Infrastructure investment plan 2021-2022 to 2025-2026 - draft: consultation analysis

4. Prioritisation – A Common Investment Hierarchy

Context

4.1 The Scottish Government has accepted the Commission's suggestion to develop an "investment hierarchy" which prioritises maintaining and enhancing existing assets over new build.

4.2 The proposed new common hierarchy will aid planning and decision-making and drive future investment choices. In practice, this means that the following steps would need to be considered, in turn, before deciding the right investment plans:

1. Determine future need.

2. Maximise use of existing assets.

3. Repurpose and co-locate.

4. Replace or new build.

4.3 In future, this will mean that a higher proportion of investment and resource is likely to be directed towards the initial steps in the hierarchy than in previous years.

Question 2a

Table 7: Do you agree that the steps proposed in the common investment hierarchy are the right ones?

	Yes		No		Unsure
	Number	%	Number	%	Number	%
Individual	7	9%	2	3%	4	5%
Organisation	42	55%	12	16%	9	12%
Construction and Built Environment	11	79%	3	21%	0	0%
Natural Environment and Climate Change	7	78%	2	22%	0	0%
Travel and Transport	7	58%	2	17%	3	25%
Local Government	7	54%	3	23%	3	23%
Energy, Telecoms, Water and Waste	3	75%	0	0%	1	25%
Business and Enterprise	3	60%	1	20%	1	20%
Health, Education and Public Services	1	100%	0	0%	0	0%
Other	3	60%	1	20%	1	20%
Total	49	64%	14	18%	13	17%

N=76

4.4 A majority of consultation respondents agree that the steps proposed in the Common Investment Hierarchy are the right ones (49, 64%). Relatively equal proportions of individuals and organisations agree, albeit as with the previous question level of agreement varies by organisation sub-group.

4.5 Almost one-fifth of consultation respondents disagree with the proposal (14, 18%), and a similar proportion are unsure.

Question 2b

If you think any adjustments are needed to the proposed investment hierarchy, please provide suggested changes (and evidence, where appropriate) to support your answers.

4.6 In the main, the Common Investment Hierarchy is "broadly welcomed" and considered to be a "sensible approach in principle" across all consultation respondents regardless of how Question 2a is answered (i.e. Yes, No, Unsure, Not Answered). The high-level steps set out within the hierarchy are generally considered "broadly appropriate".

4.7 Firstly, there is general agreement and recognition within many responses of the "merits" and "benefits" of maintaining, enhancing or repurposing existing assets (e.g. to promote a circular economy approach).

4.8 It is further acknowledged that the Common Investment Hierarchy represents a "significant shift in practice", and that there would need to be a commitment given by the Scottish Government to continued, appropriate and long-term investment in the maintenance of existing physical and natural infrastructure assets to ensure they are "robust, resilient, and fit-for purpose" (e.g. to prevent deterioration, to address net zero resilience).

4.9 The importance of retrofit and adaptation is also mentioned as being equally important in terms of building in "climate-readiness" to Scotland's existing infrastructure assets (e.g. embedding nature-based solutions and increased sustainability, making assets more accessible, inclusive, greater alignment to place-making objectives). The role of planning is also emphasised as crucial to ensure Scotland makes the most out of its existing infrastructure assets, including "resilience to the effects of climate change".

4.10 Further, while not mentioned to a large extent, wider comments in support of the Common Investment Hierarchy highlight other sectors/areas where such an approach or framework to inform decision-making is considered to have worked well (e.g. heritage, waste management).

4.11 Secondly, much of the wider commentary relates to the graphical depiction and visualisation of the Common Investment Hierarchy as presented in the Draft IIP. The general consensus is that it the depiction is too "rigid", "strict", or conveys an overly "simplistic" message, or perhaps does not "convey the level of nuance that must inform the decision making process". Plus there are a variety of comments around language, terminology and wording.

4.12 There is feedback from representatives across many organisation sub-groups (but most common from Local Government, Construction and Built Environment, Natural Environment and Climate Change, and Travel and Transport) that the Common Investment Hierarchy could be strengthened by:

• Acknowledging regional differences in the provision and quality of existing infrastructure across Scotland's urban, rural, remote and island communities ("different starting points", "to avoid any unintended consequences and inadvertently disadvantaging rural areas"). Further, giving consideration of regional place-based priorities and challenges.
• Could strike a better balance to ensure that future need as well as "unlocking future opportunities" are both addressed.
• Ensuring that it is adaptable and recognises the "immediate need" due to the coronavirus pandemic (COVID-19) and the economic impact that Scotland is facing.
• Ensuring that infrastructure investment decisions deliver "system-wide benefits" (i.e. project proposals should not be considered in isolation, strategic view of investment priorities, cross-sector engagement).

4.13 Aligned to this are a variety of comments around language, terminology and wording. In particular, there is a perceived lack in emphasis or a lack of explicit reference across each step of the Common Investment Hierarchy to: consideration of natural infrastructure and assets; a route map to achieving net zero emissions by 2045; circular economy approaches; engagement and co-production. These are all aspects that are felt could be more strongly reflected, embedded and integrated across the Common Investment Hierarchy. As a result, there are many suggestions for how the graphical depiction and wording could be further improved, strengthened and/or clarified to aid presentation and communication.

4.14 Another key theme that was raised across the board is a request for further/additional guidance and greater clarity within the Draft IIP on the following:

• More detail on the Common Investment Hierarchy (e.g. supporting mechanisms, metrics, consultative processes, how it would be used to leverage funding).
• The parameters that would be expected to be applied to each stage.
• How the move between each of the four steps is justified, including "gateway checks".
• How the Common Investment Hierarchy is expected to be applied and implemented in practice, and, to natural capital infrastructure.
• The processes to be involved to ensure that "investment decisions are carefully assessed" and that "clear and transparent decisions" are made at each step.
• The level at which the Common Investment Hierarchy will be applied (e.g. Scotland-wide, regional, local or major project level in assisting decision-making).

4.15 There is particularly strong feedback on the importance of the Draft IIP providing a precise definition/criteria for "future need". The main points raised are that the plan could set out more clearly how future need is to be determined, scored/ evaluated, justified and prioritised for natural infrastructure and for physical infrastructure projects.

4.16 Another key theme relates to the extent to which certain types of projects (e.g. repurpose or redevelopment) will be prioritised over new build projects. While there is broad agreement that all options should be considered as part of a detailed options appraisal process, many provided examples of where repurposing or redevelopment might not be the "best option", "right option" or the "most appropriate course of action". This is raised by all organisation sub-groups, albeit to varying degrees (with Construction and Built Environment, Local Government and Travel and Transport most common).

4.17 This point is reflective of comments that highlight the following:

• The poor quality of existing infrastructure e.g. areas that feel there has been years of under investment in infrastructure or a disproportionate focus on city-level infrastructure.
• The development of new sustainable infrastructure could provide an opportunity to adopt new construction techniques and energy efficiency methods, have the potential to generate greater economic, environment and social impact, and be more sustainable long-term.
• A concern that maintenance of existing grey assets could always take precedence over new investment in natural infrastructure.

4.18 As such, strong support is expressed for sufficient "flexibility" to be built into the Common Investment Hierarchy from the outset, and for it to be "adaptable" to accommodate a more "pragmatic" approach to ensure consideration of all potential options.

4.19 To provide a flavour of this, consultation responses referred to a wide range of points, factors and/or specific examples including the following:

• There is recognition that repurposing can be complex and uncertain to adapt to modern requirements, and that it often involves additional costs. It can mean maintaining a redundant asset and refurbishing it at a significantly higher cost than demolition and new build (e.g. once factors such as accessibility, sustainability, safety standards, core construction materials that are unsafe or hazardous, ongoing maintenance are taken into account). Or that there can be wider challenges (e.g. VAT on repair, access to appropriately skilled tradespeople).
• That repurposing can lead to higher carbon emissions on a whole life basis.
• That many local authorities will require the use of greenfield sites (new build) to deliver on new housing needs and requirements for their area.
• Old digital technology/infrastructure that is no longer fit for purpose and which has also been superseded by new technology.
• Existing road network with assets at or near end of life, safety and accident history.
• New investment in semi-natural infrastructure may be more beneficial than investing in maintenance of existing grey infrastructure (e.g. in a high-risk flood area the maintenance and upgrading of an existing combined sewer overflow system could be prioritised over building new permeable pavements and installing ponds to absorb storm water).

4.20 Indeed, there are various comments that go onto raise the question of "whole life costs" which links to points that highlight the importance of being able to demonstrate "value for money in the longer-term" and to "ensure functionality and longevity" (i.e. as reflected above, reuse and redevelopment of existing assets may be more expensive over the longer-term than new build projects). The main point raised is that the methodology should be based on whole life cycle carbon and guard against carbon leakage – "Investments should be based on lifecycle outputs rather than inputs to support the country's net zero ambitions". There is a request for greater clarity and additional guidance within the Draft IIP on how this issue is to be considered and assessed within the Common Investment Hierarchy.

4.21 The quotes below are reflective of the points raised above.

"In particular, we would seek assurances that the hierarchy will not unduly disadvantage necessary infrastructure developments in rural and remote parts of Scotland where new build can be the only or optimal solution".

Highlands and Islands Enterprise

"…we need to consider 'spend to save' requirements so that we are not holding on to a redundant asset and refurbishing at a significantly higher cost to avoid new build… Reusing our existing assets is important, but it is only one of a number of factors which would be part of an option appraisal for meeting a particular need or addressing a problem. These would include whole life costs and all the sustainability, economic and social factors… It may discourage thinking out of the box. For example, if we have some hard flood defences, it may not be the best solution to continue adding to these as flood risk increases, when there may be a nature based solution upstream, involving new and greener infrastructure, delivering other multiple benefits".

Falkirk Council

"The hierarchy needs amending in order to accommodate the delivery of natural infrastructure and the inherent differences in approach that should be taken in determining investment needs for natural compared to built infrastructure…. in practice, the determination of future need to which they are applied must have at its core the need to meet greenhouse gas emissions targets. A plan to do this will require the replacement of existing high-carbon-use infrastructure with low, zero or negative carbon...Natural infrastructure is so fundamental to addressing the twin crises of climate change and biodiversity loss that sufficient weight, or arguably even priority, should be applied to such projects over traditional 'grey' infrastructure to accelerate the delivery of much needed nature-based solutions".

Scottish Environment LINK Planning and Economics Group members