Policy paper

Government Response to the National Infrastructure Commission report Infrastructure, Towns and Regeneration

Published 26 August 2022

Introduction

At Spring Budget 2021, the government asked the National Infrastructure Commission (NIC) to make recommendations on how to maximise the benefits of infrastructure policy and investment for towns in England.

The government remains keen to understand the potential in places outside city centres, specifically towns and suburban centres with different characteristics, for both economic and quality of life benefits from infrastructure interventions. The government also wanted to understand further the potential implications of Covid-19 on infrastructure for towns, and to explore local governance and capability for delivering infrastructure.

The NIC’s final report was published on 23 September 2021. The study focused on transport and digital infrastructure in particular, with the commission ensuring that any recommendations in reserved areas are applicable across the UK.

The government thanks the NIC for its thorough report, and welcomes their recommendations. What follows is a detailed response to each of those recommendations in turn.

Response

Recommendation 1

Every local transport authority should have a long term infrastructure strategy for the towns in its area, supported by a pipeline of projects. These strategies should be developed locally and collaboratively as part of, or complementary to, distinctive 15-year place-based plans for the economic development of towns. Infrastructure strategies and wider plans should draw on local strengths, presenting a distinctive vision for towns. To ensure accountability, infrastructure strategies and wider plans should set out clear, transparent outcomes and, at the end of each five-year funding period (see recommendation 2), local authorities will need to carry out assessments of whether those outcomes have been achieved.

The government accepts this recommendation and is committed to ensuring long-term infrastructure strategies are in place across all parts of England ^{[footnote 1]}, supported by locally developed plans and a pipeline of prioritised projects.

The NIC recommended that all Local Transport Authorities (LTAs) should have long-term infrastructure strategies for the towns in their areas. LTAs already have a statutory duty to have Local Transport Plans (LTPs), and the Department for Transport (DfT) is updating the LTP guidance to support LTAs, bringing it in-line with current government priorities, encouraging overarching strategic coherence to existing strategies, including Bus Service Improvement Plans (BSIPs) and Local Cycling and Walking Infrastructure Plans (LCWIPs), and enabling authorities to deliver a robust pipeline of projects. The government recognises the importance of funding certainty to developing meaningful plans and will update the guidance to facilitate the delivery of effective plans.

Local Transport Plans will also be required to align with Infrastructure Delivery Strategies and follow guidance on Quantifiable Carbon Reductions (QCR) in line with HMG’s Transport Decarbonisation Plan. Infrastructure Delivery Strategies are included in the Levelling Up and Regeneration Bill, which was introduced to parliament in May 2022.

Local Authorities (LAs) will have a statutory requirement to publish their infrastructure strategies. By giving clarity for communities on what infrastructure will be provided and when, LAs will be held to account on their delivery commitments.

DfT will continue to consult widely on both LTP and QCR guidance, including a public consultation through the autumn, with an expectation of publishing the new guidance in the first quarter of 2023.

Significant settlement-based funding for transport schemes and ambitious plans on devolution further underpin the government’s ambitions. The City Region Sustainable Transport Settlement provides £5.7 billion across eight English city regions to transform local transport networks through London-style integrated settlements. This long-term funding commitment, allocated over five years, gives city regions the long-term funding certainty required to design and deliver ambitious investments in their local transport networks.

The government has also committed to extending the benefits of devolution beyond existing Mayoral Combined Authorities (MCAs) in the Levelling Up White Paper (LUWP). Discussions over multiple new devolution deals, including brand new ‘County Deals’ are underway and all areas of England wishing to agree a devolution deal will be offered the opportunity to agree one by 2030. On 1 August 2022, the government published the terms of a proposed agreement for a devolution deal worth £540 million over 30 years with the local authorities of York and North Yorkshire. This would create a new combined authority across the area with a directly elected mayor, and would devolve a range of powers and responsibilities to better address specific needs within the region, subject to ratification by councils.

In addition, LTAs will take on greater powers and responsibilities, so that they can plan their transport systems more effectively. In the National Bus Strategy, for example, the government set out an ambitious vision to improve bus services outside of London, driven by local leadership. By working together with local operators and communities, LTAs are developing locally prioritised pipelines of projects through BSIPs. As the Devolution Framework published in the LUWP sets out, areas that opt for the highest level of devolution will be able to negotiate the consolidation of existing core local transport funding for local road maintenance and smaller upgrades into a multi-year funding settlement.

The government is also working with LAs to improve transport infrastructure and connectivity in a number of places outside of city regions through the £1.1 billion committed to delivering BSIPs. A portion of the £710 million committed to boost active travel will go to Local Cycling and Walking Infrastructure Plans (LCWIPs).

While the government is committed to long-term infrastructure strategies, there should be a balance between funding certainty and the ability to respond to unexpected changes in the fiscal position. These measures advance the government’s commitment to supporting place-specific, locally-developed plans which draw on local strengths and ensure the economic development of towns.

Recommendation 2

The government should give local areas greater control over funding and decision making on local infrastructure investment. It should provide all county and unitary authorities, or combined authorities where they are in place, with devolved five year budgets for infrastructure, to match the arrangements in place for mayoral combined authorities. Funding should be allocated on a simple basis that reflects population and the size of the transport network being managed.

The government partially accepts this recommendation in relation to maintenance and Integrated Transport Blocks. Through the government’s commitment to rolling-out devolution deals across England, as outlined in the response to Recommendation 1, some benefits previously only available to MCAs will be extended to County areas.

Five-year devolved infrastructure budgets, however, should only be available for county, unitary or combined authorities, where appropriate governance arrangements are in place. This ensures that local accountability is safeguarded and reflects the greater level of control over budgets committed to by central government. As outlined in the LUWP, it is important that devolution is accompanied by sharper and clearer accountability, and the government plans to both develop an effective mayoral accountability framework, and strengthen transparency for local people and publish rigorous, comparable data on performance, driven by a new independent body.

Organisation for Economic Co-operation and Development (OECD) research shows there is a risk that when local governance is poor, devolution is negatively associated with productivity ^{[footnote 2]}. Therefore, whilst the direction of travel is towards devolved infrastructure budgets, this can only happen where there are safeguards in place to ensure Managing Public Money principles are upheld.

By extending devolution across the country, more areas will have the ability to be covered by authorities with the necessary governance in place to devolve decision-making on local infrastructure investment, including locally-led brownfield funding and the ability to establish Mayoral Development Corporations.

While the take-up and delivery of these deals will depend on areas’ appetite and capacity to undertake negotiations, the offer to areas as set out in the LUWP Devolution Framework puts policy on a firm track towards the recommendations set out by the NIC.

Alongside extending devolution, the LUWP also announced that the government is opening negotiations on extending deeper devolution deals with the West Midlands and Greater Manchester. These deals will act as the blueprint for other MCAs and institutions with ‘level 3’ devolution deals to follow.

Recommendation 3

In addition to devolved budgets for infrastructure, the government should provide targeted funding for key strategic priorities: where infrastructure outcomes are particularly poor, or where infrastructure could help towns seize economic opportunities. To access this targeted funding, places will have to demonstrate that they have a credible infrastructure strategy and wider place-based plan in place.

The government partially accepts this recommendation.  Through the Levelling Up Fund and the Towns Fund, the government is providing infrastructure funding targeted at need.

The report acknowledges that there can be a role for competition in delivering targeted funding. The Levelling Up Fund is a good example of a large, flexible pot that delivers local infrastructure projects and requires LAs to evidence fit with wider strategic plans. At Autumn Budget 2021, the government allocated £1.7 billion to 105 priority projects through the first round of the Fund. Of the 94 funded projects which underwent a characteristics of place assessment, 77% went to places in the highest category of need.

The first round of the Fund saw over £450 million invested in transport across the UK. From renewing links to isolated communities to reducing congestion in our cities, and from connecting residential areas with employment centres to widespread upgrades to electric vehicle charging networks, places will soon see these benefits realised. The second round of the Fund will focus on the same investment themes as the first round, including local transport projects that make a genuine difference to local areas. Transport investments may include public transport, active travel, bridge repairs, bus priority, local road improvements and major structural maintenance, and accessibility improvements.

Local areas will be encouraged take a holistic approach to their infrastructure needs across transport, regeneration and cultural investment when developing their bids. Applications for funding will need to clearly demonstrate how proposed investments will support relevant local strategies and their objectives for improving infrastructure, promoting growth, enhancing the natural environment, and making their areas more attractive places to live and work.

The £3.6 billion Towns Fund, launched in 2021, also recognised that high quality and well-designed infrastructure is critical to supporting local economies and sustainably improving living standards. The Fund highlighted the commitment to spreading prosperity in towns through infrastructure investment, whether through improving the speed and reliability of transport connectivity or ensuring internet speeds are fit for the needs of businesses.  Towns Fund recipients have established Town Deal Boards, with investment priorities and project proposals set out in a locally-owned Town Investment Plan.

The government also announced in the LUWP the intention to support local leaders to make a difference in their communities by simplifying the funding landscape. The government will publish a plan this year, which will be guided by the principles of reducing unnecessary proliferation, streamlining bidding, and supporting greater alignment between revenue and capital sources.

Recommendation 4

The government should make available expert strategic advice and support for places that lack the capability and capacity to develop their own infrastructure strategies and wider place-based plans. The government should determine which national organisation or body is best placed to provide that support and ensure it is adequately funded.

The government accepts this recommendation and work is ongoing to support the capacity and capability of local authorities to develop and deliver infrastructure projects. At Spending Review (SR) 21, the government committed £34.5 million over the SR21 period to further strengthen local delivery and transparency – including support for commercial and procurement capability. LAs in priority areas have also received capacity funding of £125,000 to support bid development for the Levelling Up Fund.

Furthermore, the new UK Infrastructure Bank (UKIB) is developing an advisory service to support LAs to develop infrastructure projects that support net zero and/or regional and local growth. The bank is taking a phased approach to building the advisory function as they scale up their internal expertise. In the first phase, they will run a number of targeted pilot projects working in partnership with local authorities to test where and how they can best add value. They will identify pilots that address common challenges faced by local authorities and have the potential to help them develop replicable investment models. They expect to launch the first round of pilot projects in the summer and are actively exploring potential projects in mass transit, zero emission fleet, heat networks and retrofit. In addition, UKIB is offering lending to local authorities to support them in delivering infrastructure projects.

Recommendation 5

The government should set out a clear plan, with milestones and funding, for delivery of gigabit broadband to the hardest to reach premises that will require public subsidy. In those towns where there are likely to be gaps in commercial rollout, and where the government’s regional procurement programme is scheduled to start later, the government should work with local authorities and operators to identify opportunities for local solutions and facilitate voucher funded projects to accelerate coverage wherever possible.

The government accepts this recommendation, which is already being fulfilled by Building Digital UK’s (BDUK) Quarterly Updates and the publication of the Corporate Plan for 2022-23, the latter of which set out BDUK’s delivery plans up to the end of 2025. The government considers digital connectivity essential to closing the digital divide and supporting the government’s levelling up missions. That is why the government has committed a landmark £5 billion Project Gigabit to support the rollout of gigabit connectivity in the hardest to reach areas, with a target for at least 85% of the UK to benefit from gigabit-capable connectivity by 2025. To date, 69% of the UK is covered by gigabit-capable broadband.

BDUK is in the process of mapping telecoms operators’ commercial plans across the UK to identify those premises that will require public subsidy, and will have launched the data collection process for more than 95% of the UK by the end of 2021-22. BDUK expects that up to 20% of UK premises will not be reached by the private sector alone. This figure includes the subset of towns referred to by the NIC.

Through Project Gigabit, the government is running procurements across the UK, designed to target premises in each area that fall outside of commercial build plans to enable nationwide coverage of gigabit-capable networks. By targeting uncommercial premises, including those in urban and rural locations, Project Gigabit can ensure these premises are connected to gigabit-capable broadband while maintaining value for money and avoiding the displacement of private investment.

In denser urban areas, the government is predominantly expecting telecoms operators to provide gigabit connectivity without government support. As advanced in the recommendation, BDUK already offers vouchers for a gigabit-capable connection that can be used by business and residential premises in rural locations (including small towns) to encourage suppliers to extend broadband networks to their premises. BDUK’s recently published Performance Report ^{[footnote 3]} showed 89% of all premises passed by BDUK were rural premises in 2021-22. The latest information on BDUK procurements is available in BDUK’s 2022 Spring Update ^{[footnote 4]}.

The government is also working on barrier-busting activities that will support these commercial plans in towns. For example, provisions in the Telecommunications Infrastructure (Leasehold Property) Act 2021 will enable telecoms operators to benefit from a fast-track process for interim access rights when landowners of multi-dwelling units are repeatedly unresponsive. Making this process more efficient should help address the issue identified by the NIC that unresponsive landlords can make it difficult to obtain access through the wayleave process. Additionally, provisions in the Product Security and Telecommunications Infrastructure Bill intend to better facilitate consensual agreements between landowners and operators and encourage more effective engagement. Both pieces of legislation are designed to improve communication between parties, and ultimately support faster gigabit connectivity to urban areas.

Recommendation 6

The government should develop a strategy by 2022 for encouraging the take up of new communications networks and services by small and medium enterprises.

The government partially accepts this recommendation. The government intends to set out how it will help businesses – large and small – realise the full benefits of 5G by encouraging the adoption of 5G and other forms of wireless connectivity in its Wireless Infrastructure Strategy later this year. The strategy will be relevant to small and medium enterprises (SMEs) and the government will continue to push forward with policies that support the take-up of communications networks across the UK. It is vital that the UK’s SMEs are clear about the benefits of upgraded communications networks.

The government has invested £200 million in the 5G Testbed and Trials (5GTT) Programme, which has focused on exploring the benefits and challenges of 5G across a range of use cases and geographies. The majority of businesses involved in the programme have been SMEs. The findings and lessons shared through the Programme are expected to spur further innovation and productivity improvements in a range of organisations including SMEs throughout the UK. In the long term the government also expects the extent of deployment of 5G to be increased, for example using private networks, due to the programme demonstrating the improved benefits of doing this and the reduction of deployment costs, meaning more people and organisations will benefit from this transformative technology.

The first Interim Evaluation Report of the 5GTT Programme was published in 2020 ^{[footnote 5]}. The programme enabled SMEs involved to de-risk investments in 5G communication networks and participants who had not previously used wireless connectivity solutions committed to work with 5G technologies following the programme’s closure. The government has also launched the 2022 Interim Evaluation for the programme and expect this to be completed by April 2023. The government will share findings with SMEs demonstrating the possibilities that 5G adoption could have for their businesses, alongside updates on GOV.UK.

In the case of gigabit broadband, the government is taking steps to address the barriers to network adoption identified by the Gigabit Take-Up Advisory Group (GigaTAG) and referenced by the NIC. Regarding the NIC’s first two barriers on a lack of understanding and awareness of gigabit connectivity and its benefits, Building Digital UK are developing new broadband toolkits for LAs to help them raise awareness of the publicly funded gigabit broadband rollout in their areas. Work is also being taken forward by Ofcom to improve the consistency of broadband terminology and information to aid more widespread understanding. Regarding the NIC’s third barrier to network adoption, on a lack of digital skills slowing SME gigabit adoption, the government is supporting digital skills through the Help to Grow scheme, the globally competitive visa scheme set out in the Plan for Growth and via significant investment in education, such as the £117 million announced at Spring Statement 2022 to create 1,000 new AI PhDs through Centres of Doctoral Training.

Given the government’s existing and forthcoming work, including UK5G and the Department for Business, Energy & Industrial Strategy’s Made Smarter programme that have helped SMEs utilise new communication networks, the government does not agree that there is a specific need to develop a standalone strategy for this. The government will, however, ensure that work in this area is coordinated, well targeted and continues to keep pace with further communication network developments. This approach will ensure that SMEs can harness the productivity benefits offered by modern communication networks, both now and in the future.

Recommendation 7

Ofcom and the government should consider real world user experience data, alongside prediction models, to improve the understanding of how people experience mobile connectivity in different places and identify any significant patterns that need to be addressed. As part of this, consideration should be given to whether Ofcom’s existing reporting on user experience can be extended to provide a more granular view of localised mobile user experience.

The government agrees with the recommendation and supports Ofcom’s work to provide up-to-date mobile coverage information. This information is published by Ofcom based on data supplied by operators. Ofcom is undertaking a programme of work to establish how it should report on the availability and quality of 4G and 5G coverage. This will involve Ofcom working with industry to explore how different sources of real-world data can provide consumers with more accurate information on mobile connectivity and performance. Ofcom intends to report on this work in late 2022.

Recommendation 8

The government should publish the electric vehicle charging infrastructure strategy, without further delay, followed by a roadmap for the rollout of electric vehicle charging infrastructure in towns. Local infrastructure strategies should also include an active role for the local authority in planning and managing the rollout of on street electric vehicle charging.

The government accepts this recommendation and published its electric vehicle (EV) charging strategy ^{[footnote 6]} on 25 March, and expects the public charging network will increase by tenfold by 2030. The strategy set out plans to make that network convenient, affordable and reliable for all.

The strategy features a key role for LAs in facilitating the rollout of on-street EV charging, as they are ideally placed to identify the local charging needs of residents, fleets and visitors. The government has consulted on putting requirements on LAs to develop and implement local EV charging strategies to plan for the transition to a zero emission vehicle fleet. Working closely with chargepoint operators, the energy network and local communities, the government expects local strategies to identify how to provide affordable, convenient charging for residents, businesses (including fleets), and visitors without causing pavement disruptions that could discourage walking and cycling. They will also need to consider charging opportunities for other vehicles, including e-bikes and motorbikes.

To support LAs, the government has committed £500 million which will be invested to bring high quality, competitively priced public chargepoints to communities across England. This includes a £450 million Local EV Infrastructure (LEVI) Fund, and the On-street Residential Chargepoint Scheme. The LEVI Fund will boost projects such as EV hubs and innovative on-street charging, so those without driveways do not miss out on cleaner transport. The LEVI funding includes up to £50 million to fund the staff needed to do this work, and the supporting knowledge and tools to help them to work out their specific local challenges and plan accordingly.

Alongside this financial support, the government has also published an LA toolkit ^{[footnote 7]} for installing EV charging infrastructure to empower LAs to facilitate the rollout of high-quality charging infrastructure to meet residents’ needs.  This will act as the roadmap referenced in the recommendation.

Recommendation 9

The government should support innovation in towns where trials would be too costly and risky for local authorities to run on their own, and where government involvement can accelerate progress substantially. This should be delivered via a local innovation fund and should include:

• Partnering with towns to run innovation pilots for new communication technologies, including 5G use cases
• Supporting experimentation and early rollout for innovations in on demand bus services.

Government should ensure that lessons from trials are transparently and proactively shared.

The government partially accepts the recommendation and recognises the potential to work with local areas to support the adoption of new communication technologies such as 5G to help level up the UK. That is why the government set up the £200 million 5GTT Programme, an innovation fund to demonstrate and pilot 5G use cases in conjunction with several LAs. For instance, one of the projects was the £20 million West Midlands 5G project which worked with the West Midlands Combined Authority to accelerate the deployment of 5G networks and to test, prove and scale new 5G services across the West Midlands. These projects have shown the exciting potential for 5G to transform the lives of consumers and businesses and are a key part of ensuring the benefits of 5G can be felt in every corner of the UK by the mid-2020s. Therefore, at this time the government does not fully support setting up a new local innovation fund for testing pilot 5G use cases as it may duplicate some of the current work by the 5GTT Programme. We will, however, keep this under review.

The government has also committed £7 million to the Digital Connectivity Infrastructure Accelerator (DCIA) programme which is dedicated to supporting LAs to simplify processes with the telecoms industry to support the rollout of 4G and 5G infrastructure on public buildings and street furniture such as CCTV poles, traffic lights, lamp posts and bus shelters.

The government strongly agrees that the findings of these programmes need to be transparent and proactively shared. All projects are required to publish final reports, summarising their results and, as mentioned previously, the government has commenced work on the 2022 Interim Evaluation Report for the 5GTT programme. The 2022 Interim Evaluation Report will summarise the overall results of the 5GTT programme in a shareable, digestible way (the 2020 Initial Evaluation report can be found on GOV.UK. The government expects this work to be completed by April 2023. In the meantime, the government will continue to gather lessons on an individual basis from the remaining projects and will share those both via GOV.UK and through the UK5G Innovation Network, an organisation the government set up to promote the research, collaboration and industrial application of 5G in the UK.

As part of the upcoming Wireless Infrastructure Strategy, the government will set out how it will continue to work with local areas to help them realise the full benefits of 5G, through increasing adoption and attracting investment in 5G.

Finally, while a range of proposed or hypothetical demand-responsive bus services exists (for example, village dial-a-ride services), little empirical evidence exists on their value for money and effectiveness.

1. Given the scope of the National Infrastructure Commission’s report, this response refers to infrastructure strategies in relation to England only, unless stated otherwise. ↩

2. Jong, D., et al. (2021), “A comprehensive approach to understanding urban productivity effects of local governments: Local autonomy, government quality and fragmentation”, OECD Regional Development Papers, No. 11, OECD Publishing, Paris, https://doi.org/10.1787/5ebd25d3-en. ↩

3. BDUK’s 2021 to 2022 Performance Report - GOV.UK (www.gov.uk) ↩

4. Project Gigabit Delivery Plan, spring update, GOV.UK (www.gov.uk) ↩

5. Process and Early Impact Evaluation of the 5G Testbeds and Trials Programme Final Report ↩

6. UK electric vehicle infrastructure strategy - GOV.UK (www.gov.uk) ↩

7. Zero emission fleets: local authority toolkit - GOV.UK (www.gov.uk) ↩