdonald.

 

http://www.mca.org.uk/news/think-tank-report-urges-government-to-up-its-game-on-infrastructure

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