14/08/09
Focused on the future of water, energy, transport and the rest, the great infrastructure debate is also the great quality-of-life-debate.
Essential service providers could soon be seen meeting society's aspirations, not just its 'back-office' functions.
Britain has begun a long overdue infrastructure debate. As the 'difficult' child of complacency and crisis, the debate's adolescence may mean tantrums and controversy. Its maturity should mean a better country in every sense.
Political and public focus is on individual services. Every week there are headlines about the industries that keep the nation going. In July alone:
• Energy – which renewables offer most potential?
• Transport – will there be a new airport or cleaner, faster trains?
• Telecoms – how soon universal broadband?
• Post – what future for Royal Mail?
• Banking – will the 'utility' (the part that exists to finance the real economy) be separated from the 'casino' (investment banking)?
• Water – how, the Financial Times asks (24/07/09), will companies in England and Wales cope with Ofwat's draft 2009 Price Review settlement, if energy costs, inflation or credit markets deviate from expectations?
Does all this add up to a great national debate?
In my view, the answer is yes, for two reasons. First, it links the sectors by showing them all facing the same problems (which may provoke a lot of foot-stamping and even threats to leave home). Second, it is evidence of an already widespread and growing appreciation that, in future, these sectors will be more important than ever to our quality of life.
Universal problems
The problems cover every aspect of the state: industrial, financial, political, regulatory. Here are at least seven:
• Criticality. How the consequences of failure are defined.
• Legacy management. How, and how quickly, to make up for past neglect.
• Investment. How to ensure access to adequate capital at reasonable cost.
• Regulation. How to obtain the appropriate mix of regulatory and market mechanisms.
• Innovation. How to set incentives and measure risk.
• Maintenance. How to set objectives and allocate funds.
• Public engagement. How to motivate the citizen-consumer.
The problems are tough and present hard choices. But I think another, more positive, factor is at work too. The great infrastructure debate is also the great quality-of-life debate.
Quality of life
Essential service providers could soon be seen as meeting society's aspirations, not just its 'back-office' functions.
The argument is that people's understanding of what contributes to quality of life is changing. There is a growing appreciation of the things we own collectively (for example security, public transport, green space) and those none of us can do without (water, energy, broadband access) as compared with the things we own as individuals.
It is important not to exaggerate. Perhaps it will be temporary. The cause may be the economic crisis. It may be that knowledge of climate change is subtly changing perceptions ("we're all in this together"). Or the arrival of a global forum of ideas in the internet. The point is that a more social sense will increasingly drive individual action.
Also, it is important not to ascribe to people a conversion to greater charity and goodwill. That would be nice but is beside the point. There is a natural sense of self-interest in worries about dysfunctional transport or energy insecurity or water shortage.
Case for investment
The value to the infrastructure industries of a stronger focus on quality of life is that it adds support to investment proposals. The familiar business case for more, or earlier, investment in infrastructure services has long rested on a need for more efficiency in the rest of the economy and, particularly in recent years, higher consumer expectations.
This is fine except that, as time goes on, these two supports seem to be in conflict. Directing more investment to infrastructure (that can mean higher consumer prices) is understood to mean fewer resources available for the things people want to consume as individuals.
If the quality-of-life argument is even partly right, making the case for investment should be a little easier.
As it happens, we have a test case close to home. In its draft determinations for PR09, Ofwat makes cuts in the industry's proposed capital expenditure. It argues, on the basis of research (this is important), that consumers want the average bill in 2014 to be £14 less than now in real terms.
Ofwat may be right. But it is big assumption that savings at this level for individual consumers will be more valued than the collective contribution they could make to a more secure water supply or less sewer flooding of homes and gardens - in other words to the quality of life of the community.
A version of this article, by Barrie Clarke, appeared in Water & Wastewater Treatment magazine, August 2009.
