Full steam ahead with infrastructure

Transport and infrastructure have always been central pillars of the Chancellor’s narrative of “building Britain” and today was no different. The Government has trumpeted on several occasions that Crossrail is Europe’s largest infrastructure project. Indeed, they liked it so much they are going to do it again. The Government has commissioned Crossrail 2, which will runnorth to south in London.

The Chancellor would never dare forget his Northern Powerhouse. So the Government has endorsed all of the National Infrastructure Commission’s recommendations on improving transport links between Northern cities with the headline announcement that £60 million has been allocated for a High Speed 3 network between Leeds and Manchester. The Government will be setting aside £300 million for Transport for North (TfN) to carry out significant road improvements and the Trans-Pennine Tunnel.

The Budget also gave a nod to the recent Shaw Report on Network Rail. In its 2016 Budget document, the government said it “welcomes the recommendations of the Shaw Report, and will respond in full later this year”. This stopped short of the immediate privatisation which some observers had predicted.

With an eye on the average voter, the Chancellor has decided to continue the freeze on fuel duty so that we are paying less at the pump. There is no denying that this is popular policy with voters. But more importantly at the moment this is equally well-received by Conservative backbenchers. The Chancellor will have welcomed the cheer this announcement received in what was a quieter than normal Commons.

Another headline infrastructure announcement was additional funding for flood defences, £700m in total by 2020-21. This will be on top of £2.3bn already allocated. The difficultly is that despite more money being allocated, cuts to DEFRA and the Environment Agency continue to raise questions about these organisations’ ability to cope with major natural disasters.

It is also important to remember the infrastructure that you cannot see. Rural broadband and broadband rollout have been a thorn in the Government’s side. There was no mention or update in the Chancellor’s speech, but the Government will setting up a Broadband Investment Fund that will operate on commercial basis to support alternative network developers. The National Infrastructure Commission will also carry out a review of how the UK can become a world leader in 5G. This will inform a 5G strategy in 2017.

One obvious omission from the large infrastructure projects was airports. With Heathrow versus Gatwick still unanswered and an electable Conservative candidate running for London Mayor in May, the Chancellor felt it was best to not open Pandora’s box during this Budget.

Douglas McIlroy

Hill & Knowlton Strategies Search