Movers and shakers who can put us in the fast lane
AS well as being truly independent, a National Infrastructure Commission for Wales would need an executive team and board of directors with a proven track record in major infrastructure projects and fundraising.
And of course it cannot work in “splendid Welsh isolation”.
So it would make sense if there was an overlap, perhaps via mutual board observers, with the infrastructure commission for England.
It would also need be to aligned to the development of the Swansea Bay and Cardiff Capital city regions and the infrastructure investments from their proposed City Deals – where while a £1.2bn deal for the Cardiff Capital region is agreed in principle, critically the 10 local authorities still need to not only agree on which projects will be funded beyond the South Wales Metro, but the percentage split between them on the capital and interest repayment on borrowed finance.
And any commission will need to work closely with the proposed Development Bank for Wales, as it looks to bolster the new £136m Wales Business Fund with other sources of finance, including for infrastructure projects.
While democratically elected ministers should give the infrastructure commission a steady stream of projects to assess on a return on investment criteria, it should also be encouraged to bring forward its own plans.
Let’s just say that Plaid Cymru’s ambitious vision – assuming, of course, the UK Treasury is enlightened enough to give the go-ahead – sees a commission having the scope to raise more than £7bn for economy-boosting infrastructure projects, including hospitals and schools over 10 years (repaid over 25), it would also need to be thinking all the time about how to attract private sector investment.
What type of projects could attract funding for the private sector? Well, they have would be of significant scale with an identifiable and secured long-term revenue stream if they are to attract the interest of big institutional investors.
Projects like a proposed tidal lagoon for Swansea Bay, effectively a prototype for a series of larger lagoons, and a new nuclear power station at Wylfa – and their required subsidies via contracts for difference – will be decided by ministers at a UK level and not in Cardiff Bay.
But let’s be honest – if the investment panels of a Middle Eastern or the Norwegian sovereign wealth fund were in town tomorrow, what projects could be pitched to them to get their serious attention, and that means crucially those that are close to or are investor-ready? Well, examples on a postcard please.
So this is where Wales plc, both the public and private sectors, needs to be smarter.
While under the Wales Bill the Welsh Government will get powers on energy projects up to 350 megawatt of generation – currently just 50 – it could act now to effectively bring hundreds of smallscale renewable energy projects into one huge scheme – with a planning consent golden ticket. It could then invite institutional investors to bring them to energy generation – having brokered an equity/profit share for the original project owners.
The world is awash with cash and the commission has to try to get as much of it invested in Wales as it can, even if that means having an overseas presence. It needs, like the WDA, to be arm’s-length, but ultimately accountable to the National Assembly. And that, of course, means setting out its remit and governance. Of course many projects will need to be funded directly from the Welsh Government’s capital budget or borrowed capital, as there will be little appetite, say, for road projects funded by investors who would then make a long-term return on tolls. Although on the Metro, finance could be secured against future rail fare incomes for further stages of the network. But new road and rail infrastructure will open up significant private sector opportunities for new housing or mixed-used developments around, say, new Metro stations or along a new stretch of the M4. So the commission could look at Section 106 agreements, or whatever you want to call them, where in return for creating new development opportunities the private sector provides a financial contribution to infrastructure projects. But, there needs to be democratic accountability and final sign-off on recommended projects from the commission will require Welsh Government approval before being put to AMs. And this will prove a big test of a the credentials of “grown-up devolution” in Wales. The commission should be looking at