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Tories Vs Labour – The infrastructure pledges

Just four months after the shock result of the snap general election, a weakened Conservative Party and an emboldened Labour regime took to their annual conference stages to begin the next stage of the battle for the keys to Number 10.

With a slim Commons majority and the tricky Brexit negotiation process underway, there is all to play for and key figures in both parties were keen to appeal to voters around the country with their speeches in Manchester and Brighton.

But how likely are any of the pledges to become reality?

 

Labour

1. Nationalising the train operators

Shadow chancellor John McDonnell must have been aiming to appeal to young voters who don’t remember British Rail.

“Building an economy for the many means bringing ownership and control of the utilities and key services into the hands of people who use and work in them,” he told the party faithful. “Rail, water, energy, Royal Mail – we’re taking them back.”

Bringing each train operating franchise into public ownership as contracts expire is eminently possible – but is it sensible? One of the biggest reasons these deals were let to the private sector in the first place was to increase investment in rolling stock; nice new trains have boosted passenger numbers and created the business case for mega projects such as High Speed 2. All this would be at risk if the government retook control, with rolling stock investment drying up.

 

2. Nationalising water and energy firms

As discussed before the election, this is an empty promise from Jeremy Corbyn’s party.

Thames Water, just one of the firms currently supplying UK homes from its privately-owned infrastructure, was recently valued at around £5bn. To buy National Grid and the distribution network operating companies, along with all the privately owned power stations and other infrastructure, would cost well over £100bn.

3. Bringing PFI back in house

McDonnell raised eyebrows when he announced that not only will there be no new PFI deals, but that they would also bring existing PFI contracts back in-house.

Again, this would cost billions of pounds, and does it even make sense? The government would be paying out huge lump sums rather than staggered payments over time. The cost to buyout just the NHS’s PFI contracts would total £50m+.

While PFI is a dirty word in political circles currently but I wouldn’t rule the system out for the future, whichever party is in power. The UK infrastructure sector is crying out for private sector investment in these cash-strapped times, PFI may just need to be re-branded first.

4. Regional projects

A swathe of tantalising projects were promised to the furthest regions of mainland Britain – as well as a tidal lagoon for Wales, there was high speed rail in Scotland, electrification in Cornwall and even Crossrail for the North. Happy days for all but will any of it happen?

Electrifying the Great Western Railway all the way to Penzance, after the existing Great Western electrification tripled in cost, seems fanciful in the extreme.

High Speed 2 probably will eventually connect to Edinburgh and Glasgow, the question is when. The line won’t reach Manchester and Leeds until 2033, so this pledge for Scotland is not even jam tomorrow, but jam in two decades time.

As for the grand-sounding Crossrail for the North – what exactly is this? McDonnell said it would “connect our great northern cities from west coast to east”. So will it be an extended version of High Speed 3, the project to join the two northern ends of High Speed 2, for which development funding was approved by the Tory government last year? It sounds suspiciously like the Labour Party is using new terms for old schemes.

 

Tories

1. Heathrow expansion

It’s been nearly a year since Grayling said he was taking “decisive action” on Heathrow’s expansion, which was recommended by the Davies Commission in 2015 and has been mooted several times over the past 30 years.

The next step in this tortuous process is a national policy statement to allow an application for a development consent order. Promising this NPS within the next nine months is hardly revolutionary and the caveat of Parliamentary approval is getting ever harder to overcome as the majority in the Commons shrinks. Maidenhead MP Theresa May and Epsom & Ewell representative Chris Grayling may find the vote particularly uncomfortable.

2. Northern rail links

Hammond has pledged an extra £300 million to link the HS3 rail link in the northern powerhouse to HS2. Vague pledges that won’t be built for another 20 years will hardly set contractor CEO’s pulses racing.

3. £100m for roads in the North

Sure, this will happen, but it is a drop in the ocean, being shared among a raft of congestion-busting projects in the North West, North East and Yorkshire. Look forward to a roundabout somewhere on your journey to work being widened but don’t any expect radical changes to the health of the road network or the construction industry.

4. £2bn for council housing

Overall, whereas Labour have promised a load of shiny things they can’t deliver, the Tories have stayed well within the bounds of reality – and promised almost nothing.

The council housing funding is interesting, we will await the detail. If it’s genuinely new money, as it seems to be, then it could make a difference and have a knock-on effect to infrastructure work as well to unlock potential sites.

If your transport and infrastructure plans are slightly more concrete than those announced at the party conferences, then you may be looking to make some changes or additions to your senior teams. Click HERE to see how we can help.

By Jim Newsom9th October 2017

Author: Jim Newsom

Jim Newsom leads our work in construction and infrastructure having worked in executive search since 1998, recruiting for both public and private sector companies in infrastructure, transport, engineering and construction. Prior to forming Newsom Consulting, Jim spent 11 years working for the one of the UK’s largest independently owned executive recruiters and then two years at a boutique search firm. Jim is a graduate in civil engineering from Liverpool University.

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