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UK government to continue with National Infrastructure Plan as part of productivity package


The UK government will publish a new long-term National Infrastructure Plan (NIP), setting out its priority transport, energy, flood defence, water, waste, communications and science projects, as part of a broader package intended to boost national productivity, it has confirmed.

The new NIP will be published later this summer, and will be “supported by annual updates on progress with delivery”, according to a 90-page ‘productivity plan’ policy paper published by the government. It also intends to publish an additional ‘National Infrastructure Plan for Skills’, including analysis of the UK’s current infrastructure skills capability and assessment of future need, according to the document.

Infrastructure expert Jonathan Hart of Pinsent Masons, the law firm behind Out-Law.com, said that the introduction of the original NIP by the previous coalition government had made “a genuine contribution to the way we look at the nation’s infrastructure”.

“The productivity plan rightly highlights how poor infrastructure drags down productivity,” he said. “In some areas, for example quality of transport infrastructure, it re-states the data used in many of the criticisms of the coalition and previous government departments as to just how poor the UK is by comparison to other countries.”

“Despite this insight, however, many of the solutions that the plan has to offer come across as a bit of a rag-tag compilation of pre-existing policy initiatives. If this is going to be a continuation of repeating the same announcements over and over again then this will justifiably stoke the fires of cynicism and indifference. Hopefully the serious work will be starting in the autumn,” he said.

The policy initiatives set out in the report are based around two ‘pillars’: encouraging long-term investment and promoting a dynamic economy. They cover 15 areas including tax, skills, infrastructure, planning reforms, transport, trade, higher education, science and devolution.

UK productivity, referring to economic output per hour worked, is “well below its potential”, with the average UK worker now taking five days to produce what a German worker could in four days, business secretary Sajid Javid said in a speech at a launch event in Birmingham. Boosting UK productivity to that of the US would raise the country’s gross domestic product (GDP) by 31%, or the equivalent of £21,000 a year for every UK household, he said.

The government would invest up to £100 billion in infrastructure over the five-year parliamentary term, create a new ‘roads fund’ from 2020-21, financed from vehicle excise duty, to ensure stable investment in the strategic road network and take action to “get the rail investment programme back onto a sustainable footing”, he said. It would reform planning rules governing the installation of fixed and mobile digital infrastructure, and ensure that ‘superfast’ broadband was available to 95% of UK households and businesses by 2017, he said.

According to the document, the government intends to reduce the financial impact of regulatory ‘red tape’ on businesses by £10bn by the end of this parliament; and will require regulators to publish ‘innovation plans’ setting out how their enforcement frameworks could adapt to emerging technologies and disruptive business models by spring 2016. It will publish a ‘Digital Transformation Plan’ setting out the actions it will take to support the adoption of digital technologies across the economy later this year, it said.

Financial regulators the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) are to establish a joint ‘New Bank Unit’ to help new, prospective banks enter the market and improve competition, according to the document. The regulators will review the effectiveness of this initiative after three years. The government will also issue ‘remit letters’ to the regulators in order to highlight those aspects of economic policy that are most relevant to their duties, including the government’s priorities for increasing financial services competition and innovation. The document also announced the appointment of Eileen Burbidge as a ‘Special Envoy for FinTech’, responsible for championing FinTech across the UK; and the planned launch of an international FinTech benchmarking exercise later this year.

The report also announced two programmes of work, to be led by independent experts, that will feed into the government’s work on improving national productivity. Sir Charles Bean, a former deputy governor of the Bank of England, will lead an independent review of the quality, delivery and governance of the UK’s economic statistics; and John Lewis chair Sir Charlie Mayfield will lead efforts to improve business productivity.

“This is a bold and ambitious plan, to achieve our vision of a more dynamic economy, with a business environment that fosters long-term investment, raising our living standards and become the best of all the major economies by 2030,” Javid said. “The plan shows we are taking the decisions necessary to address issues of productivity and build a foundation for Britain’s future.”

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