A FLAGSHIP £310 billion coalition government drive to get Britain building and revive the flatlining economy has been branded “unrealistic” by an influential committee of MPs.
The Treasury has not properly prioritised 200 key projects, according to the public accounts committee, which also raises doubts about how much private and public investment can be raised as the economy stalls in a report today.
The Scottish Government has previously criticised the coalition government’s approach to infrastructure spending. It points to the United States, which funded mass infrastructure projects to stimulate the construction industry and build its way out of recession.
The UK’s National Infrastructure Plan was launched in 2010 and last updated in December. It listed projects costing a total of £310bn, with about £200bn of that expected to be wholly funded by the private sector.
The UK infrastructure plan covers Scotland in “reserved” areas such as the extension of mobile phone networks and energy, including the £1bn 2GW subsea electricity transmission link planned between Scotland and North Wales.
Other areas, such as roads, schools and hospitals north of the Border, are covered separately by the Scottish Government’s own infrastructure plan.
The committee stressed that investment in power generation, transport and communication systems is “crucial for stimulating economic growth”.
But it added: “We are not convinced that a plan requiring £310bn of investment in infrastructure is credible given the current economic climate, the cutbacks in public finances and the difficulty in raising private finance for projects on acceptable terms.”
The Treasury says it has prioritised 40 programmes, but many of those cover broad areas and there are 200 individual projects “whose relative priority is not clear”, says the committee.
The cross-party group of MPs went on: “Given the financial constraints affecting the government and consumers’ ability to fund infrastructure expenditure on this scale, the Treasury should assess how much investment can realistically be financed and develop a coherent strategy using tightly defined criteria to identify and prioritise project.”
The report cautioned that investors would be reluctant to come forward with money “until government policy is clear and consistent”.
Committee chair Margaret Hodge said: “Most of the £310bn of investment needed will come from the private sector, with households shouldering the cost through higher energy bills and fares. Family budgets are already badly squeezed and inevitably those on the lowest incomes will be hit hardest. ”
Mrs Hodge said the government “may have to use taxpayers’ money to attract investors through grants, guaranteed incomes or agreeing to bear risks”.
The Scottish Government’s finance secretary John Swinney pledged to undertake a “building boom” under a £205m plan for construction supporting 2,000 jobs after months of lobbying saw additional cash allocated from the Treasury to Scotland for “shovel ready” schemes late last year.
“The Scottish Government has consistently argued for greater infrastructure spending, which is why we argued for the UK government to come forward with additional capital spending for shovel-ready projects in Scotland,” a spokesman said yesterday.
Public divided on growth over prudence
Nearly half the public believe the government must prioritise growth over economic prudence, research for a think tank found.
But one third of voters believe the next government will be powerless to improve living standards, according to the Resolution Foundation.
It found that while eight out of ten voters agreed they cannot trust a political party on the economy unless prudent management of public finances is the top priority, the same number also believed promoting growth should be the government’s
No 1 aim.
Forced to make a choice between which should come first, 49 per cent backed growth while 38 per cent backed prudence.
Overall, half of the public believe that, with the right policies, government can secure rising living standards but 35 per cent think that is beyond the ability of ministers and the most that can be hoped for is a stable economy and sound public finances.
The Resolution Foundation report, 2015 – The Living Standards Election?, found Conservative supporters were most pessimistic about the issue, with 64 per cent believing it is hard for a government to secure higher living standards, compared 43 per cent of Liberal Democrats and 20 pe cent of Labour supporters.
Peter Kellner, president of YouGov, which carried out the polling, said: “Politicians who look for a clear lead from the public will look in vain. Voters know that over time Britain needs to cut the deficit and create more jobs, but they are divided on which should come first.”