Is it time for an infrastructure secretary to sit at cabinet?
The prime minister and the chancellor stood in front of an audience of construction workers last week, eager to convince the industry that the Conservative Party is best-placed to deliver desperately needed investment in UK infrastructure.
David Cameron joined George Osborne in a rare joint appearance at Skanska’s headquarters, where he said delivering first-class infrastructure was “a crucial part” of the government’s long-term economic plan.
But if infrastructure is so crucial to economic recovery, is it now time for the main political parties to consider creating a dedicated infrastructure secretary role within the cabinet?
Or should the political parties back proposals for an independent commission to help get the major schemes the UK needs under way?
KMPG and Shelter’s report, Building the homes we need – a programme for the 2015 government, this week urged the next PM to appoint a housing minister to the cabinet immediately, but also urges major infrastructure planning to be integrated with housing delivery.
“Our industry, in my opinion, is as important as the finance industry and yet we do not have the same voice”
Madani Sow, Bouygues UK
London’s Evening Standard reported last month that London mayor Boris Johnson was “itching” to take up an infrastructure ‘superpost’ in cabinet that would combine responsibilities for transport, business and housing.
Construction News sources in the Conservative and Labour parties insist there are no immediate plans to create such a role, though neither party is ruling out a new post in the long term.
The presence of an infrastructure secretary at the cabinet table is one that appeals to many as the seemingly endless debate over how construction leaders should talk to those in government continues.
Contractors have long been concerned that the industry is punching below its weight, and want to see political leaders treat wider infrastructure delivery as a priority in the same manner as they have backed housing stimulus packages such as Help to Buy.
Infrastructure in numbers
£36bn Planned investment into infrastructure for 2014 to 2015
200 Major projects due to get under way over the next two years
10.1% Forecast growth in the infrastructure sector for 2014
6.3% The construction industry’s contribution as a percentage of total UK GDP
19% Forecast growth in total housing completions for 2014
Bouygues UK chairman Madani Sow bemoans a lack of recognition within the government, despite what he calls the “worldwide impact” of the construction industry, not only as a significant contributor to UK GDP but through exports and worldwide demand for British expertise.
“Our industry, in my opinion, is as important as the finance industry and yet we do not have the same voice,” he says. “We need to be taken much more seriously.”
Industry leaders believe a commitment from all three political parties to introduce a role at cabinet level would send a signal to firms across the UK that Westminster is serious about its commitment to the construction sector.
Wates group chairman James Wates tells Construction News that an infrastructure secretary would benefit industry, as it could have one identifiable leader within government with whom to liaise.
“It would be a signal [from] government saying, ‘Infrastructure investment is important’,” he says.
“We’re not very good at presenting a joined-up, coherent view to government and, as a result, government finds it very difficult to deal with us”
James Wates, Wates
Mr Wates also chairs the UK Contractors Group, which works with other bodies such as the CBI Construction Council to lobby the government.
One of UKCG’s first requests to government upon its establishment in 2008, Mr Wates says, was for a dedicated infrastructure minister, but the move was met with resistance.
He adds: “The view was, ‘No, no we can’t possibly have that’, so we got a chief construction adviser, which is a step in the right direction. But is it really getting construction talked around the top table on the basis that we deliver 8 to 10 per cent of GDP? The answer is probably not.”
However, Mr Wates acknowledges the industry is partly to blame if there is a lack of productive dialogue.
“We’re not very good at presenting a joined-up, coherent view to government and, as a result, government finds it very difficult to deal with us.
“You could ask why should [the construction industry] have an infrastructure or construction minister? Because it’s like punching porridge – we’re not very good at getting our voice in the right places.”
But not all parts of the industry believe a new infrastructure secretary would benefit the industry. Concerns have been raised by those in the financial sector that changes to the way we deliver infrastructure in the UK could cause further delay to investment.
One financial adviser, who asked not to be named, tells Construction News: “Big, top-down changes and reorganisations inevitably lead to a period of uncertainty and a period when it is extremely difficult to make any changes on infrastructure investment.”
The finance expert agrees that joined-up thinking is required from the government to deliver projects successfully in the UK, but is sceptical this can be done by one minister and insists a new infrastructure secretary role in government could end up being “superficially attractive to developers”.
Regardless of a new role at cabinet level, the final say on funding for major schemes would inevitably continue to go through the Treasury, he warns, so the secretary’s power would be limited.
KPMG partner of global infrastructure Darryl Murphy also believes that a major shake-up to the government’s structure “would only cause more delay” to schemes.
He admits he is not surprised to learn that the main political parties would resist creating a new infrastructure secretary role in government.
For the Conservatives, this would mean “admitting after four years they have got something fundamentally wrong”, he says, while the Labour Party has prioritised reform through its Armitt Review.
In October 2012, Labour commissioned Olympic Delivery Authority chairman Sir John Armitt to undertake an independent review of long-term infrastructure planning in the UK.
The 32-page report sought cross-party consensus over infrastructure delivery and made a central recommendation that an independent national infrastructure commission be created to assess the needs of UK infrastructure.
“I wouldn’t like to go into a situation where post-election we then spend another year of changing the whole mechanics of how infrastructure gets delivered”
Darryl Murphy, KPMG
Sir John is currently working on a draft bill, which will outline how to implement his recommendations, but securing cross-party support for the bill alone will prove difficult, due to its Labour Party backing, which has been led by George Osborne’s sparring partner, shadow chancellor Ed Balls.
The prime minister has urged Construction News readers to lobby opposing political parties for support for the government’s National Infrastructure Plan, which he says sets out the long-term vision needed for the delivery of infrastructure projects in the UK.
Both Mr Cameron and Mr Osborne sidestepped the opportunity, when asked by Construction News, to back Sir John’s proposed commission.
Sir John says his approach “gives the best chance of creating a cross-party consensus through parliament” over the need and timescales for UK infrastructure, as well as prioritising delivery.
He says his review has “widespread support” and adds that he hopes the draft bill will receive backing after its publication. The bill is expected to be published this summer.
Liberal Democrats on infrastructure
Deputy prime minister and Liberal Democrat leader Nick Clegg said his party played an important role in setting up the cabinet infrastructure committee, which he has chaired since it formed in 2011.
He added: “This is an important committee and the Liberal Democrats will want to ensure its continuation post May 2015.
“We recognise how important infrastructure spending and investment is to the economic recovery and rebalancing the economy right across the UK. Since 2010, the Liberal Democrats have helped to delivered 2000 infrastructure projects and improvements to infrastructure projects and, if returned to government in 2015, the Liberal Democrats will continue with this rate of investment in infrastructure while unlocking the potential for economic growth.”
KPMG’s Dr Murphy says he is sceptical of the bill receiving cross-party support and that, despite being supportive of the commission, he is “a little worried” of the time it would take to implement.
He adds: “I wouldn’t like to go into a situation where post-election we then spend another year of changing the whole mechanics of how infrastructure gets delivered. It comes at a wrong time.
“[I also believe] it’s slightly naïve to think you can suddenly take politics out of infrastructure by creating the commission, because even though all the arguments around the Armitt Review are correct, you will not move away from the political interference.”
Questions will be asked, Dr Murphy adds, over Infrastructure UK, a unit that sits within Treasury to work on long-term infrastructure priorities and private sector investment; he questions how different Sir John’s commission would be from this.
“If you are going to create an independent commission, does that just look like IUK taken out of the Treasury?”
The government has a wide range of senior leaders with responsibilities tied to the construction industry, from Conservative construction minister Michael Fallon and commercial secretary to the Treasury Lord Deighton, to Liberal Democrat business secretary Vince Cable and chief secretary to the Treasury Danny Alexander.
They all sit on various industry and government boards: Mr Fallon, for example, is co-chair of the Green Construction Board and Lord Deighton is on the HS2 Growth Taskforce.
However, Mr Fallon also sits on the Construction Leadership Council and has had ministerial responsibility for energy and the city of Portsmouth added to his brief since he was made business minister in 2012.
Lord Deighton, referred to by the government as infrastructure minister, is also restricted by his departmental responsibilities to the Treasury.
In addition, the government speaks to industry through numerous forums and boards, such as the Construction Leadership Council, co-chaired by Vince Cable and HS2 chairman Sir David Higgins.
“I do not believe today we are seeing the government’s message on infrastructure working”
Madani Sow, Bouygues UK
The CLC was established through the work being led by chief construction adviser Peter Hansford on the Construction 2025 industrial strategy.
The National Infrastructure Plan Strategic Engagement Forum was established in 2012 and is co-chaired by Association for Consultancy and Engineering chief executive Nelson Ogunshakin and Danny Alexander.
However, concerns have been raised to Construction News that both groups are failing to disseminate information more widely within the industry.
The CBI published a report last month which examined the public’s perception of the UK’s infrastructure and showed that government’s message was not hitting home.
Two-thirds of those surveyed said decisions on infrastructure should be delayed for the public’s views to be heard, even if it means delays to tackling failing infrastructure.
Bouygues UK’s chairman Mr Sow worries that the government is failing communicate clearly on infrastructure.
“I do not believe today we are seeing the government’s message on infrastructure working,” he says.
“Things are moving but they are moving very slowly because you’ve got political intervention”
Mike Putnam, Skanska
“Take housing as an example: for many years we have heard that there is a big demand for housing in the UK, yet we are not seeing the level of building to meet this demand.
“This is just one example. There has been too much uncertainty for a number of years, coupled with a lack of clarity, vision and long-term strategy.”
Skanska chief executive Mike Putnam, who also sits on the CBI Construction Council, says he is “disappointed” with the CBI findings and finds it “amazing” the public generally feel there is not a significant need for infrastructure in the UK.
On the creation of an infrastructure secretary to deliver this national and local engagement, Mr Putnam says “it would be nice but I’m not sure we’re going to get it”.
He explains: “Things are moving but they are moving very slowly because you’ve got political intervention… there’s a lot damage caused when the shutters come down as everything did in the spending review of 2010. [As a result], everything gets stopped with infrastructure projects.”
A cabinet minister would be able to deliver a more “holistic approach to infrastructure”, with “strong political will” to drive projects ahead, he says.
Pinsent Masons infrastructure partner Patrick Twist says infrastructure is so diverse that he believes there would be resistance to “a particular individual having that power”.
He believes the role could lead to “infighting” between departments each wanting to hold on to infrastructure development within their departmental responsibilities.
However, Mr Twist says a clear message and political leadership is needed for public support on infrastructure and adds that “democratic accountability” is central to this.
Construction News’ quarterly barometer, a survey of chief executives, chairmen and senior directors of the top 100 UK contractors, found in February that support had grown for the Conservatives (52 per cent) as the best political party for the industry, ahead of Labour (38 per cent).
The previous barometer had shown higher support for Labour, at 47 per cent.
As politicians gear up for what is going to be a busy year, the importance all three parties will place on infrastructure when there are votes on the line is clear.
Whether that is through the creation of an infrastructure role at cabinet level or an independent commission, the construction industry waits to pledge its support to the party with the right approach.
Election build-up: Timeline
22-25 May 2014 European Parliament elections be held in all member states of the European Union.
14 May 2014 Deadline for updated runway scheme proposals, to be submitted to the Davies Commission.
4 June 2014 State opening of parliament, which marks the formal start to the parliamentary year.
Summer 2014 Draft bill is expected on the implementation of Sir John Armitt’s recommendation around a national infrastructure commission.
September 2014 The Lyons Housing Review expected to be published. This is an independent review by Sir Michael Lyons as part of Labour’s policy review.
12 September 2014 Final investment decision expected on the Thames Tideway Tunnel project; however, the project’s MD recently warned financial close could be pushed back until after the election.
18 September 2014 Scotland to hold vote on independence, following an agreement that was made between the Scottish and UK governments on a referendum put forward last year.
21 September to 8 October 2014 Party conference season. All three parties will hold their final party conferences before the next general election.
October 2014 The European Commission’s decision over state aid on EDF Energy’s nuclear power project Hinkley Point C expected, having originally been due in summer 2014.
30 March 2015 Parliament dissolves. During this time dates will be set for parliament to meet after the general election as well as the date of the Queen’s Speech at state opening.
April 2015 Political parties expected to launch their manifestos.
Spring 2015 Government aims to conclude the transformation of the Highways Agency into a government-owned company.
7 May 2015 Election day. Polling booths will open between 7am and 10pm. Counting of votes will begin when the poll closes.