Unfilled potholes. Crumbling schools and community centres. Is this an overly alarmist vision of the future state of public infrastructure?
Not according to Baroness Eaton, Conservative chair of the Local Government Association.
Launching a report this week, she argued for urgent action to offset the gap in projected capital spending (see 'Local government calls for infrastructure funding powers').
Unless ways are found to renew public transport, buildings and other vital infrastructure, we shall be ‘storing up big bills for the future’, she warned.
The LGA has a point. David Cameron might have tried to brush aside special pleading from ‘vested interests’ ahead of the Spending Review.
But it’s hard to argue with the claim – from the CBI and many others – that cutting capital spending by nearly 60% over the next five years is not a ‘smart choice’.
Reducing investment from £49bn in 2010/11 to £20.6bn by mid-decade will have a hugely damaging effect on the country’s social fabric.
The LGA argues – Obama-style – that investment in infrastructure is vital to help the economy recover from recession.
But the chancellor is not about to emulate the US president’s $50bn programme of public works. He is more inclined to say ‘no, we can’t’ than do anything that adds to the deficit.
Instead, the coalition is pinning its hopes on private finance (see 'Not so fast'). When the Treasury body Infrastructure UK publishes its strategy for capital investment in October, it is likely to focus on market-based models, whether for health, schools or transport.
But with private investment levels down by over 20%, and the value of public sector assets in steep decline, how realistic is it to expect the private sector to take up the slack?
True, there are some interesting models being floated to replace the increasingly out-dated Private Finance Initiative. Municipal bonds, local tax breaks, and investment by pension funds, are some of the ideas around.
All are worth a look. But all depend on substantial under-writing by government. And none is capable of digging the UK’s infrastructure out of the bottom of the OECD league.
As Bank of England governor Mervyn King admitted to the Trades Union Congress this week, short-termist thinking carries a heavy price. ‘We let it slip,’ he told delegates, and ‘the costs of this crisis will be with us for a generation’.
The risk, unless the chancellor does some rapid rethinking, is that he will trip over a hole of his own making.
