The National Infrastructure Commission (NIC), an organisation tasked with advising the government on infrastructure projects, has recently received a significant directive to prioritise the transition to net-zero carbon emissions in its recommendations. This directive was conveyed through a letter from Chancellor Rishi Sunak to Sir John Armitt, the chair of the NIC. The directive follows a comprehensive review conducted by the Treasury, which sought to evaluate the NIC's role, responsibilities, and fiscal remit. As a result of this review, a new framework agreement has been published, outlining the revised objectives for the NIC.
The newly established objective for the NIC is to actively support climate resilience and the transition to net-zero carbon emissions by the year 2050. Alongside this objective, a revised framework has been introduced, which underscores the importance of considering the role of economic regulators in overseeing infrastructure providers and fulfilling the government's legal obligations, such as meeting carbon reduction targets and conducting assessments of environmental impacts.
The NIC, established in 2015, serves as an advisory body to the government, providing valuable advice and recommendations on various infrastructure needs and initiatives. In a notable intervention last December, the NIC proposed a delay in the construction of the £32 billion branch of HS2 to Leeds, advocating instead for the improvement of connectivity between cities in the North and Midlands.
In conjunction with the Autumn Budget and Spending Review, the chancellor's letter emphasised that the NIC must also consider the potential interplay between its infrastructure recommendations, the government's legal target to halt biodiversity loss by 2030, and the implementation of net biodiversity gain. This integrated approach aims to ensure that infrastructure development aligns with broader environmental objectives.
Sir John Armitt expressed his contentment with the explicit inclusion of the objective to support the transition to a low-carbon economy. He emphasised the pivotal role infrastructure will play in achieving the net-zero target and safeguarding biodiversity. The NIC stands ready to provide guidance to the government on the critical decisions required to accomplish these objectives.
The Treasury has also revised the fiscal remit for the NIC, which serves as the basis for funding the commission's recommendations. Originally, in 2016, then-chancellor Philip Hammond set the annual public investment in economic infrastructure at 1.0-1.2 per cent of GDP until 2050. However, the revised remit has increased this range to 1.1-1.3 per cent of GDP, effective from 2025 to 2050.
While acknowledging the need for sustained investment aligned with the government's infrastructure objectives, Chancellor Sunak stressed the importance of clear prioritisation in the commission's recommendations. He also recognised the commitment to fiscal sustainability, considering the substantial challenges posed by the COVID-19 pandemic and the extensive economic interventions required since March 2020.
The NIC announced that this adjustment in funding will shape its approach to the second National Infrastructure Assessment, which is scheduled to be published in 2023. Sir John Armitt welcomed the expanded funding envelope, emphasising that the revised fiscal remit provides a realistic context for the commission's work and facilitates the adoption of independent policy recommendations. This broadened remit could potentially translate into billions of pounds of additional funding for infrastructure projects over the long term.