2 March 2012
Does this government believe in investment or not?
As 2012 was getting under way, the UK Government seemed to be facing in two opposite directions on transport spending and its impact on the economy.
On the one hand we have the decision to go ahead with HS2, which will inject billions into the economy during its construction and will act as a real driver of growth in the long term.
On the other, is the acceptance that passengers should continue to endure ever-higher fares due to the structural inefficiencies of the most fractured rail system in the world. This dampens demand for rail travel and reduces the positive impact on jobs and growth that having a better connected country would bring.
Heavy construction work on HS2 won’t begin until 2017 but there is much that the Government could be doing almost immediately to invest in the existing network. Not only would this provide long- term benefits, but most crucially, it would give a big boost to the construction and engineering industries. Spending such as this is proven to pay for itself many times over by getting the wider economy moving again.
Britain’s economy has hardly grown since George Osborne’s crippling spending review, but as Paul Krugman, the Nobel prize winning economist said recently, ‘A slump is a good time to invest in infrastructure: funding is cheap, and many of the resources you would use would otherwise be unemployed.’
The arguments against spending to generate growth were always weak, but now the same credit ratings agencies – said to have been on the verge of declaring Britain bankrupt due to supposed over-spending – are now highlighting the idiocy of the Tory’s reliance on cuts as a cure-all. In a stinging rebuke of George Osborne’s economic policy, the US agency Standard & Poor’s recently wrote, ‘We believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating.’
For the sake of all our jobs and the public services we rely on, let’s hope someone is listening!
Ben Soffa, editor