Committee warns against legacy of infrastructure "white elephants"

Government plans to boost growth and ‘level up’ the economy need to be well thought through, responsive to local need, and delivered through effective, efficient and transparent major projects, the Public Administration and Constitutional Affairs Committee has warned.

In a report published today, the Committee cautions that the hundreds of billions dedicated by the Government for new infrastructure projects risk being squandered without better co-ordination of local projects, long-term tracking of performance and greater transparency over delivery. The report calls on the Government to clarify its overall aims for major infrastructure spending as soon as possible and provide greater detail on how it will support economic development and regional growth.

Publishing the report, Committee Chair William Wragg MP said:

“Developing grand infrastructure projects must not become an end in itself and we must move away from the short-term view that measures the value of major projects in terms of whether they are finished on time and at the expected cost. As the nation embarks on a period of significant infrastructure spending we must focus on how much they deliver the benefits they set out to achieve and were the basis for being given the go ahead.

“The Government must clarify its overarching aims for this strategy – how infrastructure spending will support economic growth, what ‘levelling up’ means in practice and how they will be achieved.

“We must also see improvement in how projects are developed at a local level. It will be critical not just to get local support for infrastructure projects, but getting local input in identifying problems and developing solutions must be better supported and become a feature of programme development at a much earlier stage.

“Investing time at the outset to make sure everyone is clear about the aims and proposed benefits, alongside a change in the culture of how major projects are developed and managed, should mean that this transformative change is achievable.”

Summary of findings and recommendations:

The Major Projects Portfolio currently comprises 125 projects worth £448 billion including some of the largest, most risky and most innovative programmes of work undertaken by government in the UK. Current major projects include infrastructure, such as Heathrow expansion and Crossrail; welfare reforms, including Universal Credit and 30 hrs free childcare; and military programmes, including HMS Queen Elizabeth. After the 2019 General Election, the Government announced its intention to drive growth and ‘level up’ the economy through investment in infrastructure. This was followed by the announcement of £640 billion in investment for projects across the UK and a further £5 billion in Coronavirus ‘bounce back’ investment.

Developing a coherent national strategy

At present the overall aims of this significant boost in infrastructure spending remain ill-defined. The Government must clarify what it means by ‘levelling up’ and set out a coherent plan for co-ordinated infrastructure investment that will deliver defined long-term benefits at a local and national level. Greater detail must also be provided on the data that will be used to assess performance, including how this will be recorded and published.

The National Infrastructure Strategy should be published as soon as possible and before a penny is spent on new projects. The Government must clearly set out its objectives for the economy and how planned infrastructure investment will support these aims. It should also include an assessment of regional or local needs, and provide the central principles on which the value of individual infrastructure projects will be assessed and how they will support wider development.

The Cabinet Office must take an active role in ensuring infrastructure programmes are co-ordinated and avoid a scattergun approach that has plagued major projects historically.

Delivering long-term benefits

Individual projects should be set up and run with a focus on achieving stated benefits. The principle factor in judging the success of a project must be how much it realises its stated benefits, not simply whether it has been delivered on time or on budget. Mechanisms should be put in place that enable greater scrutiny of this performance in the long-term.

The Infrastructure and Projects Authority (IPA) should report on performance against benefits plans for individual projects, including a standardised financial measure and narrative on transformational benefits promised, in its Annual Reports from 2021-22. They should also consider periodic reporting on past projects to better assess their long-term performance.

Identifying and achieving benefits in regional investment

Investment in major cities has historically demonstrated more immediate economic benefit than investing in areas of the country with slower economic growth. The Government will need to be clear on the objectives of investment, particularly in the North and the regions and set a framework for Departments to better appraise the benefits of that investment. This may mean accepting lower overall economic returns for wider benefits, such as local regeneration or ‘levelling-up’. The Treasury should update the Green Book to reflect these wider Government objectives and publish it no later than September so that it can provide a basis for post-Covid spending and future infrastructure investment.

Locally-led infrastructure projects can in some circumstances respond better to local challenges and the context in which they will operate. The Government will need to understand how it can take local needs into account when developing infrastructure projects. The Cabinet Office should outline the extent to which it plans to take use local structures in the development or implementation of infrastructure programmes, and who would be accountable for the outcomes in these instances.

Too often local consultation begins after fundamental decisions have already been made, leading to project delays and infrastructure that neither meets local need nor has full public support. All projects should include proper consultation, proportionate to their scale and profile, as part of the early decision making phase and take appropriate action to respond to its findings. Any project failing to prove it has done so adequately should not get Treasury or IPA funding.

Ensuring the right skills at the right level

Secretaries of State and Ministers must be better prepared with the skills needed to develop and drive delivery of major projects. The Committee welcomes the introduction of training for members of the Government in project management expects all will take the opportunity to educate themselves about how projects are delivered and the role they play in that. The Government should include a list of all ministers who have received the training in its response to this report.

A scarcity of appropriately skilled people and salary constraints in the public sector has led to ongoing staffing shortages, particularly at SRO level. This lack of capability has the potential to act as a significant block on the Government’s ability to achieve its goals in infrastructure. In the short term, the salaries may need to be made more competitive. It should be the norm for SROs to lead a project from start to completion, and remain accountable for delivering benefits after completion. The Cabinet Office should also review whether a separate pay scale is needed to attract SROs and skilled project managers to key roles, and ensure they remain there for the duration of the project.

Improving transparency

Good and transparent data is critical for parliamentary and public scrutiny of major projects. Too often, projects have shown little sign of difficulty through their reported data during implementation yet still fail to deliver the intended results. Current data published in IPA reports is insufficient to demonstrate whether a projects are in line with what the public was promised when projects were devised.

The Cabinet Officer should co-ordinate with the Treasury to improve on what standardised data can be collected and published of major projects to better demonstrate performance, with the aim of having all departments publish this information in their Annual Reports from 2020-21.