Five questions answered on the UK governments’ infrastructure plans

After Danny Alexander admitted to underspending on infrastructure over several decades, just how much do they expect to spend?

Today the government unveiled its infrastructure plans for the next two decades. We answer five questions on the announcements.

What is the big news from the National Infrastructure Plan (NIP) announced today?

The most significant news includes the government selling off its 40 per cent stake in the Eurostar rail service, as reported by the BBC. What's more, the insurance industry, which isn’t traditionally a big infrastructure investor, is to invest £25bn in infrastructure over the next five years.

The government has already announced a £10m guarantee for new energy efficient lighting systems across car parks in the UK.

It has said it will also open a £10m competitive fund in early 2014 to test innovative solutions to deliver superfast broadband services to the most difficult to reach areas of the UK.

Plus it will build on the Spending Round commitment of £2.3bn capital investment for flood defences by developing a new long-term plan, including naming key projects by Autumn Statement 2014.

How much is expected to be spent over all?

About £375bn of investment is expected to be spent on energy, transport, communications, and water projects.

What has the government said?

The Chief Secretary to the Treasury, Danny Alexander, told the BBC: "The most important thing we've done as a government is create an environment in which people want to come in and invest in British infrastructure."

But he admitted that the UK had "underinvested ... over several decades".

He added: "There are projects going on in every part of the country."

Lord Deighton said today 45 per cent of the projects that have been announced by the government since 2010 are under construction, with lots already completed.

What have the experts said?

Mat Riley, Head of Infrastructure at EC Harris told the Telegraph:

“Today’s revised infrastructure spending programme is, again, strong on headlines, but unclear on delivery. The government is working hard to attract investors such as the insurance funds, but the UK still does not have the right policy environment for these funds to be put to good use and make a real difference, which is compounding the problem.”

“Who would want to take the risk and invest in a nation that cannot even put together a coherent Energy Policy without fear of ridicule? Regulation is largely ineffective, and the balance of power now sits with asset owners and their investors, which means only one outcome for the consumer, and that is higher costs. Politicians are in denial, the real issue is how much cost consumers are ultimately going to bear, and by when.”

What has the opposition said?

Chris Leslie, shadow chief secretary to the Treasury, speaking to the BBC said: "With the country facing a cost-of-living crisis we need to invest in infrastructure to create jobs, boost living standards, and strengthen our economy for the long-term."

He added that the government’s record on infrastructure had been "a complete failure".

"The Office for National Statistics says that infrastructure work is down 3.7 per cent in the last year, and fell by 10 per cent in 2012.”

Danny Alexander said the UK had "underinvested ... over several decades". Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.