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Govt infrastructure plans ‘will increase energy bills’

PAC: Public will foot the bill for govt’s spending

hand grabbing moneyThe billions needed to fund the government’s ambitious plans to boost UK infrastructure will be paid for by the public through increased energy bills, the Public Accounts Committee (PAC) has claimed.

In a new report, members of the PAC cast doubt on whether the coalition’s £310 billion infrastructure spending plan is credible, claiming that it is not realistic to expect that amount of money to be raised in the current economic climate.

The government is set to use the fund to invest in projects ranging from the new HS2 high-speed rail link and toll roads to revamped sewage systems and windfarms, and estimates that around £200 billion will be raised through private funds.

However, the PAC believes that a number of factors will stand in the way of the coalition delivering on its ambitions, with one side effect being the public footing the bill for the improvements through increased energy bills, rail fares and other incremental charges.

Not convinced

“We are not convinced that a plan requiring £310 billion of investment in infrastructure is credible given the current economic climate, the cutbacks in public finances and the difficulty in raising private finance for projects on acceptable terms,” the committee states.

The PAC reiterated that it is not against infrastructure investment, noting that roads, railways, airports, ports and communication systems all need to be upgraded in order to stimulate economic growth, and stressed that new means of generating energy are vital in order to secure the nation’s energy security and drive down fuel bills.

However, raising the funding needed to bring the government’s intentions to light will have a detrimental effect if the plans remain in their current form, the committee says.

Time for action

Urgent action is needed, according to the PAC, which noted that potential private sector investors will be reluctant to commit until government policy is “clear and consistent”.

“The Treasury’s Infrastructure Plan is simply a long list of projects requiring huge amounts of money, not a real plan with a strategic vision and clear priorities,” said Labour MP Margaret Hodge, chair of the PAC.

“Most of the £310 billion of investment needed will come from the private sector, with households shouldering the cost through higher energy bills and fares. The government needs to urgently assess the impact on consumers and how this can be contained.”

The Treasury responded to the claims by saying it disagrees with the committee’s depiction of the infrastructure delivery plans, adding that planning and delivering essential long-term infrastructure is a “central economic priority”.

“As well as switching billions of pounds from current to capital spending, we are also using the government’s balance sheet to provide vital funding,” it said.

Clarity needed

The assurances are yet to convince the nation’s business, with John Cridland, director-general of the Confederation of British Industry, claiming “a queue of businesses” have said the government’s infrastructure plan needs speeding up.

“The new guarantees scheme has so far only managed to deliver two projects. More are in the pipeline but we need them delivered,” he added.

Until greater clarity on the government’s infrastructure policy is put in place, businesses and consumers alike will remain in the dark, and question whether the investment plans will actually benefit them in the long run, when higher energy bills and elevated uncertainty are among the potential side-effects.


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