Investing to build Britain’s economy

Maximising economic growth and getting more ‘bang for our buck’ has to be the priority in future investment decisions, a Network Rail study shows.

Paul Plummer, Director Planning & Regulation

With investment in infrastructure a key element of the coalition government’s strategy for growth, the report – ‘Prioritising investment to support our economy’ – makes the case that the present way of assessing transport, housing and regeneration investment does not do enough to focus that investment to make the largest possible contribution to the economy.

Paul Plummer, Network Rail’s director, planning and development, said: “Investment in infrastructure is vital to the UK economy. At a time when the government’s top priorities are reducing the deficit and driving economic growth, we should be trying to focus investment decisions on how to grow the economy and how to deliver the best value for money.

“The way these decisions are taken at the moment just doesn’t take into account the potential impact on economic growth in any meaningful way. We are suggesting one way to provide that focus, and are hoping to start a debate about how these decisions are taken in future.”

Neil Bentley, the CBI’s director of business environment policy added: “The UK economic recovery will depend on private sector growth, and investment in our nation’s infrastructure – in whatever sector – is absolutely key. When money is scarce, we need to prioritise the investment that is likely to support economic growth.”

The report, prepared in partnership with KPMG’s infrastructure strategy team, contends that a new approach to investment decisions must:

• Address how investments affect the supply side of the economy and make the UK a more attractive location for business;
• Capture how investments can change the size, location and type of economic activity;
• Consider how an investment attracts unemployed people into the workforce; and
• Provide a level playing field for closely related sectors in the pursuit of economic objectives, so that transport, regeneration and housing can be compared against each other and combined to maximise economic returns.

This approach has already had practical successes, such as in Greater Manchester, where local authorities prioritised a £1.5bn package of transport investment schemes on the basis of their impact on jobs and productivity, whilst also reducing overall carbon emissions.

Welcoming the report, Sir Howard Bernstein, chief executive of Manchester City Council said: “This is a timely contribution to an important national debate on how we prioritise growth at a time of fiscal restraint, by breaking through traditional appraisal and spending regimes to identify where real economic impact can best be achieved. The findings underline the need for an integrated approach to spending across all elements of the public sector to secure consistent levels of value for money and economic returns and the work which has been done shows that this is a practical proposition.”

The report will feed into the government’s study led by Sir  into getting value for money in the rail industry.