Talk is cheap: why the gap between rhetoric and reality in the coalition’s infrastructure policy matters

Ministers should not be under any illusion that public spending on high carbon projects offers a quick economic fix.

Amid all the headlines about the biggest programme of road building for 40 years and announcements of new support for fracking, you would be forgiven for thinking that the recent Comprehensive Spending Review meant an abandonment of plans to decarbonise Britain’s economy. Thankfully, that’s not what our analysis of the Treasury’s own numbers shows as the plans for upgrading Britain’s infrastructure still remain focussed on public transport and renewable energy. However, there are major contradictions at the heart of the government’s policy, which risk deterring the very private sector investors who are needed to implement many of these projects.

There is a marked contrast between the government’s approaches to its fiscal and environmental responsibilities. They happen to be compatible principles but they need to be seen in perspective. Our children will care more about the state of the physical world they will occupy as adults than whether they inherit government debt of 80 rather than 90 per cent of GDP. Yet the government appears to focus all its visible efforts on the fiscal front, like a first world war general celebrating every tiny advance, irrespective of the huge sacrifices made. Meanwhile, on the environmental front, quiet progress has been made with decarbonising our energy system in recent years. Further huge strides can be made by pressing ahead with long standing plans for renewables and public transport.

There is also a contradiction in the promotion of private rather than public sector activities. When it comes to jobs, the government champions the ability of Britain’s private sector to create new jobs to offset those lost in the public sector and trusts in its ability to carry on doing this. Yet when it comes to infrastructure, it celebrates public spending on roads planned for the next parliament more than ongoing private investment in renewable energy.

The disconnection between rhetoric and reality can be seen clearly when you look at the plans for both public and private investment. The Comprehensive Spending Review heralded £20bn of public money for roads between 2015-2020, yet that is only about half of the planned spending on the railways of £38bn. The contrast for private sector investments in energy is even more striking. According to data gathered by the Treasury for its infrastructure pipeline, there are plans for around £10bn of gas related projects between 2015-2020. By contrast, there are plans for four times this investment in offshore wind, which could see an injection of £39bn by the private sector.

Some might think it doesn’t matter what politicians say, as long as the right plans are in place, but this overlooks the role of political leadership in shaping private sector expectations. As most of our low-carbon infrastructure will be delivered by the private sector, investor confidence is vital if these projects are to go ahead. However, confidence in the UK’s low carbon direction has fallen dramatically because of the perception that the coalition is divided on decarbonisation. As a result, investors have been delaying financial decisions, or expecting higher returns on their investments to cover risks. Indeed, the 50 per cent fall in new orders for infrastructure in the first quarter of this year serves as an early warning of the danger that the ambitious plans might not come to fruition.

This uncertainty is unnecessary and damaging. It comes at a time when Britain desperately needs sustained economic growth, supported by productive infrastructure that helps to rebalance the economy away from consumption.  This is the only way the government will be able to make good on its promise to restore the public finances.  The sheer scale of existing plans for low carbon infrastructure projects, means that they offer the fastest route to boosting growth. Conversely, cancelling these projects would leave a major hole in our investment plans and risk knocking us back into recession.

Some ministers have a tendency talk up high carbon infrastructure, perhaps hoping to protect themselves against criticism from climate sceptics or other opponents of renewable energy policy. But they should not be under any illusion that public spending on high carbon projects offers a quick economic fix. The government’s own numbers show the opposite as the majority of the UK’s infrastructure activity is clean and low carbon. Boasting about spending public money on roads, whilst sounding lukewarm on private investment in renewables, endangers both our economic recovery and our low-carbon future.

Julian Morgan is the chief economist for Green Alliance

George Osborne. Photograph: Getty Images
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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland