Building the Future: Tackling Infrastructure Costs in Major Developments

In the latest episode of Truth About Local Government, I sat down with Owen Jenkins, Executive Director of Place at Surrey County Council, to explore one of the most pressing and persistent challenges facing local authorities across the UK: the rising cost of infrastructure in major developments. As councils grapple with the dual pressures of delivering essential services and meeting climate commitments, all while operating within increasingly constrained budgets, the conversation offered a timely and candid look at the realities behind the scenes.

“There are a number of cost components planning, design, land acquisition, and construction but also subcomponents like staffing, materials, and consultation. No two schemes are exactly the same.” Owen Jenkins

This blog post distils the key insights from our discussion, offering a comprehensive overview of the cost dynamics, funding models, and strategic considerations shaping infrastructure delivery today.

Understanding the Cost Drivers

Infrastructure delivery is a complex and multifaceted endeavour. Jenkins began by breaking down the key cost drivers, noting that while construction is often perceived as the primary expense, the reality is far more nuanced. The process of delivering infrastructure involves a wide array of activities many of which are not immediately visible to the public but are essential to the success of any scheme.

Smaller, more controversial schemes such as active travel initiatives or congestion management can incur disproportionately high costs due to extensive consultation, community engagement, and iterative redesign phases. These schemes often require a delicate balance between technical feasibility and public acceptability, which can significantly extend timelines and inflate budgets.

“Sometimes the smaller schemes have a far greater proportion of their costs associated with non-construction activities.”

For larger, national-scale projects, the lead-in time itself becomes a significant cost factor. The longer a scheme takes to develop, the more expensive it becomes not just due to inflation, but because regulations, standards, and societal expectations evolve over time. What may have been a compliant and cost-effective design five years ago could now require substantial revision to meet new environmental or safety standards.

The Vicious Cycle of Delay and Cost

One of the most striking insights from Jenkins was the cyclical nature of infrastructure delays and cost escalation. Optimism bias in early scoping stages often leads to underestimation, and when funding delays occur, costs spiral. This is a familiar story in local government, where ambitious plans are often hampered by the realities of budget cycles, political change, and bureaucratic complexity.

“If you were going to deliver a scheme that cost £50 million in 2020, by 2025 that same scheme could cost £75–80 million.”

This inflationary pressure is compounded by the need to pause projects for revaluation, redesign, or additional funding each step adding further delay and expense. The longer a scheme remains in development limbo, the more vulnerable it becomes to external shocks, such as changes in legislation, market conditions, or public sentiment. Moreover, the cost of delay is not purely financial. It also affects public trust, disrupts local economies, and undermines the strategic coherence of regional development plans. Jenkins emphasised the importance of getting the initial scoping right not just in terms of technical detail, but also in anticipating the long-term trajectory of the project.

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Balancing Efficiency with Political Realities

In a politically dynamic environment, infrastructure planning must navigate shifting priorities, administrative hurdles, and electoral cycles. Jenkins emphasised the importance of long-term thinking and strategic planning to mitigate these risks. He argued that infrastructure should be planned with a 20–30 year horizon, rather than being constrained by the typical four or five-year political cycle.

“If we have longer-term plans with a 20–30 year horizon rather than a political four or five-year horizon, then we’re in a better place to get things right.”

This approach requires a cultural shift within local government from reactive problem-solving to proactive system design. It also demands greater alignment between funding availability and strategic goals. Jenkins advocated for a whole-system approach, where infrastructure is not seen in isolation but as part of a broader ecosystem of public services, economic development, and environmental stewardship. The challenge, of course, is that long-term planning often clashes with short-term political imperatives. Elected officials may be reluctant to invest in projects that will not bear fruit within their term of office, while public expectations are shaped by immediate needs rather than future resilience.

Funding Models: Traditional and Emerging

Funding remains a perennial challenge in infrastructure delivery. Most schemes rely on a blend of sources, including central government departments like the Department for Transport (DfT), Homes England, Section 106 contributions, and the Community Infrastructure Levy (CIL). While these sources provide essential capital, they are often fragmented, conditional, and subject to competitive bidding processes.

“Most of our schemes are a blended source of funding… but there hasn’t been enough work done in terms of alternative funding sources or models.”

Jenkins noted that while models like Private Finance Initiatives (PFI) and green infrastructure investment exist, they are underutilised in the local government context. He called for more innovation in funding mechanisms, particularly those that can leverage private investment without compromising public value.

One promising avenue is the use of management companies to maintain infrastructure assets such as roads and green spaces within new developments. This approach can reduce the burden on local authorities, but it also raises questions about accountability, equity, and long-term sustainability. Ultimately, Jenkins argued that the sector needs to move beyond piecemeal funding and towards more strategic, long-term investment models. This includes exploring mechanisms for capturing land value uplift, integrating infrastructure planning with housing delivery, and aligning public and private sector incentives.

Section 106: Promise vs. Reality

Section 106 contributions often carry high expectations from communities, who see them as a means of securing local benefits from new developments. However, Jenkins was clear-eyed about their limitations.

“It’s not the golden bullet. Section 106 and CIL are only partially effective in mitigating the impacts of developments.”

These funds are intended to offset local impacts such as increased demand for roads, schools, and libraries but they are subject to viability negotiations with developers. If demands are too high, developers may claim the project is financially unfeasible, leading to protracted negotiations and, in some cases, reduced contributions.

“There are so many calls on Section 106 funding that you end up in an argument around viability.”

This tension underscores the need for supplementary funding sources, especially for national infrastructure needs like flood defences, rail upgrades, and energy networks, which fall outside the remit of developer contributions. Jenkins highlighted the role of organisations like Homes England in bridging this gap, but also noted that more systemic reform is needed.

Climate Commitments and Sustainable Design

Climate change is reshaping infrastructure planning in profound ways. Jenkins highlighted the shift from “predict and provide” to “decide and provide” models, which prioritise future needs over historical patterns. This shift reflects a growing recognition that infrastructure must be designed not just for current demand, but for future resilience.

“We’re much more now building the infrastructure required for the future rather than just repeating what we’ve done before.”

Sustainable design often comes with higher upfront costs biodiversity net gain requirements, for example, may necessitate additional land or off-site credits. However, Jenkins urged a long-term perspective, arguing that these investments can reduce societal costs over time by promoting healthier lifestyles, reducing emissions, and enhancing ecosystem services.

“In the long term, the cost to society could be reduced. We’ve got to look at these things in the long term rather than the short term.”

He also pointed out that sustainable choices can sometimes reduce costs, such as using recycled materials or minimising transport needs. The key is to adopt a whole-system approach that considers lifecycle costs, social value, and environmental impact not just initial capital expenditure.

Planning for Long-Term Resilience

Resilience is a recurring theme in infrastructure discussions, but Jenkins argued that it’s not yet a prominent enough consideration at the national level. He welcomed the emergence of spatial development strategies and growth plans for mayoral strategic authorities, which offer a more regional lens.

“We need to look at bigger geographies to enable us to plan for infrastructure that deals with long-term resilience.”

However, he cautioned that political boundaries often don’t align with infrastructure realities. Water catchment areas, flood zones, and transport corridors frequently span multiple jurisdictions, making coordination essential but challenging.

“Flooding, wildfires, coastal erosion they’re not all local issues. We need better collaboration between all parties that deliver infrastructure.”

Jenkins called for stronger connections between local government planning and national agencies like the Environment Agency, arguing that better collaboration is essential to building resilient, future-proof infrastructure systems.

A Call to Action for Directors of Place

In closing, Jenkins offered a clear directive for local government leaders:

“Think regionally, think nationally. Embrace spatial development strategies, growth plans, and longer-term funding models. Collaborate better across sectors water, energy, housing, rail and start planning at that level.”

This holistic, forward-thinking approach is essential if councils are to meet the infrastructure needs of today while preparing for the challenges of tomorrow. It requires courage, collaboration, and a commitment to long-term value over short-term expediency.

Final Thoughts

The conversation with Owen Jenkins was a powerful reminder that infrastructure is not just about bricks and mortar it’s about vision, strategy, and collaboration. As costs rise and climate pressures mount, local authorities must evolve their planning and funding models to build resilient, future-proof communities. If you’re a Director of Place, planner, or policymaker, the message is clear: long-term thinking isn’t a luxury it’s a necessity.

 This blog post was sponsored by Alliance Leisure, the UK's leading leisure development partner, specialising in supporting local authorities to improve and expand their leisure facilities and services. Click the logo above and check out their website and services.