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Subject: Long Term Infrastructure Investment
Plan for London
Report to: Oversight Committee
Report of: Head of Paid Service and Executive
Director of Development, Enterprise and
Environment
Date: 10 September 2013
This report will be considered in public
1.
Summary
1.1
The London Finance Commission report ‘Raising the Capital’ report called for greater tax raising
powers for London and recommended the GLA produce a high level plan to set out London’s
long term infrastructure needs, how much they will cost and how they might be financed under
current fiscal arrangements and in a more devolved future (the “Long Term Infrastructure
Investment Plan for London” or “Plan”).
1.2
At the Committee’s meeting in July, the Head of Paid Service agreed to provide the Committee
with an informal progress report on our preparatory work to deliver such an Infrastructure
Investment Plan for London. This paper therefore updates the Assembly on our thoughts on the
scope of the Plan and our approach to delivery.
2.
Recommendations
2.1
That the Committee notes the emerging proposals for producing the Plan.
2.2
That the Committee notes this is a significant piece of work, which will be important in
determining and planning for London’s ability to cater for its growing population and to
remain competitive. It will also be central to London’s bid for fiscal devolution and
London’s ability to attract investment. As such, it will take some time to deliver and will
require external expertise, some of which will come from partner organisations and some
may need to come from consultants. The Assembly will receive progress updates as the
project develops to allow input into the approach to producing the Plan and to its
contents.
City Hall, The Queen’s Walk, London SE1 2AA
Enquiries: 020 7983 4100 minicom: 020 7983 4458 www.london.gov.uk
3.
Background
3.1
The Mayor’s Vision 2020 and Raising the Capital both emphasised that London’s population is
growing and will continue to do so. Current projections suggest London’s population will reach
10 million by the early 2030s. By 2050 it is projected there will be around 10.8 million people
living in London. The London economy will continue to grow and create new jobs. The
number of workforce jobs (jobs located in London whether or not they are taken by Londoners)
has grown by over 100,000 over the past year. London is likely to attract continually increasing
numbers of visitors – there were over 15 million international visitors to London last year;
Oxford Economics forecast this will increase to over 20 million by 2022. All will add pressure to
London’s infrastructure, much of which is already operating at capacity.
3.2
The London Finance Commission (LFC) argued that funding arrangements in London should
allow the GLA to make additional self-determined investments in its own infrastructure both to
cater for the growth already forecast for its population and economy, and to promote additional
economic growth.
3.3
The LFC clearly stated that fiscal devolution is necessary for the Mayor to be able to provide the
long term financing needed to fund London’s infrastructure needs. At present almost all taxes
collected in the UK are paid to central Government and spent and/or redistributed according to
its priorities. Tax devolution allows sub-national government to raise some of its own tax
revenues, delivering accountability and removing dependence on grants. The LFC called for
greater tax raising power for London, particularly from property taxes. A thorough
infrastructure and capital investment plan will be an important part of the argument for securing
fiscal devolution.
3.4
The Mayor’s 2020 Vision set out the case for the investments needed for London by 2020.
Infrastructure, particularly transport, featured heavily. The Mayor also committed to bringing
forward a London Infrastructure Plan that will cost schemes and set out how they should be
funded.
3.5
This is an opportunity to look beyond 2020 and assess London’s longer term needs and think
more strategically rather than on a project by project basis. The intention is that the Plan should
consider London’s high level infrastructure needs and provide a set of priorities and a timeline
for delivery.
3.6
A great many of London’s infrastructure needs have already been set out in a variety of
documents such as the London Plan, the London Plan Implementation Plan and the Mayor’s
Transport Strategy, along with external documents such as the 5 year plans produced by the
regulated utilities. Many of the projects set out in these documents are already in the pipeline.
The Mayor’s 2020 Vision makes further proposals in this area. We will bring these existing
plans together to provide a coherent prioritised plan setting out London’s high level needs in the
medium term. This will provide the base for planning into the longer term.
3.7
It is not straightforward to provide an estimate of the scale of investment involved. On
transport alone, the Mayor’s Transport Strategy estimates £4.8 billion a year for the next 5
years, and continuing investment of £3.5 billion to £4.5 billion a year to 2031. The London
Plan Implementation Plan suggests somewhere in the region of £50 billion to £75 billion may
be a reasonable estimate for total infrastructure spend over the next 5 to 10 years. This project
will aim to provide more robust evidence on the total investment necessary for London’s long
term infrastructure needs, split between different categories and demonstrating the funding and
financing implications.
4.
Issues for Consideration
4.1
This is a significant high profile piece of work, and the first time London has produced a long
term look at its infrastructure needs. There are therefore a number of issues to consider in terms
of how to approach the work.
Scope
4.2
The Infrastructure Investment Plan will be as much a capital investment plan as an
infrastructure plan. It will provide a high level assessment of London’s infrastructure needs;
along with an assessment of the magnitude of costs associated with the required infrastructure.
Importantly, it will also consider funding streams, both in a future where the current fiscal
arrangements apply and in a more fiscally devolved future. We would aim to extend thinking on
financing options.
4.3
Our current thinking is the Plan should include London’s high level strategic needs across the
whole range of infrastructure (public transport, roads, energy, water, flood defences, sewerage,
waste, telecoms, broadband, schools, hospitals, and green infrastructure). Some aspects,
particularly those where the GLA has more control, may be covered in more detail.
4.4
The timescale we look to needs considering. We are currently minded to look to 2050. This is
an ambitious horizon to consider - the next London Plan iteration will take us to 2036. The
current Transport Strategy horizon is 20 years. However, this is not intended to be a one off
piece of work that commits to a series of projects between now and 2050. Instead it will provide
a first view on the scale of investment needed to ensure London has the infrastructure it needs to
keep pace with a growing population and to remain competitive. It is worth noting that in
terms of infrastructure planning and financing, this horizon is not excessively long. We are
likely to still be paying for much of the infrastructure currently being planned in 2050.
4.5
Other cities have recently brought out long term plans, generally also looking to 2050. New
York City’s “Plan NYC” covers the period to 2050, with a recent announcement to extend it to
2100. We are looking into how other cities have managed the processes.
4.6
As we develop the work further, it may become clear that looking this far is not feasible and a
2030 horizon may be more realistic.
Approach
4.7
We expect the project will need to be delivered through a mixture of in-house work ,
consultancy and external input. The Economic and Business Policy Unit will project manage the
process. An iterative approach will be taken to the project, using findings from each stage to
inform the content of the next. The first stage is taking place in house and will be completed by
the end of September, it will include the following:

Literature review of infrastructure planning in other cities;

Assessment of existing infrastructure and infrastructure plans;

High level costed infrastructure plan to 2020; and

Long term projections for London’s population, employment and infrastructure
requirements.
4.8
In carrying out this initial work we are starting to identify emerging themes, key questions and
sources of expertise, along with the main issues facing each sector of infrastructure. The next
stage will develop a long term vision of London and the potential financing options available.
This will allow us to then consider the city’s high level infrastructure requirements and how
these fit with the funding and finance available.
4.9
External input will be sought to ensure buy-in. The London Enterprise Panel and the London
Infrastructure Group will provide strategic input. We will also consult with key stakeholders,
for example through events organised with London First and London Councils. Partner
organisations, such as London Councils and the City of London, will input through evidence
papers.
4.10
We are likely to also need some consultancy support, to provide industry and finance expertise.
The funding for this has not yet been agreed. As it becomes clear exactly where this input will
be required, we will assess the financial implications.
Outputs
4.9
The final product is envisaged as a published report, which sets out the high level infrastructure
needed to ensure London keeps pace with population growth; the economy remains
internationally competitive and regeneration and growth are unlocked in specific areas. This
will be backed up with explanations of needs, costs and financing proposals. Financing options
will be given for current arrangements and in a more devolved future.
4.10
The published report may need to be supported by a more detailed report and supporting
documentation to the Mayor.
4.11
This will not be a one off exercise; the city’s needs will of course change over time. As such the
Infrastructure Investment Plan will need to be revisited periodically.
Timing
4.12
As we are still in the early stages of the work, it not yet clear exactly how long will be needed to
produce the end product. Adequate time is needed to undertake the necessary background,
work up the detail and consult on recommendations.
4.13
London First have organised an Infrastructure Summit for late March 2014, at which the Mayor
is speaking. By March 2014 we should be a position to publicly talk about the potential content
of the plan and use this event to an opportunity for businesses to debate.
4.14
We hope to be in position to publish by summer 2014. We will keep this under review and
update the Assembly as things become clearer.
Risks
4.15
Given the high profile nature of the project and its importance in arguing for the investment
needed to support London’s infrastructure, it carries significant risks. The main risk is that the
report does not have the desired impacts. The report could be seen as simply a lobbying
document for a long list of expensive projects. At the other extreme it could be too high level to
have any real impact. Further, without buy-in from infrastructure providers or central
Government any recommendations may simply be ignored.
4.16
We are aware of these risks. The final report will not be overly specific on the exact
infrastructure requirements, to avoid either being seen as a list of projects or as trying to predict
the precise consequences of technical change over the longer term. All key stakeholders are
being engaged throughout the project to provide them the opportunity to input evidence and
discuss recommendations. So far there is support for the project. Infrastructure UK has been
involved and will continue to be, to ensure a level of central Government buy in.
5.
Legal Implications
5.1
Under section 30 of the Greater London Authority Act 1999, the GLA has power to do anything
which furthers any of its principal purposes (subject to certain limitations, not material to the
present proposal at this stage, under section 31). Those principal purposes comprise promoting
economic development and wealth creation, promoting social development, and promoting the
improvement of the environment, all in Greater London.
5.2
Under section 34(1) of the same Act, the GLA may do anything which is calculated to facilitate,
or is conducive or incidental to, the exercise of any of its functions. Under section 34(2), this is
subject to the proviso that the GLA may not “by virtue of this section raise money (whether by
precepts, borrowing or otherwise) or lend money, except in accordance with the enactments
relating to those matters”.
5.3
This paper proposes the preparation of a “Long Term Infrastructure Plan” for London, which is
understood to be intended to cover London’s infrastructure needs as far ahead as 2050, and the
extent of the investment which would be required to supply the infrastructure.
5.4
The requirements of Greater London for infrastructure in the foreseeable future touch on all of
the GLA’s three principal purposes. The process of identification, examination and discussion of
those requirements is within the powers of the GLA.
5.5
The contemplated fiscal devolution would require legislative change; the form of any fiscal
devolution agreed by central government would determine the nature and extent of the
legislative change.
5.6
It is currently proposed that publication take place approximately a month before the date
projected for local (and European Parliament) elections in 2014. This may need to be considered
again nearer the proposed time, specifically by reference to the sections relating to elections in
the Code of Recommended Practice on Local Authority Publicity, and generally to ensure
compliance with the conventions in relation to activity by local authorities in pre-election
periods which is, or could be interpreted as, party political.
5.7
Officers are further advised to seek specific legal advice as the project progresses, and to be
mindful of the following:
a) that all relevant approvals are obtained (via DD/MD as appropriate); and
b) that any procurement for services is undertaken in accordance with the Contracts and
Funding Code working with TfL procurement. This includes completion of a single
source request form is a suitable exemption is permissible.
6.
Financial Implications
6.1
This report seeks approval for the proposed Long Term Infrastructure Investment Plan for
London. As this is a significant piece of work, it will take some time to deliver and require
external expertise. The costs associated with the need for consultancy support to provide
industry and finance expertise cannot be substantiated at the time of this report. There is
currently no budget allocated for this purpose and the approval of any budgetary requirements
will be subject to the Authority’s decision making process.
Local Government (Access to Information) Act 1985
List of Background Papers: None
Contact Officer: Suzanne Moroney
Telephone:
020 7449 6569
E-mail:
[email protected]