UK: How £100bn Will Be Spent On Infrastructure

Last Updated: 10 July 2013
Article by Angus Walker

Today's entry reports on the government's infrastructure announcements that formed part of the 'Spending Round 2013'.

A day later than Chancellor Jeffrey Osborne's Spending Round speech on Wednesday, his deputy Danny Alexander announced how spending on infrastructure was to be allocated over the next parliament.  The announcements are contained in a document entitled 'Investing in Britain's future'.

The document is signed by Osborne and Alexander, but clearly has the imprint of Infrastructure UK and new infrastructure minister Lord Deighton on it - indeed the document's filename is 'PU1524_IUK_new_template.pdf'.

The main announcement is a commitment to spending £100bn on infrastructure during the lifetime of the next Parliament, i.e. 2015-20.  Of course that depends on the coalition being re-elected in 2015 - it's not clear that any other combination of one or more parties would stick to the plan.

It is not an announcement of new spending - the spending was committed to in the Budget back in March - it is setting out what the spending already committed will actually be spent on.

Transport is the big winner - of the £100bn, £70bn will be spent on transport, £20bn on schools and £10bn on science, housing and flood defences.  Although energy doesn't get any money, long awaited draft 'strike prices' for 14 different types of renewable energy have been published, ranging from £65 to £305 per megawatt, depending on the technology type, as well as various other announcements - see below.

Transport spending

The £70bn for transport breaks down into seven pots of money.  £16bn will go to High Speed 2 over the five year period in question, and the document puts the total cost of High Speed 2 at £50.1bn, once the £7.5bn cost of trains is included.  This is a near-£10bn increase on previous figures that was revealed on Wednesday during the second reading debate on the High Speed Rail (Preparation) Bill (see column 343), although the government do not intend to spend the whole amount, it is a 'funding envelope'.

A further £15bn will go to the Highways Agency for its projects to repair and upgrade the motorway and trunk road network.  The amount of resurfacing of roads by 2020 will be the equivalent of resurfacing a two-lane road from London to Nairobi, as the document graphically puts it.  Following the Cook Report in 2011 into highway financing, the Highways Agency is to be turned into a 'publicly-owned corporation with long-term funding certainty and flexibility' - not quite 'Network Road', since Network Rail is a private company, albeit a special sort that can't issue dividends.

The third big amount of money is for Network Rail, which gets a projected £22.4bn.  It's projected because Network Rail is funded in five-year tranches where the next one ends in 2018-19 and the funding to that date has already been set.  The government has carried the figures on for a further two years to make up its total, but warns that 'this does not represent the government's policy on rail investment in the period 2019-2024'. Hmm.

Various projects are singled out, notably Crossrail 2, once called the Chelsea-Hackney line in London, the devolution of part of the West Anglia franchise to the Mayor of London, and the electrification of the Gospel Oak to Barking line, also in London. In smaller print there are even some schemes outside London - the Northern Hub, East-West Rail from Bedford to Oxford and electrification of other lines.

Four smaller transport pots are Transport for London: £5.8bn, local authority maintenance: £5.9bn ('19m potholes'), local authority major projects: £5bn and the 'Integrated Transport Block': £2.7bn.  The second-last and part of the last of these will go towards a 'Single Local Growth Fund' to be administered by Local Enterprise Partnerships (LEPs).

Energy news

As mentioned above, not much in the way of money for energy infrastructure, but various other announcements, the first being draft 'strike prices' for various types of renewable energy generation.  The rates for the first year of 2014-15 are as follows (some rates go down a bit over the years):

Generation type

£ per megawatt

Landfill gas


Sewage gas


Energy from waste (with Combined Heat and Power)




Onshore wind


Biomass conversion


Dedicated biomass (with CHP)




Large solar photo-voltaic


Anaerobic digestion


Advanced conversion technologies


Offshore wind


Tidal stream




The prices will be finalised in December.  Nuclear power. tidal range (the other type of tidal energy) and carbon capture and storage will also be underpinned by 'contracts for difference' eventually but no strike prices have been announced. For more on electricity market reform, see this document.

Other announcements are the introduction of a 'capacity market' for gas-fired electricity generation from 2018-19.  This evens out payments to generators whose power stations are only operational at times of stress.

Yesterday's announcements from the Treasury coincided with a report from electricity and gas regulator Ofgem, who said that the chance of a 'supply disruption' - i.e. blackouts - would increase from 1 in 47 years now to 1 in 12 years or lower in 2015-16.

Shale gas gets prominence once again.  A package of measures is to be announced next month to 'kick start the shale gas industry in the UK', including planning and permitting guidelines, a consultation on tax incentives and a community benefit scheme (rather like the one for onshore windfarms).

Finally, flood defence gets a boost, with £370m per year from 2015-16.

If you were expecting an update of the National Infrastructure Plan, this will not be issued until the Autumn Statement later this year. In fact, Investing in Britain's Future feels more like a plan than the National Infrastructure Plan itself, which is more in the way of a snapshot.

- See more at:

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