3 The impact on consumers |
18. Because the Government expects most new economic
infrastructure to be wholly owned and financed by the private
sector much of the cost of new infrastructure will fall on consumers
rather than taxpayers.
There are difficulties in trying to estimate what the impact on
consumers will be of future infrastructure investment. Policy
decisions will affect infrastructure investment and the costs
of certain types of infrastructure that will be built in the future
are currently unknown. An
example is nuclear power generation where the unpredictability
and constant escalation of costs makes cost estimation difficult.
19. Consumers have already been hit by rising
energy bills owing to increases in world energy prices before
taking account of the additional impact of the cost of infrastructure
has been no overall assessment by Government of the future impact
of infrastructure spending on consumers. Affordability has been
judged and addressed in individual sectors such as energy although
these sector assessments have contained considerable uncertainty.
Infrastructure UK initially planned to develop an overall framework
for judging affordability but subsequently decided it was not
feasible to establish such an overall framework.
The Treasury argues that there are a range of factors, not just
infrastructure, that affect households' cost of living. These
include council tax, import prices and the devaluation of sterling.
The Treasury considers, therefore, that the cost of living has
to be monitored through a broad affordability framework but has
not ruled out a framework just focussing on the aggregate impact
on consumers of infrastructure spending.
20. Those on low incomes are particularly at
risk from the impact that infrastructure spending may have on
consumer bills. The Treasury is concerned about the impact of
costs on the poorest people. The Government already supports citizens
on low incomes through initiatives such as the Warm Homes Initiative
and Winter Fuel Payments for pensioners. If new infrastructure
investment adds to future household bills then this will raise
further issues about the distributional effect of the costs on
21. The Treasury also has to consider the macroeconomic
effect of increased prices that may arise from infrastructure
spending. The Treasury told us that some of the estimates as to
why the economy is still 6% smaller than before the economic crisis
is the rise in household bills and the impact this has had on
living standards and consumer spending.
34 C&AG's Report para 17 Back
3 37 7
C&AG's Report paras 3.2-3.3, Qq 97-98, 175
C&AG's Report para 17 Back