Design & Funding

The Commission’s Design Group was established in May 2019 following a recommendation in the National Infrastructure Assessment which highlighted how projects can benefit from good design. Chaired by Professor Sadie Morgan, the Design Group brings together leaders from engineering, architecture, transport and landscape, to champion design excellence in infrastructure.

In February 2020 the group published Design Principles for National Infrastructure. This set out four principles – climate, people, places and value – that should guide the planning and delivery of major projects, with support from dedicated design champions on the project board. The government has subsequently committed to the principle of embedding good design in all infrastructure projects in its National infrastructure Strategy.

Design has sometimes been treated as an afterthought on major projects. These principles, the first of their kind for the UK, enable projects to deliver good design throughout the project lifecycle. They can be applied to all economic infrastructure: digital communications, energy, transport, flood management, water and waste.

The government has subsequently committed in its National infrastructure Strategy to the principle of embedding good design in all infrastructure projects, backed up by design champions.

The National Infrastructure Assessment recommended that the analysis of costs and benefits of private financing and traditional procurement should be improved by collecting data at appraisal stage, upon construction completion and in the operations phase to help provide a clear view on value for money over the whole lifecycle of a project.

To help with this process, in 2019 the Commission piloted a new analytical framework to guide the analysis of whole-life performance of private financed and traditional procurement infrastructure delivery models. It aims to ensure that government selection of infrastructure procurement models is made with a robust and comprehensive consideration of broader factors beyond financial cost.

The Commission has also looked at how to compare the value for money of different financing models for nuclear infrastructure.

The National Infrastructure Assessment made the case for an operationally independent, UK infrastructure finance institution to replace access to the European Investment Bank.

This would act as an anchor investor across a portfolio of projects and promote confidence for private investors; it would also catalyse innovation, support due diligence functions and enable projects of public significance that may not otherwise take off, by appropriately sharing risk and reward between public and private sectors. It would also act as a centre of financial and technical excellence on infrastructure project development, procurement and delivery, giving confidence to other investors.

The government announced the establishment of a new infrastructure bank in the National Infrastructure Strategy in November 2020. The Bank will be based in Leeds and its remit has a particular focus on investment in green infrastructure that supports both economic growth and levelling up.

The Commission recommends that government should make £500 million a year of funding available from 2025/26 to 2034/35 for local highways authorities to address the local road maintenance backlog.

The Commission recommends that cities should have the powers and funding they need to pursue ambitious, integrated strategies for transport, employment and housing.

• By 2021, metro mayors and city leaders should develop and implement long term integrated strategies for transport, employment and housing that will support growth in their cities.
• By 2021, government should ensure city leaders have the right powers to deliver these integrated strategies, including the power for metro mayors to make decisions on major housing development sites.
• Government should set out devolved infrastructure budgets for individual cities for locally determined urban transport priorities in line with the funding profile set out by the Commission. Budgets for 2021-2026 should be confirmed by mid 2019. Government should pass legislation, by 2020, requiring cities to be given regular five year infrastructure budgets.
• Government should allocate significant long term funding for major capacity upgrades in selected growth priority cities, in line with the funding profile set out by the Commission. Cities benefiting from major projects should make commitments on housing delivery and provide at least 25 per cent of funding. Priority cities should be identified by mid 2019, with long term investment commitments agreed by 2020. Future rounds should take place no more than twice a parliament.

The Commission recommends that design should be embedded into the culture of infrastructure planning, to save money, reduce risk, add value, support environmental net gain and create a legacy that looks good and works well, by:

• Government ensuring that all Nationally Significant Infrastructure Projects, including those authorised through hybrid parliamentary bills, have a board level design champion and use a design panel to maximise the value provided by the infrastructure.
• Design panels for nationally significant infrastructure projects having regard to design principles to be published by the National Infrastructure Commission based on advice received from the national infrastructure design group.

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 by 2021.
• 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.

Forward looking regulation, by independent regulators, remains the best approach to balancing the needs of consumers and investors, whilst incentivising efficiency. However, this should be embedded in a clearer strategic framework for the long term investment needs of the country:

• The government should introduce legislation by 2021 to fulfil its previous proposal that regulators have regard to endorsed recommendations from the Commission
• The government should set out a long term strategic vision for each of the regulated sectors, through strategic policy statements, within the first year of each Parliament, to support lasting plans and stable funding.