The best post-crash indicator of the coming decade is Japan in the 90s: “The lost decade” as they call it.
Understanding that the current malaise will continue for 5 to 10 years means we need to be thinking now about how we will be boosting the economy in 5-10 years and preparing it for growth in the decades after that.
The answer has to be infrastructure. Not only is the construction industry among the hardest hit right now, but infrastructure activity has amongst the most stimulating effect on the economy, and also it creates “facts on the ground” – useful assets that don’t evaporate in bad times (unlike the finance sector).
It is great news that the Coalition has continued and expanded Lord Adonis’s courageous plans for High-speed Rail and electrification. But while High Speed 2 is a good start, what is really needed is a step-change of rail investment that will transform transport in the UK for the 2020s, stimulate regional growth, take the strain off London and the South-east, and propel us back into the 1st division competing economically with the Far East. We need to connect high speed rail across the country: west to Cardiff via Heathrow, north to Scotland, and electrify and enhance all the existing major rail routes. That’s a bit over £100bn of investment in total!
The current incredibly low interest rates mean that it’s actually an ideal time for entities with low debt to borrow to invest in the future.
Unfortunately, the Government is not one of those entities, being saddled with giant debts. But private companies can’t build a high speed rail network as the risk too high for them, and PFI is rightly discredited as just voodoo economics.
What is needed is a way for the state to exchange money with low debt private companies. If only we had something they want… and actually, we do – if we are prepared to think big. We have a huge motorway network which is worth over £100bn. Running a network like this is low risk and private firms would happily do it.
Yes: we should privatise it – and spend the lot on rail investment.
I’m not talking about the “semi-privatisation” of major roads to fund more motorway-building that was trailed recently – we don’t need more motorways, and privatising only new roads would be a missed opportunity.
I’m talking about full and total privatisation of the motorway network – the whole lot.
The two historic objections to this have been firstly safety, and secondly diversion of traffic onto domestic roads.
On safety, Britain is rightly proud of its safe motorways, but the functioning of the airlines under private ownership shows that proper regulation can maintain safety and continue to deliver if it’s done right. Tough penalties can keep cost-cutting in check – the lessons of the terrible way the railways were privatised can been learned.
On traffic diversion, the huge escalation of petrol prices has largely eliminated this is a serious prospect. A drive from Bristol to London now costs easily £30 for most people. Hardly anyone is now going to increase their journey-time by 50% or more to avoid just any toll under a tenner or so. Ironically, Peak Oil has made the privatisation of the motorways a plausible option.
Liberal Democrats have always been more willing to bite off big totemic issues. The other parties are scared to go here. We should champion this policy and start laying the railway tracks out of our own “Lost decade”.
* Dr Mark Wright is a councillor in Bristol and was the 2015 general election Parliamentary candidate for Bristol South.
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26 Comments
For a brief moment I was with you. But having a toll on motorways would be incredibly unpopular, despite the logic of your arguments. In any case private ownership is meant to work best where there is competition and where being uncompetitive means you go out of business. So how would that work here? The privatisation of the trains was a disaster, we have the most expensive service in the EU. So why would this be any different?
Hmm. There are lots of good reasons to support infrastructure development, but getting out of the recession isn’t one of them, because big infrastructure projects take a long time.
Also, you are not right on fuel cost – the rise in fuel prices have been offset by the rise in fuel economy of cars, and particularly the rise in the share of cars that are diesel. A 48 mpg diesel costs in fuel than now than a 35 mpg petrol engined car 10 years ago. As Geoff says, the private sector works well when there is competition.
Terrible example – Japan’s infrastructure spending has become notorious for not delivering the jobs and growth it promised, costing a fortune and becoming a hallmark of recession there – this has been written about at great length. Infrastructure spending alone, without other stimulus for job creation is the way to ruin – you’re saying we should spend our way out of recession (and out of debt?) and sell the roads to private companies. I suppose, like the trains, once private companies own the biggest public spaces in the UK they’ll make us lots of money and we’ll never have to worry about this stuff again? You’re off your swede mate.
With thinking like this we should privatise the sky, spend the money on crack and then we won’t have to worry about what happens after 2015.
@Geoffrey: The privatisation of rail was a disaster. “So why would this be any different?” – because I think we can learn from mistakes. Obviously private enterprise is easier when there is the real competition and the chance of failure – arguably in that scenario little regulation is needed at all. But even with natural monopolies private ownership can work with appropriate targets, penalties and tough regulation. It’s not ideal, but more importantly – we need the money right now to avoid bigger problems.
@Tim: This isn’t about getting out of the recession – as I said at the top of the article this is about making sure we don’t end up still in depression in 10 years’ time. Re: fuel costs, that assumes everyone has new cars, which the vast majority don’t. Otherwise, noone would be complaining about the rising cost of petrol because they’d be exchanging for new more efficient cars all the time.
I think you are a little confused – it is actually the government that can borrow for extremely low rates.
No thought of high speed lines until the rural towns have been connected back to the network. Rural driving is becoming unaffordable and even the 4×4 brigade rankle at filling up for £100 plus every time. The heady days of straight-line growth forever upwards is over – perhaps for the forseeable future – well at least until man invents a new form of propulsion not based on fossil fuels.
Ten years ago I would sit on the M25 at 6am wondering what we were all doing there at this time in the morning – 4 lanes each way stationary. The 8am rush had become the 7am rush and eventually the 6 o’clock scramble. The world had gone mad and only now is common sense beginning to take over.
The problem is that our youthful politicians like Clegg and Cameron think that is how life should be because that was the world they grew up in during their formative political years.
No-No -No – that was unsustainable.
We should be looking at the Japan model – sustainability without growth – self-sufficiency within each region of the country and not this relentless need to build bigger and faster. Those days are over and the sooner everyone realises that the better.
Petrol will get more expensive, never less expensive – so stop moaning about it. Plan a sustainable transport policy that is accessible to all. Local railways, trams and the like, most certainly yes – more roads and High Speed trains – certainly not.
“Hmm. There are lots of good reasons to support infrastructure development, but getting out of the recession isn’t one of them”
On the other hand, cutting investment in construction seems to be an extremely good way of getting IN to recession. The cuts announced in Autumn 2010 have contributed to a collapse in construction output, which is the main reason why we have now plunged into the dreaded double-dip.
The govt could of course simply levy the tolls – which would be something like £8bn a year or £350 per motorist – without privatising it and spend that money on infrastructure. Or it could borrow the cash and use the tolls to pay the interest. I’m not sure the point of privatising it?
@Keith
“Local railways, trams and the like, most certainly yes – more roads and High Speed trains – certainly not.”
You’re objection to High Speed Rail seems ungrounded. You argue for more sustainable transport policy with improvements to local services. However this is exactly what High Speed Rail will deliver. Without high speed rail, local services will only get worse as capacity becomes more of a problem. Regional services are already being cut to make way for intercity services. If you want regular local services, you need the extra capacity, which high speed rail will deliver. This freeing up of capacity will also allow far more rail freight to be transported , taking large, polluting lorries off the motorways. This is a more sustainable transport policy.
People should be arguing for more high speed rail, not less. I applaud the government’s decision to carry on with this project, however I think that they were not ambitious enough. Hs2 should not be stopping at Manchester and Leeds, but should carry on the Newcastle and Scotland.
@Matt: The Government is too indebted to go on further borrowing sprees. We need to find entities with low debt to do that for us.
Infrastructure spending is very important, but as Tim points out, it’s not a quick fix – ask Team Obama about the unfortunate term “shovel ready”. What does make sense is a significant increase in spending, and I would advocate a £12bn p.a. scheme funding by cutting upper rate pension tax relief (£7bn), cutting comfortably off pensioners’ benefits (my parents don’t need free bus passes, winter fuel payments or free tv licences), ending red diesel, and current to capital switches from existing budgets. (Without a red book here I can’t give you the numbers).
Pace Tim, I would speed up HS2, with the aim of completing the whole route to Scotland by 2022,. But I’d also focus on smaller scale rail schemes that would make a significant local and national difference, e.g.:
– Complete the Northern Hub plan,
– Reopen the Leamside line,
– Electrify Gospel Oak – Barking (GOBLIN), Felixstowe – Ipswich, Haughley – Ely – Peterborough – Nuneaton for electric freight routes, and Cambridge – Bury for electrified passenger trains
– Reopen March – Spalding to provide a freight route from the Haven ports to the NW without hitting the ECML south of Doncaster, build the Redhill flyover to route Channel Tunnel freight away from London,
– Think about Birmingham cross city
– Complete the Varsity line by building Bedford to Cambridge and electrify throughout
– Double track Stansted Airport branch and link to Braintree
As a starter for ten….
The government is NOT too indebted to invest in rail. That said, there’s a lot of basic investment that’s needed, rather than shiny shiny new tracks and high speed rail. Electrify the western region, eliminate bottlenecks, more rolling stock. As to privatising the motorways – I suppose that goes along with a government that plans to privatise the NHS, post office, forests, .. I wouldn’t be surprised if they privatised defence. Some things are better provided by the state, not by private enterprise for profit. Exhibit A – Southern Cross. Exhibit B – PFI. Exhibit C – The privatised rail system. I know, lets privatise the air. I’m sure people would pay for access to air.
Jenny
I’m afraid it is ultimately a capacity issue. Without the so called ‘shiny shiny new tracs and high speed rail’ there can be no improvement to local and regional services. You don’t seem to offer a solution to the capacity problem on our railways other than bottlenecks and rolling stock – even when you fix the bottlenecks (which will causes major disruption for many years) there will still be a major capacity problem.
Forget tolls or road pricing. The Tories will never allow that to happen to a significant degree, because they are wedded to the car lobby – and the car lobby, though generally a bunch of right-wing free marketeers, believe passionately in socialist roads.
I would be more convinced of the argument that the railway was short of capacity if I saw fewer trains of 2-3 carriages taking up capacity!
Cllr Mark Wright – The real yield on the 50 year index-linked gilt is 0.04% (so a nominal yield of just over 2%). There’s no way a private company would want a return this low, so by selling the roads and using the money to build trains, rather than borrowing it and using the money to fund the interest payments, surely you are making life worse for taxpayers and worsening the fiscal situation?
Selling an asset does not improve your net debt position.
The only rail lines with genuine capacity constraints are rush hour trains in Waterloo, Charing Cross, Victoria, London Bridge and Liverpool St. All the rest have spare capacity in that you can run longer/more frequent trains and/or fewer first class carriages, 5 across second class.
And even the crowded ones could have more capacity if we ran the trains closer together – as they do in other countries and as we did in days of yore.
Queue to pay QEII bridge toll back to J28 A12 today. You want that for Avonmouth, too?
@Terry: No.
HS2 is a bad idea. Hubris. As others have suggested what we need is full utilisation of the rail network by, first of all, manufacturing exemplary fit for purpose rolling stock here in the UK. This meets our needs for increasing manufacturing as well as capacity.
The money is simply not a constraint. The so-called lack is simply a device by the be-knighted Treasury to scare us into fruitless austerity. There are trillions locked up in corporations who lack the confidence to invest. There are billions available in unpaid taxes by the extremely rich individuals and corporations.
Get rid of that mindset. Houses need to built, urban roads repaired, and infrastructure renewed. These are what create jobs (skilled and unskilled) NOW. What we need is a confident leadership who tell the British just how capable and good they are at getting on with it, and a new breed of managers who understand collaboration and effective working as opposed to the bunch of moaning minnies who blame the government for everything. Look at the success of Tata. They flourished under one of the most anti-capitalist and over-regulated regimes in a democracy. Let’s have more of them and their imaginative ways of working that always bears in mind the good of the community.
John Carlisle – agree with your central premise. However, your comment about HS2 is not very sensible. We are already years behind France, Germany and Italy (and several years behind Spain) in development of high speed rail. Only by developing a network of high speed lines, linking, of course to similar lines across the Channel and the North Sea, will we reduce dependence on short haul air, and make a real impact on road traffic. In 1970, we had a pretty advanced railway system, with the best of 100mph trains operating on lines out of Euston to the Midlands, the NW of England, and West of Scotland. At that time we were readying ourselves for 140mph operation, with the Advanced Passenger Train. Aside from Japan, with their Bullet Trains, we were ahead of the world. Then came Oil shocks, the IMF and Thatcher, dealing a huge blow to our railways.The last 20 years we have spent pxxxing around with preparations for privatisation, the actual event, and the aftermath, when we should have been electrifying, and generally preparing for the future of transport.
It’s a shame John Major’s Cones Hotline didn’t survive, as Rail privatisation seems to be the major Major legacy, of a PM I always secretly rather admired!
@Toby Fenwick
“cutting comfortably off pensioners’ benefits (my parents don’t need free bus passes, winter fuel payments or free tv licences),”
As a comfortably off pensioner, I do feel a bit uneasy about winter fuel payments. I’m not old enough for free tv licences. (Comfortably off in our case means each of us having a fairly average income, but owning our house and cars outright.)
The Greater London Freedom Pass is however invaluable; it not only makes travel cheap, but it also avoids the nightmare of working out how to pay the correct fare for multi-leg cross-city journeys. If you think I’m comfortably off, I would be quite happy to make an annual contribution to keep it for convenient and efficient travel.
Also, my local authority and community benefits from me having the pass; every time I leave my car in the drive-in and take a bus or train, the pollution and the congestion of saturated urban roads is reduced. The evil day when the community would have to spend money on road schemes is put off.
You didn’t mention free prescriptions for the elderly. As you get older, doctors put you on more and more preventative and ameliorative medicines. Many will be on 6 or more continuously – think of the cost to the patient if there weren’t free prescriptions!
Tim13
Sorry, but your HS2 does not stack up: Taking Scotland and Northern Ireland out of the land mass and we have an area to be served of about 150 sq kms, compared with 547 for France, 505 for Spain, 357 for Germany and 301 for long skinny Italy. Even Japan, which is a skinny curved archipelago is over twice as big with railways connecting the 4 main islands along a distance of over 2000 kms. That makes a case for the Bullet train; but Brighton to Edinburgh (an unlikely frequent journey) is only 605 kms. At 320 kms/hour as opposed to a possible 230 kms/hour you would save about 45′.
Simply not worth the investment. Put it into the best rolling stock in the world and really please the passengers, who would exchange comfort for speed anytime.
@ John Carlisle
HS2 is about capacity more than speed. With current projected increases in usage, the West Coast Mainline won’t be able to cope and we can’t get the extra capacity by upgrading the existing line. Speed is only an added advantage.
RC
Then fix the West Coast Mainline; which is something Maggie T and the iniquitous MoT never allowed InterCity to do.
But, no more totemic projects, please.
I believe there was an alternative and cheaper plan put forward for adding capacity between London and the Midlands. As others have pointed out, the saving in time promised by HS2 isn’t worth the huge cost. The money would be better spent on a host of less high-profile improvements around the country.
I also think that the madness of commuting to London will / must be cut back, due to IT and ever increasing fuel costs.
As for Road Pricing, it will happen sometime – with IT replacing queues at tolls.