The UK needs a ‘step change’ in infrastructure investment to meet its Net Zero goals, but it will not attract the investment required without an urgent programme of policy and regulatory reform. That was the stark message from the Global Infrastructure Investor Association (GIIA), a group of infrastructure investors that includes pension funds, insurance companies and sovereign wealth funds. GIIA members already have £130 billion in infrastructure assets under management in the UK and they have $250 billion ready to invest, the group said in a new publication, Regulating for Investment. But the UK framework of regulation put in place at privatisation “has been found wanting” in the face of new challenges and it needs “urgent and decisive action”, the group says.
The GIIA says regulators are “operating in a vacuum” because there is no government-led long-term plan for the utility sectors. Without the necessary strategic direction and democratic mandate to make difficult choices they have favoured controlling short-term bills at the expense of long-term investment.
The organisation wants a framework that has a clear delineation of roles and responsibilities between parliament, the government and independent regulators, and accompanied by robust mechanisms to ensure accountability. It wants a shared infrastructure plan to set strategic direction, simplified regulatory duties and accountability. It wants a bigger role for competition in delivering the plan with government covering risks that are beyond investors, along with simplified price regulation across longer periods than the current five-year price determinations where competition is not applicable. The government should build “intergenerational fairness” into decisionmaking. it should use available data, working across infrastructure sectors, to identify vulnerable groups that need targeted assistance and make sure they receive it.
Chief executive Lawrence Slade said, “It is essential for us to have an open and honest conversation about how conflicting policy goals should be balanced. Clearly communicating this to the public in a way that generates enduring consensus is the shared responsibility of Government, regulators, companies and civil society groups. We must rise to the challenge.”
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Further reading
Ofgem ‘must think more widely’ on local Net Zero delivery, encompassing at least heat and mobility