Guidance

National Infrastructure Commission: terms of reference

Published 30 October 2015

1. Future Investment in the North’s transport infrastructure

Terms of reference

The Commission’s review will be formed of two stages:

• first stage will require the Commission to work closely with the Department for Transport, Transport for the North and its member authorities and national partners^{[footnote 1]} in order to establish the evidence base and identify the options for future investment in the North’s strategic transport infrastructure with a view to improving connectivity between cities, particularly east-west across the Pennines

• in the second stage, in consultation with the Department for Transport and Transport for the North, the Commission will evaluate the available evidence and options identified through the first stage of its review. The Commission will then provide independent advice to government on its view of the future investment priorities to improve connectivity between cities, particularly east-west across the Pennines

1.1 Stage 1: Establishing the evidence base and identifying the options available

The Department for Transport and Transport for the North have jointly produced an initial Northern Transport Strategy (March 2015) and are undertaking a significant programme of work^{[footnote 2]} to identify options for long-term transport investment in the North that will improve connectivity between cities, form a single northern economy and drive economic growth. They will be publishing an updated Northern Transport Strategy by Budget 2016.

Through their ongoing work programme Transport for the North will, by Budget 2016, identify and prioritise potential schemes for a programme of investment in inter-city connectivity, both on rail and road, particularly focused on east-west trans-Pennine transport corridors, where natural geography forms a barrier to fast, regular and reliable transport connections.

The Commission will need to work with the Department for Transport and Transport for the North, building on the evidence they have established to date and continue to progress, in order to:

• review and prioritise the transport challenges faced over the next 2-3 decades that could serve to constrain or drive economic growth in the North, particularly focused on connectivity between the North’s cities and towns, especially on the east-west axis across the Pennines. This should draw on lessons from international experience where relevant

• consider the priority outcomes for future long-term transport policy in the North that best respond to those challenges and improve inter-city connectivity, including east-west – considering the relative importance of, and trade-offs between, capacity, reliability, journey times and connectivity to markets

• consider the way in which existing long-term investment plans are helping to address the challenges and targeting the outcomes identified, and identify where there are any gaps

• explore the strategic options for future transport investment in the North to address the gaps identified, and improve inter-city connectivity, particularly east-west. This should consider options on both rail and road, consider how to make better use of the region’s existing transport infrastructure, what investment in new infrastructure may be required, and how new technologies may impact on these choices. This work will be informed by the work that is underway as part of the Northern Transport Strategy. For the options under consideration, the Commission should work with the Department for Transport and Transport for the North to carry out a strategic evaluation of:

  • strength of the strategic and economic case, based on a consistent appraisal methodology that is in line with the principles set out in the HM Treasury Green Book. It should also identify where there is a risk that an option or options may not pass a value for money threshold consistent with Spending Review 2015

  • the potential to increase benefits and reduce costs as far as possible, including through different interventions

  • maturity of plans, including the extent of understanding about costs, benefits, scope, timetable and deliverability

  • options for funding and financing in a way that minimises the taxpayer burden, and ensures those that benefit most bear a fair share of the cost

1.2 Stage 2: Independent recommendations on future investment priorities

The Chancellor has asked Transport for the North and the Department for Transport to present, by Budget 2016, a prioritised list of scheme options for future investment in strategic road and rail links in the North. This prioritisation of potential investments will be done locally

Having worked with the Department for Transport and Transport for the North in the first stage of its review, the Commission will then conclude its work by providing government with a set of independent recommendations on future transport investment priorities in the North that improve inter-city connectivity, particularly east-west across the Pennines, based on an equal and balanced consideration of all available evidence and options. In providing this independent advice, the Commission should:

• stress test these recommendations under a range of affordability scenarios for the next 2-3 decades and highlight to government whether the conclusions of the review change materially under these different scenarios. The government will put forward, having consulted the Commission on the basis of its early work, three affordability scenarios that the Commission will use as the basis for its analysis

• highlight any major gaps in the evidence base. The Commission should clarify the extent to which these evidence gaps impact on its recommendations and future choices for government

This will allow government to make an informed choice about long term transport investment in the region when it receives proposals from Transport for the North and takes future investment decisions

The Commission should report back to government with its recommendations by Budget 2016.

2. London’s transport infrastructure

2.1 1. The Commission’s review will be formed of two stages:

• first stage of work will require the Commission to review the evidence base and the strategic options for future investment in large scale transport infrastructure improvements in London – on road, rail and underground – including Crossrail 2

• in the second stage, the Commission will evaluate the available evidence and options identified through the first stage of its review and provide independent advice to government on the future large scale transport investment priorities in London

In taking forward this work, the Commission should engage with Transport for London, Network Rail and other relevant stakeholders.

The Commission should not through this study consider questions relating to airport capacity. The Davies Commission has already examined this issue in detail.

2.2 Stage 1: Establishing the evidence base and identifying the options available

The Commission will need to review and where necessary supplement the work undertaken to date by the Greater London Authority and Transport for London, in order to:

• review and prioritise the strategic transport challenges faced over the next 2-3 decades that could serve to constrain economic growth in London and the key corridor approaches into London

• consider the priority outcomes for future long-term transport infrastructure choices in the capital that best respond to those challenges – considering the relative importance of, and trade-offs between, capacity, reliability, journey times and connectivity to markets

• consider how existing long-term investment plans are successfully tackling the challenges and targeting the outcomes identified, and identify where there might be any gaps

• explore the main strategic options for future investment in large scale transport infrastructure improvements in London – on road, rail and underground – including Crossrail 2 – that could best address the future challenges

This should include Crossrail 2 but also consider a range of other strategic alternatives for large scale transport investment in London. For each option, the Commission should evaluate:

• strength of the strategic and economic case, based on a consistent appraisal methodology that is in line with the principles set out in the HM Treasury Green Book. It should also identify where there is a risk that an option or options may not pass a value for money threshold consistent with Spending Review 2015

• potential to increase benefits and reduce costs as far as possible, including through different interventions

• maturity of plans, including the extent of understanding about costs, benefits, scope, timetable and deliverability

• options for funding and financing in a way that minimises the tax payer burden, and ensures those that benefit most bear a fair share of the cost

The Commission should consider the potential impact of both Crossrail 2 and other strategic options for employment, productivity and housing supply in London and the South East.

As part of its review of the evidence base, the Commission should consider relevant international experience in major metropolitan areas, to review how other cities have responded to similar challenges and priorities, and whether there are any lessons to be learned and applied in London.

2.3 Stage 2: Independent recommendations on future investment priorities

In parallel, through the second stage of the review the Commission will conclude its work by providing government with a set of independent recommendations on future transport investment in London, including on Crossrail 2, based on an equal and balanced consideration of all available evidence and options. In providing this independent advice, the Commission should:

• stress test these recommendations under a range of affordability scenarios for the next 2-3 decades and highlight to government whether the conclusions of the review change materially under these different scenarios. The government will put forward, having consulted the Commission on the basis of its early work, three affordability scenarios that the Commission will use as the basis for its analysis

• highlight any major gaps in the evidence base. The Commission should clarify the extent to which these evidence gaps impact on its recommendations and future choices for government. Where relevant, the Commission should recommend further work that is required for government to make an informed choice

The Commission should report back to government with its recommendations on next steps by Budget 2016. 

3. Delivering future-proof energy infrastructure

Consider how the UK can better balance supply and demand, aiming towards an energy market where prices are reflective of costs to the overall system. The aim should be to reduce the cost of providing secure, clean energy supplies whilst reducing the long-term need for investing in a surplus of back-up power stations and unnecessary network reinforcements.

This should pay particular attention to the roles of storage and interconnection, but may also consider related solutions such as demand side response.

The review will propose solutions to each of the following issues:

Whether the correct framework is in place to ensure that the UK’s electricity grid is operated in a way which fully considers the range of options for balancing supply and demand. If not, the review will propose what changes need to be made to the current framework, in particular whether there are grounds for increasing the independence of the system operator.

What barriers there are to the deployment of national energy storage capacity, considering both current and future technologies. This will consider what price signals and financial arrangements would enable low cost storage solutions to be delivered by the UK market where this reduces overall costs to consumers.

Assess what further electricity interconnection is likely to be in consumers interests, considering whether there are systematic barriers that could prevent cost-effective interconnection being realised. In particular:

• The ability of increased interconnection to reduce energy costs, lowering bills for consumers at a system-wide level.

• The contribution of increased interconnection on security of supply, and how this compares to counterfactual scenarios.

• The overall economic impact on the UK of a greater degree of interconnection.

Building on the above, note any project-specific barriers to the future delivery of more complex, high priority interconnection projects, and suggest how these may be mitigated.

Each of these options should consider the cost-reduction potential for the UK through to 2030 and 2050.

The conclusion of the review will be to provide advice to government on what next steps should be taken in respect of storage and interconnection investments, and whether an appropriate institutional framework is in place.

Where possible, the Commission should aim to develop market solutions to these issues.

The Commission should report back to government with recommendations on next steps by Budget 2016.

1. The Transport for the North partnership comprises the North’s local transport authorities and Local Enterprise Partnerships, as well as the Department for Transport, Highways England, Network Rail and HS2 Ltd ↩

2. Transport for the North’s work programme is split into six workstreams, which are rail (including the TransNorth/Northern Powerhouse Rail programme); roads (including options for a new Trans-Pennine Tunnel); smart and integrated ticketing; freight; international connectivity; and local connectivity. ↩