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The price of eggs and modern infrastructure. Can consumers afford it?

As the cost of living crisis bites, professionals must take a lead, says Antony Oliver

Antony Oliver, Infrastructure Intelligence editor

Having spent the last five years establishing the case for investment in infrastructure as the best way to drive the nation’s economy out of recession, the spectre of affordability is now well and truly hanging over us. 

We are not talking about the price of eggs. Rather the cost of power, heating, transport and water supplies.

Make no mistake, the cost of living political agenda – call it a crisis if you like – is only going to get louder the closer that we get to the General Election. 

And we are not talking about the price of eggs here. Rather the cost of power, heating, transport and water supplies. 

In short, politicians will increasingly need to be able to show voters that they can close the gap between stagnated incomes and rising household bills. Ed Miliband called it a priority this week; George Osborne did the same the week before.

In many ways that really is a good thing for infrastructure. It means we will have to think that bit harder about our priorities.

Margaret Hodge, chair of the hugely influential Parliamentary Accounts Committee this week laid down the challenge. “High levels of new investment in infrastructure mean that bills and charges are likely to continue to rise significantly in the future,” she said.

“No one seems to be sticking up for the consumer in all of this,” she added warning that by 2030 average household bills are likely to be 18% higher in real terms compared to 2013.. “This is of particular concern given that the poorest households are hit hardest by increases in bills.”

No matter how creative we are over financing our new infrastructure, there really are only two places that the funding to pay for it is ever going to come from: tax or user charging.

The fact that 65% of the proposed infrastructure will be delivered by the private sector not the public purse is interesting and means that the debate will certainly affect the political risk profile for investors and so the deliverability of the pipeline. 

But this public-private split is largely immaterial when it comes to affordability.

Because as Institution of Civil Engineers vice president Keith Clarke pointed out while launching the State of the Nation report on infrastructure last week, no matter how creative we are over financing our new infrastructure, there really are only two places that the funding to pay for it is ever going to come from: tax or user charging.

The point made well by Clarke is that understanding this brings focus to the fact that, regardless of professional passion for infrastructure, the sooner we accept resources as finite the better.

That means accepting, he said, that in a future faced by extreme weather conditions, it may not be cost effective to run all services all of the time. And it means accepting that if we cannot afford to maintain assets, then we shouldn’t be building new.

It’s a bold move for a profession geared around creating infrastructure to advocate building less of it and instead thinking harder about what we already have. 

But for all of society, for consumers and crucially for politicians it is surely a welcome one. 

Antony Oliver is the editor of Infrastructure Intelligence

If you would like to contact Antony Oliver about this, or any other story, please email antony.oliver@infrastructure-intelligence.com.