Andrew Adonis picks apart the Coalition’s spending review statement on infrastructure investment
“While the Government talks a good game on infrastructure, we’ve seen too little delivery on the ground so far.” Not a partisan point but the business perspective from John Cridland, the Director General of the CBI.
The £300bn of infrastructure investment which the Chancellor trumpeted yesterday is a forward projection right to the end of the decade, with no new funding for this year or next and a real terms cut in capital investment in 2015.
The Office for Budget Responsibility reports that over the three years. since 2010, the government has actually spent £5.6bn less than the previous government had planned on infrastructure. In consequence, in 2010 the government cancelled a string of shovel-ready infrastructure schemes, some of which they are now trying to reinstate but of course they are no longer shovel-ready: including the cancellation of 715 new and refurbished schools, and a string of major road schemes including upgrades of the A1, the A14, the A19, the A21, and the A47.
The National Infrastructure Plan is the longest fairy tale since Snow White. Of the 576 projects in the last version of the plan, 80% haven’t even been started. Only 7 have been completed, five of them started under the last government.
On housing, The Home Buy scheme, which the Chancellor said would support 100,000 home purchases and stimulate house building, has so far supported only 2,000 purchases, suggesting it will take half a century to meet its goal.
On energy, the government’s hype about shale, investment in energy infrastructure has decreased in this parliament. There still isn’t a real contract between the government and EDF to build Hinkley Point, as the first of the proposed new nuclear power stations.
On transport, Crossrail 2, highlighted today, does not even yet have an agreed route, let alone a funding plan, and construction could not start until the 2020s or even the 2030s.
But taking a specific immediate project of considerable economic importance, the A14, which links the Port of Felixstowe with the M1, the M6 and the Midlands – a project which was cancelled in 2010 and is now being revived – there is still no firm timetable for construction. The government is saying it will be a toll road, but there is no plan for how the tolling will work on an A road with the risk of mass diversion onto untolled roads going through Cambridgeshire villages.
There is a gaping black hole in the government’s transport infrastructure plan: airport capacity in the south east of England. The last government published plans to expand Heathrow which the private sector would have financed entirely. The present government cancelled the plan. Ministers did nothing for two years. Then, last year, the prime minister appointed a commission. But it isn’t even going to report for another two years. So by 2015 there will have been five years of total inaction on extra hub airport capacity serving London, desperately wanted by business.
On HS2, the plan for which I published 3 years and 3 months ago, there is still no Bill to grant planning powers for the first London to Birmingham section of the line. In 2010 the government pledged to enact such a Bill by 2015 – something which is now an absolute impossibility, given the Hybrid Bill procedure required.
The only thing high speed about the government’s infrastructure delivery is the speed at which ministers read out long lists unrelated to real projects being delivered in the real world.
In the real world, 84,000 construction jobs have been lost since 2010. The World Economic Forum ranks the UK lower than Barbados for infrastructure delivery. And according to the ONS, infrastructure spending in the first quarter of this year plunged by 50 per cent on the previous quarter and by 40 per cent on the same time last year.
As for the government’s much trumpeted private financing of new infrastructure, the Pensions Infrastructure Platform has so far raised commitments of just £2bn – none of it yet invested. The UK Guarantees Scheme announced in July 2012, with the promise of up to £40bn worth of projects that were ready or nearly ready could qualify, has so far only guaranteed a single project. The Chief Secretary spoke of two more today – the Mersey Gateway Bridge and Hinkley Point – but then concluded by saying, and I quote, “these are not done deals.”
All of which vindicates the Director General of the British Chambers of Commerce, who describes the government’s National Infrastructure Plan as “hot air, a complete fiction.”
Lord Andrew Adonis is Labour’s infrastructure and growth spokesman in the Lords
Published 27th June 2013
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