10 Year Infrastructure Strategy Working Paper

Alongside the Budget, the Government made changes to the framework for infrastructure investment including:

• 1. a new fiscal rule based on public sector net financial liabilities;
• 2. a financial transaction control framework, which designated five public financial institutions, including the National Wealth Fund (see below); and
• 3. the introduction of the National Infrastructure and Service Transformation Authority (NISTA) which will bring together functions of the National Infrastructure Commission and the IPA.

HM Treasury published its 10 Year Infrastructure Strategy Working Paper on the 26th of January 2025, which sets out its plan for the 10 Year Infrastructure Strategy (Strategy). The Strategy seeks to reduce market uncertainty by bringing together a long-term plan for the country’s social, economic and housing infrastructure.

The Government is consulting with stakeholders as it develops the Strategy and views can be shared with HMRC on the following email address: [email protected].

The intention is for the Strategy to set out an institutional framework to support its implementation and to include setting out the role of public financing institutions such as the National Wealth Fund Limited (Fund), which is a private limited company registered in England and Wales wholly-owned by HM Treasury. The Fund seeks to solve financing problems through partnering with the private sector and local government to increase investment and drive growth across the UK.

The Fund seeks to aid delivery by government of economic growth and clean energy missions, generating a return for the taxpayer and crowding in private capital. It will publish its long-term strategic plan in early summer to coincide with the Strategy and Spending Review, to be published together in June. This will ensure alignment between long-term spending and non-spending policy decisions.

On 19th March, the Chancellor set out the following priority sectors for investment: clean energy, digital and technologies, advanced manufacturing and transport. The Fund has a target to deploy at least £5.8bn in carbon capture, port infrastructure, green steel, green hydrogen and gigafactories over the course of this Parliament.

The UK Government has five missions, as set out in the Prime Minister’s Plan for Change, and the Strategy will focus on how infrastructure can support delivery of those missions. These include raising living standards through boosting productivity, reducing the percentage of patients waiting more than 18 weeks for treatment, securing home grown clean energy and improving outcomes for young people.

To support the UK Government’s missions and Plan for Change, the Strategy has three objectives:

• Enabling resilient growth (through boosting and removing barriers to growth and ensuring growth is resilient to future threats such as flood risk management).
• Delivering the clean energy superpower mission (through clean power by 2030 and accelerating to Net Zero by 2050).
• Ensuring social infrastructure can support public services (through hospitals and healthcare facilities, schools and colleges and prisons).

The methodology and policies to be adopted by the UK Government are to focus on four principles:

• Mission-oriented prioritisation: the Strategy will look at evidence for economic growth and prioritise key areas.
• Providing long-term confidence: the Strategy will set out longer-term directions for goals such as net zero, for infrastructure in the public and private sectors. This is to be supported by stable institutional arrangements including five-year capital budgets, rolled forward at Spending Reviews every two years, and the establishment of NISTA to support delivery. This will provide confidence for businesses to make investments, for young people and adults to train and upskill, and for employers to invest in training to help deliver the pipeline of skilled workers needed.
• Addressing crosscutting challenges: the Strategy will work across sectors to deliver a package of measures which is joined up and coherent. Investment will be prioritised and spatially distributed to support the Government’s regional growth strategy, housing targets, net zero target, the industrial strategy, resilience to threats and hazards such as climate change, Environment Act targets, and its ambitions for public services.
• Ensuring deliverability and affordability: the Strategy will be affordable for taxpayers and billpayers and ensure that its projects and programmes are deliverable within the constraints of the fiscal rules, industry capacity and Government capability.

Producing a forward pipeline is key, and the Government has commissioned the National Infrastructure Commission (NIC) to consider the key features of an effective pipeline, reviewing international approaches and setting clear objectives. The NIC already reported on economic infrastructure in the Second National Infrastructure Assessment and subsequent analysis (The Second National Infrastructure Assessment) (10 Year Infrastructure Strategy Working Paper).

No such independent assessment exists for social infrastructure, and departmental 10 Year Infrastructure Strategy spending review submissions are intended to identify where needs assessments already exist and identify evidence gaps that the Strategy will then need to address. It will also include the Government’s approach to the balance of the maintenance, renewal and replacement of assets, something taken into account in PFI/PF2 and PPP schemes but otherwise sometimes ignored, particularly, as the NAO reports, in the criticism of such schemes.

Alongside considering the UK’s economic and social infrastructure needs, the Strategy will tackle barriers to meeting that need, considering the role of private investment and regulation, the framework of public institutions supporting infrastructure rollout and improving delivery. Government is also considering the degree to which the Strategy can be a spatial strategy.

The Government aims to:

• maximise the benefits of its investment, e.g. by coordinating investment in transport and housing to maximise the growth benefits of both;
• provide a place-based perspective; and
• consider the implications of investment on wider infrastructure need, e.g. by setting out the implications for future water and energy demand on Government housing targets.

This all looks very promising and the ability for market participants to plan and programme investment in a very uncertain world is much required. However, the devil will be in the detail and we await further updates in June, when the Strategy and Spending Review are due to be published, along with the Fund’s long-term strategic plan.