Newcastle University

National reforms in policy and regulation are required to enable an integrated approach to local infrastructure planning that can identify, and has the capacity to exploit, synergies across infrastructure sectors.

Infrastructure systems are increasingly interdependent because of their proximity - for example, utility networks are co-located underneath roads; operational reliance - for example, infrastructure relies on energy or information communication technology; or, economic or regulatory frameworks - for example, assets and systems may share similar investment cycles or finance models. These interdependencies can create risks,^[17*] but they also present opportunities for alternative infrastructure business models, particularly at the local level where these interdependencies are closely related and tightly coupled.

The current disjointed nature of local infrastructure planning, investment and management is complex, uncertain and produces inefficient outcomes.^[18*] Enhancing coordination, through alternative local infrastructure business models, of the planning, delivery and management of multiple infrastructure classes would enable infrastructure systems to be developed around the principle of providing the highest level of service at the lowest level of resources used. This would generate additional wider social and environmental benefits such as tackling fuel poverty, reducing carbon emissions as well as creating local jobs and reducing costs.^[19*,20*] Local actors need additional capacity and empowerment, including more effective decision support tools, alongside national reforms in policy and regulation, to enable places and organisations to integrate local infrastructure provision.^[21*] A major appeal of infrastructure to investors is the potential for stable returns at low risk over the longer term. Current governance and regulatory arrangements typically foster investment on a sector or project specific basis which can create objectives that conflict with those taken by an integrated approach. Bundling the physical, social and economic components of multiple infrastructure services into a single investment package is one option to address this.^[18*] Ongoing research is exploring the potential for other financial instruments that are consistent with an integrated approach but package investments and returns in different ways that capture value whilst minimising risks for investors, operators, users and tax-payers.