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Archive for the ‘Infrastructure’ Category

On the charge: government plans to stimulate the uptake of electric vehicles

Encouraging the uptake of electric vehicles (EV) has become a key part of the government’s plans for a “green industrial revolution” and for meeting its Net Zero targets. The sale of new petrol and diesel cars and vans is due to end by 2030, by which time all new vehicles will be required to have “significant zero emission capability”. By 2035, the government plans that all new vehicles will be zero emission.

WA will shortly be launching consumer polling looking into the priorities of the public in relation to EVs, focusing on the barriers to greater uptake and on charging infrastructure in particular. The government has taken the view that expanding and improving the UK’s network of EV charging points will be key to achieving this transition. It is expected that many will regularly charge their vehicles at home or work, but sufficient provision of public charging points – including rapid charging stations on motorways and kerbside charging for those without a driveway – will be particularly important.

There is considerable regional variation in the availability of charging infrastructure. Only 1,000 of the roughly 6,000 on-street chargers, for example, are outside London, and the total number of chargepoints per head in Yorkshire and the Humber is a quarter of those in London. At motorway and A-road services, there are 145 public charging stations at motorways and A-road services, providing around 300 individual chargers across the UK.

Stimulating investment in charging infrastructure is seen as a priority for regulators and the government

In order to promote the development of charging infrastructure, regulators have been keen to encourage increased investment in the sector. In May 2021, for example, the UK energy regulator Ofcom approved a £300 million investment round for regional network companies across more than 200 low-carbon projects over the next two years. This is expected to include the installation of 1,800 new rapid charging points at motorway service stations and a further 1,750 charging points in towns and cities.

These new installations will go towards the government’s vision for the rapid chargepoint network in England, for which the Department for Transport has set the targets of having:

In pursuit of these targets, the government has allocated £950 million to the Rapid Charge Fund (RCF), designed to “future-proof electrical capacity at motorway and major A road service areas”. While the government has stated that it expects the private sector to deliver chargepoints where they are commercially viable, the RCF may provide a potential source of funds for businesses seeking to expand the charging network in areas where they can make the case for what the government calls “a clear market failure”.

Concerns over competition in the charging sector are likely to inform the government’s approach to regulation as the sector expands

Alongside efforts to stimulate further investment in the sector, the regulatory framework for chargepoints – particularly in relation to ensuring adequate competition – remains a subject of active debate, liable to evolve rapidly as more infrastructure is installed.

In July 2021, the Competition and Markets Authority (CMA) published its report – Building a comprehensive and competitive electric vehicle charging sector that works for all drivers – outlining challenges to effective competition in the market in relation to rolling-out charging along motorways, in remote locations, and on-street. As a result, the CMA recommended a number of “targeted interventions” to “kickstart more investment and unlock competition”.

For chargepoints along motorways, where one chargepoint operator holds a market share of 80%, the CMA found that constraints on the capacity of the electricity grid and long-term exclusive contracts prevent entry by competitors at many sites. It recommended that the government use its commitment to fund upgrades to the grid as a means of opening up competition and facilitating market entry.

For on-street charging, the CMA highlighted that the roll-out is slow, and suggested that local monopolies could arise if the market is left unchecked. It recommended that local authorities play an active role in overseeing the market in their areas, and suggested that they could require fresh powers to ensure that they were adequately equipped to do so.

In response to these recommendations, the government has confirmed that it is considering regulatory changes with a view to enhancing competition in the sector. This includes considering requiring service area operators and large fuel retailers to tender charge point service contracts openly and have a minimum of two – and at some sites more than two – different charge point operators at any particular site. The Department for Transport has also suggested requiring existing providers of charge point services at motorway service areas to make their charge points open-access rather than available only to an exclusive network or group of networks or manufacturers. The Office for Zero Emission vehicles’ consultation on the Future of Transport regulatory review closed in November 2021, and its findings will feed into legislation which may feature in the next Queen’s Speech.

The regulatory environment for chargepoint providers is thus likely to evolve rapidly as the UK’s road charging network expands over the next few years. With changes likely to impact established players in the sector as well as providing potential means of market entry for challenger firms, investors will want to monitor these developments closely in evaluating opportunities for their target or portfolio companies.

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More bang for our buck, please: the government wants more out of R&D tax credits

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Navigating the NSIA: which way for M&A?

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Solvency II reforms: a key Brexit win for the government?

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Building safety regulations: what to expect from the next phase of reforms

With the return of Parliament from its summer recess, the Building Safety Bill has entered its Committee Stage in the Commons. This marks the latest phase of the government’s plans for far-reaching reform of building regulations. The plans – born of the tragedy of the Grenfell Tower fire – are likely to result in a significantly different operating environment for the construction industry;  investors in the sector will need to pay close attention to the proposals, and the changes are also likely to present a number of opportunities in related sectors.

The fire at the 24-storey Grenfell Tower on 14 June 2017 claimed the lives of 72 people, with dozens more seriously injured. Combustible cladding surrounding the building was found to have exacerbated the disaster, allowing the flames to spread and engulf the tower. As a result, the principal focus of the government’s funding initiatives to date has been to ensure the removal of both aluminium composite material (ACM) cladding and other combustible non-ACM claddings from high-risk buildings. £5 billion has been allocated to cladding-removal schemes, including:

Buildings under 18m tall but over 11m, with a lower safety risk, have access to protection from the costs of cladding removal via long-term, low-interest, government-backed financing arrangements, which will see no leaseholder pay more than £50 per month for cladding removal works. Leaseholder groups have voiced their opposition to leaseholders being liable for the removal of cladding and – while the government has not indicated it will change its approach – it remains under considerable political pressure to do so.

The Hackitt review found widespread shortcomings in current building regulation

The Grenfell Tower disaster has also precipitated a comprehensive review of fire safety and building regulations, led by former Chair of the Health and Safety Executive (HSE) Dame Judith Hackitt. The recommendations of that review have formed the basis for the legislation which the government subsequently introduced.

The Hackitt review published its final report in May 2018, having found a “system failure” in the current regulatory regime. The report found that:

As a result, the review recommended a new, overhauled regulatory framework, designed to be simpler, provide stronger and clearer oversight of dutyholders, and provide more robust means for residents to raise safety concerns than under the previous system. The review recommended that initial focus of this new regime be on multi-occupancy higher-risk residential buildings (HRRBs) or 10 storeys or more, and would include specific safety measures for each of the design, construction, occupation and refurbishment phases of a building’s life.

The Fire Safety Act has been approved by Parliament, but is not yet in force

As part of its efforts to implement the Hackitt review’s recommendations, the government introduced the Fire Safety Bill – amending the existing Regulatory Reform (Fire Safety) Order 2005 – in March 2020. The Bill passed into law on 29 April 2021 but is not yet in force.

The Act applies to all multi-occupancy residential buildings, regardless of their height, and introduces significant new obligations on those in control of multi-occupancy buildings. These “Responsible Persons” (RPs) will now have an obligation to “reduce” as well assess and manage fire risks, and risk assessments will now have to include the risks posed by the structure and external walls of the building, as well as by any individual doors opening on the common parts of the building. In seeking to make these new assessments, there may be increased demand from RPs from specialist fire-safety consultants. Businesses providing these services may represent an opportunity for investors.

The government has said that it will not enforce the Act until it has finalised comprehensive risk-based guidance to aid compliance. The considerable additional duties on RPSs will be accompanied by severe new penalties for non-compliance, with criminal prosecutions and unlimited fines possible in the most significant cases. RPs and investors in the space will therefore want to be very familiar with the guidance, which is likely to be published in the autumn.

The related Building Safety Bill is still before Parliament

The government published the Building Safety Bill in July 2021, having promised it in May’s Queen’s Speech. It will begin its Committee Stage in the Commons on 9 September 2021 and will likely pass into law in early 2023.

As in the case of the Fire Safety Act which it complements, the Building Safety Bill is set to introduce new obligations for the controllers of multi-occupancy builders, and provisions which will have a considerable impact on the sector. Chief among these provisions is the creation of a new regulator – the Building Safety Regulator – which will operate as a division of the HSE and have substantial enforcement and prosecutorial powers. This move represents a centralisation of oversight compared to the current regime, in which developers have been able to choose a local authority of an approved inspector for higher-risk buildings.

The Bill will introduce tougher sanctions for non-compliance. Directors or managers of companies responsible for high-rise residential blocks will be personally liable for safety failures, and the most serious cases will carry the potential for two-year prison sentences. Similarly, neglecting to register buildings with the new regulator, or failure to apply for a buildings assessment certificate when required could result in criminal actions.

Taking up a recommendation of the Hackitt review, the Bill will seek to introduce a “golden thread” of information and documentation sharing through new responsibilities to collaborate between all responsible parties from development to construction, to occupation, to refurbishment. Ensuring that the “golden thread” is comprehensive and robust is likely to require significant digital transformation and expansion activities; investors will want to pay close attention to specialist firms offering promising technologies in support of this goal, as these may present considerable growth opportunities.

The outlook for investors

The new regulations will entail significant changes for the building sector and, while the new regime is unlikely to come into force until next year at the earliest, investors will want to monitor the evolution of the government’s guidance over the next few months in order to ensure that portfolio or target companies remain fully compliant. The new regime also looks set to drive growth in related sectors – not least specialist safety consultants to meet new risk-assessment requirements and digital technologies to ensure reliable information sharing among responsible stakeholders. Investors should pay close attention to these areas to maximise their opportunities under a regime which, the government hopes, will ensure that the tragedies of 2017 are not repeated.

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What we can expect from the Heat and Buildings Strategy

The imminent publication of the much delayed and highly anticipated Heat and Buildings Strategy is expected to have significant consequences for the fabric and the fuel source of our nation’s homes.  The scale of change – as the Government seeks slash into the 40% of CO2 emissions that heat, and buildings are currently responsible for – is set to be even bigger and more impactful on peoples’ lives than the nation’s move from coal to gas 50-years ago.

We’ve all read the headlines about gas boilers, so here we pull together a summary of what industry, investors, consumer groups and environmental campaigners are calling on the Government for if we are to smoothly accelerate progress towards net zero.

1.Plug the hole left by the Green Homes Grant.

The scheme, shelved less than a year after it was announced, was plagued by criticism for being too bureaucratic and laborious to access.   Despite condemnation of its complicated set-up, there remains a sense that uptake of energy efficient and insulating products will continue to be insufficient without market intervention to stimulate demand.  These products – used in our homes at scale – are critical to reducing emissions from existing housing stock, but the high upfront costs are often prohibitively expensive and off-putting.  The Government has committed to bringing forward a new scheme and will be hoping it is a case of ‘third time lucky’ (readers will remember the Green Deal debacle of the Cameron era and the eye-watering interest rates homeowners were expected to pay on loans).

2. Answer how we will have enough skilled tradespeople to carry out the scale of work required.

Fewer than 2 percent of UK homes are heated by a low-carbon source and estimates put the number of gas boilers that will need to be replaced, either by a heat pump or hydrogen-ready boiler, at around 20 million.  That’s not counting new homes yet to be built where Government plans to halve energy use by 2030, compared to today’s standards.  These figures are set alongside an exising shortage of approximately 100,000 gas engineers.  The Government is expected to set out detailed plans on how it will attract, train, retain and upskill the huge number of engineers we are going to need to install new heating systems across the country.

3. Detail how the remaining £6 billion committed to energy efficiency in the 2019 manifesto will be spent.

Less than a third of the £9.2 billion earmarked for energy efficiency has been allocated to projects and programmes to date.  While the fiscal situation has changed markedly since Covid, industry is looking to the Government for a steer on whether the scale of this commitment remains in-tact and, if so, where resource will go.

4. Support new supply chains.

Buying energy efficient products and using new sustainable infrastructure is brilliant but putting in place the building blocks to establish a deep-rooted supply chain for their design and manufacture in the UK is the cherry on the top that many will be looking for.  Making sure that the Heat and Buildings Strategy ties into the Government’s Levelling Up agenda will be particularly important for political audiences who have seen the offshore wind industry put down roots in the UK and who want to see that model successfully replicated in other parts of the country.

5. Explain how homes not connected to the grid will be heated.

Around 4 million homes are not connected to the mains gas supply, the majority of these being in rural communities that rely on oil or LPG for heating.  Electric heat pumps could well be the answer, but some suggest an increased role for biofuels to cut emissions from these households sooner rather than later.  Guidance from Government on how rural homes will lock into the transition is keenly anticipated and will likely receive significant scrutiny.

6. Clarity on taxation.

A very contentious area that the Government will have to wrestle with, eventually.  There is growing pressure on ministers to re-orientate the tax system to encourage more clean heat as well as demand for green products. Whether the Government decides to entirely remove levies currently applied on electricity generation and place them on gas bills or even general taxation is a big question, or to scrap VAT on things like insulation and heat pumps.  The answer is likely to result in a lot of debate and for that reason, we may not see receive a complete one in this strategy. That being said, industry will be looking for some indication of where Government thinking is going.  A signal that it may be minded to change tax treatment could be a huge boon for the UK’s embryonic heat pump industry, but could have repercussions for the gas sector’s transition hydrogen – a nascent endeavour that the Government won’t want to knock off course at this stage.

All of this goes to show the careful balancing act that the Government must perform in what it sets out in its strategy.  The complexity potentially being part of the reason for the delay in its publication.  One thing unites all the different lobby groups in this debate – a desire that the strategy sets out meaningful detail, promotes action, provides confidence, and unlocks investment.  A repetition of ambition and targets won’t be enough.

We hope this short overview provides a useful reference point against which the strategy can be judged once published for consultation.  To discuss any of the issues raised or how the Heat and Building Strategy could impact your business, please email me at naomiharris@wacomms.co.uk.

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FinTech needs to find its legs

The UK’s FinTech sector is having its time in the sun.

Major players in the sector are growing into serious outfits. Revolut is now the most valuable private tech company of all time, Wise is setting course on its next decade of business, and a suite of smaller firms being eyed up by investors.

Added to this, political figures are keener than ever to discuss the sector’s role in Britain’s economic future. In the wake of Brexit, ministers have set out on a charm offensive to align themselves with FinTech success stories as part of government’s narrative of the UK at the heart of financial and technical innovation. Whether large or small, government has positioned itself as an ally of these businesses and Britain as the place to be to start, grow and succeed.

This trend is set to continue with announcements planned at attracting talent through ‘new tech visas’ and a new fund aimed at investing in tech start-ups by taking a stake in them. A new consultation will also aim to create a more level playing field for new businesses by curtailing the market dominance of the largest foreign tech companies like Google and Apple.

Despite this overall positive picture there are still considerable challenges for the sector.

Many FinTech businesses are disrupting existing markets and making meaningful improvements for consumers. Whilst a set of engaged customers will reap the benefits of this approach, many do not, due to a lack of awareness, or fears of new brands. Though government will not drive uptake, it has yet to engage coherently in the meaningful action it can take, such as greater transparency or setting new consumers standards. This means that businesses are left communicating with often disengaged consumers on technical issues that they have little experience of, where strategic government intervention would drive consumer benefit.

Government is now also giving greater attention to other (more traditional) financial services to deliver its agenda for ‘left behind’ consumers, such as protecting physical cash infrastructure for those who still use it, or relying on banks to deliver home ownership through the 5% deposit scheme. Whilst this could reflect the strong contacts of existing financial services within government, it also shows that many within departments default to engaging traditional financial services instead of looking to new and innovative approaches.

As scrutiny of online economic harms grow and other issues emerge, FinTech needs to be on the front foot if it is to make its current good standing connect with the priorities of the government and result in meaningful change.

FinTech businesses have a clear and compelling story to tell on their success, benefit for consumers, and role in the future of Britain. As they look to expand beyond their current customer base, and take the UK by storm, businesses will need to work with government more closely. Not as a photo opportunity, but a constructive partner to resolve the challenges of the day.

This can be achieved, but it will need clear messaging, strong alliances, and a proposition that government can get behind.

 

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What next for the housing market

The Conservative Party has always billed itself as the party of home ownership. From Margaret Thatcher’s Right to Buy to George Osborne’s Help to Buy, in government the party has always held that supporting people onto the housing ladder is good policy and good politics.

Constituencies with higher home ownership are more likely to support the Conservatives. Steps to increase this will help the Party hold on to newly gained Red Wall seats, whilst opening up further electoral opportunities. It has meant housing policy has taken on a renewed focus under Boris Johnson and Housing Secretary Robert Jenrick even as the pandemic has taken hold.

In the last year alone, the government has acted to quickly reopen the market (prioritising it over other parts of the economy), introduce and then extend the Stamp Duty holiday, and launch a mortgage guarantee scheme to support first time buyers.

So, what else is on the government’s agenda, and what are others calling for?

Reducing the property tax burden

The Stamp Duty holiday and subsequent extension has shown that fiscal policy levers can drive a boom in the housing market: both in terms of activity and prices. There are a number of calls for different reforms to Stamp Duty – from scrapping it entirely to boost transaction levels, to combining it with Council Tax to create a new ‘fairer’ property tax. It is clear that there is momentum growing for reform with influential voices on the centre right – think tank Bright Blue and Conservative MP Kevin Hollinrake amongst them – calling for action. But securing long-lasting change will be an uphill struggle. On the one hand the Treasury is concerned at losing tax revenue, and on the other it is fiercely resistant to anything that could be perceived as a ‘wealth tax’ hitting the Home Counties. 

Making moving easier and quicker

One of the biggest challenges in the market is the length of time it can take for transactions to complete. As well as causing stress for movers, it opens them up to problems from gazumping and added costs. Whilst government has consulted on how it can reduce this, minimum progress has been made as government looks to industry and HM Land Registry to lead reform. In the face of increasing transaction lengths, political and sector appetite to achieve this may have grown, but there is still a lack of detailed proposals to endorse or take forward. As such, industry will need to build the case for change and highlight the benefit consumers could see.

Reforming our planning law

Planning reforms have become one of the government’s most contentious policies. Ministers believe it is crucial to cement Conservative success in the Red Wall and reach the elusive 300,000 new homes a-year target. To deliver its proposals, government will have to navigate significant pressure from southern Conservative MPs that fear swathes of new houses will be built in their constituencies. Already, dozens of MPs have voiced their discontent, with some fearing the electoral consequences of wide-reaching developments in the South. It means that when the Bill comes before Parliament in Autumn, the government will face a considerable challenge to secure its preferred solution and risks considerable concessions or animosity from within its own party.

WA is exploring these issues further in an upcoming webinar. Our panel of experts will be looking at what’s next on the government’s agenda and how industry and policymakers can work together to achieve a more vibrant market. Our event will bring together Ben Everitt MP, Conservative Member of the Housing Select Committee; Melissa Lawford, The Telegraph’s Property Correspondent; Simon Brown, Chief Executive, Landmark Information Group; and Angus Hill, Associate Director at WA. We’d love you to join us at 9am on Tuesday 8th June – to register for the event, please sign up here.

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Communication matters: Covid-19 and the UK broadband sector

Broadband: a fourth utility

Yesterday should have seen the closure of Ofcom’s huge three month consultation examining almost all aspects of regulation for the UK’s fixed telecoms market. This exercise sits in the context of a very ambitious political target to deliver gigabit capable broadband to every UK premises by 2025.

Instead, Ofcom has suspended all consultation deadlines and has put any new consultation or decisions on hold in response to Covid-19.

The world has changed for every sector of the economy in the last three weeks and telecoms is no exception.

The challenge facing the sector has gone from racing to be part of the gigabit capable rollout and seeking every avenue to help accelerate build plans to maintaining what is now, more than ever, a vital fourth utility for a population largely unable to leave their homes.

Securing political recognition of the importance of maintaining these vital communication services has not been hard. With most of the population now attempting to work, educate their children and fulfil all their recreational needs without leaving the house, classing maintenance of broadband and mobile services as an essential service is a no-brainer.

The COVID-19 challenge

Securing classification of their engineers and street works operatives as key workers was a critical win. So is new guidance endorsed by DfT and DCMS underlining the importance of street works for this activity to continue.

So, what is the challenge?

In short, ensuring that the operational capacity is in place to maintain these vital networks and, where possible, for new network building to continue. This will mean flagging to government at an early stage if, and when, additional support measures to facilitate this are going to be required.

Protecting the supply chain will be critical to ensure that vital materials can continue to make it to the teams that need them. The risk is that suppliers further down the supply chain are impacted by an extended period of lockdown which may require more specific measures to ensure that the manufacturing and transportation of key materials can continue.

Government is alive to these dangers, but ensuring clear and regular communications between the sector and key officials and ministers will be critical. Government will need to understand as quickly as possible if new operational or regulatory constraints emerge that need to be dealt with at a political level and how they can help to fix them.

Looking ahead

What happens when the immediate crisis abates and attention turns back to medium term policy priorities?

Ofcom has been clear that this remains a critical area of focus, stating:

“The current situation has confirmed the vital role of our industries, and we are conscious that we need to be ready to support our sectors in being ready for the future as the country comes out of the crisis. Investment in fibre and 5G connections will remain of critical importance. Our review on promoting investment and competition in fibre networks and the 5G auction are important building blocks for this.”

The question the telecoms sector will be asking itself is: Does that mean everything just gets picked back up where it left off? Or will the experience of managing the worst pandemic in 100 years change the terms of the debate and shake up the familiar arguments over competition, the role of Openreach and how other players can access its passive infrastructure, full fibre vs gigabit capable etc?

Most likely it will be a bit of both.

This experience has reinforced the critical importance of delivering next generation connectivity to the whole country. The 2025 rollout target may be slightly relaxed if the operational impact makes it even clearer that it is not realistic. But the political sentiment and impetus behind full fibre rollout will, if anything, strengthen.

However, it is unlikely that the perspective of government or individual companies will be completely unchanged by this experience.

When everyone dusts off their draft Ofcom consultation responses or key messaging for the DCMS select committee inquiry on full fibre rollout there are almost certainly going to be new points to make and new angles to explore.

How might the policy debate change?

With telecoms and broadband edging closer to being classed as a critical utility in the same way as gas, water and electricity there will be renewed questions in the minds of policy makers about what this means for consumer protection.

Ofcom is already looking at this and undoubtedly ensuring the consumer gets a good deal and is protected will likely come into even sharper focus.

Early signs can be seen in the commitments from the main broadband retailers to lift data caps and adopt a flexible approach to consumers struggling to pay bills during the current crisis.

Furthermore, when building new gigabit capable networks, this may finally prompt more assertive action on the regulations governing the access of rivals to Openreach’s passive infrastructure (and to other wholesalers’ passive infrastructure in future).

This will now be viewed not just from a commercial perspective but from the perspective of maintaining network resilience.

Precisely how these new questions will evolve into the policy debate will be informed by the experience of the industry in the coming weeks. We are still a long way from being out of the woods but the process of learning lessons from the current experience to produce more effective policy outcomes that help accelerate the UK’s digital infrastructure upgrade is already underway.

For example, does there need to be an increased focus on network resilience when driving forward full fibre rollout and how can this be factored in? What additional protections, if any, are required for consumers, particularly in vulnerable groups? How can the efficiency and resilience of the supply chain, both of contractors and materials, be reinforced?

Those companies able to start that forward-looking process sooner rather than later stand to benefit a great deal in terms of their ability to shape the policy environment in the months and years ahead.

 

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404 Error: nationalisation not found

Nationalisation is back. Labour’s plans to nationalise parts of BT and offer a free national full fibre broadband service represent the most radical policy announcement of the election.

Should Jeremy Corbyn secure a majority, he has now pledged to bring all major utilities back into public ownership – gas, electricity, water, rail, mail and now telecoms. Such a move would fundamentally change the telecoms sector overnight with grave consequences for private network builders and retailers.

There will be much commentary on the commercial implications for the sector in the coming days.

However, it is also worth considering the political process that will be required to make this radical vision a reality.

Nationalisation: Getting the numbers

Firstly, it is important to remember that this whole agenda can only be delivered under a Labour government with a stable, workable majority.

Neither the Liberal Democrats or the SNP will back it under a confidence and supply agreement. There’s a long way to go in this campaign and the polls still indicate that Jeremy Corbyn has a lot of work to do to have any hope of securing a majority in December.

This announcement itself will be a major theme in the election going forward as free, high-speed broadband for all is likely to go down well with many voters.

The key question is whether it ultimately feels too good to be true and leads voters to question the credibility of a policy that will have a long list of detractors.

Learning from the past

But what if Labour do forge a way to power? How will the Party turn such a radical nationalising agenda into reality? Previous rounds of both nationalisation and privatisation took a great deal of time and political capital to realise.

Margaret Thatcher’s converse plans to re-privatise much of the same parts of the economy took three parliamentary terms to deliver. Ticking off Labour’s long list of target nationalisations in just one five-year parliament will be a mammoth of a task.

There are several significant elements that will require primary legislation for broadband nationalisation:

The political capital, technical complexity and potential legal wrangling resulting from just one of these three areas would daunt any government regardless of its majority. Yet collectively, even if a majority Labour government could overcome these three challenges and nationalise the broadband industry, it will only deliver one of the party’s five targeted nationalisations.

Nevertheless, it’s important to note that nationalising broadband is perhaps the most ambitious and complex pledge for Labour to deliver on.

A juggling act

Let’s not forget that on top of all this, a Labour government will simultaneously be renegotiating yet another Brexit deal with the EU, scrapping universal credit, setting up a new National Education Service and making significant investments and reforms in housing, social care and other areas.

The reality of government is that some agendas will have to be prioritised over others simply due to – if no other reason – the practical limitations on time and resource in the civil service.

Especially on the topic of Brexit, there is a question mark over whether Labour’s broadband proposal would comply with EU state aid rules, though they will cite recent rulings on Ireland’s public subsidy for broadband in their defence. It could nevertheless be a potential stumbling block in agreeing a new, closer economic relationship currently envisaged as the Party’s preferred approach.

Finally, were this to ultimately go through, the government would find itself taking on responsibility for a plethora of tricky issues that were previously the problem of private players in the sector. The debate over online safety and the level of responsibility that intermediaries such as ISPs have for harmful or illegal content distributed over their networks would suddenly become an in-house issue for government. Questions over net neutrality – whether ISPs can or should prioritise bandwidth for certain sites over others – as well as the control and use of people’s data, would also be questions government would have to solve as the sole service provider.

These are headaches that no government wants to grapple with and while this announcement is a potential game changer, it’s one which is still far from being realised.

Even if it ever is, it could come with a host of difficult unintended consequences attached.

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The electric vehicle infrastructure problem

As set out in the Road to Zero Strategy, the government plans to end the sale of petrol and diesel vehicles by 2040, and for all vehicles to be zero-emission by 2050. This is a significant commitment to electric vehicles and is part of the government’s wider Clean Growth Strategy.

The government anticipates that most drivers will charge their electric cars at home or at their place of work. But these options are not available to everyone; many people do not have access to off-street parking, nor does every workplace have the capacity to provide electric vehicle charging. These problems are particularly pronounced in urban areas, which suffer the most from low levels of air quality.

The government believes that if electric vehicles are to become truly mainstream, there will have to be provision for on-street vehicle charging. Delivery of this infrastructure has been left to local authorities and the private sector (with some funding available from central government), but many local authorities do not have the money or the expertise to build it and have struggled to coordinate with network companies. This has meant the electric vehicle charging network lacks size and geographic coverage.

A further issue is that increased use of electric vehicles will increase the pressure on the UK’s energy network. The National Grid is confident that new capacity, and reinforcement of the existing grid, can be brought online in time to meet any increase in demand. However, this will require significant investment in new electricity generation capacity and in ‘smart charging’ technology. The latter is particularly necessary to ease the burden on distribution networks that could be subject to local overload.

The development of infrastructure can also be encouraged from the demand side; increased demand for electric vehicles should be a catalyst for greater provision of charging infrastructure. More electric vehicles on the road provides a greater incentive for firms and local government to work together to install electric vehicle charging points. However, the government has recently decided to reduce the subsidy for electric vehicles, and tax incentives relating to the use of electric vehicles remain limited. The government believes that the price of electric vehicles will fall as battery technology improves, but a lack of demand side support is likely to constrict growth of electric vehicle ownership and charging infrastructure.

Money, knowledge and planning are issues that affect all government infrastructure projects, particularly ones that involve a significant amount of coordination between different levels of government and the private sector. However, there is a more fundamental problem that has received little attention: how to make long-term infrastructure decisions when faced with technological uncertainty? Current government policy is to end the sale of petrol and diesel cars by 2040, but this is over 20 years away. In 20, or even 10 years’ time, how we use cars and roads might have completely changed. The danger for the government is that it might be doing the equivalent of investing in CD players, with digital streaming just around the corner.

The government recently announced that it wants to have self-driving cars on UK roads by 2021. While this is an ambitious target, it signals a technological revolution that could completely alter the way we use vehicles, and therefore the infrastructure those vehicles need. Should vehicles become truly autonomous, there may be no need for individuals to even own their own car. Driverless cars could be used like taxis and charged in out-of-town charging centres when not in use. Privately owned autonomous cars could drive to charging stations when not being used, negating the need for on-street charging.

This presents a puzzle for government: should it invest billions of pounds in a charging network that may only have a useful lifespan of a decade? While this may seem like an unattractive option, the alternative may not be very palatable either. If the government adopts a ‘wait and see’ approach and does not fully commit to on-street charging in the short-medium term, there is a danger that the take-up of electric vehicles will stall. This will directly affect the UK’s ability to achieve reductions in greenhouse gas emissions and could slow the growth of an important emerging industry in the UK.

The government is in an unenviable position. It will need to invest in on-street charging technology to keep to its promises on climate change, and to stick to its Industrial Strategy aims. But, thanks to rapid technological change, it may only be able to reap limited rewards from this investment. This dilemma tells us something about the role the state can play during periods of technological uncertainty. If private actors are unwilling to invest in a new technology due to concerns over its long-term profitability, investment from the state may be necessary to bridge the gap and allow greater gains to be realised in the future. This investment may only provide short-term or limited benefits directly, but it could lay a foundation on which private sector investment can then build. On-street charging infrastructure may not be a permanent fixture on our streets, but it may be required if the electric vehicle industry is to succeed in the UK.

Rather than assessing government investment in new technological infrastructure on a case-by-case basis, we should be content with a broader view. It is almost impossible to accurately predict the path of technological development, and under such conditions there will always be wins and losses from government investment. Rather than being distracted by the noise surrounding each individual decision, we should focus on whether government investment supports innovation and growth throughout the economy.

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