Time for real commitment to infrastructure

Mace's Richard Shaw, operations director for Yorkshire and the North East, talks to Yorkshire Business Insider about how connectivity across the north is the single-biggest priority.

A switch in economic approach by the government towards a more fiscal policy had been predicted before the Autumn Statement on 23 November. But the Chancellor Philip Hammond has since played down comments by a government mandarin that he want to adopt a more interventionist approach with increased spending on infrastructure projects.

Instead Hammond said he might decide not to increase capital spending and suggested that if economic data did not deteriorate he would not seek to borrow more for infrastructure than was already planned. He did, though, acknowledge that he would like to have space in his new budgetary rules for “high-value economic infrastructure investment”, with projects like removing road bottlenecks – popular at the Treasury as they are relatively small and score well in terms of economic benefit to cost.

It was only in March that the government launched a National Infrastructure Delivery Plan. The commercial secretary to the Treasury at the time, Lord O’Neill, said the government was “stepping up with the private sector to invest in some of this country’s most ambitious projects”. But the former Goldman Sachs executive has vacated his tenure in charge of the government’s infrastructure strategy and since then not much has been heard about the plan or the National Infrastructure Commission, born to a great fanfare last Autumn.

Indeed it announced last month that the commission will no longer have its independent status enshrined in law. This was an about turn from what had been promised in the Queen’s Speech in May.

Leading figures in Yorkshire have regularly voiced concerns that the region starts to get its fair share. Leeds West Labour MP Rachel Reeves, a member of the Treasury Select Committee, called on business and civic leaders to lobby government for the road, rail and energy networks the region deserves.

The Institute For Public Policy Research (IPPR) think-tank said London receives six times the amount of transport construction spend that the north does per person. The total spend on Crossrail will be £4.6bn between 2016/17 and 2020/21, exceeding all projects in the north (£4.3bn) put together.

Contractor Mace is a founding member of the Northern Powerhouse Partnership and regionally is behind projects including Siemens’ wind turbine blade factory in Hull, the new John Lewis store in Leeds, and plans for HSBC’s relocation in Sheffield.

Richard Shaw, operations director for Yorkshire and the North East, agrees that connectivity across the north is the single-biggest priority. He said: “We would like to see a solid commitment to HS3 rail, which would also be a boost for the trans-Pennine road tunnel. “For me, the key word is certainty. That applies to investors and occupiers and filters through the industry as a whole. A developer was telling me their biggest struggle is with end occupiers having confidence. And it would be good to hear some commitments on university funding. They are very unsure about European funding. Some of them have capital programmes of £500m-plus. They will start to get very nervous if funding is pulled. A reassurance would be absolutely invaluable.”

Global construction consultancy Turner and Townsend that was founded in Leeds is now on with HS2, Hinkley Point C and Crossrail. Turner and Townsend's Jon White, UK managing director said:

“Each scheme is scored and benefits are assessed. But we do need commitment that programmes are seen through without delay. HS2 is very important for capacity. But the east-west, trans-Pennine connections are very important too.

“As a company, we feel aligned to the devolution agenda that had been promoted by George Osborne and David Cameron. And more collaboration with the private sector is important. The public sector can do certain things well and it is about understanding what an appropriate transfer of risk is.

“We all know the Brexit can has been kicked down the road and is a potential threat to the industry. But more infrastructure investment helps us to ride the cycle. It not only provides jobs but business generally benefits afterwards.”

The Conservative government sees infrastructure as a crucial part of its economic strategy, although delivery has been patchy. The World Economic Forum ranks the quality of Britain’s infrastructure 24th in the world, down from 19th in 2006.

More projects like those of Mace and Turner and Townsend are needed nationally, but particularly so for Yorkshire. Many of us welcomed the announcement of the progression to remodel work at Leeds station. But that is only the start, and we now need to see a far greater commitment.

This opinion piece features in our Northern Powerhouse section.