Wanted: a Secretary of State for Infrastructure

After some neglect, the UK is ramping up investment in its economic infrastructure. A Minister for Infrastructure should now lead the charge, writes Alexander Jan.

George Osborne's 2013 budget, which aims to trim department spending to support infrastructure projects, is encouraging – to a degree. We're surrounded by economic stagnation, and there's general consensus that Britain will not be able to compete internationally without major investment in its economic infrastructure.

The Government's own National Infrastructure Plan notes that:

…many power stations are ageing, road congestion is a growing concern, train punctuality in the UK is worse than in other parts of Europe and in the longer term there will be an airport capacity challenge in the South East of England.

Few readers could disagree with this. And without action it is going to get worse. Energy analysts darkly talk of power outages if the country's generating capacity is not renewed, official forecasts point to big increases in congestion on the road network. As the UK's population grows and economic confidence (and growth) finally return, airports risk once again reaching bursting point. Even Crossrail, the new east to west rail link being carved out under London, will need supplementing with a second scheme and possibly others.

The £3bn which George Osborne recently announced for housing and other infrastructure projects is only the tip of a £400bn iceberg. Power, telecommunications, transport, waste and water are queuing up for this investment. But in an age of austerity and with a long term desire to reduce the size of the state's take of national income, the Government hopes that pension funds, banks and other private investors will stump up more than two thirds of requirements. That would be a remarkable triumph of hope over experience.

The reality is that successive governments have shifted spending away from capital formation. At the same time, private investment in fixed assets has decreased. Taken together, UK investment in property, plant and equipment has lagged behind our competitors since the late 1990s. Amongst them, infrastructure investment averaged 3.5 per cent of GDP over the last decade. The Organisation for Economic Co-operation and Development (OECD) notes that British infrastructure investment was as low as 2.5 per cent of GDP in the same period. More worryingly, analysis by Arup (using data from the Institute for Fiscal Studies) shows that UK public investment has actually fallen in real terms from around £52bn in 2009/10 to an expected £24.6bn in 2012/13. Further declines are forecast to the end of this parliament. This fiscal reality sits uncomfortably with Treasury aspirations.

Few commentators or ministers question the need for increased infrastructure investment. Billions of pounds are looking for infrastructure opportunities, we are told. But somehow they are failing to fully connect. Britain is a preferred destination for international capital. It has tried and tested investment models (think water), a stable legal system, low political risk and lots of infrastructure expertise. All this raises the question as to whether the UK's machinery of government is right. The National Infrastructure Plan itself can provide only so many clues about the Government's overarching investment strategy. Some would argue it reflects the UK's department-centric approach to major project planning. Changing that requires more than a plan.

Government is moving in the direction of improving leadership around infrastructure. Infrastructure UK, a Treasury body, provides some long-term focus on the UK's infrastructure priorities. The Chancellor has announced a set of initiatives to enhance Whitehall's capacity to support private investment across the infrastructure sphere. Guarantees and co-lending and equity investment by the state, are intended to accelerate projects that developers are struggling to finance or where commercial lending appetite falls short. To orchestrate funding and development, the Chancellor has focused the work of the incoming Commercial Secretary to the Treasury on infrastructure development. The Treasury may now appear more "joined up". But are the departments of state?

A Department for Infrastructure should be created. This super ministry would provide more than leadership for spending departments. It could consolidate infrastructure resources and talent spread thinly through the rest of Whitehall. It would give the Prime Minister a mechanism for knocking heads together and ensuring delivery. It could oversee the development of effective frameworks including reforms already in train, to bring in private sector investment to boost growth and competiveness across the countries and city regions of the UK. It could be the agent for delivering a big part of Lord Heseltine's forty billion pound "challenge" fund. It could provide a strong delivery partner for the all-powerful Treasury. With firm delivery objectives that would not be lost in departments' business plans, its minister would be high profile. It would be a potent department of state that senior politicians and civil servants would fight over. There would be a real sense of urgency to get things done and join them up with local government.

This new department of state could be modelled on those found in other Commonwealth countries. Australia integrates infrastructure leadership with its transport ministry. Their Department of Infrastructure and Transport adopts a national strategic function, advising regional governments. It coordinates construction timing and investment decisions under a cabinet-level minister. In Canada which has an enviable track record on securing private sector investment, there is a Minister of Transport, Infrastructure and Communities.

As leading UK economist Dieter Helm has pointed out, Britain is in knots over infrastructure. A Department for Infrastructure might just help slice through them.

The Crossrail shaft in Farringdon. Photograph: Getty Images

Alexander Jan is a consultant at Arup.

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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.