Forecasters possibly getting wrong the need for infrastructure in the long term is one of five key risks to the value for money of projects included in the government’s national infrastructure plan, the National Audit Office (NAO) has said.

A second risk identified by the NAO is that uncertainty over government policy might lead project sponsors, lenders and contractors to defer or abandon project in the UK for opportunities elsewhere.

Thirdly, there is the possibility of a failure to take into account the cumulative impact on consumers of funding those infrastructure projects where the costs are recovered by charging users. Increasing that burden may increase the risk of financial hardship or the need for unplanned taxpayer support. The full impact of spending on economic infrastructure in the years ahead is still unclear and, despite information on individual sectors being available, an overall assessment has not yet been undertaken by government.

Fourthly, the NAO pointed out that, although the government’s guarantees to bear some project risks might attract new sources of finance, it may also expose taxpayers to increased financing risk.

The last risk, which is that delivery costs might turn out to be higher than they should be, is being looked at by the Treasury, which plans to implement a cost reduction programme aimed at reducing costs by 15 per cent.

The NAO therefore called for the Treasury to work with departments and regulators to provide greater clarity for consumers regarding the financial impact of planned infrastructure investment. In case of limits on affordability and availability of finance, the Treasury and departments may need to prioritise infrastructure programmes and projects.

Head of the National Audit Office Amyas Morse said: “Economic infrastructure keeps the country running. Demand for infrastructure is set to increase, fuelled by population growth, technological progress, climate change and congestion.

"But there is a lot at stake in taking forward the national infrastructure plan in an environment of straitened resources, with real risks to value for money and uncertainty about the sustainability of piling costs on to consumers.

"I have made a number of recommendations which look to the Treasury, departments and regulators to provide greater clarity on the costs which taxpayers and consumers will bear. Work is already in hand to drive down the costs of delivering new infrastructure and this should continue."

The government hopes that £310bn will be spent on new infrastructure projects in sectors such as energy, rail, roads, water, waste, flood defences and digital communications by 2015 and beyond. With limited funds available, the government is looking to private companies to wholly own and finance around 64 per cent of the £310bn, with the burden of funding likely to shift towards the public as consumers rather than taxpayers.

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