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Frank debate on costs and expectations needed to prepare infrastructure for climate change

Sir John Armitt gave evidence to the Joint Committee on the National Security Strategy

A public debate needs to be held on the right level of investment that today’s consumers and taxpayers can be expected to pay to prepare key national infrastructure for climate risks of the future, the Chair of the National Infrastructure Commission has told a Parliamentary committee.

Sir John Armitt told MPs and Peers that on the basis of that democratic conversation, ministers must “grasp the nettle” and decide what resilience standards are appropriate, alongside a review of regulators’ statutory duties, so that infrastructure operators are facilitated to invest in achieving those standards in the longer term.

Sir John was giving evidence to the Joint Committee on the National Security Strategy on Monday 13 December. The committee, chaired by Rt Hon Margaret Beckett MP, is currently holding an inquiry into critical national infrastructure and climate adaptation. The full evidence session can be watched back here.

Sir John explained that the Commission has previously recommended that government, working with industry, should publish transparent standards from each key infrastructure sector to set out “what standards the public expect and what level of resilience we regard as adequate and something we are prepared live with”. These should be monitored by the relevant regulators, who would also co-ordinate stress testing of operators’ plans to ensure these standards can be met, he said.

Sir John told the committee that “at the end of the day we as the public are going to have to pay for it and therefore there is always the underlying issue of what we think we can afford to pay, what we are prepared to pay and what is the level of tolerance that we have for failures”.

Noting the recent tragic tornadoes in the United States, Sir John added that “we probably don’t expect to be protected against absolutely every instance” and that “there will be limits – we have to find the right balance between what we are a society are prepared to accept, what we are prepared to pay and what can be delivered in a sensible timeframe.”

Drawing on research undertaken for the Commission’s recent Baseline Report, Sir John noted that the public are broadly satisfied with infrastructure services in the UK, with high levels of confidence that key services will met their needs in 30 years’ time. However, extreme circumstances naturally raise questions and the likelihood of similar events in future needs to considered based on the best available data.

“The real challenge are those lower probability, very high impact risks,” Sir John said. “In the case of most infrastructure operators there is a regulator looking over their shoulder who will also be taking a view. You could argue that for the last 20-30 years the regulators’ key focus has been on making sure these [operators] are super efficient and keeping their costs down. There is, I think, a growing recognition that there needs to be considerable attention given to their investment programme for the future and what they are doing to ensure the resilience of their systems,” he added.

Sir John suggested that the only way of ensuring regulators place a greater emphasis on long term capital expenditure in allowing operators to invest for resilience is for government – representing the views of voters – to set standards that regulators then need to help deliver, and to give signals on how costs should be shared. “As we face the consequences of climate change on our infrastructure, we may have to face up to some unpleasant realities that if we want to have a very high level of resilience and reliability, it’s going to cost us more – and we’re all going to have to pay. That requires a conversation with the public about the risks and potential consequences,” Sir John told the committee.

Responding to questions on the best governance arrangements for ensuring appropriate levels of climate resilience, Sir John suggested that closer co-ordination and direction by the Cabinet Office or potentially the National Security Council might better drive delivery and reduce dependency on the individual political merits of different ministers. The key goal is clarity on where authority sits and the chain of command for decision making and delivery, he said.

The National Infrastructure Commission has recently embarked on work for the second National Infrastructure Assessment, to be published in 2023. The Baseline Report sets out the key areas the Commission will explore in conducting the Assessment, including better infrastructure asset management to improve resilience and how data and technology can support this.

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