Amidst the clamour for greater spending, it’s worth taking a moment to look at what the UK is trying to achieve as we move in to a post-Brexit world. I would propose that if we want to build wealth, the UK needs to be seen as the most attractive country in Europe to base a business. Hence, we must offer businesses the best environment in which to operate with world-class infrastructure that enables the easy, efficient movement of people and goods.

Unfortunately, in terms of the quality of its infrastructure, the UK ranks 24th according to the World Economic Forum’s Global Competitiveness Report and 27th in the world according to the 2017 CBI / AECOM Infrastructure Survey. Looking at total public spending forecast for FY 2018, Transport will receive £32b. In contrast Public Pensions cost £161b, National Health Care £147b and Social Security £114b.

So, whilst we are looking after our people short term, we are not showing real commitment to building long term wealth that will help us to pay for the NHS etc in the future.

A country with a competitive offering 

Our society depends on infrastructure to sustain quality of life and business competitiveness. The UK’s advanced economy increasingly relies on connectivity – bringing people together physically and virtually to innovate and trade. However, congestion on Britain’s roads and railways is already constraining economic growth – we’re all aware of the wasted time spent in traffic jams.

Each industrial revolution has been based on a transformation of infrastructure; first with the construction of canal networks, then with railways, electrification of industry and modern communication technologies. Today, another revolution is under way which is enabling smart delivery, think Deliveroo, and use of infrastructure services. Critically, we need to look at infrastructure as not a series of stand-alone assets but recognise that it delivers benefits through complex networks that need to be carefully managed.

In its ‘Vision for UK Infrastructure’, the National Needs Assessment (NNA) has set out what it considers to be the steps needed for a national infrastructure system that is efficient, affordable and sustainable, i.e. an infrastructure fit for an innovative and productive global trading nation. Interestingly, a key focus of this vision is the need to reduce the cost of building and operating infrastructure, using new technology to help streamline new construction, improve management and reduce maintenance costs.

Core to its recommendations is that the Government should increase investment in the commuter rail network and other public transport to ensure the economic development of urban centres is not constrained by overcrowding and congestion. In addition, it suggests that substantial funding for transport should be devolved to local and regional authorities to allow them to invest in growing the economic areas they know very well and for which they are responsible.

We all know infrastructure investment drives growth 

Citing the prevailing view that investment in infrastructure brings immediate benefits and long-term advantages, the ICE (Institution of Civil Engineers) believes that infrastructure investment should be at the heart of economic policy. Its assertion is supported with strong figures – in 2014, the construction industry contributed £103bn in economic output, 6.5% of the UK total. It has identified that for every 1,000 direct jobs created by new infrastructure projects, wider employment grows by more than 3,000 jobs and for every £1 of infrastructure investment the country sees £2.84 worth of economic activity or, to put it yet another way, for every £1 invested by Government, £3.20 is returned through increased GDP, resulting in up to 108,000 new jobs per year.

Lots of numbers, but the principle is clear. Infrastructure investment is a good thing for the country. The ICE propose that we move away from what it describes as ‘knee-jerk decision-making and stop-start pattern of investment’ and with Public finances tight, probably for ever, adopt a strategic approach that guides priorities. We are already seeing investment plans being deferred, perhaps the first sign of a Brexit effect, and advocate the need for a strategy of new infrastructure, enhancements and deployments of technology to get much more from our existing networks.

The CBI, through the 2017 CBI / AECOM Infrastructure Survey, found that 96% of the 727 businesses surveyed see infrastructure as important, of which 55% view it as critical. Only one in five firms is satisfied with the pace of delivery (20%) and almost three-quarters (74%) doubt infrastructure will improve over this parliament. This lack of confidence is attributed primarily to policy inconsistency (+94% of firms) and political risk (+86%).

The Global Infrastructure Index from Iposos Mori is a survey of 1,004 British adults (16-65) on a variety of issues against 28 other countries. It revealed rail infrastructure is now considered to be the top priority for improvement ahead of new housing supply. 46% felt rail investment should be prioritised compared to 43% who chose housing. Tellingly, rail has risen since 2016 and housing has fallen, although we feel that both categories need to work together and be properly coordinated.

In the survey results, Britain was viewed as lacking the necessary infrastructure to compete, with 59% saying not enough was being done to meet the country’s needs. Ipsos More research director Ben Marshall said: “The British still think investment in infrastructure is vital to future economic growth and there remains a sense that we are not doing enough to meet needs. But it does show an uptick in the salience of rail infrastructure. This is likely to reflect British reliance on rail – we’re more dependent on rail to get around than many other countries – and also inferior ratings of the current quality of tracks and stations compared to elsewhere, including Germany, the US, France and Japan.”

From this, it appears the public view is that being able to move people and goods around the country effectively is critical to our future prosperity. So perhaps the government should listen to the people and businesses and focus on delivering integrated infrastructure investments that will deliver future economic benefits.

Is government best placed to decide on new projects? 

The Institute of Economic Affairs states that good infrastructure can enhance the productive potential of the economy, but the political decision-making process often leads to bad choices on spending, whether that is for electoral reasons or inefficiencies driven by a lack of market discipline.

In the UK expensive prestige projects, such as HS2, get chosen over smaller road projects with much higher benefit-cost ratios. The 2010 Comprehensive Spending Review deferred, cancelled or placed under review strategic road schemes with average benefit-cost ratios of 6.8, 3.2 and 4.2 respectively. These were much higher than the estimated benefit-cost ratio of 1.2 for HS2, the costs of which keep getting revised upwards.

In summary, if infrastructure investment is a good thing, maybe politicians at Westminster are not the right people to select all the projects. After all, the mysterious £350m / week we’ll be saving by leaving the EU is yet another example of manipulation of figures for a political agenda. Even if it was correct, the money was immediately ear-marked for the NHS – an obviously worthy case (albeit a politically driven one) but again a short-term fix that won’t be help us build the capability to pay bills in the future.

I believe we need a government that is focused on generating long term wealth through a strong economy, one that doesn’t automatically divert funds to short term fixes to meet the raised voices calling for more money for the NHS or higher pensions. This needs an open discussion about major challenges that governments of all colours do not seem ready to have, perhaps because it requires them to think long term and not just for their term of office. This may seem controversial, but my concern is that if we don’t think and act to build long term wealth, we won’t have the economy to generate the money to pay for the NHS we so revere and the pensions everyone wants to have.

Surely, we can all agree that is not a position in which any of us want to leave our children.