NISTA to ‘strengthen’ UK infrastructure delivery ‘lacking strategic direction’

The news coincided with publication of a new report by the National Infrastructure Commission (NIC) (46-page / 1.4MB PDF) that identified “a lack of clear strategic direction” as one of four “root causes” of the soaring cost of UK infrastructure projects and the common failure to deliver them on time or on budget. Pinsent Masons contributed to the NIC’s report.

The functions of the NIC, which include assessing infrastructure needs in the UK and providing independent advice to the government, as well as those of the separate Infrastructure and Projects Authority (IPA), which including monitoring and reporting on project delivery, are to be combined into NISTA.

NISTA will therefore lead on the delivery of the government’s new 10-year national infrastructure strategy, which chief secretary to the UK Treasury, Darren Jones, confirmed will be published in the spring.

Jones said: “Building on the work of the NIC and the IPA, NISTA will bring oversight of strategy and delivery into one organisation, developing and implementing our 10-year infrastructure strategy in conjunction with industry, while driving more effective delivery of infrastructure across the country. In short, it will bridge the gap between what we build and how we build it. It will be a crucial part of our plan to improve delivery.”

Among other things, the government has committed to: deliver 1.5 million new homes before the next general election due in 2029; improve school buildings and build new, and modernise existing, hospitals; make the UK a clean energy superpower, by scaling up renewable energy generation capacity and supporting carbon capture usage and storage (CCUS) and green hydrogen projects; support road and rail network improvements and investment in electric vehicle charging infrastructure; and facilitate data centre development, to underpin investment in AI and other new technologies that can support business innovation and efficiencies.

In its report, however, the NIC said those ambitions are at risk unless the government can reduce infrastructure project costs, which it described as having been “too high … for decades”.

“Critical drivers of project cost are a failure to iterate effectively between a concept design which ensures desired outcomes and affordable budgets, a failure to plan projects well and build them fast, a failure to enable repeatability of projects which can drive down cost and a failure to invest in innovation,” the NIC said.

“In the early stages of a project efficiencies can be identified which can reduce costs while still delivering project objectives. If changes are made during the delivery stages, delays and redesigns tend to be far more costly. Getting a project right in the scoping and planning stages is crucial to minimise these changes. Being able to repeat similar types of projects within a stable pipeline also enables learning and standardisation which can drive down costs in the long term. The Commission has identified four root causes which lead to these systemic failures: a lack of clear strategic direction, challenges with project clients and sponsors, inefficient consenting and compliance, and a constrained supply chain,” it said.

In relation to strategic direction, the NIC said there have been problems for decades, spanning “successive governments”.

“Government has not been able to identify, with a single voice, what the most important infrastructure projects are to achieve its goals and then to ensure it is collectively working to deliver them on time and to budget,” it said, adding that the short-term nature of public spending commitments have also impacted confidence among prospective private sector investors in infrastructure.

While it said the UK is not alone with the problem of soaring infrastructure project costs, the NIC said significant benefits could be derived from “improving the budgeting, specification, design and delivery of the UK’s infrastructure projects”. Implementing measures such as planning reforms, optimised design processes, and more efficient construction methods on a system-wide basis could help cut outturn project costs by between 10-25%, it said.

“Where these outturn cost reductions can be made, now is the time to make them,” the NIC said. “For several decades sectors such as transport, water and energy transmission and distribution have operated as mature systems maintaining a steady state and managing incremental growth. But … to deliver net zero, support economic growth, and support resilience to a changing climate, a much greater level of change is now required. The UK has to start building infrastructure at scale to transmit enough electricity to power electric cars and heat pumps, to have enough water to support a growing number of homes and to improve mobility in congested cities.”

In his speech on Friday, Darren Jones said the government’s new 10 year national infrastructure strategy will address “core economic infrastructure” such as transport, energy and housing, as well as “social infrastructure” like schools and hospitals, and he promised it would be coordinated across all government departments.

In relation to project finance, Jones promised public funds will be better allocated in future, but he also confirmed that the private sector will have an important role to play in funding new infrastructure in the UK, describing as “crucial” the need for government to have a “new and improved relationship with the private sector”.

“There is … only so much that the public sector can or should do, and we all know that the vast majority of our growth will be driven by private sector investment,” Jones said. “So we will unlock private investment by being a real partner to business, sharing in the risks and financial burdens that come with investing.”

Jones added that some funding for infrastructure projects will also come from the new National Wealth Fund the government has set up, and that the government will further look to catalyse investment from pension savings.

“By our estimates, pension pots could be boosted by £11,000 on average, whilst unlocking £8 billion of new productive investment into our economy,” Jones said, adding that the government will further publish a new modern industrial strategy to “provide much needed clarity and certainty over the government’s approach to key British sectors and industries, and long term guidance on our priorities and missions, helping investors to plan ahead”.

Commenting on Darren Jones’ speech, infrastructure strategy and planning expert Robbie Owen welcomed the creation of NISTA to bring together the strategy and delivery aspects of infrastructure projects.  But he added: “The Treasury and Cabinet Office will need to get a wriggle on to set up NISTA by the spring of 2025 and publish the first 10 year National Infrastructure Strategy (NIS), although confirmation of Sir John Armitt’s continued role should greatly assist with that. Some fundamental questions remain to be answered, however, including what sort of process will govern preparation and approval of the NIS including parliament’s role, what it means for a project to be included in the NIS, and what the process should be in future for cancelling projects as there is no doubt that the UK’s habit of chopping and changing projects has only added to the cost of delivering major infrastructure”.

He called on NISTA to be set up as an effective enforcer of the timely delivery of projects whilst maintaining the vision and leadership the NIC has shown since it was created in 2015, which would need a significant culture change from the IPA’s largely compliance role.

He also urged the government to publish the Banner Review’s report on judicial review of infrastructure projects, received in May 2024, as steps were urgently required to reduce repetitive judicial reviews and to consider more radical solutions if the UK’s urgent Infrastructure needs were to be delivered at a manageable cost.

Infrastructure expert Anne-Marie Friel said of the NIC’s report on cost drivers in major infrastructure programmes, “The NIC’s latest report provides further valuable evidence justifying the necessity for system-wide disruption to the status quo, across all stages of the project delivery lifecycle, and throws light on the positive interventions that will be needed at each stage, if better outcomes are to be achieved on any project.”

“The need for an intelligent and informed client, who understands the outcomes they must achieve, is prepared to invest the necessary time needed in planning how it will achieve those outcomes before rushing into delivery, and who understands that, regardless of procurement structure, that they are ultimately always responsible for the overall risks of delivery, is a key overarching theme emerging from the report,” she said. “We agree with the findings including the Commission’s comments on the importance of a resilient and profitable supply chain in successful project delivery and the need for a balanced approach to risk allocation within the procurement models, which incentivises supply chain around delivery of the key project outcomes. These themes are not new and provide further support for the work done by Project 13, the Construction Playbook, and other industry initiatives. All infrastructure organisations and their advisors should pay special attention to the proven cause and effect that sits behind the common themes and recommendations. To ignore the comprehensive information available to them on why these themes and recommendations matter would be at their peril.”