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Five takeaways from the London Infrastructure Summit 2017

London First Infrastructure Director David Leam highlights his five main takeaways from last week’s summit. As published in Construction News.

1, Crossrail 2 has momentum – and needs business support to maintain it

If the London Infrastructure Summit was a stick of rock, the letters running it through it read Crossrail 2. London First Chief Executive Jasmine Whitbread’s opening speech emphasised the need to press ahead with the scheme, a point reiterated by speakers from Network Rail’s Mark Carne to TfL’s own Mike Brown. Crossrail 2 MD Michele Dix stressed the need for a decision ‘pretty soon’ on moving to the next phase of route consultation early in 2018.

Funding is now the main obstacle facing the scheme, particularly in light of the Government’s challenge to London to cover half of the cost during construction. HSBC’s Dan Howlett and KPMG’s Richard Threlfall both argued convincingly that there is no shortage of investors willing to finance London & SE infrastructure projects (Aecom’s David Barwell reminded us of this at the pre-summit dinner by announcing Aecom’s initial investment in the privately-promoted Heathrow Southern Rail scheme). But infrastructure projects will always need reliable funding streams.

As part of our autumn programme, London First is revisiting our previous work on Crossrail 2 funding and financing options to identify additional funding streams, particularly ones which might help realise funds up front. This work will cover many of the ideas which popped up during summit debates – from the land value capture ideas being explored by TfL, through to fiscal devolution, as proposed by Tony Travers.

We will also be stepping up our wider campaigning activity behind Crossrail 2, much as we did at a similar stage for Crossrail 1. This will cover case-making, profile-raising, and coalition-building – not just across London and the wider SE, but also with the UK as a whole. If you would like to get involved in any of this activity please do get in touch.

 

2, Housing is now core to the infrastructure debate

Susan Emmett who has been involved in all four of our summits, reminded me that in our first year housing was something of an afterthought. Now it is ever-present to the extent that one of Mark Carne’s key themes was how rail can unlock new housing. The contribution towards new housing supply is now part of the core business case for transport schemes – whether Crossrail 2, or the Bakerloo Line Extension (as Southwark’s Colin Wilson reminded us all).

More broadly, the GLA’s new Housing Infrastructure Fund (in partnership with CLG) could be a significant innovation. The Mayor has proposed committing £250m of the GLA’s own money to help create an ongoing fund, allowing the GLA to buy land and prepare it for development, and then recycle receipts for further investments. A lot now rides on finding the right schemes for investment. Matt Calladine of Barratt London namechecked Meridian Water in Enfield as a good example of public-private joint-working, so the trick will be to find more projects potentially like that. Housing will continue to be one of London First’s priorities in the year ahead.

 

3, Big issues remain in aviation

London’s airports were united on the threat posed by Brexit and the need for a deal on future air travel rights to be prioritized during Brexit negotiations. Without new air services agreements with the EU and rest of the world, UK airlines will have no legal right to fly from March 2019. As our recent aviation report argued, robust transitional arrangements must now be put in place that are both passenger friendly and cargo friendly.

With all of London’s airports continuing to experience rising customer demand, capacity remains a key issue. Having finally received Government backing for a third runway, Heathrow continue to be upbeat – though Lord Adonis later said he thought there was still a 50% chance of the decision unravelling. Here at London First we believe there remains a clear majority in Parliament in support of Heathrow expansion and will be keeping up pressure on our politicians ahead of the parliamentary vote next spring so as to ensure this vital and long overdue new capacity is now delivered.

Elsewhere, both Gatwick and Stansted see an inadequate government policy framework as the only cap on their growth plans. Gatwick’s Stewart Wingate reiterated that his investors continue to back an additional runway, regardless of what happens at Heathrow. He also heralded last week’s launch of Easyjet Worldwide (whereby the Easyjet website now sells connecting flights for participating long-haul carriers) as a potential ‘game-changer’ for Gatwick.

London Stansted’s new CEO Ken O’Toole was also upbeat on growth. Stansted will shortly be applying to raise the current planning cap on its passenger numbers, so as to make full use of its existing runway. Stansted believe this would enable them to meet 50% of London’s expected passenger growth over the next decade. City airport meanwhile are in the fortunate position of having planning permission for their own growth plans. All airports agreed on the need for better rail links, a more efficient service at the UK Border and airspace modernisation. Taken together this gives us a full agenda for the coming year.

 

4, How should London deal with innovation and disruption?

For me, one of the big questions left unanswered by the summit was how London responds to disruptive technologies, particularly in the road transport sector. TfL continues to have an uneasy relationship with new taxi providers, and is currently locked in legal tussles with both Uber and Taxify. James Taylor of DriveNow UK highlighted the challenges car clubs experience in negotiating common rules across London’s 32 boroughs (and the City). And with a wave of dockless bike schemes hitting the capital (before we even talk about connected and autonomous vehicles), this is something London needs to get to grips with.

The Deputy Mayor for Transport Val Shawcross emphasised how these issues were being addressed through the draft Mayor’s Transport Strategy and by TfL’s new Director for Transport Innovation, Michael Hurwitz. She also highlighted ‘proposal 99’ in the MTS which invited proposals for demand-responsive bus services. However, she stated that any innovation must be consistent with the MTS’s overarching vision for 80% of trips in London to be on foot, by cycle or using public transport by 2041. Val stressed that any company seeking to impose inappropriate business models on the capital would be met with pretty short shrift by TfL and the Mayor.

One potential solution to the problem of congested road space was outlined by Stephen Rutherford of Jacobs in his presentation on congestion charging. The current scheme could evolve into something more targeted and flexible, while in the longer term a more sophisticated scheme could be developed. While Val was clear that any changes would be limited for this Mayoral term, the draft MTS is explicitly open to charging as a possible longer term measure and commits to undertaking the further detailed work now needed.

London First will be responding to the MTS and exploring these issues further so please do get in touch if you would like to be involved. We will also be working with the incoming new Chief Digital Officer at the GLA, Theo Blackwell, to ensure that all GLA bodies play their part in ensuring London remains a global tech hub.

 

5, It’s not just transport and housing

While transport and housing tend to be pre-eminent in London infrastructure discussions, it was refreshing to hear about some of the other challenges and opportunities facing the capital. Richard Aylard of Thames Water highlighted the growing risk of water shortages in the SE and the need to begin planning now for new water resources, while Robin Mortimer of the Port of London Authority set out a new vision for use of the river Thames.

Nick Pollard of Cory Riverside Energy identified the opportunities for London to generate more energy from its own waste, provided appropriate infrastructure was enabled by policymakers. Mark Adolphus of UK Power Networks outlined the neeed for joined up thinking to address the challenge facing London’s power grid, including from far greater electric vehicle take-up. And Malcolm Keys of BAI Communications and Douglas Grierson of Vodafone both emphasised the need to upgrade London’s digital infrastructure to ensure Londoners have world class connectivity wherever they are.

These are all issues London First will be engaging with over the coming months, including through the Mayor’s draft energy and environment strategy presented by Shirley Rodrigues, and also the draft National Infrastructure Assessment which Lord Adonis told us will be launched next month. Again, please do get in touch.

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