FST JOURNAL

“The High Speed Two (HS2) programme has become a casebook example of how not to run a major project”: That was the verdict of the House of Commons Public Accounts Committee in its latest update on HS2[1]. Yet the government’s plans for growth and clean energy rely upon upgrading the nation’s infrastructure: from East-West rail to unlock the potential of the Oxford-Cambridge Growth Corridor, to the Great Grid Upgrade that will connect renewable energy supplies with demand. The Chancellor’s growth speech, delivered at the Siemens facility in Oxfordshire in January 2025[2], triggered yet more speculation in the press about whether Britain could build big things anymore[3].

Actually, if you look at the data for infrastructure costs, as the National Infrastructure Commission (NIC) did carefully in its recent study of the cost drivers of major infrastructure projects in the UK[4], the UK does not compare particularly badly regarding infrastructure cost outcomes, relative to comparable countries and projects, though like-with-like comparisons are challenging. In the roads sector, for example, projects in England are typically delivered within budget and the sector has improved its cost performance over time[5]. But some of the largest projects are outliers – notably HS2 (for which there is not yet an agreed cost estimate for Phase 1¹) and the Hinkley C nuclear reactor which EDF estimates could cost £46bn, when taking price rises into account, up from the 2022 estimate of £26bn[6].

The NIC’s study of infrastructure costs identified four root causes that can contribute to cost over-runs on major infrastructure projects. The reasons start with clients, which for major infrastructure always involves the government – even for privatised infrastructure including energy supply, water and telecommunications, where government still sets the strategic direction and regulatory regime. Across the board, stop-start decision making has shaken investors and driven up costs.

Second, the NIC identified challenges with leadership and management by the client. Successful projects have clear responsibility and retain leadership expertise, whilst their government sponsor empowers project leaders rather than interfering with them.

Third, as the NIC had previously identified in its review of the planning system[7], consenting of major projects in Britain has ground to a snail’s pace, increasing from 2.6 years on average in 2012 to 4.2 years. Some of the blockers were already being addressed by the last government – for example by strengthening capacity in the Planning Inspectorate[8] – and more will be done in the Planning and Infrastructure Bill[9]. Meanwhile, infrastructure constraints on new development, notably connection to the power network, are being addressed by connection reforms[10].

Complying with environmental regulations has proved to be a particular fraught, as there’s been a tendency to lose sight of the ‘big picture’ goal which is to improve the quality of the nation’s environment and biodiversity overall. A much more strategic approach is required, to map out how and where environmental goals can best be achieved. The creation of the Nature Restoration Fund in the Planning and Infrastructure Bill, to fund larger strategic interventions for nature, should provide better outcomes for the environment, whilst also speeding up infrastructure delivery.

The final reason for infrastructure cost over-runs which was identified by the NIC is a lack of capacity in the construction industry and supply chain, which is driving up costs. Some of the cost increase is due to global inflationary pressures, but the UK’s construction sector is particularly fragile compared to other large European countries. France, for example, is dominated by only three big multinational firms: Vinci, Bouygues and Eiffage. Even Britain’s largest construction firm (Balfour Beatty) is quite a lot smaller than France’s third firm, and it competes with more than half a dozen similar-sized UK firms, who hire multiple layers of small and medium sized subcontractors. There is dreadful inefficiency in all of those contractual interfaces, which too often become litigious, plagued by a culture of blame. Such a fragmented industry inevitably finds it hard to retain the profits to invest in innovation, and faces recalcitrant barriers to driving productivity in the supply chain.

Meanwhile, infrastructure projects are becoming more complex, not least because of the ever-greater integration of digital systems within physical infrastructure. Digitisation provides tremendous opportunities for more efficient and tailored service provision – just think about the amount of energy supply that will be saved by smart management of electricity demand. Technology provides the opportunity for infrastructure to constantly monitor itself, to optimize asset management and enhance resilience. Yet this requires new skills and advanced systems engineering capabilities.

The construction industry faces well-known and persistent skills issues, in particular in the construction trades. Migrant labour from the EU is hardly a reliable solution, but there has not been a meaningful strategy for home-grown construction skills. The government body Skills England is still being set up, and its alignment with the embryonic industrial strategy remains to be seen. What’s needed is investment in regionally-led and employer-guided skills provision, along with new modes of delivery to accelerate training and qualification in sectors facing critical gaps.

The newly created National Infrastructure Service Transformation Authority (NISTA) is central to the government’s plans for prioritizing and speeding up infrastructure delivery to drive economic growth. NISTA will merge the strategic infrastructure advisory function of the National Infrastructure Commission (NIC) with the Infrastructure and Projects Authority’s (IPA) role of supporting the delivery of major projects. As the Chief Secretary to the Treasury said in his speech in October 2024, NISTA “will bridge the gap between what we build and how we build it”[11]. Significantly, NISTA will have responsibility for social infrastructure (hospitals, schools, prisons etc.) as well as the economic infrastructure (energy, transport, water, telecommunications, waste, flood risk management) that the NIC advised upon. This is an attractive proposition, creating an organisation with end-to-end responsibility, from long-term infrastructure strategy (in the government’s forthcoming 10 Year Infrastructure Strategy (10YIS)) through to project prioritization, creation of a credible project pipeline, and driving delivery. As someone who has been a Commissioner of the National Infrastructure Commission for the last three years, the prospect of having a greater role in making infrastructure happen – and not just advising on what it should be – is an appealing one.

However, the need for impartial advice on long-term strategy is not going to go away once the 10YIS has been published. The economic, technological and political landscape which infrastructure decision making inhabits is constantly changing, and no doubt there will be unfinished business once the 10YIS has been published. For example, the government’s reforms of land use are at different stages, so housing, industrial strategy, regional energy plans and the rural land use framework will need to be harmonized. There is a growing recognition of the need for better spatial planning, making use of all of the spatial data and geospatial tools at our disposal.

The NIC was created to build long-term consensus around the UK’s economic infrastructure needs, to try to avoid infrastructure becoming a political football, plagued by stop-start decisions and vanity projects. Looking back over almost a decade of the NIC’s existence, the extent to which it achieved that aim is debatable, though when you analyse the NIC’s advice, the vast majority of its recommendations have been accepted and adopted by government. Some of that has taken a while: the NIC set out its strategic vision for the Cambridge-Milton Keynes-Oxford arc in 2017, and this year the Chancellor has committed to realising the obvious economic growth potential[12]. Infrastructure takes a long time to materialise – across multiple parliaments – so it is important that the long-term impartial advisory role that the NIC embodied persists into NISTA.  

Though project delivery – from planning, to finance, contracting and progress monitoring – is going to be an important part of NISTA’s remint, we mustn’t lose sight of the fact that infrastructure operates as a system that delivers services to people and the economy – not as a disconnected stack of projects. That’s why the words Service Transformation in NISTA’s name are so consequential. They set the focus upon the infrastructure services that will be needed in the future. For example, before committing to building new hospitals, we should be asking what healthcare services will be needed decades hence, and what are the options for their provision. Healthcare practitioners and managers may be too immersed in the day-job to spare time for future gazing, but NISTA needs to examine these questions before committing to new social infrastructure.

NISTA also has the opportunity to shine a light on asset management – the whole-life performance of infrastructure so that services continue to be delivered reliably and efficiently. It’s all too easy for maintenance budgets to cut, which gradually erodes infrastructure performance and resilience. On the other hand, modern asset management systems, combining real-time monitoring with predictive modelling to optimise interventions, reduce whole-life cost and safeguard system performance.  

The infrastructure project pipeline, for which NISTA will be responsible, is fundamental to enabling the supply chain to plan for the future, and to providing confidence to infrastructure investors. Vast chunks of British infrastructure are in the private sector: energy, water, telecoms, ports and airports. Whilst the UK has traditionally been regarded as a stable, low-risk jurisdiction, investor confidence has been shaken over the last decade. Investor confidence needs to be patiently rebuilt, so private finance can be accessed at a reasonable cost for the major infrastructure investments that are needed in the coming years, not least to deliver the government’s Clean Power 2030 mission.

Which brings me to the final, and arguably most crucial, success factor for Britain’s infrastructure ambitions, which is securing public support… and going beyond that to build public enthusiasm. Transformative changes to our infrastructure – from eliminating fossil fuel dependence in the power sector, to cleaning up rivers – have become mired in controversy and protest. There are remarkable feats of engineering going on, which will make people’s lives cleaner, more efficient, and more affordable – yet these success stories are not getting the attention they deserve. There is no single or simple solution to building public support, so everyone with a passion for technology and a concern about Britain’s industrial future – from professional engineering institutions to industrialists who are called upon to speak in the media – needs to find a clearer and more persuasive voice to explain the exciting future for our national infrastructure.