Will Boris be the Builder? Some post election thoughts...….

The definitive election result means that the new Conservative Government should be in a position to be held to account for its infrastructure expenditure plan over the next 5 years. But what exactly have they committed to spending and on what? How much other investment headroom are they likely to have? How will the change in their party's electoral demographic success impact infrastructure investment priorities and approach?

An analysis of their manifesto Costings Document, when combined with their recently sign posted new fiscal rules suggests they have considerable infrastructure investment headroom, with plenty of scope for further eye catching investment announcements in the early months of the new Government. And then there is the small matter of laying the ground work now for

"Reaching Net Zero by 2050 with investment in clean energy solutions and green infrastructure to reduce carbon emissions and pollution"

which was a headline guarantee in the Manifesto.

Capital spend.

The new fiscal rules announced by the Chancellor of the Exchequer on 7 November 2019 already permit “public sector net investment” to go up to 3% of GDP, averaged over the standard five-year forecast horizon, provided that interest rates do not rise significantly.

As a result, these new rules make possible approximately ￡100 billion in additional capital spending over the next five years, much of which has not yet been allocated to specific projects. The capital spending described in the Costing Document summarised below "only" totals approximately ￡22 billion and will be accommodated within that fiscal envelope. Further detail on how the remaining balance will be allocated will no doubt be set out by the Chancellor at the first Budget of the new Government.

However, give the scale of the election result, and the collapse of the "red wall" of Labour seats in the north in favour of new Tory seats, it is hard not to think that the type of infrastructure investment represented by the ideas known as "the Northern Powerhouse" will be invigorated by the result. As Boris himself put it last night in his victory speech to party workers, the Conservative Party:

"must recognise the incredible reality that we now speak as a one-nation Conservative Party literally for everyone from Woking to Workington, from Kensington to Clwyd South, from Surrey Heath to Sedgefield, and from Wimbledon to Wolverhampton."

For example, on rail, the manifesto already committed to:

• building Northern Powerhouse Rail between Leeds and Manchester and then focus on Liverpool, Tees Valley, Hull, Sheffield and Newcastle. 
• investing in the Midlands Rail Hub, strengthening rail links including those between Birmingham, Leicester, Nottingham, Coventry, Derby, Hereford and Worcester. Final
• improving train lines to the South West and East Anglia.

But major transport projects take significantly longer than the five year parliamentary timetable to deliver - often many multiples of that period - so Boris will be keen to find some "oven ready" eye-catching smaller projects that can be delivered before returning to the polls in 2024 - particularly for his new northern seats. Where will he find these? Perhaps in the education sector, or something to show case northern based manufacturing, innovation and technology businesses.

Follow the money

In terms of what else is already costed and committed to, the Conservatives have committed ￡22 billion to the following capital projects over the next 5 years:

• Transport: reversing Beeching fund: ￡0.5bn 
• NHS: car parking extensions to meet increased demand: ￡0.26bn
• Transport: new cycling infrastructure ￡0.35bn
• Further education: upgrade estate: ￡1.8bn
• Potholes Fund: i.e. local roads maintenance, including pothole filling and investment to reduce new potholes: ￡2bn
• Social Housing Decarbonisation Fund: ￡3.8bn to be spent over the next 10 year period.
• Homes Upgrade Grants: ￡2.5bn
• Public Sector Decarbonisation Scheme: ￡2.9bn 
• CCS Infrastructure Fund: ￡2.9bn
• Nature for Climate Fund, which includes rural trees, urban trees and peatland: ￡0.64bn 
• Intra-city transport settlements: ￡4.2bn
• Industrial Energy Transformation Fund: ￡0.5bn over the next 8 year period.
• Electric Vehicle Infrastructure: ￡0.6bn over a six year period, but on top of the ￡400m fund already announced to help develop rapid charging infrastructure points.
• New Flood Defence Programme: ￡4bn