Infrastructure commission backs road pricing as way to encourage switch to public transport

Long term review sets out need to modernise infrastructure to support economic growth and climate action

Measures such as road pricing and workplace parking levies could reduce traffic congestion suggests the National Infrastructure Commission in its latest report.

The government’s independent advisers on infrastructure strategy state that sequencing of transport changes will be important as reducing trips by car where there is no viable public transport. It says the government should invest £22bn to improve public transport in regional English cities such as Birmingham, Bristol, Leeds and Manchester.

Improved infrastructure to boost economic growth across the UK and meet climate goals is both achievable and affordable if the right policy steps are taken now, according to the National Infrastructure Commission.

The Second National Infrastructure Assessment – a five yearly review conducted by the National Infrastructure Commission – sets out a programme of transformation for the country’s energy, transport and other key networks over the next 30 years.

The NIC’s recommendations include:

• backing electrification as the only viable option for decarbonising buildings at scale, to reduce reliance on volatile fossil fuels, lower energy bills over the long term and to meet the UK’s climate targets, with government fully subsidising the costs of installing a heat pump for one third of households – based on income – and offering £7,000 support to all others to switch to a heat pump or heat network
• adding low carbon, flexible technologies to the electricity system to ensure a highly renewable energy system remains reliable, and creating a new strategic energy reserve to boost Great Britain’s economic security
• major public transport upgrades in England’s most congested cities to unlock economic growth, and an urgent and comprehensive review of rail priorities for the North and the Midlands following government’s recent decision on High Speed 2
• better maintenance of existing roads and targeted enhancements to speed up journeys on underperforming parts of the national road network
• building additional water supply infrastructure and reducing leakage, while introducing compulsory water metering as part of efforts to reduce water demand
• Urgently implementing reforms to meet a 65% recycling target by 2035 and phasing out energy from waste plants that do not include carbon capture facilities.

The report is upfront about the need for significant public and private investment in infrastructure if the UK is to rebalance its economic geography, meet climate obligations, improve resilience and enhance the natural environment.

The commission calculates that government’s commitment to a sharp increase in public sector investment in infrastructure to around £30bn per year will need to be sustained until 2040. This sits at the top of the funding envelope set by HM Treasury for the Commission’s recommendations of up to 1.3% GDP a year.

Meanwhile, private sector investment will need to increase from around £30-40bn over the last decade to £40-50bn in the 2030s and 2040s.

Attracting this investment to the UK in the face of global competition will require a new approach, says the commission. It sets out the need for:

• policy stability: setting out a clear plan and sticking to it, to lend certainty to investors and help build up supply chains
• pro-investment regulation: clear guidance from government on priorities, investment ahead of need and business models to support emerging technologies
• speeding up the planning system for major projects, particularly energy transmission schemes: with regularly updated National Policy Statements from government, strategic spatial planning, more effective sharing of environmental data and clearer community benefits in return for hosting key infrastructure.

The assessment also sets out the likely impact of the commission’s recommendations on households, where private investment is recouped through infrastructure service bills. It finds that the average household will save at least £1,000 per year by the mid 2030s compared to today, largely driven by the transition away from fossil fuels onto cheaper low carbon electricity.

The report draws on two years of analysis, expert engagement and public research, resulting in what commission chair Sir John Armitt labels “probably the most comprehensive assessment yet of the infrastructure costs associated with supporting regional growth and reaching net zero”.

Energy and net zero

Alongside other recommendations, the Assessment makes the case for heat pumps and heat networks as the solution for switching buildings from gas for heating. Noting that 7 million buildings in England will need to make this transition by 2035 to meet the Sixth Carbon Budget, the commission sets out a bold, comprehensive and fully costed programme of government support for households to make the switch, including:

• Around £1.3bn per year to 2035 to cover the full cost of heat pump installations for lower income households, with additional support for energy efficiency improvements and devolution to local authorities to manage local energy efficiency programmes
• Around £1.9bn per year to 2035 for an initial upfront subsidy of £7,000 to households installing a heat pump or connecting to heat networks, tapered over time as costs fall, in addition to zero per cent financing for the remaining cost
• Around £3.2bn per year to 2035 to improve energy efficiency and install heat pumps across the public sector estate and social housing.

In addition, the commission calls on government to rule out the use of hydrogen for heating and focus hydrogen on power generation and industrial decarbonisation.

New networks will need to be up and running by 2035 for the storage and transmission of hydrogen and carbon, to serve these needs and ensure heavy industry has the means to decarbonise and remain competitive in global markets. The assessment sets out proposals for encouraging the private sector to build these networks, and an indicative map of core initial pipelines connecting key industrial hubs across Britain.

The assessment also proposes significant additional electricity storage capacity and demand side response – tools to reduce or reschedule energy usage at times of peak demand – to increase the short term flexibility of the power grid. The commission calculates 60GW of this capacity will be needed by 2035 (up from around 15GW today).

To ensure resilience during extended calm or cloudy periods, the commission also calls for effective business models to incentivise private investment in power plants driven by hydrogen, or gas with carbon capture and storage. The commission suggests 30TWh of long term flexibility provided by such plants will be needed by 2035 – about 6% of projected total electricity demand in that year.

Economic growth across regions

The commission calls for action to tackle road congestion and improve public transport, calling for investment of £22bn in mass transit schemes in the cities outside London with the greatest likely need for increased passenger demand, beginning with Birmingham, Bristol, Leeds and Manchester and their city regions.

As the cities will be the primary beneficiaries of better public transport, they should contribute to the costs. Cities should have the autonomy to fund as well as find local infrastructure solutions, says the commission.

To increase capacity sufficiently to meet future demand, the assessment indicates that city regions benefiting from major new public transport schemes will also need to identify ways to reduce the volume of car journeys into city centres, especially at peak times.

However, investment in public transport alone will not be sufficient to reduce congestion and improve capacity, says commission. Cities will also need to reduce car journeys into congested city centres, especially at peak times. Measures such as congestion charging and workplace parking levies can reduce car use, thereby freeing up room on the roads for more public transport. The sequencing of these transport changes will be important as reducing trips by car where there is no viable public transport alternative risks hindering, not supporting, growth and having negative social impacts.

The commission is clear that the design and sequencing of such demand management schemes should be for local leaders to decide and are only likely to be appropriate once public transport options offer passengers a viable alternative to using private cars.

Following the government’s recent decision on the northern legs of HS2, “a new comprehensive and long term strategy that sets out how rail improvements will address the capacity and connectivity challenges facing city regions in the North and Midlands is needed,” says the commission. Such a review, undertaken in partnership with local leaders, should lead to “a rigorously costed portfolio of schemes with clear delivery timescales.”

Increased funding for the maintenance of road and rail networks is also proposed, with targeted enhancements to networks to improve underperforming routes between key locations. The commission offers initial analysis on where such routes lie, as a starting point for a future integrated transport strategy.

The assessment repeats the commission’s call for gigabit broadband coverage across the country by 2030 and makes additional recommendations on a market led approach to rolling out 5G.

Rolling out electric vehicles

Increasing the adoption of electric vehicles will be key to decarbonising surface transport. Electric cars and vans are the future of road transport, says the commission. As well as being zero-emission, they are cheaper to run and create less air pollution.

But consumers will only purchase electric vehicles if they are confident they can charge them when they need to. Government should ensure there is a nationwide network of public chargepoints, reaching at least 300,000 chargers across the UK by 2030, says the NIC. These chargepoints must be spread across all regions of the country to support every consumer to make the switch.

Environment and climate resilience

Noting that most assets that will be operating in 2055 have already been built, the NIC assessment calls for government to set outcome-based service standards for infrastructure. Operators should be required to set out the costs of meeting these standards while adapting their networks to climate and other risks, to inform future regulatory and funding settlements.

The commission restates its calls for increased investment in infrastructure to reduce the risk of coastal, river and surface water flooding, and to reduce the at least 4,000 mega litres per day water supply gap by 2050 by tackling leaks, reducing demand and building new storage and transfer networks.

Action in these areas will also help improve water quality, which the commission recognises is a major concern to the public. The assessment notes the importance of utilising nature based solutions to address sewer overflows, alongside more active management of underground networks to better regulate flows into treatment works.

Measures to boost recycling rates should be implemented without delay, says the commission, assisted by setting tailored targets for each local authority in England and expanding the ban on hard-to-recycle plastics. To reduce emissions from the waste sector and encourage more investment in recycling capacity, the assessment recommends that no new energy from waste plants should be built without carbon and capture storage facilities.

Among a range of cross-cutting recommendations, the commission also recommends that public spending frameworks for infrastructure are reformed to encourage more effective project management. The assessment calls for fixed multi-year budgets for major projects, where money can be moved between years to avoid the illusion that delay saves money; and for the largest projects to have their own ‘project expenditure limit’ to protect smaller projects that sit within the same government department.

Infrastructure supports economic growth

Writing in the report’s foreword, Sir John Armitt, chair of the National Infrastructure Commission, said: “The good news is that modern, reliable infrastructure can support economic growth, help tackle climate change and enhance the natural environment.

“We stand at a pivotal moment in time, with the opportunity to make a major difference to this country’s future. But we need to get on with it.

“People often talk about infrastructure as the backbone of our economy: what our infrastructure needs now is the collective mettle to turn commitments into action that will reap rewards for decades to come.”

The government is expected to respond formally to the assessment within 12 months.