05 March 2017 | Uncategorised
Risks and Issues to be tackled
An advisory NIFCW would add to the plethora of advisory bodies that already exist. It would also set up a body with a remit that covers areas that are too widely spread to be effectively integrated; and duplicate work already done by other bodies such as Transport for Wales and NRW. There is also the more fundamental question of what problems, deficiencies, or issues an NIFCW is designed to address. These would include a lack of stability in infrastructure planning; a lack of knowledge and research about the relative benefits of different developments, the influence of the political cycle, leading to short-termism and the urgent dominating the important; a rather random approach to the financing of infrastructure; and a doubt as to whether procurement is economically and socially efficient.
The General Context for an Infrastructure Commission
Government needs a strong means of grading bottlenecks or constraints, and setting priorities. An infrastructure commission is one possible solution but it is not a necessary one. The problems could be solved by stronger Cabinet Government, with all changes of substance required to be signed off in Cabinet or by a specialist Cabinet sub-committee. Together with this, a specialist research unit could be set up within the Welsh Government with the necessary resources, perhaps in the Economy Department. The influence of the political cycle is harder to tackle, but this is an argument in support of establishing an infrastructure commission with some degree of independence, whilst the financing arrangements could be resolved by an enhanced role for the new Welsh Treasury.
An infrastructure commission is not strictly necessary, nevertheless, it has certain advantages as an approach. Firstly, the research or cost-benefit studies it conducts would be in the public domain and would have more prestige than the work of an internal unit. Secondly, insofar as different infrastructure decisions are lodged with different Government Departments, the location of an internal unit might be contested or give rise to turf wars between Departments and between Ministers.
The development of infrastructure for Wales should be done within the context of coherent local and regional plans that reflect differing local priorities. There is currently an opportunity to ensure that local, regional, and pan-Wales views and needs are all taken into consideration.
To implement policies in other areas, the government has to negotiate with Network Rail, companies owning the electricity, telephone, water, and gas grids, companies involved in the generation of electricity, and private companies running rail franchises, broadband or mobile telecoms services. Projects in all of these areas will be carried out by the private companies concerned.
Proposals for an Infrastructure Commission
Given the considerations discussed above, what would the Commission look like and how would it fit in with Welsh Government functions?
Financing and Political Considerations
Firstly, we do not think that the NIFCW should take over the planning of infrastructure finance, which should be a Welsh Treasury function. Some specialist expertise in the modalities and details of project finance could, however, be a useful part of its capabilities.
We do believe that the Commission should have specific expertise in procurement for certain types of infrastructure project with skilled staff seconded from Government. That would give the NIFCW the character of an executive agency, whilst policy decisions remained the prerogative of Government.
The NIFCW could provide advice and research to inform policy decisions and help determine the best means of achieving broader Government objectives, though final decisions would rest at the political level. The NIFCW would then be the centre of skill and experience in procurement and project management to deliver the projects.
This approach would have to be in tandem with a change in attitude at Welsh Government level to the process of making decisions, and in established financing arrangements.
Operational Structure for NIFCW
The NICFW, to be useful, would be stand-alone with its own executive and a supervisory board on which the government would be represented. The Commission’s work would be confined to projects of national scope, whilst acting in a coordinating role with City Regions. It would have a high-powered research capability combining technical and economic expertise to assess the cost-benefit ratio of different infrastructure projects (acknowledging uncertainties and incommensurables), while its reports would be published.
Decisions on infrastructure development would remain with the Government but decisions between alternative means of achieving the same broad ends would be informed by the work and opinions of the NIFCW. The Commission could also be the repository of procurement and project management skills that would deliver projects determined by Government. Note that these would cover only a part of all infrastructure, however, namely transport, and flood and coastal defence.
The separation of policy from execution has its dangers but also considerable advantages. The danger comes if policy is made without the input of people with practical experience of execution. However, this danger can be overcome quite readily if policy-making is intelligent and takes appropriate advice at the appropriate time. The advantage is that Ministers who have determined on a good policy are not automatically blamed for execution failures over which they have little control. The management or Commission board can assign, or take responsibility for significant failures, and personnel can change. If a policy is implemented contrary to published NIFCW advice, however, the political responsibility is clear.
Multi-level Governance Relationships
Projects currently falling under the auspices of Local Government or due to fall under the auspices of City Regions would not be in its remit. We propose, however, that intelligent use of proposed structures such as the City Regions is made. We propose that each city region (3 in total) should have an infrastructure executive agency. Each agency would work to develop coherent, regionally focussed, plans for infrastructure development, including a strong advisory/planning role in areas such as housing.
However, these agencies could seek input or advice from the NIFCW, and would be required to keep the NIFCW informed of their own plans so that they could be harmonized with each other or with national plans where necessary. It would be expected that the NIFCW would work closely with the regional equivalents set up by City Regions but with a clear division of responsibilities.
Accelerated investment would require partnerships with Local Authorities (in the guise of Combined Authorities /City Regions) and innovative approaches to public/private financial co-operation. The government will need to address its own incapacities in integrating planning as illustrated by the case with the WIIP, which was compromised by Welsh Government Departmental rivalries and short-term finance pressures.
Given the adoption of a tri-regional infrastructure executive agencies structure plus a national NIFCW, consultation could start with Agencies, Departments, Local Authorities/ Combined Authorities and business on a “wish list” of projects. The NIFCW then determines inter-infrastructure issues, estimates rough costs, and rank projects for draft plan, which is then signed off by Welsh Government Cabinet. Regionally-based steering groups/working parties could be set up for each project in order to:
– specify project in detail
– decide institutional structure and finance responsibilities
– determine costs
Detailed plans would be reviewed by the NIFCW and re-ranked if necessary. After which, the final sign-off by Cabinet is given, and the project may then proceed to implementation, overseen by the NIFCW and/or the appropriate regional infrastructure agency.
Such a scenario would require that financial planning has to accompany physical planning, requiring, in turn, greater Welsh Treasury control of the Welsh capital budget. The infrastructure planning agencies would have to overcome the political distaste for “quangos”, whilst political and/or local rivalries will have to be overcome. The infrastructure bodies would also require a major job of management and co-ordination where failure would be high-profile.