Government keeps infrastructure cards close to chest

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Now that the dust has settled on last week's Autumn Statement, it's worth spending a moment reflecting on what the much trailed infrastructure announcements reveal about the government's priorities.

The £5bn infrastructure package was billed as a step change in the government's growth strategy. But does the pre-Christmas package of goodies actually fit this billing?

From a growth perspective, the attraction of investing in infrastructure is largely two-fold – it helps make the UK a more attractive place to invest in over time and gives the construction industry a shot in the arm in the here and now.

The £1.5bn allocated to the road network fits the bill. It's a mix of funding for road maintenance that will provide a quick boost for the economy and targeted investment in major bottlenecks that will make a real difference to businesses dependent on these routes.

Other elements of the package, however, are much harder to explain as part of a growth strategy. The biggest single recipient of support is the project to extend the London Underground's Northern line to Battersea, which will have a £1bn loan underwritten by the taxpayer.

Whilst this is undoubtedly an important project for London and the Malaysian property developers who recently bought the Battersea Power Station site, it's not the most obvious starting place for a national growth strategy.

Another case in point is the £120m for flood defences. The social and environmental credentials of this investment may be impeccable, but billing it as an investment in growth seems a stretch.

The more one looks into the infrastructure announcements, the more they look like a mixed bag trying to fulfil a range of policy objectives rather than a coherent and targeted package focused on growth.

This vindicates the widespread view that the Autumn Statement in general contained a lot of good individual measures but didn't quite add up to a clear and completely convincing national growth strategy.

At the very least, the jury is certainly still out on whether growth is the overriding objective of the government's infrastructure policy. Let's hope that its transport strategy, which has been pushed back till Spring next year, shows a clearer commitment to growth.


Media Team 020 7654 1576

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