What’s wrong with infrastructure decision-making?

Summary

The aim of this initial report is to contribute to a discussion about how best to plan, deliver and evaluate infrastructure, by identifying some of the main flaws in recent and controversial ‘megaprojects’.

Knowledge Resource

High-quality economic infrastructure – energy, transport, utilities and digital communication – supports successful modern economies. Well-chosen projects contribute to job creation and increased productivity. Given this, government has prioritised infrastructure investment as a means of strengthening the economy. In the Autumn Statement, the Chancellor Phillip Hammond pledged to spend £23 billion (bn) in the National Productivity Investment Fund over the next five years. From 2020, government plans to spend between 1 and 1.2% of gross domestic product (GDP) on economic infrastructure.

But not all infrastructure projects are equal. Some are significantly less likely than others to deliver economic benefits effectively and efficiently. And looking back at historic decisions, from the Millennium Dome to the Garden Bridge proposal, it is apparent that government is not always adept at identifying the best investments. This is a serious problem. Picking the wrong infrastructure projects can lead to white elephants – projects that deliver scant economic dividends compared to better alternatives, wasting public money in the process. To compound this, bad infrastructure decisions are often extremely difficult to undo. Infrastructure requires high levels of up-front capital which cannot be easily recouped, meaning that once the initial investment has been made, it is economically and politically difficult to turn back.

Successive governments have tried to reform the infrastructure policymaking process through: depoliticization; the creation of new planning and delivery agencies; increased use of private finance]; extensive additional research to map the effects of infrastructure more comprehensively.

Most recently, Philip Hammond promised that ‘long-term economics, not short-term politics, [would] drive Britain’s vital infrastructure investment’. But so far, these reforms appear to have come up short.

In this paper we look at six large and controversial infrastructure projects (the Heathrow third runway, High Speed 1, High Speed 2, the Thames Tideway Tunnel, Hinkley Point C and the Jubilee Line Extension) to understand the decision-making process and identify opportunities for improvement.

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