On 17 January 2017 the UK government opened a conversation with the nation. In its quest to build a new, more proactive Industrial Strategy, the government’s Department for Business, Energy and Industrial Strategy (BEIS) sought views on its 10 proposed pillars to growth. The blog piece you’ll read below, and those that will follow in this series, form PA’s response.
We believe the new Strategy has the potential to address inherent inefficiencies and market failures in the UK economy. That’s why we’re pleased to offer our views – drawn from conversations across our businesses – on the challenges the strategy must address, and opportunities it must seek, if it’s to realise a significant impact.
We see this consultation as the beginning of an ongoing conversation between BEIS and the business community. And we look forward to a robust and sustained dialogue.
Infrastructure is now at the heart of the UK’s economic recovery. In fact, major infrastructure investment promises to help solve some of the UK’s longstanding economic challenges, whether it’s feeding the Northern Powerhouse with high-speed rail links, supercharging productivity with superfast broadband, or securing energy supply through nuclear power.
The UK now has a larger infrastructure investment pipeline than at any time in history, with £500 billion of private and public sector investment planned over this Parliament and beyond.
But the opportunity cost of spending billions on infrastructure is greater than ever in light of NHS and welfare budget constraints. So to make sure the investment delivers for the economy and for taxpayers, the UK needs two things: the capability to manage the investment – this involves better planning to avoid cost overruns – and the technological skills and start-up culture to imagine and build the infrastructure. How can this be achieved?
Improving how investments are managed
The UK is investing more in roads than it has in a generation. In 2013, the government announced £11.4 billion (later increased to £11.9 billion) to improve motorways and A-roads between 2015 and 2020. This marked a crucial step towards longer-term funding for roads, and away from the annual allocations that drove short-term thinking and under-investment in skills and equipment.
Substantial efforts are being applied to boost capability. Better understanding of road conditions will be delivered by bringing road management information in house. Investment in new systems and operational capabilities would also improve performance.
But delivering the large volume of additional work in the first Road Investment Strategy on time, and on budget remains a significant challenge for Highways England. Focusing on skills and capability will be essential to realise the benefits of longer term funding in highways and other ambitious infrastructure plans. This challenge will only grow as infrastructure becomes more connected, intelligent and autonomous.
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Change the culture
Government also needs to be prepared to foot the bill to attract expensive new talent, and banish stigma around the industry.
Only recently, reusable rockets landing on platforms in the sea and people travelling in pods at several hundred miles an hour were distant dreams. But they’re close to becoming reality with SpaceX and Hyperloop. Innovation Centres like the Transport Systems Catapult in Milton Keynes are a potentially powerful government intervention. Their role in opening up access to ‘live’ infrastructure as test beds for innovation, such as the UK’s first Smart Station Demonstrator, is perhaps most powerful of all. But they need better links with seed funding, venture capital, industry and academia if they’re to help bring the most promising new technologies to market.
Tech Nation 2017, the latest annual report from Tech City UK, shows the stark effect on salaries of the UK’s burgeoning demand for new technology. The average advertised salary for digital-tech jobs has now reached £50,663 a year, compared to £35,155 for the average non-digital salary. Incredibly, salaries in northern cities like Newcastle, Leeds and Sheffield have risen 25% in just five years.
Demand for talented technologists means those with the right skills can walk into well-paid jobs in leading investment banks or the world’s most advanced technology companies. Attracting the same talent to work on a major station upgrade or airport expansion is going to be a severe challenge for infrastructure providers and the supply chain. Subsidies might overcome it, but a lack of attractiveness will still dog infrastructure.
Make infrastructure inspiring
Changing attitudes towards jobs in infrastructure means raising the profile of jobs in relevant fields through bold interventions like the National College for High Speed Rail. It means incentives to encourage uptake of STEM (science, technology, engineering, and maths) subjects. And it means removing the ‘nerdy’, ‘uncool’ stigma associated with jobs in these fields.
The supply chain must then help children understand what an infrastructure job using STEM skills might look like. That might be inventing a futuristic travel experience or a smart city concept.
With the right focus on management and culture, the UK can ensure its infrastructure investments grow the economy and deliver for taxpayers.