Rachel Reeves

Member of Parliament for Leeds West

Admit you were wrong on borrowing, George

7 March, The Times

 

George Osborne promised last October that Britain “has  rediscovered its ambition and we are thinking big again”. The chancellor claimed that projects to build new roads, improve railways and install superfast broadband were all surging ahead. But the reality behind Britain’s creaking infrastructure is very different.

Just 114 out of 565 major projects are “in construction”, according to the latest figures in July from the National Infrastructure Pipeline, which monitors public and private sector projects valued at more than £50 million. Under David Cameron and the chancellor, public investment as a share of GDP has fallen to new lows

The International Monetary Fund forecast that – taking into account public and private sector investment over this parliament – the UK is set to fall from 30th to 31st in a league table of 34 OECD countries. Millions of people face longer journeys to work, higher fuel bills and frustrating delays using the internet because of the chancellor’s failure to support targeted investment that does not increase the burden on the taxpayer. We are paying the Chinese and French billions of pounds to invest in our energy industry and rail network, but not enjoying the returns.

When it comes to broadband, we have some of the slowest and patchiest connections in the developed world. We do not even make it into the top fifty countries when it comes to the latest “fibre-to-the-building” broadband – seen as the game-changer when it comes to making the most of digital technology. In my constituency in Leeds, homeowners and businesses are still struggling to get back on their feet after spending cuts left them exposed to the devastating impact of flooding. All this is evidence that Mr Osborne’s short-sighted refusal to change his borrowing rules is further damaging our already fragile economy.

Instead of using his budget next week as the latest in a series of job applications to become the next Tory leader, the chancellor should radically alter his borrowing rules, which are far too crude. The rules should be changed so that investment in infrastructure which brings positive returns to the taxpayer – either directly or in the form of higher tax receipts – is separated from day-to-day spending on welfare and public sector salaries.

The two spending areas are different, and should be treated so.  With the cost of borrowing at rock bottom, there will never be a better time to improve our infrastructure through sensible investment. The chancellor should overhaul his fiscal rules to support investment in infrastructure and capitalise on those low borrowing rates.

An independent body such as the Office of Budget Responsibility or the National Infrastructure Commission should assess the chosen schemes to make sure that  they can pay their way. If the chancellor fails to change course in the budget and reframe his borrowing rules, he will only damage our growth prospects through his own failure to change with the times.

He needs to own up to his mistakes and put the nation’s ambitions for a strong, rebalanced economy ahead of his own personal ambitions to lead his party.

 

http://www.thetimes.co.uk/redbox/topic/no-topic/admit-you-were-wrong-on-borrowing-george

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