Infrastructure forum highlights need for policy certainty

The government’s new infrastructure forum has highlighted the importance of greater policy certainty around energy and renewables in its first meeting with Danny Alexander this morning.

Speaking after the inaugural meeting of the National Infrastructure Plan Strategic Engagement Forum (NIPSEF) this morning, chief secretary to the Treasury Danny Alexander said one of the key messages he had taken away from the discussion was the need for greater policy certainty from government, particularly concerning the energy market and renewables.

He said: “A very strong message that I took from it - and it’s not a new message to government - was the importance of policy certainty in a whole range of areas, regulatory certainty too.

“And in particular on policy certainty, around energy and energy investment, the energy bill, electricity market reform, the climate for investment, particularly in renewables, which is so important to our future energy infrastructure.

“So that’s a message I’ve taken very much to heart from this discussion and I’ll be communicating it very forcibly to my colleagues in government.”

A lack of certainty around the energy market reforms being brought forward by government, as well as a perceived conflict between the Treasury and the Department of Energy and Climate Change - and more broadly between the Conservatives and Liberal Democrats - over the issue of green energy has been a key cause of industry concenr in recent months.

The new strategic forum, launched at the Liberal Democrat party conference in September, will be focused on improving engagement between government and industry and driving forward the government’s infrastructure plan.

The forum is scheduled to meet at least twice in the first year and will be formed of senior executives from infrastructure delivery, financing, asset owner and managers, as well as representatives of business end users. Alexander said the next meeting would be held in January.

The first meeting, held this morning, comprised a range of industry figures, including Balfour Beatty chief executive Ian Tyler; Mott MacDonald chairman Keith Howells; HS2 Ltd chair Douglas Oakervee; Geoffrey Spence, chief executive of the Treasury’s infrastructure unit; as well as representatives from the European Investment Bank, the Pension Protection Fund, Arup, Bam Nuttall, Renewable UK, among others.

Alexander said the government’s UK Guarantees scheme continued to make “good progress”, with more projects set to be announced through the scheme in “due course”.

“We will set out in due course the projects we are taking to, obviously it depend on a project basis , and discussing are continuing behind the scenes.

“We’ve had a lot of expressions of interest and there are a significant number of projects where we think this might be something that can really help. So it’s off to a very good start.”

He added that the government could yet increase the level of guarantees available through the scheme, beyond the current £50bn limit. “The bill allows us to extend the amount of money available for guarantees should we wish to - we’ve got £50bn identified in the bill - so let’s make progress on using that first , but the bill provides the power to increase the amount of guarantees,” he said.

Alexander rejected suggestions that the government’s plans to attract institutional investment into infrastructure were failing, after it emerged that the Pensions Infrastructure Platform - the vehicle set up to help deliver on chancellor George Osborne’s call for pensions to invest £20bn in infrastructure - had only managed to attract £700m in investment.

The PIP, established by the NAPF and the Pension Protection Fund wasexpected to raise up to £2bn in an initial fundraising drive, which could be leveraged to up to £4bn, with the investment focused on major UK infrastructure projects.

However, despite signing up some of the UK’s largest pension funds, the PIP has only managed to attract £700m in investment, which constitutes a third of the £2bn the PIP had hoped to raise in its first year.

But Alexander said he was pleased with the progress the PIP was making. “They’re making very good progress and we’re very confident we will reach the scale we’ve talked about and beyond that,” he said.