Delays in delivering British infrastructure projects cost the UK economy £4.6 billion in 2015/16, according to a new report.
Transport projects alone cost us all £48,425 per minute of delay, says the research, carried out by consultants Arcadis, together with the Centre for Economics and Business Research. The pair have evaluated a range of key infrastructure projects that, they say, would clearly benefit the nation. And delays getting to the starting line, once schemes have been largely prepared, is holding back economic growth.
“Following the global crash in 2008, the government invested heavily in infrastructure, and it was this that contributed to the UK weathering the storm and remaining relatively strong through years of uncertainty,” said Chris Pike, infrastructure client development director at Arcadis. “Now as we enter uncertain times once again as a result of leaving the EU, our nation needs the same commitment – perhaps more so than at any other time in a generation.”
The analysis comes as media sources suggest the government will shortly announce it is supporting the expansion of both Heathrow and Gatwick airports, after much delay. The move is said to have been spurred on by the fact that passenger numbers have grown far faster than predicted when the Davies Commission reported to the government in 2015.
Researchers reviewed a total of £293 billion of infrastructure investment, taking note of projects detailed in the 2015 and 2016 National Infrastructure Pipeline reports, and analysed a six year period ahead to 2020/21. Their cost of delay figures are based on infrastructure investment delivering a 1.3 times multiplier, in terms of economic benefit.
Aside from depressing economic growth, there are direct consequences as projects cost more to complete, the longer they are delayed. Among transport costs, £241m of delay costs were identified, over five years, per one month delay – equating to £8m per day of delay. Of this total, £126m is attributable to rail, and £34m specifically to projects in London.
The report calls on government to demonstrate to the world that, post the Brexit vote, the country means business – and that means being decisive and getting projects out of the ground. And one key part of that, is getting the National Infrastructure Commission working effectively, said Pike: “We need a strong, independent legislative body that is empowered to oversee and co-ordinate key projects. Failure to give such statutory powers to the National Infrastructure Commission is akin to going into battle with a wooden spoon.”
Down at the airport, the decision to finally act is said to be down to passenger numbers growing far faster than expected. The Davies Commission used growth forecasts based on 2010 to 2012 airport usage, a period now acknowledged to have been depressed in the aftermath of the 2008 financial crash. That predicted Heathrow would grow to see 85m passengers in 2030, but it already hit 75m last year; at Gatwick the odds are on the 2030 growth figure being achieved this year or next.
Even with government approval, there is still a question mark over who pays for the infrastructure upgrades at what are now privately owned assets. Willie Walsh, CEO of the International Airlines Group that includes British Airways has been vociferous in his criticism of the high costs put against expansion at Heathrow, insisting his airlines will not pay substantially higher landing charges to cover those costs.
LPA Perspective: As many of us regularly sit in traffic jams, we’re all more than familiar with the concept of the economic damage inflicted by slow infrastructure decisions, and delays in delivering projects. Just as many parts of the M25 were close to capacity not long after they actually opened, so we watch and wait for many other projects to be planned, financed and, finally, delivered.
It’s not just airports. The discussions over new river crossings for east London have been plodding on for years. Rail extensions are coming, from linking the Tube to Battersea, to taking the train into Barking – but they happen woefully slowly.
Will the airport decision come shortly? Will it be positive for Heathrow, and for Gatwick? Most of us are now convinced only of one thing – that dithering costs us all. And now, research proves just how much that cost is.