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Infrastructure blog

The Chancellor must use the Spending Review to deliver an infrastructure-led recovery

23 November 2020

Shadow Chancellor Anneliese Dodds sets out the Labour party’s priorities for the economic recovery, ahead of the upcoming spending review.

The Chancellor must use the Spending Review to deliver an infrastructure-led recovery
Shadow Chancellor Anneliese Dodds

The UK has been hit hard by the coronavirus pandemic. Our economy is going through the worst economic downturn in the G7. Tragically, we are also the first European country to have suffered 50,000 deaths from the virus.

That is why the government’s first priority must be getting a grip on the crisis. Yet it is not too soon to be thinking about how we are going to recover the jobs that have been lost and rebuild our economy in the months and years ahead.

The role of infrastructure

Infrastructure has a vital role to play in that effort, for three reasons.

Firstly, infrastructure is vital for UK growth and regional re-balancing. The UK is behind other advanced economies such as France, Germany and the Netherlands in the World Bank’s ranking of infrastructure quality. And the British Chambers of Commerce have found that only a quarter of UK businesses are satisfied with the transport infrastructure in their region.

Secondly, an infrastructure-led recovery would support the UK’s effort to reach net-zero. For the first time this year, the breakdown of UK infrastructure was explicitly linked to the impact of the climate crisis. We know what needs to be done: independent bodies such as the National Infrastructure Commission have identified the priority projects needed to decarbonise our economy. But sadly, despite the soaring rhetoric of the Government, we lag behind other advanced economies in terms of green investment. The UK Government has just announced £3bn of new green investment, so that overall the UK government has committed £8bn this year. That is similar to the amount Germany is investing in hydrogen alone, and far less than their total green investment announcements this year (£38bn).

Finally, infrastructure investment can help support the new jobs we desperately need. More than a million jobs have already been lost since the start of the crisis. The Bank of England expects unemployment to peak in the spring with more than two and a half million out of work. Research has shown that investment in green infrastructure can provide a larger and more sustained positive impact on jobs than other forms of stimulus.

Infrastructure priorities

Over the summer, Labour asked businesses, trade unions, NGOs and think tanks for their views on how the UK can recover from the pandemic and build a fairer, greener economy. The resulting report, published earlier this month, highlights areas where progress has so far been limited in the UK, but where action now would support the creation of new jobs and tackle the climate crisis.

These include bringing forward planned investment in electric vehicle charging infrastructure, flood protection measures across the North West, Yorkshire and the East Midlands, walking and cycling infrastructure, and the accelerated rollout of full fibre broadband to the hardest to reach households.

Recover jobs, retrain workers, rebuild business: three steps to a better, more secure economy

These infrastructure priorities form part of Labour’s broader call on the Government to take three steps to support the economic recovery.

To recover jobs, the Government should use the upcoming spending review to bring forward at least £30 billion in planned capital investment as part of a rapid stimulus package. Estimates suggest this could support up to 400,000 new, clean jobs in manufacturing and other key sectors over the next 18 months. This should be delivered within a wider strategy that also meets the UK’s overall infrastructure needs.

We also need to retrain workers for the jobs of the future. In the short-term, we need an emergency training programme to equip people with the skills they need for the future greener economy. Alongside this, there needs to be action to arrest the decline in apprenticeship numbers and ensure adult education and lifelong learning adequately support people to retrain.

Finally, we need to rebuild business. The public sector alone cannot bring about an economic recovery or deliver the UK’s infrastructure needs. There needs to be the right, stable regulatory context, within a proper net zero plan to incentivise low carbon investment. Labour is also calling for the creation of a National Investment Bank (NIB) with a clear green mandate to help bring in private investment. We need to learn the lessons from what happened to the previous Green Investment Bank. A NIB should initially be capitalised using the UK’s rebate from the European Investment Bank, with the balance sheet built up over time via bond-issuing powers and by offering green investment products directly to the public.

The infrastructure sector and the Institution of Civil Engineers (ICE) will play a vital role in all of this, delivering our infrastructure needs and training the next generation of workers in the sector. The Labour party wants to work with ICE members on these important issues and welcomes your views on how infrastructure investment can support the economic recovery.

Keep an eye on our rolling Spending Review news page to find out what ICE thinks about government announcements on infrastructure expected this week.

  • Anneliese Dodds, Member of the European Parliament