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Major infrastructure projects pose big challenges, says NAO

Thu 17 Jan 2013

Major infrastructure projects could pose a number of "significant challenges", experts have warned.

According to the National Audit Office (NAO), limited funds are available at the moment to press ahead with large-scale schemes, such as road and rail upgrades and improvements to Britain's energy infrastructure.

This, it stated, means any projects that go ahead need to deliver good value for money in the long term.

However, the NAO pointed out that forecasting for the far future is an "inexact science", which means a project that goes ahead may not prove to be as badly needed as officials currently believe.

The organisation went on to stress that there is a degree of "uncertainty over government policy" at the moment.

As a result, it believes lenders, contractors and project sponsors may opt to delay taking part in new infrastructure projects, or instead invest in schemes outside the UK.

This could prove especially problematic, since the government is relying heavily on private organisations to contribute to the cost of large-scale infrastructure schemes.

Indeed, the NAO pointed out that it wants almost two-thirds of the £310 billion to be spent on new projects by 2015 to come from private companies.

The group went on to warn that government pledges to carry some of the risk associated with schemes, such as footing the bill in the event of cost overruns, means taxpayers may face "substantial losses".

Amyas Morse, head of the NAO, confirmed that it has drawn up various recommendations on how to achieve "greater clarity on the costs which taxpayers and consumers will bear".

She said demand for infrastructure is likely to go up in the next few years, due to the effects of climate change and advances in technology, as well as rising congestion and increased population numbers. Ms Morse added that economic infrastructure "keeps the country running".

For further information on any of the points raised in this article please contact our Transport and Infrastructure Team.

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