Blog 7th January 2020
As we move forward into a new decade what are the prospects for our infrastructure in Wales – and the sector that delivers it?
The long period of instability in UK politics coupled with flawed austerity policies and Brexit has led to one of the worst periods of under investment in infrastructure in living memory. And with civil engineering workloads in Wales decreasing, future orders decreasing, employment decreasing but costs increasing it’s a really difficult time for businesses. Following the December 2019 election we called on the UK Conservative Government to deliver on its pre-election promises to “turbo charge” the economy by investing heavily in infrastructure. We want to see non-devolved projects in the energy sector, such as Wylfa Newydd and tidal energy, given a new boost to secure low carbon energy sources. We want to see Wales receive a fair dividend from the UK Government’s investment in HS2 so that we can invest properly in our own rail services. And we want to see clarity on the UK Government’s proposed “Shared Prosperity Fund”, which is intended to replace EU Funds, so that Wales doesn’t “lose a single penny”. We’ll be reminding them and the Secretary of State for Wales of these promises on a regular basis. The Welsh Government also needs to put its money where its mouth is too especially given its cancellation of the M4 Relief Road project. It still hasn’t fully used it’s borrowing powers so it’s time to see action to instil some much needed confidence in a sector that provides so many high quality jobs, underpins the foundation economy in Wales and builds the infrastructure we need to develop and grow.
With Brexit finally underway can we start to look forward more positively?
If we can turn things around the prize is huge. Better transport systems, renewable energies, better water quality, improved communications, efficient houses, better schools, all these allow us to grow our economy, improve our environment and support our communities. That’s clear to most people. But we also have a capable and highly skilled industry ready and willing to build this infrastructure, delivering high quality jobs very often within those communities with high levels of deprivation and providing opportunities to those on low incomes and those where a career is the exception rather than the rule. By looking after the businesses that underpin this part of our foundational economy we generate more confident, prosperous and innovative businesses. Ultimately, we have more money circulating within Wales which is what underpins a successful foundation economy.
So, what do we need to do to get there? Well first off, we need a clear vision of the future, what will it look like and what infrastructure do we need to support it. This is where politicians should be performing far better than they currently are. This is about leadership. From this should follow greater certainty and visibility of future workload. Neither is in place at the moment which suggests a failure of leadership.
There is a lack of clarity on government policies in the infrastructure sector, at both a UK and Welsh level. Why does this matter? The reality is that most of our infrastructure is provided by and for the public sector. These are public goods even if the private sector manages much of it. Access to transport, water quality, protection against sea and river flooding, communication networks, energy supplies and so on, these are not about consumer choices, these are essentials for our wellbeing as a nation. Arguably, at this point in time we have no vision and we have no plan. And, of course, we remain reliant on methods of justification which are outdated and not fit for purpose in this age of climate change, carbon pressures, diminishing biodiversity and struggling communities. These need to change and, in Wales, we have a Wellbeing of Future Generations Act which should be driving that change.
And let’s face it, when it comes to investment and future planning, the current Wales Infrastructure Investment Plan (WIIP) is virtually useless. We also have a National Infrastructure Commission for Wales which has been almost invisible. The WIIP remains a jumbled hotchpotch of a wishlist with no real link to investment sources. And we expected the development of the Commission to highlight and start to address these issues. However, it has been in place for almost a year and yet its invisibility at a time when some fairly important decisions have been made on infrastructure in Wales has been hugely concerning. It has also been difficult to find any information on the Commission online, its members or meeting dates, agendas or minutes although, one year on, we have received the Commission’s first Annual Report and, as part of the Welsh Infrastructure Alliance, we are engaging with them in a number of areas. We hope that it starts to emulate its Scottish counterpart whose website is clear and comprehensive, including membership and remit, a call for evidence, forward plans and meeting papers.
We also need to drastically reform the way government’s, at all levels, procure work from the private sector and base the approach on long term value. We have a public sector that is so focused on lowest cost, driven by ongoing austerity policies and Brexit impacts, that it is completely out of touch with our long term needs. The Wellbeing of Future Generations Act needs to be a cornerstone of any reforms. Our previous reports on “Streamlining Public Procurement” and “Transporting Our Future Generations” have consistently called for this but it’s proving a very “tough nut” to crack!
The development of skills is essential to Wales being able to develop its own infrastructure and far too often the availability of a skilled workforce has lagged behind the work. The ability to effectively manage skills development is severely compromised by a lack of a plan and this is symptomatic of a broader issue in infrastructure planning, where the development of skills is seen as a ‘second order’ issue rather than being considered from the outset. A joined-up approach to forward planning, funding of infrastructure and skills development will help to address this.
And underpinning all of this is a fundamental shift in how we value our Welsh construction industry. It represents 7% of our GVA. It employs over 120,000 people across Wales and it trains thousands every year with many of those jobs paid far higher than the Welsh average. It’s a fundamental part of our foundational economy but it remains undervalued. The lack of visibility of future workload and the way the public sector procures infrastructure projects just reinforces this perception.
Of course, we shouldn’t underestimate the task of turning this around. There are so many blockers. So, do we just give up, do the best we can and just accept that this is how it is? That’s a depressing thought. In reality we have quite a few tools at our disposal in Wales – we just need to do something with them!
- We have devolution which means we can and should be driving forward a specific Welsh agenda. But we also need governments in Wales and London to work together to make the best of any investment.
- And we have borrowing powers. Yes, I know if you borrow you have to pay back. But interest rates remain low and the whole point of borrowing to invest in infrastructure is that you get a return far in excess of what you have to pay back.
- We also have numerous policy levers which we can use to deal with specific Welsh challenges, particularly around the way we justify investment and the standards we wish to pursue in terms of decarbonisation.
- And, despite a slow start, we do have a National Infrastructure Commission for Wales. A high performing Commission should be at the forefront of these discussions making the case for Wales. We live in hope!
- Finally, from a business perspective we know that we have a highly skilled and expert workforce which is chomping at the bit to deliver our infrastructure. And of course, it goes without saying, that this sector is passionate about Wales. Never underestimate how much that is worth!
So how do we move forward? Let’s not beat around the bush, as things stand, we are being let down badly by those who should be leading the way and if nothing changes it won’t be a pretty picture. We believe that both the Welsh and UK Governments need to focus on what infrastructure is needed to support economic growth, the wellbeing of our communities and our environment. Both need to come together to set out a clear vision for the future, across the whole of Wales, connecting individual projects to a much wider infrastructure strategy, incorporating those UK Government projects in non-devolved areas, so that decision makers, funders and the people of Wales have clarity on the social, environmental and economic benefits that new infrastructure brings and can “buy in” to these projects. And this, as well as the way we justify investment, all needs to be viewed in the context of the Wellbeing of Future Generations Act. Alongside this, understanding future needs for construction skills in Wales will help us plan better, ensure we have the capacity to build, and better link our infrastructure needs with Welsh Government aims around economic development, better jobs closer to home, and the target for 100,000 apprenticeships.
If we get positive commitment from decision makers, greater clarity on the direction of travel and greater certainty on funding from governments then we can build the infrastructure we need in Wales – embracing innovation, reducing carbon, supporting communities and businesses and delivering on our wellbeing goals.
We have an infrastructure sector that can deliver for Wales but we need government, at all levels, to get its act together.
Ed Evans, Director of CECA Wales