Which? reveals multi-billion pound consumer price tag for infrastructure improvements

Ahead of a Commons debate on the Infrastructure Bill, new research from Which? has revealed the multi-billion pound costs that consumers will have to meet over the next decade.

Based on data published by HM Treasury, Which? analysis shows that of the £327 billion infrastructure costs between now and 2021, consumers will ultimately pay around £214 billion of the bill. This estimate has increased by £69 billion in the last year alone and comes at a time when annual consumer spending on these services, including energy, transport and water, has already risen by nearly £15 billion over a decade.

Tomorrow, the House of Commons will debate an amendment to the Infrastructure Bill which would give the Government the power to task a new independent body with scrutinising infrastructure spending and publishing an analysis which would allow the Treasury to decide whether new investment is affordable for consumers.

Which? wants to see the creation of a new independent body, which could be called the Office for Regulatory Scrutiny, to estimate the impact of infrastructure spending on consumers’ bills and monitor whether infrastructure investment is providing value for money.  We want this new body to look at whether consumers are getting a good deal in all essential markets and assess the impact that regulators are having.

Which? executive director, Richard Lloyd, said:

“It’s shocking that consumers are being asked to pick up a jaw-dropping £214 billion tab for infrastructure investment without any real scrutiny of effectiveness or value for money.

“At a time when consumers are facing historically high costs for essentials, it’s vital that there is a tighter grip on the massive costs that are being passed on to consumers through their bills.”

Notes to Editors:

1. The Infrastructure Bill makes changes to the way our national infrastructure is funded, planned, managed and maintained. It first went through the House of Lords, and is now being debated in the House of Commons. Which? worked with Peers in the House of Lords to raise issues around the impact of infrastructure investment on consumers. We want to see the Bill amended to allow for greater scrutiny of the effect that infrastructure spending will have on consumer bills.

2. Which?, the National Audit Office and the Public Accounts Committee have all raised concerns that there is no clear understanding of the impact of this investment on household bills, particularly for those on low incomes. Which?’s own analysis of the latest Office for National Statistics data (2012) showed those in the lowest income bracket spent 12% of all their spending on infrastructure services (energy, water, communications and transport fares), whereas the highest earners spent 8%.

3. Using data published by HM Treasury, Which? has estimated that the total infrastructure investment from 2014-2021 will be £327 billion of which £214 billion will be passed directly onto bill payers. This is revised from earlier figures for 2013-2020 which showed that the total value of planned investment was £257.5 billion, of which £151 billion would be passed directly onto bill payers.

Breakdown of planned investment and funding to 2021 (Billion £)

NB: Figures may not sum due to rounding

4. Impacts on households: Simple arithmetic shows that the £214bn of private investment planned by 2021 equates to roughly £1,150 per year per household in the UK. This is not to say that this is how much consumer bills will rise in that time – higher prices will also fall to businesses, and companies making investment may spread the cost over a longer period of time. What is clear, however, is that all of these costs will at some time or another have to be paid for by user bills, and that any increased costs for businesses will eventually be passed on to consumers.

5. Using data from the ONS’ Living Costs and Food Survey, Which? calculated that the sum total of household expenditure on energy, water bills, communication, and travel fares combined had increased from £58.7 billion in 2003/04 to £73.5 billion (adjusted into 2012 prices). The same data was also used spending on these combined items as a proportion of all expenditure by equivalised income quintiles.

Press Release: Consumer, Economy, Personal Finance, Which?