Earlier this week parliament had the chance to debate the importance of infrastructure to the British economy. Infrastructure, whether in the form of transport links, communication networks, or energy supplies, connects businesses across our country, allowing them to trade and generate the growth our economy so vitally needs.
Labour exposed this government’s abject failure to invest in essential infrastructure projects. Of the 576 projects in the ‘infrastructure pipeline’ only seven have been completed, most of which are road schemes which began under the last government. So far just over 18 per cent have started.
The government’s failure to grasp the importance of quality infrastructure could cripple the economy. David Cameron proudly told his party conference that George Osborne had managed to cut a quarter of the deficit. Unfortunately, well over half of this reduction came from cuts to infrastructure investment, which has fallen from £51.4bn in 2009-10 to just £22.4bn last year. Sunday Times economics editor David Smith describes these as the ‘wrong kind of cuts’, as they target investment that even Osborne himself claims are essential to for economic recovery.
Last week the public accounts committee looked at the government’s plans for UK infrastructure investment. Twenty-one per cent of the UK’s energy generation capacity will need to be replaced in the next decade and our growing population means that demand for all infrastructure will increase in the coming years. Investment today is vital to keep the country moving and the lights on tomorrow.
Writing in the Financial Times Dieter Helm, an economics fellow at New College, Oxford, said that the government’s plans show no systematic planning, but is just a ‘wish list’ of projects it will not pay for. Labour will need to make some tough choices on spending for the future. As this government looks set to ignore the critical gaps in our capacity, investment will be even more important should we come to power in 2015.
Government finances mean we will have to strike a balance between consumption spending and investment. The Whole of Government Accounts, which I wrote about earlier this month, revealed outgoing expenditure that would make your eyes water. We will need to grapple with medium to long term funding priorities sooner rather than later so that we can afford to make the investments that the country and the economy so desperately need.
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Nick Smith is member of parliament for Blaenau Gwent, member of the public accounts committee, and member of the Progress strategy board. He tweets @BlaenauGwentMP
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Nick is right to emphasize the importance of infrastructure to revitalising our economy and delivering social justice.
No-one disagrees on the importance of infrastructure. But few people have given the topic any serious thought (even Dieter Helm thinks about infrastructure only in conventional ways).
It is about time we did. The fact is that the very nature of infrastructure has changed. But we still think about is comprising just “transport links, communication networks, or energy supplies”.
This definition is even more restrictive than the definition used by the Romans! For them infrastructure did not just underpin business. It also underpinned civil society (no Roman city was planned without including baths, theatres, temples, the citizens’ forum etc).
So first Nick needs to remember this.
But, especially in the light of public spending constraints, we need also to include VIRTUAL infrastructure. This is 21st century infrastructure. It comprises networks of people and organisations that can at very low cost exploit existing dispersed capacities and capabilities to deliver efficiencies and synergies in production, research, development and innovation. Such networks rely on good basic communications infrastructure and they drive improvements in that infrastructure.
Government has a key role in coordinating the development of virtual infrastructure and in creating the fiscal carrots and sticks needed to drive that development. Such development is opposed by the fragmented economy that has festered for the last 3 decades. Such development is essential to constructing a responsible capitalism in a responsible society.
Speaking from the civil society side… we’re noticing the drain of knowledge infrastructure – or perhaps just system wisdom, which means that all these great new ‘innovation funds’ that are going into the Tory version of Civil Society (people at the grassroots helping themselves or the new boys running NESTA) is being spent on people reinventing the wheel because those that learned lessons from years of experience in NGOs are going out of business…