George Osborne’s appointment of Andrew Adonis, a former Labour transport secretary, to head up a new National Infrastructure Commission last week was highlighted by many as a political masterstroke. To some commentators, this is a reinforcement of the idea that it is the Conservatives who are on the vaguely-defined centre ground. But the economic argument behind this decision is far more significant.
Barely can a week go by without us seeing pictures of the chancellor in his unofficial uniform of hard hat and fluorescent jacket, usually followed by the declaration that the UK must become a “nation of builders” if we are to succeed in the “global race”. Infrastructure, specifically greater investment, is clearly at the forefront of his, and the government’s, thinking.
The City’s view is that infrastructure development is absolutely integral to our future success, our sustainability, and the continued creation of jobs and growth. Roads, railways, power plants, airports, and broadband and telecoms connectivity are the beating heart of the economy and, if it stutters, productivity is hit. Quite simply, there is no way the City could have become a successful global financial centre without investment in these essential foundations of a modern economy.
We could of course take the cynical view that the Commission and the appointment of Adonis is an excuse to kick the problem – usually the political will to get projects off the ground – into the proverbial long grass.
However, my view is that it is actually validation to do something quite radical in firing up long-term investment opportunities. Clearly, the blueprint that we have seen with the Airports Commission has set a precedent here, taking the intricacies and long-term thinking needed for infrastructure projects out of the hands of politicians alone. And Adonis is a “doer” not an armchair commentator.
Key to this is that infrastructure plans should never be seen simply through the prism of London. Yes, projects like Crossrail will bring a distinct advantage to the City in helping boost transport links, but it will also increase wider GDP by £42bn. And the proposed expansion of Heathrow will aid connectivity with key international markets – both developed and emerging – helping firms not just in London, but across the UK.
Read more: First designs of expanded Heathrow revealed
That is why it is positive to see around £130bn allocated to the English regions, and more than £30bn allocated to Scotland, Wales and Northern Ireland combined, under the government’s Infrastructure Pipeline. What the National Infrastructure Commission’s priority should be is to work hard and transform these from figures on pieces of paper into literal spades in the ground.
Adonis will bring a wealth of expertise and experience to the position, and I am sure he is the right man for the job. But he has a challenge on his hands. He won’t be making the decisions, but instead advising the government and holding it to account. He knows that, if we delay on these big decisions, our international competitors will be the ultimate winners. The losers will be the people of Britain as we become less attractive as an investment and commercial opportunity across the globe.