Today the British Chambers of Commerce (BCC) has published its Autumn Statement submission, calling on the government to introduce new measures to accelerate the progress of infrastructure projects that are critical to businesses, both locally and nationally.
Ahead of the Chancellor’s announcement on 3 December, the BCC is urging the government to enhance the compensation and incentives available to those affected by nearby infrastructure projects such as rail and housing, and commit funding to repair deteriorating roads over the next five years.
THE BCC’S SUBMISSION TO THE CHANCELLOR PROPOSES THE FOLLOWING:
- Increase the compensation for people required to sell their home to make way for infrastructure projects. The current compensation (100% of the property’s open market value) offered to people subject to a compulsory purchase order is inadequate by international standards, and leads to unacceptable delays in the infrastructure planning process. The BCC therefore proposes to increase compensation to 150% of the open market value of the property. This will better distribute the benefits of the development to those directly impacted and match international best practice.
- Boost incentives for local communities to help accelerate the delivery of urgent housing developments. Under the proposal, neighbourhoods would be allowed to claim a share of the revenue generated by the New Homes Bonus, and the proportion of Community Infrastructure Levy revenues currently earmarked for local communities would be doubled. This additional funding could be placed in a local development fund to improve neighbourhood services and amenities.
- Improve the incentives for local communities hosting existing or new fracking sites. The government, working in partnership with drilling companies, should ensure the existing compensation scheme for local communities includes a new payment for each lateral well at a fracking site. Under the proposal, local communities could receive up to £800,000 in addition to the existing compensation scheme. This is crucial to ensuring the UK’s energy security.
- A one-off investment to bring the UK’s local road network back to a ‘reasonable condition’. Although a recent survey1 estimated the cost of returning the roads of England and Wales to a ‘reasonable condition’ at £12bn, just £6bn is currently expected to be invested during the next parliament. Under the BCC’s proposal, an additional £1.2bn in annual current expenditure over the life of the next parliament would be allocated to close this road maintenance funding gap.
THE CASE FOR ACCELERATING THE DELIVERY OF INFRASTRCTURE PROJECTS:
- The UK is trailing the rest of the world in infrastructure development. According to the World Economic Forum’s 2014-15 Global Competitiveness report, the UK is ranked 27th for overall quality of infrastructure – the second worst in the G7.
- The current pace of infrastructure delivery is unlikely to meet the demands of consumers and businesses in the future. The UK’s National Infrastructure Plan has identified approximately 650 projects required by 2030, costing £375bn, but many of these remain on the drawing board or are progressing at a glacial speed.
- Businesses are dismayed by the lack of urgency in delivering infrastructure projects that are critical to future economic growth. Successive governments have failed to introduce measures to improve the UK’s international connectivity through new aviation capacity, deliver promised investments in road and rail schemes, and help to secure long-term energy security.
- Current delays in the planning process of infrastructure projects are costing taxpayers. Delays to the construction of the A12 Hackney to M11 link road are estimated to have increased the cost of the project by 100%. In 1994, the cost of building Crossrail was expected to be £1.55bn, but it was subject to delays as opponents questioned the business case. When construction finally commenced in 2009, the cost had increased to £14.8bn.
AN INTERNATIONAL COMPARISON:
- France - has long used a compulsory purchase order compensation scheme similar to the BCC’s proposal for the Autumn Statement, and delivered the TGV Sud Est in 10 years, from initial studies to the first part of the line opening. According to the World Economic Forum’s 2014-15 Global Competitiveness report, France is ranked 10th for overall quality of infrastructure, compared to the UK in 27th position.
- Spain - the high speed rail lines between Madrid-Barcelona and Madrid-Sevilla took 10 years from conception to operation.
- UK - the first section of the UK’s HS2 rail project will open in 2026, if there are no delays to legislation or construction.
Commenting, John Longworth, Director General of the British Chambers of Commerce said:
“Infrastructure is at the core of British business – underpinning confidence, orders, jobs and competitiveness – but faces an alarming challenge in the coming years. A failure to invest in capacity and maintenance is hampering business growth and costing jobs. Too often, decisions on infrastructure are taken in the short-term interests of political parties rather than in the country’s long-term economic interest.
“Businesses across the country want to see more urgency in delivering infrastructure projects, and in turn they will deliver growth. The Chancellor’s Autumn Statement is a great opportunity to introduce targeted measures that unlock the roads, housing, rail links and energy developments businesses want.
“A world-class economy needs world-class infrastructure, and businesses need certainty that crucial improvements will actually be delivered and in a timely manner. Our proposals will help the UK become better at delivering the kind of infrastructure that will be an economic game-changer in the long term.”