By Marcus Leach
Infrastructure was at the heart of Tuesday's Autumn Statement as the Chancellor laid out plans to boost the economy via investment across the country.
Highlights in terms of infrastructure included £5 billion new spending over three years, including £1 billion for the rail network. 35 road and rail projects across England have already been given the green light, with an extra £20 billion to come from pension funds.
This news was warmly welcomed by the Institution of Civil Engineers' (ICE) Director General Tom Foulkes.
“The new infrastructure plan lays the foundations for a more structured approach to our infrastructure delivery," he said.
"An approach that rightly sets out what the UK needs from its infrastructure, the interdependencies between the networks, a strategic and comprehensive ‘pipeline’ of projects and the need for a political heavyweight to really drive the most crucial ones forward.
“Clearly Government has taken on board the case made for prioritisation of capital expenditure for infrastructure investment, despite difficult economic circumstances. Its aspirations on how to finance infrastructure in the longer term through a range of models and working with the pensions industry to leverage £20bn, are also encouraging. However, Government must now ensure its aspirations are translated into reality.
“Going forwards there must also be regular, high profile, public reporting on the progress of the infrastructure plan to ensure goals are met and the plan remains up to date. The commitment to report against performance measures for each network in an annual ‘state of the infrastructure’ report is a real step forward. However to retain confidence and create a platform for continuous dialogue between industry, investors and government there is a strong case for a National Infrastructure Forum bringing together the key players who will be involved in implementing the plan.”
However, this view was not shared by all. Sam Bowman, writing for the adamsmith.org blog believes it will do little in terms of the economy, despite boosting GDP figures.
"Spending on infrastructure is an accountancy trick. It might boost GDP numbers, but it won’t do much for the real economy — in fact, it might make things worse," Bowman said.
"A recession is a period where investors reallocate their capital and people reskill to produce things that consumers want to buy. Infrastructure spending delays this, by creating unsustainable demand for skills that the private sector doesn't want.
"That might make the economy appear to be improving in the short term, but in the long term it gives mixed signals about where people should reskill and move, and makes sustainable recovery even tougher to achieve."
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