Delivering greater certainty and value for money
While the Commission’s recommendations comprise an ambitious programme of investment, this is not an unaffordable wish list. A crucial factor in the development of this Assessment has been the fiscal remit set by government. This provides a long-term funding guideline for public investment in infrastructure of 1.0 to 1.2 per cent of GDP, including existing government funding commitments such as HS2.
Where infrastructure is funded by the private sector, and the costs of any recommendations will ultimately be met directly by consumers, the Commission has also provided a transparent assessment of the overall impact on bills. Where recommendations have net costs, the Commission believes that these are manageable and good value relative to the benefits the infrastructure provides. The recommendations in this Assessment, and the implications for public expenditure and for bills, reflect the judgement of the Commission. In reaching its conclusions, the Commission has drawn on a wide range of evidence. Uncertainty is inevitable given the timescales for infrastructure investment, and so the Commission has also sought to understand how robust its decisions are to uncertainty, seeking solutions that will stand the test of time.
The Commission recommends that government should deliver long term certainty over infrastructure funding by adopting the funding profile set out in the ‘fiscal remit’ table in Spending Review 2019 and other future spending plans. The Commission recommends that government should maintain access to the European Investment Bank if possible. If access is lost, a new, operationally independent, UK infrastructure finance institution should be established by 2021. To enable this, government should consult on a proposed design of the new institution by Spring 2019. The consultation should cover:
- Functions, including provision of finance to economic infrastructure projects in cases of market and coordination failures; catalysing innovation; and acting as a centre of excellence on infrastructure project development, procurement and delivery
- A clear mandate, including sound banking, additionality and having a wider economic and social impact
- Governance to safeguard the operational independence of the institution.
The Commission recommends that local authorities should be given further powers to capture a fair proportion of increases in the value of land from planning and infrastructure provision. To enable this, government should:
- Remove pooling restrictions on Section 106 in all circumstances, through forthcoming secondary legislation by 2020
- Remove the ballot requirement for upper tier authorities’ powers to levy a business rate supplement of 2p or less in the pound for infrastructure,
except where the supplement exceeds one third of scheme costs by 2021
- Give local authorities powers to levy zonal precepts on council tax, where public investments in infrastructure drive up surrounding property values
- Provide greater certainty in compulsory purchase compensation negotiations by including independent valuations early in the process to
be paid for by the acquiring authority by 2021.
Note: Updated fiscal remit tables have been published (May 2019) to address a small number of errors that have been identified.