We CAN afford to rebuild Britain, urges top adviser

Start spending to revive economy, says infrastructure tsar as summer mini-Budget looms

BRITAIN’S infrastructure tsar has urged Ministers to ramp up investment in roads, railways, windfarms and broadband to dig the country out of one of the deepest recessions in history. Sir John Armitt has said the Government can afford to increase infrastructure spending significantly – even as it borrows eye-watering sums to keep the economy going.

Speaking to The Mail on Sunday, Armitt said major projects were urgently needed to protect jobs, and that boosting employment was more vital than worrying about the debt incurred in keeping the economy afloat.

Armitt identified key projects, including rolling out fast broadband to rural areas such as Cornwall and Scotland and boosting the sum local authorities can spend on transport.

He also recommended putting money towards offshore wind generation on the east coast and supporting car manufacturing in the North-East and Midlands.

His intervention will pile pressure on Chancellor Rishi Sunak to revive plans for an infrastructure revolution at a mini-Budget pencilled in for July.

‘The job projections are for millions to become unemployed, and that is horrible,’ Armitt said. ‘We should do anything we can to make sure people have got jobs and are not relying on Government support.

‘The cost of this crisis is not something we all have to pay back in the next ten years. It is more important to have a healthy economy. I would rather pay my taxes to see the money spent on maintaining employment than try to reduce the debt we have taken on.’

Britain faces a contraction in economic activity of 12.8 per cent this year, according to the Office for Budget Responsibility. It expects rescue measures, such as furlough pay, to push new Government borrowing to £300billion this year. By contrast, pre-virus it predicted a £29.3 billion deficit for 2019-20, down from a peak of £153billion in 2009-10.

The gloom has prompted speculation the Chancellor will either raise taxes or ditch pledges to ‘level up’ the nation. But Armitt said the Government could lift infrastructure spending from 1.2 to 1.5 per cent of gross domestic product (GDP) – a measure of economic activity – echoing the New Deal policies used to drag America out of the Great Depression in the 1930s.

‘The Government spends 1.2 per cent of GDP on roads, rail and flood defences. The rest of the money in energy, water and telecoms is private sector investment,’ he said. ‘That is not high by European standards. You could increase that by 0.3 or 0.4 of a percentage point and that would bring you closer to other countries. I think with sensible application we can afford this.

‘This is an opportunity to use infrastructure to get an economy moving, as was done in the 1930s.’

Armitt urged the Government to publish its long-awaited national infrastructure strategy, detailing how to deliver and finance major projects. Armitt chairs the National Infrastructure Commission, which set out its formal recommendations for the strategy in July 2018. ‘Some clear Government leadership, setting out plans and targets as to how many of these things we want to achieve in the next three and five years would go a long way to enabling more activity,’ he said. ‘We are still waiting. The Brexit debate got in the way, then we had a change of Chancellor, which stopped it again. In terms of building confidence there is a lot Government could do in the next few months by announcing a strategy.’

Armitt sees infrastructure investment as the key to Boris Johnson’s promise to boost the regions. He said mayors should make their own decisions over local transport networks to avoid delays.

‘Devolution is a very good way of achieving levelling up,’ he said. ‘We have recommended putting £43billion to regional leaders over the next 20 years for city transport. These local leaders can decide what is best for their city. This saves city leaders coming down to London all the time to ask for money for a particular scheme.’

But he warned that vital private sector investment would not materialise until the Government set out a clear path for the economy. H E ADDED: ‘I’ve had this argument with officials regularly over the years. Business people need certainty about what the Government wants. They need goals and targets. Then they will respond and invest.

‘Companies are less enthusiastic about rolling out broadband in places like Cornwall and Scotland, and the Government recognises the need to subsidise that. You would also want to boost the offshore wind industry on the east coast. Then there is car making in the NorthEast and Midlands. If we’re looking at hydrogen and carbon capture storage technology, there are experimental projects taking place in the North-West.’

Armitt remains convinced of the merits of a third runway at Heathrow. The project has been beset by delays, most recently in February after the Court of Appeal blocked it on environmental grounds.

‘We have a lot of surplus capacity in airports, except at Heathrow, which is always operating at about 95 per cent of capacity,’ he says.

‘Its numbers are driven by the fact it is a hub airport – an international change-over point – and by routing your plane through Heathrow you ensure full capacity all the way through its journey.’