To turn initial signs of growth into something more permanent we need to take a long-term approach and significantly improve the UK’s creaky infrastructure
Green shoots of recovery appear to be sprouting up all around. Growth is on the up, employment is at record levels and manufacturing is said to be 'booming again'.
This is welcome news, but the recovery is still very fragile, and nothing should be taken for granted. Momentum must be maintained, or we could all too easily return to negative growth.
A Keynesian stimulus may seem out of the question, but infrastructure investment offers one route to longer-term prosperity. It is reassuring then that the coalition has embarked on what ministers describe as the ‘biggest programme of infrastructure development since the Victorian era’.
Launching the National Infrastructure Plan in June, Treasury Chief Secretary Danny Alexander promised £300bn of investment before the end of the decade. Schemes include the High Speed 2 rail line, a new school- building project and a number of offshore wind farms.
It’s a great-looking plan, but how much of it will actually come to fruition? As Mark Hellowell points out in Public Finance's October issue, only seven out of 576 projects have so far been completed.
Business leaders, such as the CBI, believe that too many investment decisions are being pushed back to beyond the next election. Meanwhile, our road and rail networks continue to deteriorate, and there is increasing concern over future energy supplies.
Britain is now ranked 28th by the World Economic Forum for the quality of its infrastructure – below our main international competitors, as well as countries such as South Korea, Saudi Arabia and Barbados.
Something needs to be done – not just to improve our transport, energy and digital networks – but also to give our recently resuscitated economy a new lease of life.
John Armitt, chair of the Olympic Delivery Authority, has suggested the creation of an independent national infrastructure commission in a review commissioned by the Labour Party. This could evaluate the country’s needs looking 25–30 years ahead and avoid short-term political infighting.
Similarly, the London School of Economics Growth Commission has called for a national infrastructure bank to help increase the supply of private finance.
Both of these ideas may not fit with the government’s antipathy to quangos and state interference. But tangible successes have been few and far between, and the current approach is clearly not working quickly enough.
It’s hard to see how we can turn the initial signs of economic regeneration into something more robust without taking a long-term approach.
This article first appeared in the October issue of Public Finance
