How Osborne can avoid more failure on infrastructure

Three years have been wasted as infrastructure 'plans' have failed to progress to projects. In the Spending Review, the Chancellor has a chance to reverse course.

There will be a sense of déjà vu on Wednesday when George Osborne stands up to announce "a long-term infrastructure plan" to help the economy move from "rescue to recovery". Nearly three years have passed since the Chancellor published his first National Infrastructure Plan. This document has subsequently been updated twice with small amounts of additional cash, such as an extra £5bn of capital investment last year, promised along the way.

We’ve now had a chance to assess whether these plans have actually materialised and what they have meant for the UK economy. The truth is that they haven’t amounted to much. In the first three years of this government, public sector net investment fell from £38.5bn to £24.3bn as the cuts kicked in. Although Labour had also planned a rapid reduction in capital investment, the Tories cut an extra £4.3bn.

The infrastructure 'plan' – perhaps better termed a wish list – currently includes 550 projects worth £310bn but just seven have been listed as "completed" or "operational". The latest set of construction figures show that output in the industry fell 4.7 per cent in the last year while output in the sector is down 12.1 per cent since the Chancellor first announced "new investments in the economic infrastructure" at his first Spending Review. Jobs in the sector have fallen too with 84,000 lost since the last election.

Not only have the government’s plans failed to live up to their billing, they are also poorly targeted at the regions that need most help. Transport spending is skewed dramatically to London and the south east. New analysis by IPPR shows that each Londoner will benefit 500 times as much as each person in the north east; 150 times as much as each person in the south west; 20 times as much as in the north west; and 16 times as much as in Yorkshire and the Humber. The top five most expensive regional public sector projects are all allocated to the south, London and the midlands. None of the top five projects are allocated to the north.

While there is a pipeline for transport, there is little for housing which remains one of the country’s weakest areas. Figures released at the end of last year revealed that starts for affordable home ownership were down 80 per cent from 3,197 to 629 since 2010. Starts for social rent did even worse - down 95 per cent. In other sectors, like energy, the government have given mixed signals about their ambition which has prompted CBI boss, John Cridland, to say, "This kind of uncertainty does not breed confidence - in fact, it scares markets and drives up the cost of capital". 

On The Andrew Marr Show on Sunday, Ed Balls challenged the Chancellor to announce an extra £10bn of capital spending. If the Chancellor follows his opposite number’s advice, there are three tests that he must follow. First, spending must be targeted at the areas that need it most. Housing, energy and transport are the most critical areas for new investment. There’s a strong case for devolving total housing spending – benefits and new build – to local authorities to help them shift the balance towards more construction. And in those areas that don’t typically require public funds, like privately financed energy projects, the government needs to do more to sing from the same hymn sheet and set the right tone for investment.

Second, the investment must do more to rebalance the economy from south to north. It’s absurd that Transport for London has a devolved budget while other regions of England do not. The government’s new infrastructure plan, which Danny Alexander is expected to unveil on Thursday, must include an analysis of how the proposals are underpinned by a commitment to regional rebalancing. Those extra resources which are available should be dedicated by Network Rail, the Environment Agency and other agencies to bring forward infrastructure projects outside of London.

Third, the government must ensure that all the new projects contribute to the decarbonisation of the economy, which is essential if Britain is to play its part in preventing catastrophic climate change. Road repairs should take priority over new roads as the Campaign for Better Transport has argued. Projects to improve the energy efficiency of homes and businesses, which create large numbers of jobs in the construction industry, must be prioritised. And ministers must start singing from the same hymn sheet on renewables.

A recovery was under way in 2010 before the government slammed on the brakes and removed the stimulus. Three years have been wasted as infrastructure 'plans' have failed to progress to projects. If the government is serious this time, it must ensure that it addresses Britain’s weak points, rebalances the economy, and help us go green.

George Osborne helps paint a picture of Canary Wharf during a visit to Old Ford Primary School on June 25, 2013 in London. Photograph: Getty Images.

Will Straw is Director of Britain Stronger In Europe, the cross-party campaign to keep Britain in the European Union. 

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Erdogan’s purge was too big and too organised to be a mere reaction to the failed coup

There is a specific word for the melancholy of Istanbul. The city is suffering a mighty bout of something like hüzün at the moment. 

Even at the worst of times Istanbul is a beautiful city, and the Bosphorus is a remarkable stretch of sea. Turks get very irritated if you call it a river. They are right. The Bosphorus has a life and energy that a river could never equal. Spend five minutes watching the Bosphorus and you can understand why Orhan Pamuk, Turkey’s Nobel laureate for literature, became fixated by it as he grew up, tracking the movements of the ocean-going vessels, the warships and the freighters as they steamed between Asia and Europe.

I went to an Ottoman palace on the Asian side of the Bosphorus, waiting to interview the former prime minister Ahmet Davu­toglu. He was pushed out of office two months ago by President Recep Tayyip Erdogan when he appeared to be too wedded to the clauses in the Turkish constitution which say that the prime minister is the head of government and the president is a ceremonial head of state. Erdogan was happy with that when he was prime minister. But now he’s president, he wants to change the constitution. If Erdogan can win the vote in parliament he will, in effect, be rubber-stamping the reality he has created since he became president. In the days since the attempted coup, no one has had any doubt about who is the power in the land.

 

City of melancholy

The view from the Ottoman palace was magnificent. Beneath a luscious, pine-shaded garden an oil tanker plied its way towards the Black Sea. Small ferries dodged across the sea lanes. It was not, I hasten to add, Davutoglu’s private residence. It had just been borrowed, for the backdrop. But it reminded a Turkish friend of something she had heard once from the AKP, Erdogan’s ruling party: that they would not rest until they were living in the apartments with balconies and gardens overlooking the Bosphorus that had always been the preserve of the secular elite they wanted to replace.

Pamuk also writes about hüzün, the melancholy that afflicts the citizens of Istanbul. It comes, he says, from the city’s history and its decline, the foghorns on the Bosphorus, from tumbledown walls that have been ruins since the fall of the Byzantine empire, unemployed men in tea houses, covered women waiting for buses that never come, pelting rain and dark evenings: the city’s whole fabric and all the lives within it. “My starting point,” Pamuk wrote, “was the emotion that a child might feel while looking through a steamy window.”

Istanbul is suffering a mighty bout of something like hüzün at the moment. In Pamuk’s work the citizens of Istanbul take a perverse pride in hüzün. No one in Istanbul, or elsewhere in Turkey, can draw comfort from what is happening now. Erdogan’s opponents wonder what kind of future they can have in his Turkey. I think I sensed it, too, in the triumphalist crowds of Erdogan supporters that have been gathering day after day since the coup was defeated.

 

Down with the generals

Erdogan’s opponents are not downcast because the coup failed; a big reason why it did was that it had no public support. Turks know way too much about the authoritarian ways of military rule to want it back. The melancholy is because Erdogan is using the coup to entrench himself even more deeply in power. The purge looks too far-reaching, too organised and too big to have been a quick reaction to the attempt on his power. Instead it seems to be a plan that was waiting to be used.

Turkey is a deeply unhappy country. It is hard to imagine now, but when the Arab uprisings happened in 2011 it seemed to be a model for the Middle East. It had elections and an economy that worked and grew. When I asked Davutoglu around that time whether there would be a new Ottoman sphere of influence for the 21st century, he smiled modestly, denied any such ambition and went on to explain that the 2011 uprisings were the true succession to the Ottoman empire. A century of European, and then American, domination was ending. It had been a false start in Middle Eastern history. Now it was back on track. The people of the region were deciding their futures, and perhaps Turkey would have a role, almost like a big brother.

Turkey’s position – straddling east and west, facing Europe and Asia – is the key to its history and its future. It could be, should be, a rock of stability in a desperately un­stable part of the world. But it isn’t, and that is a problem for all of us.

 

Contagion of war

The coup did not come out of a clear sky. Turkey was in deep crisis before the attempt was made. Part of the problem has come from Erdogan’s divisive policies. He has led the AKP to successive election victories since it first won in 2002. But the policies of his governments have not been inclusive. As long as his supporters are happy, the president seems unconcerned about the resentment and opposition he is generating on the other side of politics.

Perhaps that was inevitable. His mission, as a political Islamist, was to change the country, to end the power of secular elites, including the army, which had been dominant since Mustafa Kemal Atatürk created modern Turkey after the collapse of the Ottoman empire. And there is also the influence of chaos and war in the Middle East. Turkey has borders with Iraq and Syria, and is deeply involved in their wars. The borders do not stop the contagion of violence. Hundreds of people have died in the past year in bomb attacks in Turkish cities, some carried out by the jihadists of so-called Islamic State, and some sent by Kurdish separatists working under the PKK.

It is a horrible mix. Erdogan might be able to deal with it better if he had used the attempted coup to try to unite Turkey. All the parliamentary parties condemned it. But instead, he has turned the power of the state against his opponents. More rough times lie ahead.

Jeremy Bowen is the BBC’s Middle East editor. He tweets @bowenbbc

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue