Publicly Funded Infrastructure Projects

Baroness Stedman-Scott Excerpts

Tuesday 2nd July 2019 Grand Committee

[Baroness Stedman-Scott (Con)]

My Lords, I am delighted to respond to this important debate, and I echo other noble Lords in congratulating the noble Lord, Lord Berkeley, on having secured it. At the risk of stating the obvious, there are extreme views on HS2, and we have heard them today without falling out, which is a major concession.

With noble Lords’ permission, I shall set out the Government’s position on major infrastructure projects and the vital matter of transparency, which all noble Lords raised today, before turning to some of the specific points raised. This Government have demonstrated their clear commitment to transforming the nation’s infrastructure. More than 4,900 public and private infrastructure projects have been completed since 2010. We are increasing public investment to levels not consistently sustained in 40 years, including through our £37 billion national productivity investment fund. We established the National Infrastructure Commission in 2015 to provide impartial, expert advice to government. Alongside the spending review, we will publish a major national infrastructure strategy, responding in full to the commission’s landmark assessment of the UK’s infrastructure needs.

It is essential that this significant investment is properly monitored, and the Government take this extremely seriously. Transparency is crucial for accountability, but it is also essential so that the Government can learn lessons when things go wrong and seek to improve in the future. This is a key reason why the Infrastructure and Projects Authority was established in 2016. The IPA oversees the Government Major Projects Portfolio. This includes the Government’s most complex and strategically significant projects and programmes including, but not limited to, infra- structure. As of the 2018 annual report, the GMPP included 31 infrastructure projects with a total whole-life cost of £196 billion.

Large projects in government must undergo independent assurance and pass through a staged process of assurance and approval points before they are given the green light. Those projects on the GMPP also have to provide quarterly data returns, which include up-to-date information on project costs, benefits and timescales and assessments of delivery confidence. This intelligence informs the IPA’s work with government departments to support improvements in the delivery of major projects.

The Government have published clear transparency guidance which sets out how major project data is used and published. The National Audit Office has access to the full body of data, and its analysis supports the work of parliamentary committees in holding government to account. Additionally, committees often seek input from the IPA directly. The National Audit Office also holds the IPA itself to account and has consistently been positive about its efforts while acknowledging the need for continuous improvement and identifying areas for further action. A snapshot of GMPP data is published each year in an annual report. Of course, this is the tip of the iceberg, and the IPA supports departments in properly undertaking projects of all shapes and sizes. As noble Lords will know, Parliament is also able to probe spending through its routine scrutiny of departmental annual report and accounts documents and supply and supplementary estimates. Also, the IPA publishes an annual National Infrastructure and Construction Pipeline, which looks ahead to future public and private investment, and a summary of data on all PFI and PF2 projects. Over and above this, departments also publish relevant information directly, including progress updates, business cases and cost-benefit analysis information.

It is worth noting that the UK Government’s approach to managing, monitoring and providing transparency on major projects, and tracking costs and benefits, is regarded as world leading. Aspects of the Treasury Green Book have been used as best practice and adapted by the G20 and the New Zealand Treasury. We have been invited to share our experience with countries across the globe, from Indonesia and Hong Kong to Australia and Brazil. However, we are not complacent. The recent experience of a number of high-profile projects demonstrates clearly that we still have a great deal of work to do. As in the rest of the world, major infrastructure projects in the UK are prone to escalating costs and increasing timescales. Commercial, technical, political and behavioural factors all play a part in these challenges. The Government are committed to identifying and addressing the causes of these issues. For example, in recent years we have strengthened the way in which the benefits of projects are captured and tracked, to help avoid unrealistic claims—that might get a smile—or skewed decision-making. Having previously called for action in this area, the National Audit Office commended the IPA in a 2018 report for driving improvement in the reporting of monetised benefits for major projects, and for ensuring a clear,

“distinction between cash savings … and wider economic benefits”.

More recently, in response to challenges in the rail sector, the IPA and the Department for Transport have carried out and published an in-depth study to identify key lessons from transport for the sponsorship of major projects. These lessons are now being implemented in the DfT and elsewhere, with oversight from some of the most senior officials in government. The noble Baroness, Lady Randerson, questioned the time taken to get infrastructure projects through. There is clearly some optimism and short-termism, as she raised. Improving infrastructure delivery will be the focus of our forthcoming national infrastructure strategy, and the IPA is focused on optimism bias as a key risk to project deliverability, cost and timescales. This was a key theme in the recent IPA-DfT lessons-learnt exercise.

The spending review will see a renewed focus on delivery because too often in the past Governments have signed off too optimistic or unrealistic plans for complex major projects. The Chief Secretary to the Treasury is carrying out a zero-based review of major projects. As in the past three spending reviews, we will be running a zero-based review of capital spending to maximise the value of our investments. The Treasury will appraise the bids, with the guidance of a panel of independent economists and delivery experts, according to several criteria including strategic case and economic value. We are finalising membership of the expert panel and will communicate this in due course. I am able to tell noble Lords that HS2 is within the scope of the zero-based review.

The noble Lord, Lord Berkeley, asked why HS2 has been amber-red for the past six years. I apologise if I am stating the obvious: HS2 is one of the Government’s largest and most complex projects. The delivery confidence reflects the overall scale and complexity of the programme. A red or amber-red does not necessarily mean that the project will not be successfully delivered but that sufficient risks need to be investigated. By taking the right steps following the IPA reviews and managing challenge effectively, DCAs are often improved; they do change.

My noble friend Lord Framlingham is consistent and persistent in his position on HS2, and all credit to him for those characteristics. Parliament has approved phase 1 of HS2 following scrutiny by both Houses. HS2 still has strong support in this House and, as I understand it, in the Midlands and the north. I believe the noble Lord, Lord Snape, expressed his support for the project.

The noble Lord, Lord Berkeley, said that HS2 costs are out of control. I am advised that HS2 remains within the limits of the 2015 spending review.

I come to the point made by my noble friend Lord Framlingham about HS2 being scrapped. This debate is not about whether HS2 should be cancelled but about how all major infrastructure projects are monitored. HS2 will become the backbone of our national rail network. It will improve capacity, connectivity and growth, carrying over 300,000 people a day. It remains government policy, was a manifesto commitment and retains cross-party support.

I thank the noble Baroness, Lady Randerson, for her support for the project. It is good to know that local authorities, elected mayors and regional businesses in the Midlands and the north support HS2 and recognise that Northern Powerhouse Rail is dependent on HS2 infrastructure being delivered.

I am going to run out of time, which is common these days in such important debates. If I have not answered anyone’s question, we will review Hansard and I will write to them. I finish my contribution by recalling the words, “a country with a can-do culture rather than a can’t-do”. I hope that, with all the good will and all the commitment there is to make our country a great country to live in wherever you are, these projects will be successful. We will work very hard to make sure that they are.