UK Budget 2024

The Budget's emphasis on a value-based approach signals a shift toward balancing the costs of public debt with measurable benefits from infrastructure investment. This change in policy has opened billions for investment, but also requires a strengthened framework to maintain public confidence and fiscal responsibility. The main way the government is doing this through a stronger institutional framework. Key changes include the formation of the National Infrastructure and Service Transformation Authority (NISTA), merging the National Infrastructure Commission and Infrastructure and Projects Authority to create an expert "critical friend" in government infrastructure assurance with an enhanced role in validating business cases. Meanwhile, the Office for Value for Money (OVfM) will focus on identifying inefficiencies and validating the value of proposals, while the National Wealth Fund (NWF), transitioning from the UK Infrastructure Bank, will mobilise investment more effectively under government priorities and missions. Together with the National Audit Office (NAO), these institutions aim to drive a confident, value-focused agenda.

However, while positive, the practical execution isn’t clear. The real challenge will be how these organisations (alongside the complex system of regulatory bodies) efficiently collaborate to support projects to deliver, and not just to independently scrutinise. In doing so there is a risk of over-administration, which could impact project efficiency and stifle innovation. Clear guidelines on how these organisations will work together is needed, alongside a commitment from government as to the benefit that this network of strengthened institutions will provide to projects.

Additionally, the commitment to publish business cases for major investments is a welcomed step to driving transparency and informed debate. However, this will need to be accompanied by increased accountability from these institutions, and a commitment from government and industry to increase meaningful public engagement around major projects and programmes. With cost-benefit analysis already routine in demonstrating value in business cases, the expectations to be placed upon projects should be provided alongside the cases themselves, and these expectations should be transparent and forward-looking. They should particularly focus on how to factor in value-drivers that are difficult to quantify monetarily, and how to increase confidence in the deliverability of business cases.

The Budget represents the first step in a broader infrastructure and investment strategy. It paints big numbers with a broad brush, but in many instances lacks the detail that enables meaningful investigation. Phase two, expected in the Spring update, promises a 10-year infrastructure plan that will define long-term objectives and funding allocations across sectors such as transport, energy, healthcare, and housing. This next phase will also provide the foundation for an industrial strategy aligned with the government’s goals for economic growth, productivity, and sustainability. Additionally, targeted investments in high-priority projects, including the Transpennine Route Upgrade, Sizewell C, Small Modular Reactors, and the New Hospital Programme, are anticipated, alongside workforce-focused strategies in the "Get Britain Working" white paper.

Infrastructure strategies need structure from government machinery to drive commitment from the private sector, and policy consistency from the public sector. The tension between short-term political cycles and long-term delivery timescales of infrastructure makes this difficult. Some steps will give cautious optimism, such as bringing more predictability to setting and reviewing five-year capital budgets - but five-years for infrastructure is not a long time.

A key enabler of this government’s Budget is driving up private sector investment. When it comes, a robust 10-year infrastructure plan will be welcomed by the industry. The government's phased approach provides an opportunity to synchronise investment, workforce, and policy initiatives across sectors. An integrated and detailed approach in phase two could substantially increase private-sector confidence, but for now there is a gap without a clear direction. Organisations need consistent policy direction to commit resources, and the Budget has been silent in several areas. Phase two will hopefully detail how the government will promote specific skill development, encourage digitally enabled and modern methods of construction, and reduce planning and approvals time.

For the Budget’s value-driven vision to succeed, both government and industry must take proactive steps:

• From the Government: Streamlining collaboration among NISTA, OVfM, NAO, NWF, and other bodies such as regulators is essential to avoid redundant oversight and unlock efficient project delivery. Phase two should deliver a clear, actionable roadmap for skill development, digital construction, and planning reform, providing the industry with specific guidelines to facilitate investment and innovation. Departments should work with industry to think how a transformative approach to delivery models for major investments could help achieve the 2% productivity, efficiency and savings targets.
• From Industry: Engaging with these institutions early on is vital for shaping policies that encourage real-world innovation. As the emphasis on measurable value increases, industry must be prepared to confidently and publicly demonstrate the deliverability and benefit cases of investments. Active involvement will help create a sustainable, value-based infrastructure landscape where confidence in project delivery meets tangible public benefit. A key evolution will be ensuring there is a golden thread of value throughout contracting and delivery mechanisms.

An integrated approach in phase two could substantially enhance private-sector confidence, but currently, there are gaps in clear policy direction. Bridging these will require a cooperative framework, where government and industry work toward shared outcomes in both the near-term and long-term infrastructure development of the UK.