Sir John Armitt speech to Utility Week Congress

Sir John Armitt’s speech to the Utility Week Congress at the BCEC Centre in Birmingham, 10 October 2018.

Published: 10 Oct 2018

By: Ben Wilson

This is an exciting time to live and work here in Birmingham. The regeneration of New Street station has transformed the look and feel of the city centre, and once complete HS2 will stop at two different stations here. Alongside Coventry and Wolverhampton, Birmingham is part of the country’s first multi-city testbed for 5G technology. And autonomous vehicles are being tested on the streets of the West Midlands.

All this as preparations are being made to host the Commonwealth Games in 2022.

These are all infrastructure success stories – projects that either have, or will, improve the lives of entire communities, increase the city’s competitiveness and support economic growth long into the future. We want to see communities not just in Birmingham, or even the West Midlands but across the country reap these kind of benefits.

That was one of our guiding principles as we developed the UK’s first-ever National Infrastructure Assessment. Looking as far ahead as 2050, it covers transport, flood management and waste, but also digital communications, water and energy. On digital communications, we’ve backed the national roll-out of full-fibre broadband and made the case for Government subsidy to ensure those living and working in the hardest-to-reach areas, and particularly rural communities, benefit from this technology.

All this should mean that Government and Ofcom can allow for copper switch-off by 2025, and I was pleased to see the recent Future Telecoms Infrastructure Review mirroring many of our findings.

We’ve highlighted how we need a far more resilient system of water supply, with measures in place for the increasingly likely chance that the UK faces a major drought.

As well as new reservoirs, that means a system of water transfers from places in surplus to those in need.

But it also means tackling the amounts of water we lose to leakage – as much as 20 per cent of our mains supply every day. We want to see the industry halve leakage by 2050, with Ofwat agreeing five-year commitments from each company and reporting on progress. I’m therefore encouraged that companies including Thames and Southern say they plan to rise to this challenge.

And our findings show that the UK having an electricity system powered mainly by renewables would cost no more than relying on new nuclear power plants. We’ve set a clear target for at least 50 per cent of our electricity to come from sources including wind and solar by 2030 and argued that the Government should support no more than one new nuclear power station after Hinkley Point C between now and 2025.

And we’ve looked for alternatives to natural gas, with recommendations to trial hydrogen at community scale by 2021, and for the Government to further examine th evidence base for future installation and use of heat pumps.

But our electricity supply also needs to be ready for electric vehicles. We want to see Ofgem playing a key role in doing this, and were pleased that within days of us launching our Assessment, they published their own proposals that would go some way to meeting some of our recommendations.

Digital communications, water and energy. Three different utilities that people the length and breadth of this country rely on to go about their daily lives, whether that’s getting i touch with loved ones, running a shower or even turning on a light.

Three different industries whose pricing decisions, investment strategies and opportunities to innovate can be influenced considerably by Ofcom, Ofwat and Ofgem respectively.

And three different sectors that we at the National Infrastructure Commission have made recommendations for in our Assessment that require the involvement of these regulators.

It is not an unaffordable wish-list – and to prove it, we have offered a transparent assessment of the overall impact on costs to businesses, consumers, public bodies and other end users of infrastructure.

Where there is an impact on bills, it is no more than an average £20 a year per household, and is only where we believe the costs are manageable and good value compared to the benefits of the infrastructure it provides.

But this means we have had to make some tough decisions and trade-offs, which mean our Assessment will not satisfy everyone.

But it is something that Ministers can realistically adopt.

We know that, and from the feedback we know others do too, from local government, environmental organisations, and from across the infrastructure sector as a whole.

If these recommendations are to become reality, we will need the support of all of you to make it happen, making the case clearly and regularly to the media, Ministers, and MPs from across the political spectrum, that we need investment in our infrastructure, and
that our Assessment offers a strategy to achieve it that will benefit communities North and South.

The Government now has until July next year – at the latest – to respond to our Assessment. We cannot rest on our laurels: we must instead make the case time and time again for its implementation, and I hope people in this room will help us to do that. But I also hope that you will work with us on our latest work – the new regulation study I announced last week.

Among other issues it will examine what future changes may be on the horizon for our telecoms, water and energy industries as set out in our National Infrastructure Assessment; and whether the current regulatory model encourages sufficient innovation to address these changes, and how regulators are currently working across sectors on cross-cutting challenges.

And as we examine all of this, we will keep a watchful eye on ensuring that bills are kept affordable, and vulnerable customers are protected.

We will want to hear from you – the regulators and the industry – to hear your experiences, and your views of how the current system is working and how it may be improved.

This will complement the National Infrastructure Assessment and help make sure that it can be delivered.

Together, they have the potential to offer the best chance we have to increase infrastructure investment, and set the conditions to make sure that every pound goes further.

And on top of that, they have the potential for the UK to be a world-leader in these fields, using the latest technologies while continuing to deliver for customers and communities.

I would urge you to work with us at the National Infrastructure Commission to make the case to Government for our recommendations to be accepted, to help us set the right regulatory conditions to support the future success of our utilities, and to ensure that together with Government and wider industry, we can meet the country’s long-term infrastructure needs.

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