We all know that the United Kingdom is a competitive international economy. This fact sometimes risks being taken for granted. London is the world’s financial capital, our professional services industry is globally first class, and our labour market, Covid-19 notwithstanding, is one of the most flexible in the OECD.
However, the Covid-19 pandemic has also thrown into stark relief the ways in which our economic structures can be improved, and one area where we can make a real and immediate impact as we recover is infrastructure investment.
The World Economic Forum (WEF) reported in 2018 that the UK came 26th in the world for the quality of its roads, 22nd for the efficiency of its train services, 40th in terms of mobile subscriptions, and 51st in terms of transmission and distribution losses in the electricity supply. Our road connectivity index came only 29th.
A recent Policy Exchange report noted that, according to the IMF, our capital stock as a percentage of GDP is lower than the US or France, and comparable to Germany, which has famously low government investment in infrastructure.
Conversely, the WEF also found that we were the eighth most competitive economy in the world.
The disparity between our infrastructure rankings and our competitiveness makes one thing clear: the UK is competitive, but we are hindered, not helped, by the quality of our public infrastructure.
That’s why, with interest rates at record lows, and with plenty of spare capacity, the British state has the means to make strategic investments in infrastructure now, to generate a long-term increase in output, reduce disparities between the regions, and power local economies from Caithness to Cornwall. The Prime Minister has been clear that this is his foremost priority, and it is very much welcome, especially in the East Midlands where historically we have been overlooked.
Infrastructure needs to be strategic because the benefits are long-term and have a dynamic impact on the economy. That is why I am very pleased that the Government has already adopted changes to the Green Book, raised initially in a Centre for Policy Studies report in June, that will shift focus from the use of a benefit cost ratio (BCR) to considerable weight being placed on an actual strategic case. This could have a real impact on projects in leftbehind parts of the UK.
Take the part of the A1 that serves my constituency of Rutland and Melton. The East Midlands already has one of the lowest per capita spending on capital in the country, to the tune of £169 per head lower than average, according to a recent Policy Exchange report. For years, local authorities and Local Enterprise Partnerships have raised concerns about significant congestion, and a very high rate of accidents, on the stretch of the A1 between Blyth and Peterborough. There is a lane closure more than once a week, and full closure once every two weeks. The BCR is 0.47 (or 47p for every £1 invested) which is normally too low. However, this is also because the very congestion on the A1 has made local authorities hesitant to plan for any development on or near the road, out of serious concerns for usability.
The strategic case to upgrade the A1 is robust: it will reduce congestion and hours lost, allow the high percentage of HGVs on the stretch of road better access, and allow local authorities across the East Midlands to more strategically use available land. This is a key road for the UK, especially post-Brexit, but until now the BCR made this impossible. These are precisely the kind of long-term projects that we need to commit to now to generate growth in our regions. Changes in the Green Book are a brilliant first step, but they need to be coupled with immediate investment to power the recovery.
I welcome the Government’s £100 billion in capital spending, and I agree with Sajid Javid’s After the Virus report that the 3% average investment ceiling should be relaxed. Policy Exchange has recently noted that 5G broadband and green investment are two major areas for further investment, because they can bring immediate impacts, and support rural communities.
I fully embrace the Government’s commitment to green investment, but I know some constituents are worried that, while the shift will happen, it will leave rural areas behind.
That’s why the Government needs to expand the Rapid Charging Fund to ensure all hard-to-reach rural areas are supported. At the same time, we can expand the 5G voucher scheme, working directly with local authorities, to boost productivities in our towns and villages. The 2019 Conservative manifesto commits to ensure every person is within 30 miles of a charge point, and gigabit-capable broadband in the home is a game changer for rural areas. Let’s make sure we hit them!
There are more ways we can boost our recovery by levelling up across the UK, and indeed it’s a sign that much more work needs to be done for the UK to reach its potential in every region. We are on the right track and the Government is listening fully to those who have too often been forgotten in investment decisions. By powering up through shovel-ready projects now, and making long-term, strategic investments in our regions – like the East Midlands – we can build a more prosperous Britain for all, and seize prosperity out of the jaws of the pandemic.
The Prime Minister has a bold and empowering vision of a country where we have levelled up and built back cleaner and better after the pandemic. He has my full support in this commitment which will transform our country and set the agenda for generations to come.
This article originally appeared in Bright Blue https://brightblue.org.uk/road-to-prosperity/