Rachel Reeves

Member of Parliament for Leeds West

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Rachel's article for the Guardian on infrastructure investment

The Tories are giving us distractions, not actions

Rather than build for our future, the coalition government has resorted to making endless promises that never bear fruit

With our economy in the longest double-dip recession since the second world war, record numbers of young people unemployed, and government borrowing up by a quarter this year, Britain desperately needs new sources of growth and job creation. Investment in the transport, energy, water and communication systems that we all rely on, as well as new housing and public facilities such as schools, is what we should be looking for.

Instead, the low level of investment in our infrastructure is a major factor behind the economy's return to recession. The building sector has lost 77,000 jobs since the Tory-led government came to power. Fewer new houses have been started since the beginning of 2011. And data published by the Office for National Statistics on Friday shows that in May to July this year, the volume of new infrastructure work was down 24% from the same period last year.

The causes of this contraction are clear. Public investment has been cut sharply – contrary to the government's claims that it is spending more than Labour had planned, Office for Budget Responsibility figures show that it will have spent £6.6bn less over three years than Labour had planned, with budgets for schools and affordable housing hit especially hard.

Even more importantly, private-sector investment – on which most infrastructure projects depend – has been hit by George Osborne's decision to try to raise taxes and cut spending too far and too fast.

The situation has been worsened by dither and delay over critical policy decisions and planning processes. Aviation and airport strategy is still in limbo, cuts to the feed-in tariff have put off potential investors in low-carbon energy and, contrary to rhetoric about streamlining planning, major and minor applications are actually taking longer. In a recent industry survey, 60% of respondents said a "lack of clarity from the government" was the factor that most discouraged infrastructure investors.

Instead of taking action to turn this situation around, the Tory-led government has devoted its energy to creating distractions with statements and announcements that promise much but deliver next to nothing. At last year's Conservative Party conference, transport secretary Philip Hammond cited the Mersey Gateway Bridge as a project that could be implemented "quickly" – but a preferred bidder is not now expected until 2013. Proposals to resolve traffic congestion around the A14 in Cambridgeshire have been repeatedly announced and repeatedly delayed.

Osborne's autumn statement included a long list of road-building projects – none of which have actually begun construction. The national infrastructure plan, published alongside the statement, has been described by the British Chambers of Commerce as "hot air, a complete fiction". Today, a year later, the CBI warns: "Firms fear initiative overload and are becoming impatient with delivery."

On Monday afternoon the Commons will debate the government's latest attempt to create the impression of activity – a scheme by which the Treasury hopes to encourage private investment by offering taxpayer-backed guarantees. Labour won't oppose the measure – but there is no guarantee that it will see any projects going ahead that wouldn't have happened anyway. It remains utterly inadequate to the scale of the challenge we face, and fails to get to the heart of the problem: the lack of demand in our economy, and a lack of confidence in the government's ability to get it moving.

For a year now, shadow chancellor Ed Balls has been calling on the government to genuinely bring forward investment in transport and schools, and use a tax on bankers' bonuses to fund a new affordable house-building programme. If it had taken our advice, there could already be more "diggers on the ground". And the other measures we have proposed to boost employment and growth would help to create the climate of confidence we need to unlock investment.

For the future, Labour will be setting out a vision for a more productive economy, with rules encouraging investment for the long term, in which modern, high-quality infrastructure will be critical. And as the shadow business secretary, Chuka Umunna, has emphasised, we are ready to work on a cross-party basis to develop the strategic vision and stable policy framework that investors and the industry need to deliver it.

The Olympic Games showed how, with the nation united behind it, and the right combination of public and private enterprise, the most ambitious project can be delivered on time and on budget, to provide a perfect platform for Britain at its best. Now let's get to work on laying the foundations for the fairer, stronger economy we want to build for the next generation.



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