On the wrong track

Paul Clifton

January 16, 2012

The government says its multi-billion pound investment in transport is to maximise economic benefi ts for the entire country. Examples include electrifi cation of the Great Western and the Trans Pennine route, and a new generation of Intercity express trains. The aim is to ‘promote growth across regions and nations’, including moving away from an over-reliance on the south east and towards more balanced economic growth across the UK.

Or is it? The re-balancing is not happening at all, according to the Institute for Public Policy Research.
‘We analysed the data and the result was truly shocking and grossly unfair,’ Ed Cox, the author of On the Wrong Track, told Rail Professional. ‘The government talks about rebalancing the economy but doesn’t do anything about it. Only six per cent of those transport projects that involve public spending are in the north. It is incredibly skewed towards London and the south east.’

IPPR North found that 84 per cent of all planned spending was in London and the south east. The north east of England is to get only 0.04 per cent of the money.

Put another way, it equates to £2,731 per head for Londoners – that’s more than in all the other regions combined. It compares with £201 per head in Yorkshire and the Humber, £134 per head in the north west and £5 per head in the north east.

Eighteen major transport projects have already started in London and the south east, meaning that any short-term boost to the economy is likely to be concentrated there. Crossrail is the largest public project by a wide margin. It is followed by the investment programme for the London Underground and Thameslink, then the Reading station upgrade.

‘As a country we agree on the need for the Olympics, Crossrail and Thameslink,’ explains Cox. ‘But the spending is incredibly unbalanced. Even if you take those – and the London Underground – out of the fi gures, London still gets double the spend of anywhere else.’

The research marks the continuation of a long trend, underlining the depth of the north/south divide. Cox’s report concludes that: ‘London and the south east are locked into a dependency on public sector spending on infrastructure which masks the true costs of doing business in the capital and holds back growth opportunities for other cities.’

The National Infrastructure Plan, which accompanied the chancellor’s autumn statement, outlined £30bn in spending. It included an immediate increase in government spending of £5bn over the next fi ve years, with another £5bn in the following fi ve years. The remaining £20bn – it is hoped – will come from private pension funds, China and other overseas investors.

Cox says this pattern of spending will perpetuate the UK’s unbalanced economy. He argues that the south east is only able to function economically because large sums of public money are spent on enabling people to commute.

‘Investment in transport in the north will generate a bigger bang for the buck than investment in the capital,’ he argues. ‘There is a general assumption that the economy is driven by London and the south east. Actually, we are paying a high price for jobs growth there, because we need Crossrail and Thameslink and so on for it to happen. It would be a lot cheaper to generate national prosperity in the north. The OECD states that ‘lagging regions’ are those areas where the greatest contributions to economic change can be made.’

The Department for Transport responds that London is a global capital that supports a large number of commuters. It points out that the government has recently approved additional investment of £1.4bn in transport schemes outside London.

Before joining IPPR two years ago, Cox was a policy advisor to the secretary of state for communities and local government.

He views the regional disparities he uncovered in the autumn statement as ‘simply unfair’. He also says they defy the economic logic on which they are supposedly based.

So what’s to be done? Cox argues that the government should review all big transport projects beyond 2014. He says much of the money should be handed to local and regional transport authorities. Without growth in the so-called lagging regions, the burden of ever more transport infrastructure in the south will grow, increasing dependency on the public funding from which the government is keen to escape.