Energy and infrastructure to dominate the week ahead

Editor

The economic climate and uncertainy over policy risk delaying new projects that are vital to securing the UK’s energy supply, says a new report. Infrastructure policy is also proving to be a sticking-point.

Earlier this month, David Cameron’s surprise commons announcement that energy firms would be forced to offer customers cheap tariffs triggered a wave of accusations that the government is making up its energy policy on the hoof.

And while the PM has denied that his energy plans are unravelling, there are growing concerns in the sector over the UK’s status as an attractive place to invest.

These concerns are at the heart of this week’s “Powering the UK” report, which claims that policy uncertainty is risking a slowdown in a sector that is critical to the UK economic growth.

Carried out by Ernst and Young for Energy UK, the report shows that UK energy sector has received greater investment than any other area of the UK economy. Energy companies have invested £43 billion in the UK over the past 4 years and £10 billion in 2011. The report also found that jobs and investment have been increasing in the energy sector at a time when other sectors are in decline.

However, an analysis of investment trends raises concerns that the economic climate and policy uncertainty are now slowing down decision-making and delaying new projects. Tony Ward, Head of Ernst & Young’s energy team, and co-author of the report, said that the growth and investment highlighted by the reports is the result of a historically clear path in energy policy. But he raised concerns over whether current policy can maintain this confidence. ‘With Electricity Market Reform still to be delivered in final form, and short term expedient seeming to drive many recent statements, delivering that confidence cannot be taken for granted.’

Elsewhere this week the government’s infrastructure policy – another area of some administrative uncertainty – will also come under the microscope as the
National Infrastructure Plan Strategic Engagement Forum is launched.

While the government hopes that the new body – set up to ensure greater communication between industry and government – will help fast-track a variety of vital infrastructure projects its Growth and Infrastructure bill, which will receive it’s second reading n the commons today, is coming under increasingly heavy fire.

Designed to stimulate the construction industry by removing red-tape the bill is expected to help fast-track significant infrastructure projects. However, critics claim that relaxing planning rules could have a disastrous impact on the quality and safety of new buildings.

Meanwhile, an influential group of scientists and entrepreneurs including physicist Brian Cox, former Royal Society President Lord Martin Rees have added their voices to a Nesta’s “4Growth campaign”, which calls for the £4bn expected to be raised by the UK’s 4G auction to be reinvested in the UK science and technology infrastructure.

Commenting on the campaign Nesta’s Chief Executive Geoff Mulgan said: ‘The 4G windfall is the result of past investments in science and technology, and the case for reinvesting the proceeds into new technologies, science and innovation is compelling. Whenever we use a smart phone, we’re standing on the shoulders of generations of innovators, from Marconi and Clerk Maxwell to Tim Berners Lee and Joe McGeehan who benefited from funding, much of it public, that was animated by commitment to the future. How the 4G proceeds are used will test whether the UK’s horizons have shrunk, or whether we can be as ambitious today in our commitment to the future.’