Analysis of UK’s National Infrastructure and Construction Pipeline 2023-2025

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The eagerly anticipated National Infrastructure and Construction Pipeline details an investment pipeline consisting of 660 projects and programs spanning both the public and private sectors.

This pipeline comes after the publication of the second National Infrastructure Assessment (NIA) from the National Infrastructure Commission (NIC), which sets out NIC’s independent assessment of infrastructure requirements over the next 30 years, and recommendations for addressing them. The government’s response to the NIA will be developed over the coming year.

The 2023 pipeline includes £379 billion of planned investment, £164 billion of which is scheduled to occur by 2024/25. The 2023 Pipeline comprises 660 projects, programmes and other investments across a wider range of infrastructure types.

IPA estimates put the total 10 year pipeline at £700-775 billion.

The National Infrastructure and Construction Pipeline includes projects and programmes distributed across the UK. The majority of the value of the pipeline however, relates to activity in England. This is because a large proportion of infrastructure spending in Scotland, Wales and Northern Ireland is the responsibility of each devolved administration, and therefore is not included within this pipeline.

Modern Methods of Construction (MMC)

Government is driving forward growth in the use of MMC in its procurement, promoting innovation and use of technologies, platforms and approaches to improve the efficiency and sustainability of UK construction.

The government’s Construction Playbook strongly promotes the use of MMC in public sector contracting, with an expectation that MMC methods are the default approach in all appropriate contracts. Of the contracts included within the procurement section of the pipeline, over £17 billion (77%) are expected to utilise some form of MMC

£64 billion of the planned pipeline to 2024/25 will include delivery through MMC. This can involve a broad range of approaches, technologies and innovations such as automated design or offsite construction, all with a focus on improving value and efficiency in construction.

Workforce

To deliver the £164 billion of planned investment over the next two years, the IPA estimates an annual average of 543-600,000 workers will be required across different industry groups including construction and engineering construction. Of this, approximately 60% are construction jobs. This is an increase from the 2021 pipeline figure which estimated an average of 425,000 workers required, and is in line with the
increase in the number of projects covered (from 528 to 660).

Civil engineers and civil engineering operatives, plant operatives, and plant mechanics/fitters are examples of construction workers which are most likely to see some level of scarcity in the coming years.

Challenges to infrastructure pipeline delivery

Despite the apparent strength of the planned pipeline, there is a challenging environment for infrastructure projects for a number of reasons:

High global inflation in the last two years, driven by high energy costs, and economic pressures which continue to affect infrastructure projects and their supply chains as well as the wider economy.

Construction material prices are over 40% higher than in January 2020, before the Covid pandemic and Russia’s invasion of Ukraine, and there is continuing pressure on labour markets. The inflationary effect has directly impacted the costs associated with delivering infrastructure projects and programmes, with sponsors in both public and private sectors having to reset expected outputs to remain within the
approved budgets.

Construction inflation has been different to the general economy. The IPA has consistently used Gross Domestic Product (GDP) indices to adjust for inflation and compare time periods. In practice, the construction sector specific indices have been higher than GDP indices over recent periods especially immediately following Russia’s invasion of Ukraine, even though there are some signs of stabilisation.

Wider systemic issues leading to delays in implementation, including planning, low investor confidence and wider uncertainty. The Nationally Significant Infrastructure Project regime has been affected by legal challenges to the efficacy of the National Planning Policy Statements, which are currently being updated.

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© Crown Copyright 2024, Produced by the Infrastructure and Projects Authority

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