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18 Oct 2023

Second National Infrastructure Assessment outlines key role of digital infrastructure to drive sustainable economic growth

Today, 18 October, the National Infrastructure Commission has released its Second National Infrastructure Assessment. A five yearly review conducted by the Commission, the assessment sets out transformation, and key recommendations for government, across energy, transport, digital connectivity, and other key infrastructure sectors over the next 30 years. It outlines the vital role of modern and resilient infrastructure in addressing the UK's key strategic challenges including regional growth, reaching net zero and enhancing the natural environment.

In the five years since the first National Infrastructure Assessment, government has made some developments in increasing the share of electricity generated by renewables, setting up the UK Infrastructure Bank, devolving transport funding to major city regions, and providing industry with the direction to rapidly build gigabit capable broadband networks.

But this assessment makes clear that there is still a long way to go, and the government must turn commitment into action to address challenges. Indeed, the government is expected to respond to the Assessment in the next 12 months.

Core recommendations for the government include:

adding low carbon, flexible technologies to the electricity system to ensure supply remains reliable, and creating a new strategic energy reserve to boost Great Britain’s economic security
taking a clear decision that electrification is the only viable option for decarbonising buildings at scale, getting the UK back on track to meet its climate targets and lowering energy bills by fully covering the costs of installing a heat pump for lower income households and offering £7,000 support to all others
investing in public transport upgrades in England’s largest regional cities to unlock economic growth, improving underperforming parts of the national road network and developing a new comprehensive and long-term rail plan which will bring productivity benefits to city regions across the North and the Midlands
ensuring gigabit capable broadband is available nationwide by 2030 and supporting the market to roll out new 5G service

Cutting across different infrastructure sectors, key take aways for digital infrastructure/connectivity, transport, energy, and data centres are summarised below.

1. Digital infrastructure to enhance digital connectivity

The assessment outlines the vital role that digital infrastructure and enhanced digital connectivity plays in delivering critical functionality and strategic objectives across other infrastructure sectors, including energy, water, road, and rail sectors.

The UK has set a target to ensure nationwide coverage of gigabit capable connectivity by 2030 and deliver gigabit capable broadband to at least 85 per cent of UK premises by 2025. Currently, around 75 percent of premises have gigabit capable broadband, but policy and regulation must continue to support private investment in networks and competition.

For 5G deployment, the Commission recommends that the government should support a market-led approach with a focus on policy stability, pro-investment regulation and speeding up the planning system for major projects. For instance, improving the consistency of planning approvals across the country and supporting access to spectrum for localised private networks.

In our recent UK Tech Plan, techUK called for the government to go further and work with the telecoms sector to devise a new strategy to complete the rollout of advanced connectivity across the UK and support the availability of high-speed connectivity across the country.

2. Decarbonising surface transport and transport to support growth across regions

Transport devolution marks an area in which the government’s National Infrastructure Strategy, a formal response to the first Assessment, has made progress. Government has established the five-year City Region Sustainable Transport Settlements for Combined Authorities.

But, the Commission outlines that more must be done given that emissions from transport have not been declining. The pace of electric vehicle charge point numbers are increasing but needs to accelerate to enable the transition to EVs. techUK agrees with the Commission that this is key to decarbonising surface transport, with electric cars and vans the future of road transport. Indeed, consumers need to confidence to purchase EVs, along with the ability to charge once purchased.

To instil confidence, key recommendations focus on ensuring there is nationwide network of public charge points and that the spread of charging points across all regions of the country, reaching at least 300,000 chargers by 2030.

The role of better transport and digital networks to support economic growth across regions of the UK marks a key theme within the assessment. A wider impact though out the economy, the report outlines that investing in transport infrastructure can help support movement within cities and enable more efficient trade of goods and services between them. In turn, driving economic growth. Clear action across the transport and digital sectors that government can take include:

investing in the maintenance and renewal of existing transport infrastructure on both a national and local level, and planning for the effects of climate change
enabling investment in new and improved transport networks to facilitate sustainable trips within and between cities
delivering nationwide coverage of gigabit broadband and new 5G services to stimulate innovation and improve productivity in some sectors.

Linking to this, techUK recently launched Digital Local Index and report analyses the strength on the tech sector across the UK in areas including digital infrastructure, as well as making recommendations for how the tech sector can be strengthened across the entire of the UK.

3. Electricity transmission and distribution networks

Little progress has been made to decarbonise heat, even though technologies to do so already exist. The Commission makes a strong case of the strategic opportunities that economic infrastructure is key to seizing, including energy security and reaching net zero.

The Commission recognises that significant changes to the energy system will be needed and energy infrastructure. Especially given that electricity demand in Great Britain will increase by around 50% by 2035, and 17 additional electricity transmission projects need to be completed by 2030. Much of the transition will need to happen over the next 12 years to meet the Sixth Carbon Budget.

Key recommendations from the Commission towards building a secure, flexible, and low carbon electricity system include:

growth in renewable electricity generation to meet increasing demand
increased volumes of flexible supply, which will also need to be low carbon, and demand side response (tools and incentives to reduce or reschedule energy usage at times of peak demand)
an end to the use of unabated gas fired generation which is high carbon
transformation in electricity networks to provide the capacity needed to manage more demand and more dispersed supply
increased resilience to shocks

techUK further welcomes the focus on energy flexibility, decarbonisation, and investments in electricity transmission and distribution networks. However, we urge a heightened emphasis on expedited grid planning and reform to meet our national targets effectively, empowering the FSO with vital data for strategic planning utilising digital technologies and infrastructure. The government must also deliver spending at scale to meet the pace of change. As the Commission outlines, pace is needed to ensure opportunities are not lost.

Investing for the future

The assessment makes clear the scale of investment needed to realise the benefits in economic infrastructure. The Commission’s analysis suggests that overall investment must increase from an average of around £55 billion per year over the last decade (around ten per cent of UK investment) to around £70 and 80 billion per year in the 2030s and £60 to £70 billion per year 2040s. Public sector investment will need to rise from £20 billion per year over the last decade to around £30 billion in the 2030s and 40s.

Ensuring a just and green energy transition, the Commission recommends the government invest in £3 to 12 billion per year to support households to decarbonise their heating systems over the next 15 years.

techUK supports the Second National Infrastructure Assessment as a welcome step in putting digital infrastructure and technologies at the centre of economic growth. The UK faces big challenges ahead, from ensuring a just and green energy transition, supporting growth across all regions, and improving resilience and the environment, and the digital sector is well placed to support this.

The government must respond by removing barriers to progress and supporting business to make long term investments necessary to achieve net zero and help improve competitiveness. A clear and stable policy environment that encourages R&D and innovation will ensure the UK can address some of the biggest strategic challenges outlined by the Commission.

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