The leading Institution of Civil Engineers (ICE) has called for the Government to put an end to stop-start investment in the UK water sector.

The call comes in a new assessment by the Institution of the Coalition government's infrastructure policy after a year in power.

The Institution said that the Coalition Government had “rightly commissioned” David Gray to review the regulation of the water industry. However, ICE said that while 20 years of regulatory-driven investment has meant that the nation’s water infrastructure is serving its customers well and is mostly in good condition, the world is now is very different to that when Ofwat was first set up.

overnment must reform the regulatory regime in order to drive the long-term investment necessary to address climate change, population growth and overall water infrastructure sustainability. It must also put an end to ‘stop-start’ investment.

Decarbonisation is one of biggest challenges

Commenting on the ICE assessment, ICE's Director General, Tom Foulkes said:

“It is clear to us that the Coalition Government recognises the importance of continued investment in our transport, energy, waste and water infrastructure - in underpinning a growing and low carbon economy as well as improving our quality of life. The placing of infrastructure at the heart of the Plan for Growth, the launch of the UK’s first ever National Infrastructure Plan and the retention of Infrastructure UK within the Treasury are testimony to that and show real progress.

“Government must now focus on translating these positive steps into clear actions that pave the way for infrastructure to improve our long term economic performance. The second edition of the National Infrastructure Plan will provide an ideal vehicle. It must set out the priorities for essential UK infrastructure, the long-term investment needs and how potential barriers to securing private investment, such as aspects of the planning system, will be addressed. This will be especially important for the decarbonisation of the energy sector, one of the biggest challenges for the Coalition going forwards.”

Pressing need for Government to unlock multiple funding

The assessment outlines a range of actions now required by the sector. On funding, ICE said the need for Government to unlock multiple funding sources to raise sufficient capital is “becoming ever more pressing.” The Government has estimated that £200 billion will need to be invested in the nation’s infrastructure over the next five years, with an aspiration for more than 70% to be delivered through private investment. Ice said that while the Green Investment Bank carries the potential to act as one of the core funding streams, it is crucial that Government demonstrates continued commitment to the principle of a ‘bank’ with powers to borrow, not a fund.

Effective carbon price level needed to drive investment in renewables

On energy, ICE said there is a very real danger of demand outstripping supply in the energy sector without prompt action from Government to shore up the regulatory and investment markets to encourage industry to deliver new low carbon energy generation. Government must deliver a robust energy market reform that reduces the risk for investors, leaving no doubt of its commitment to facilitating the decarbonisation of the sector.

A crucial part of this would be setting an effective level for the carbon floor price for 2013 and beyond, such that it will drive the major investments needed in wind, marine and carbon capture and storage technology to prevent future shortfalls.

On planning, ICE said that while the retention of a fast-track system for nationally significant infrastructure was reassuring, concerns remain about the implications of the Government’s localism agenda on ‘larger than local’ projects. In particular, clarity is needed on how the ‘duty to collaborate’ will be monitored to ensure effective collaboration between local authorities in planning and delivering local energy, waste, water and transport projects that are often key to unlocking regional growth.

Finally, on skills, ICE said that the UK has an enormous programme of infrastructure work to deliver in coming years and needs a highly skilled workforce to deliver it. Although efforts have been made to end the ‘stop-start’ approach to procurement planning and encourage skills growth through provision of more apprenticeships, further action is now needed to provide certainty around the UK’s long-term infrastructure delivery programme to encourage industry to make future investments in skills development programmes.