Our problem is no longer unwillingness to spend on infrastructure, it's inability

Outsourcing government policy since 2010

As my colleague George Eaton wrote this morning, the political top-line from the government's announcement of a £50bn infrastructure program is that it signals a gruff acceptance of Keynesian economics:

The delusion that the coalition's spending cuts would increase consumer confidence and produce a self-sustaining private-sector-led recovery has been abandoned after Osborne's "expansionary fiscal contraction" turned out to be, well, contractionary.

But getting wonkish about it, there is something interesting buried in all this about how the government has chosen to execute this volte-face. Rather than simply borrow the money – at interest rates so low that it would basically be paid to do so – it has announced that it will guarantee the private loans of any company which fulfils certain requirements.

Doubtless part of the reason is political. This way, the government can confidently state that they aren't adding anything to the deficit, even though this way of borrowing is functionally identical to doing it the standard, on-the-books way. But part of it will be because infrastructure investment is really hard.

According to the FT:

To qualify for the new guarantees, projects must be ready to start in the 12 months from the offer being made and Treasury officials say they will be monitored to ensure they would not have gone ahead in any case.

The thing is, there just aren't that many shovel-ready projects simply lying around the place, and certainly not big flashy ones. Although the government is proclaiming that the Thames tunnel, the Mersey Gateway toll bridge and the A14 road widening in Cambridge could all be helped with the money, it's usually more mundane things which are the easiest use of infrastructure spending. Forget high-speed rail and airport islands, and focus on sewers and road resurfacing.

Unfortunately, its relatively tricky to spend £50bn on sewers in a year. Thames Water is replacing all the Victorian Water mains in London, but its taking 5 years and costing £5bn. To do it any faster would risk chaos in the streets. And noteably, they had already started that program without the governments money. That's going to be true of a lot of the low-level infrastructure investments that would otherwise be ripe for targeted spending.

So the government needs ideas. And what better way to get them than to offload the generating of them to the private sector? It's no longer just a government outsourcing based on ideology. It's now a government outsourcing because it has literally no idea how to enact policy it desperately wants to.

Osborne knows what it means to be Keynesian, but doesn't know how to do it. If you think you do, why not bid for his money?

The Thames tunnel, one of the proposed uses of the infrastructure money. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The continuity between Ed Miliband and Jeremy Corbyn

The left say that the former leader created crucial intellectual and political space for them.

One of the errors in the leaked list ranking Labour MPs by favourability to Jeremy Corbyn was the inclusion of Ed Miliband in the "negative" category. Most in the party believe the former leader is better described as sympathetic to his successor. In recent interviews he has defended his leadership more robustly than many shadow cabinet members and has offered him private advice.

Last year I reported on speculation that Miliband could return to the shadow cabinet (a rumour heard again this week). Those close to the former leader continue to dismiss the possibility but he will appear with Corbyn today at a pro-EU climate change rally in Doncaster - the first time the pair have shared a platform. "Ed's more engaged than he's been for a long time," a friend told me.

Though Miliband did not vote for Corbyn in last year's leadership election (sources say he backed Andy Burnham), there is notable continuity between their political projects. In interviews with me, shadow chancellor John McDonnell and Momentum chair Jon Lansman have spoken of how the former leader created crucial intellectual and political space for the left. Those on the party's right make the same point - if rather less positively. A former shadow cabinet member told me that "the left of the party was indulged for five years and wasn't challenged".

It was under Miliband that Labour first identified as an "anti-austerity" party, with the then leader addressing a 2011 anti-cuts march. Though this stance was later abandoned, as emphasis was put on the need for public spending reductions (with room left to borrow for investment), it provided Corbyn with an opening to exploit.

It was also Miliband who denounced the Iraq war and promised a new approach to foreign policy, declaring in his 2010 conference speech: "Our alliance with America is incredibly important to us but we must always remember that our values must shape the alliances that we form and any military action that we take." His refusal to support the government's proposed intervention in Syria in 2013 was hailed by him as preventing a "rush to war". By promising "a different kind of foreign policy - based on a new and more independent relationship with the rest of the world", and opposing all recent military actions, Corbyn has travelled further down a road taken by Miliband. 

The Labour leader's promise to give greater power to party members similarly follows Miliband's decision to give them the ultimate say over the leadership (the system that enabled Corbyn's victory). Rail renationalisation, limits on media ownership and opposition to privatisation were also stances either fully or partly embraced between 2010 and 2015. 

Many of those who voted for Corbyn backed Miliband in 2010 or joined after being attracted by his radical moments. For them, Corbyn, the only candidate to position himself to Miliband's left from the outset of the contest, was his natural successor. It was these left-leaning members, not Trotskyist entryists, who enabled his landslide victory. 

The continuity extends to personnel as well as policy. Simon Fletcher, Corbyn's director of campaigns and planning (formerly chief of staff), was Miliband's trade union liaison officer, while Jon Trickett, the shadow communities secretary (and key Corbyn ally), was a senior adviser. If Miliband is more open to the Labour leader's project than many other MPs, it may be because he recognises how much it has in common with his own.

George Eaton is political editor of the New Statesman.