Nick Clegg calls for ‘gear shift’ in state spending on infrastructure

Large government capital spending projects to be accelerated in move seen as attempt to stimulate stalled economy Nick Clegg will announce plans on Wednesday to “accelerate” government capital spending projects, conceding the government must now perform a “gear shift” to ensure state spending and infrastructure play their part in Britain’s economic recovery. The announcement marks a new level of concern in government over a series of gloomy economic figures, with four downgrades in expected growth since the coalition came to power. Last week, Chancellor George Osborne was forced to insist the government would stick unwaveringly to its austerity plans, despite admitting that the long-term damage caused to the economy by the credit crunch was forcing him to revise down already weak estimates for growth. In a speech at the London School of Economics, Clegg will say that chief secretary to the Treasury, Danny Alexander, will take charge of the execution of already announced capital programmes, which if delivered on time can boost growth by “stimulating demand and raising productivity”. Whitehall is now pushing on a series of fronts to stimulate the economy, with Clegg’s speech reflecting some of the ideas being pushed in the “growth review”. While it is not the “plan B” government’s critics have called for – there is no new money being announced nor any spending being brought forward from later financial years – the push for Whitehall departments to spend money allocated to them acknowledges that government spending will be critical to any economic recovery. Clegg will say: “Since we came into government, ministers have been expected to make savings. Now they’re under the same pressure to spend the money they’ve got. Our critics say that all this government is capable of is cuts. That, beyond lowering a few business taxes, reducing a bit of red tape, there is little else we are willing or able to do. That is absolutely wrong. We can do more.” Alexander has been appointed to “handpick” 40 of the biggest infrastructure projects “important to growth” that will be given “special priority status”. The spending reflects money already committed by the chancellor in his comprehensive spending review and Treasury sources said there was no question of bringing forward funds from future years to invest in the economy earlier. Clegg has been working on the drive with Transport Secretary Philip Hammond with the statement signed off by the cabinet yesterday. Included in the 40 projects are the roll out of high-speed broadband; the efficiency of the national grid; major rail improvements, such as Crossrail and Great Western electrification, and projects to reduce road congestion which are targeting pinch points, including those on the M1 and the M25. Not all infrastructure projects will be expedited – mainly those investments that “transform growth potential”. Alexander will, in Clegg’s words, “shake the Whitehall tree”. Echoing a criticism of civil servants first made by the prime minister, Clegg will say Whitehall can sometimes act as a “block” to planned projects which could inject money into the economy – but instead, through inertia and caution, can end up being withheld as the project is delayed. Clegg will say: “A key blockage is actually within government: Whitehall. Identifying projects and funnelling cash to them can take time – I understand that. These are big investments, and you have to get the detail right. “But failure to deliver major infrastructure projects on time and on budget is a perennial problem in the UK. The extension of the Jubilee line – delayed by over a year, costing an extra £1.4bn. Wembley Stadium – meant to open in 2003; didn’t open until 2007. Improvements to the West Coast Mainline – should have cost £2bn and been completed in 2005. Didn’t finish until 2008, and cost four times that much. The list goes on and on. Whitehall has a huge role to play in breaking this cycle. And it must – the country need jobs, and time is no longer on our side.” Government sources insisted this was not “reprofiling”, which involves spending brought forward from later years in the period covered by the comprehensive spending review. Instead they said it was a question of making sure that Whitehall departments did not operate cautiously with the money they had been allocated to spend in any given year, and as a result, underspend. The source said that in the current worrying economic climate, it could end up mattering greatly if a government project was begun in November of one year or February of the following year and that this was the level of detail they wanted to look at. Clegg will say: “[We will be] making sure no one is stockpiling capital that can be put to good use today. This week, Danny has made that crystal clear to cabinet ministers and top civil servants, leaving them in no doubt of their responsibilities. And secretaries of state will report back to him on their progress throughout the autumn.” One official did strike a note of caution, saying one consideration for the government as it expedites its capital programmes was that not all ended up being rolled out at the same time meaning little stimulating activity later in the period. In the transport select committee Hammond defended other parts of planned British infrastructure, saying that the planned new high speed rail line with potentially high fares would not be significantly higher than other rail fares since the trains were already a “rich man’s toy”. Nick Clegg Danny Alexander Crossrail Transport Rail transport George Osborne Liberal-Conservative coalition Transport policy Allegra Stratton guardian.co.uk

Posted by on September 13, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.