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Take vested interests out of infrastructure debate

by Andrew Teacher

In one of the first broadcast hits I did during my time at BAA on the ever-popular passenger travel data, I pressed the apparently dull subject of Heathrow’s increasing cargo volume. As was sadly ever the case, this perplexed some colleagues to whom I explained we needed to begin (not so subtly) making the economic case for a hub airport. So began the genesis of a long campaign. 

What irked me when listening to BBC Radio 4’s Today Programme this morning wasn’t solely the fact that neither of its two economist guests supported long-term infrastructure investment. It was also the fact that Jonathan Portes, introduced as a research fellow at NIESR, wasn’t noted for his very public role as a supporter of the Stop H2 campaign.

The other guest, former Bank of England monetary policy committee man Andrew Sentance, a man known for generally taking the opposing view to whatever the party line is. He generally makes good radio but like Portes, some of what he said was perplexing. 

Portes insisted that “borrowing and spending on public investment when rates are low… is broadly common sense” but went on to slam HS2 as making no sense. Surprise, surprise. 

Sentance said that the government “needs flexibility in fiscal policy” and that “reducing the burden of business” and “giving the go-ahead for airport expansion” were key. So far so good, but then he insisted that moving the emphasis away from longer-term projects to shorter-term schemes was preferable. 

The lazy fall back both made was on “relaxing planning rules” – that catch all solution for doing everything. “You could allow councils and housing associations to build houses really quickly if you relax planning rules,” Portes said. He’d obviously forgotten about the slight economic blip housing associations encountered when George Osborne kicked away their knees by cutting social rents by 1 percent a year. 

Planning is the least of housing associations’ worries, by some margin. 

The point around councils borrowing is also much discussed. Yet, given the routine failings of many councils on everything from parking policy to the care of older people, I’d question whether these people should be trusted to hold the purse strings of such investment. For example, my local council in Haringey was called out for its shameful negligence in funding care for a neighbour of mine. It’s not the kind of story I enjoy placing with the press. Notably, as an aside, even after the BBC turned up with cameras, the council leader failed to act.

I stress this point because these are the same people who would be charged with borrowing cash to build homes on what would essentially be a taxpayer supported balance sheet. 

It is true, however, that a greater focus on small infrastructure projects – whether “hard” or “soft” (roads or schools) – is needed but not at the expense of long term investment. You could well argue that HS2 is in the wrong place: more could have potentially been achieved by going up Britain’s east coast, regenerating nowhere towns, like Stevenage, but anyone using trains knows that more capacity – irrespective of any speed increase – is essential. 

The trouble with infrastructure policy is there is no single economic plan setting out all of the different components we need. Canada has one. We need to remove the vested interests of politicians (battling for local victories) and other parties – like Mr. Portes – from the debates; or at least make their positions clear. 

It goes without saying that airport expansion, like rail expansion is crucial and should continue at all costs. Theresa May’s constituency in Maidenhead, at the terminus of Crossrail, will be a huge beneficiary of the expansion. Hopefully she’ll see the benefit in a cabinet full of the likes of Theresa Villiers and Philip Hammond (with west London constituencies) who are largely against more runways. 

With the sheer amount of cash now needed to hire back ex-civil servants to lead Britain’s diplomatic Brexit negotiations, whether we’ll have enough money left for any of this remains to be seen.

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