U.K. Urged to Gauge Consumer Impact of $640 Billion Plans

The U.K. Treasury should assess the effect on households of 375 billion pounds ($640 billion) of planned infrastructure spending that will mostly be paid for by consumers through bills and fares, a panel of lawmakers said.

Consumers are expected to finance about two-thirds of the planned expenditure on power stations, the water network and upgrades to rail infrastructure, Parliament’s Public Accounts Committee said today in an e-mailed report. At the same time, there’s no unified assessment of the full effect on consumers, putting the poorest at risk, it said.

“No one in Government is taking responsibility for assessing the overall impact of this investment on consumer bills and whether consumers will be able to afford to pay,” Margaret Hodge, the committee’s chairman, said in an e-mailed statement. “This is of particular concern given that the poorest households are hit hardest by increases in bills.”

The committee said that while median incomes didn’t climb “significantly” in the decade through 2011, energy bills rose 44 percent and water bills 21 percent. Energy charges in particular have risen to the top of the political agenda before a general election planned for May, with the opposition Labour Party vowing to freeze prices should they win.

“Poorer households spend more of their incomes on household bills relative to richer households, meaning that funding infrastructure through bills is more regressive than doing so through taxation,” said Hodge, a Labour lawmaker.

The committee, which also includes members of the ruling Conservatives and their coalition partners, the Liberal Democrats, recommended that the Treasury produce an assessment of the long-term affordability to consumers of bills across all industries. It also said regulators should verify whether infrastructure has been built to expected standards.

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