Let’s not be lured into a public spending frenzy

Yes, Britain’s infrastructure needs updating, but that doesn’t mean taxpayers should always foot the bill

When it looks like a free lunch, why are we surprised that politicians are licking their lips, salivating at the prospect of an enormous infrastructure spending binge? Government borrowing costs are at historic lows and Britain has a 50/50 chance of falling into recession over the next 18 months, according to the enonomic doom-mongers. No need to wait for official data to prove it: why not just splurge £100 billion, £250 billion, £500 billion, on new roads, rail, houses and broadband to keep Britain competitive?

For one thing, because we can’t trust them to spend wisely. Congestion is expected to cost the UK economy £21 billion annually by 2030. By all means encourage cycling, but with the average driver likely to waste the equivalent of 18 working days idling in traffic each year by then, spending a fortune replacing roads with bike lanes has real costs in terms of lost growth, missed opportunities and stressful commutes.

This is a particular problem in London. But examples of politically motivated infrastructure misadventures can be found across the UK. The most heinous is HS2 (which the TaxPayers’ Alliance now says will cost an eye-watering £90 billion). When ministers think they have buckets of money to spend, but also a political legacy to nurture, they will inevitably opt for the glamorous highspeed rail network over the mundane bypass. Not all of this takes the form of bridges to nowhere. It’s more pernicious: the quiet stretching of cost-benefit ratios and budgets ratcheting ever upwards because it’s become politically embarrassing to acknowledge that the project is no longer sustainable.

In theory, the new National Infrastructure Commission, chaired by former transport secretary Lord Adonis, should tackle these problems by taking some responsibility out of politicians’ hands. But the scandalous failure of successive governments to expedite airport expansion suggests otherwise.

No full-length runway has been built in the South East since the Second World War. Heathrow has been at capacity for a decade and Gatwick is full at peak times. Agreeing to a new runway should be the easiest decision imaginable for any minister serious about growth: paid for by the private sector, likely to create thousands of new jobs directly and hundreds of thousands indirectly, due to increased trade.

Yet even though the coalition decided to leave the hard work of deciding where that runway should be built to an independent commission, its strong endorsement of Heathrow has been ignored since it was delivered in July last year, the victim of inertia and political cowardice.

In truth, Britain has been thinking about infrastructure the wrong way round for decades. Pension funds are desperate for long-term, stable returns and eager for projects in which to invest. Housing firms would be only too happy to profit from selling us more homes.

Yet the overwhelming consensus still appears to be that the reason Britain’s infrastructure is crumbling and house prices continue to defy gravity is because the Treasury hasn’t written a big enough cheque.

The man responsible for Hong Kong’s transformation from colonial backwater to one of the most successful societies on earth, civil servant Sir John Cowperthwaite, had different ideas. When approached by businessmen who wanted the Hong Kong government to fund a new tunnel under the harbour, he said no. If it was such a good idea, why didn’t they pay for it themselves? The tunnel was built.

Such an extreme form of laissezfaire is probably inappropriate for the UK. But it is an argument for a relentless focus on overcoming those things holding the private sector back from investing in our infrastructure.

A skills crisis in the construction sector is driving up wages and making it costly to build. So why not reform education and visas to ensure we have enough skilled brickies and engineers? There’s apparently a shortage of that most basic of construction materials, bricks. Are high energy costs making brickmaking uncompetitive in Britain?

Planning laws make it risky and expensive to build, while empowering do-nothings who will oppose even the most sensitive of plans. Equally, our hyper-centralised tax system means residents see all of the downsides of new development (disruption, pressure on public services, fewer green spaces) but few of the upsides (more local tax revenue). Reforming both at once would be an elegant solution. West Londoners appear to be far more enthusiastic about Heathrow expansion now that the airport has beefed up its offer to its neighbours, promising to slash both youth unemployment and noise pollution in the area.

Britain does have a problem with infrastructure: we’re sinking down the world rankings, and score particularly poorly for the quality of our roads. But simply spending more is the easy option. Far harder for politicians to realise that it’s they – and the rules they have devised – that are at fault.

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