Prospect Magazine
This government’s assumption that a growing economy will benefit everyone is flawed. Such thinking has always prevailed in Whitehall. It has perpetuated the damaging view that it doesn’t matter if growth is driven by a limited number of regionally-confined sectors.
The result is that our economy is dangerously skewed towards London and the southeast, regions that thrive on consumption rather than production, on services rather than manufacturing, and are the only parts of the country to see growth at pre-crash levels.
The productivity gap between north and south has widened to 35 per cent: an unforgivable disparity that is even more apparent in infrastructure investment. In 2017, the government cancelled rail electrification projects in the northwest and across South Wales, only to announce—one week later—that it would pour £30bn into Crossrail 2 in London. In 2018, London will receive £4,155 per person in transport investment—in Yorkshire & Humber the figure is £844.
Years of under-investment in our industrial heartlands shaped the divisions and resentments that delivered Brexit. The defining mission of the Labour Party must be to re-unite our fragmented country, and that must start with investment in infrastructure.
A consequence of Brexit will be the loss of the soft loans that we receive through the European Investment Bank and the European Infrastructure Fund. This makes the need for the National Investment Bank and National Infrastructure Fund even more vital. Labour is already leading the way. The Conservatives have jumped on Labour’s 2013 Armitt Review, which set up a National Infrastructure Commission (NIC), to depoliticise and stabilise infrastructure policy.
The priority for infrastructure planning must be to combine the value for money of the public sector with the dynamism of the private sector. The NIC is helping to achieve this, but politics still gets in the way. It has taken far too long to make critical decisions on Heathrow, HS2, and the Swansea Bay Tidal Lagoon. Labour’s next manifesto should contain a clear commitment to giving the NIC greater autonomy.
Labour has pledged to take advantage of record-low interest rates by investing £250bn over 10 years in upgrading our economy—but we will only get our money’s worth if the majority is invested outside the southeast.
Overall, our economy desperately lacks resilience, cohesion and balance; our creaking infrastructure contributes to those weaknesses. The need for Keynesian thinking and action is greater than at any time since 1945, when it took a Labour government to unleash a programme of infrastructure investment that changed our country beyond recognition.
Clement Attlee understood that the point of politics is to build shared values and a common purpose. That single-minded, patriotic commitment to the common good translated into transformational infrastructure policies and life-changing opportunities across Britain. Now is the time for us to re-discover that sense of national mission, and to commit to bringing our roads, rail, housing, energy, and broadband into the 21st century.
Infrastructure investment: Time to recapture the ambition of 1945