Infrastructure is too important to fall under the spell of politics
Economic strength depends on independent system to identify national needs and priorities
by: Sarah Gordon
Next week, when the UK chancellor delivers his third Budget speech in seven months, companies will be listening out for new investments in infrastructure — be it roads, railways, airports or broadband. But recent developments suggest they should not hold their breath.
Last week, the UK government revealed that Network Rail, which controls 2,500 stations as well as tracks, tunnels and level crossings, was running behind schedule and over budget on several big projects. As a result, it has suspended work to electrify the lines between Leeds and Manchester and Sheffield and London, which would have improved speed and reliability. Last month, the Office for Rail and Road Regulation found that the infrastructure operator had missed more than a third of its targets since its £12.5bn five-year modernisation programme began last year.
While Network Rail has been repeatedly criticised by the rail watchdog for poor management, its attempts to deliver on an ambitious investment programme and deal with a weight of internal and external bureaucracy are deserving of some sympathy. Nevertheless, with nearly two-thirds of its £6bn annual turnover provided by the taxpayer, the public company’s failure to satisfy the needs of passengers and companies is a more than legitimate cause for complaint. This failure sheds light on the broader challenges the UK government faces in delivering on businesses’ infrastructure desires.
Some of these demands are vaguer than others. In its pre-Budget wishlist, the CBI employers’ group is asking for infrastructure plans to be “kick-started”. The British Chambers of Commerce, which claims lack of investment is hampering growth and costing jobs, is calling for an end to what it describes as the “make-do and mend” culture. More specifically, the BCC wants the government’s capital spending on infrastructure removed from national debt targets.
But all of their various calls for action on infrastructure are backed up by data.
Research published last autumn suggested that the costs of traffic congestion would rise faster in the UK than in France, Germany or the US — with London particularly badly affected.
Public infrastructure investment in the country has fallen noticeably since the 1970s despite the National Infrastructure Plan identifying about 650 projects that need to be completed over the next 15 years.
Britain also lags behind other developed countries for the quality of its infrastructure, ranking only 27th in the World Economic Forum’s league table, behind Barbados and Saudi Arabia.
However, the UK government has to steer a difficult path between the demands of business and its own long-term strategic goals, such as a wish to develop a “northern powerhouse”. It also has to contend with the difficulty of managing big infrastructure projects. Just the practical challenges, such as having to upgrade busy railway tracks between midnight and 4am and find sufficient numbers of signalling staff, are immense.
Nor is it only the UK that struggles to deliver on this front, despite commentators’ fondness for bemoaning the country’s failings compared with the rest of Europe. A year ago, Jay Walder, the head of Hong Kong’s MTR mass transit system, resigned after an internal investigation into the construction of a HK$67bn high-speed railway to Guangzhou on mainland China — a project that has been bedevilled by problems.
France’s railway system — long envied by the Brits for its high-speed TGV service, and long cosseted by the French taxpayer — is starting to feel the chill wind of competition: last year, the government liberalised inter-city coach lines that had been restricted in the routes they can offer passengers.
Fortunately for the UK, the previous coalition government at least pushed infrastructure higher up the political agenda in a way that would have been unthinkable under former prime ministers Gordon Brown or Tony Blair. For this, business should be grateful. But the new government should go one better. Both the CBI and the BCC are calling for a new independent body to decide on infrastructure needs and priorities, detached from the political cycle. Next Wednesday would be a good time for the government to announce one.
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