Blog: Britain’s politicians need to offer more to get investors excited

The future of UK infrastructure investment remains a hot topic when it comes to rhetoric, but the detail is far too thin on the ground

Anyone with a passing interest in the UK’s news cycle could not have missed that it has been party conference season in recent weeks.

Whether it was Ed Davey’s slightly bizarre cardboard Big Ben ‘Time’s up’ stunt, or Leader of the House Penny Mordaunt urging Conservative members to “stand up and fight” (a remarkable 19 times in one speech), the politicians are rattling their sabres ahead of a General Election, expected sometime next year. Indeed, this may be the last time the parties have the chance to rally their troops before voters go to the polls.

While the Conservative conference was dominated by the ‘will they, won’t they’ HS2 question (although in reality, it was more of a ‘when will they announce what everyone knows is coming?’), the eventual announcement by Prime Minister Rishi Sunak still caused uproar among many.

The decision to cancel all but the London to Birmingham leg was met with dismay by the business community, albeit with a certain level of resignation. Combined with previous announcements pushing back deadlines on some of the government’s Net Zero priorities, investors have become increasingly fatigued by changes of approach and the subsequent impact on investment opportunities.

Worse, it turned out that Sunak’s proposed Network North - which would take the money previously earmarked for HS2 and put it into new connections for the north of England - was full of holes - such as a promise to extend the Manchester Metro to the airport (that route opened in 2014) and schemes that would actually benefit places such as Plymouth (the only way the city could ever be described as ‘northern’ is in relation to which hemisphere it sits in).

Given this open goal in the days before their own conference, one might have expected Labour to have come out with some strong sentiments on redeploying money to the north, pledging to rebuild the region in a move to win back support from those so-called red wall seats who turned to Boris Johnson in 2019. And maybe even suggest that high-speed rail could make it north of Birmingham.

Alas, so far the Labour leadership has been somewhat less strident in its approach. Shadow Chancellor Rachel Reeves gave a business-friendly speech that promised to unblock the planning system (something politicians have pledged probably since the Romans were building cities in London and York).

She also said a new National Wealth Fund would be set a target of leveraging £3 of private investment for every pound put in by the government. Which sounds good, but may prove more difficult to deliver in practice unless there is a clear pipeline of opportunities for private investors.

One area where there was a bit more clarity was around energy. Reeves referred to the energy grid - something that many agree is in desperate need of an upgrade if it is to cope with all the proposed connections that will be required for a clean, electricity-driven future. Reeves said a Labour government would open up new grid construction “to competitive tendering”. While that may offer more hope to the infrastructure sector, we will have to wait on the details to see exactly how that might work in practice.

“If we want to spur investment, restore economic security, and revive growth, then we must get Britain building again,” Reeves concluded.

However, when it came to responding to the HS2 decision, Reeves said Shadow Transport Secretary Louise Haigh “will commission an independent expert inquiry into HS2 to learn lessons for the future”. Which doesn’t sound much like getting Britain building.

It has been pointed out that private investment into high speed rail has worked in other parts of the world - and West Midlands mayor Andy Street (a Conservative) had suggested that private finance was ready to keep HS2 alive

But, perhaps still scarred by the kicking it receives every time PFI and private finance are mentioned, Labour has not looked to go down that road. Indeed, London mayor Sadiq Khan has argued that a private finance solution for Euston station’s redevelopment is “wishful thinking”.

That’s not to say a Labour government wouldn’t look to utilise private finance if it does come into office - leader Sir Keir Starmer has repeatedly talked about wanting to work “in partnership” with the private sector to deliver a new type of government.

The problem has long been, though, that such an ideal is vague. A year or so out from a General Election, Labour needs to start putting some meat on those bones of a partnership, and explaining how and where private investors can fit in.

It’s been clear for some time that businesses have been seeing Labour as a credible next government, given the uncertainty and instability that the Conservative administration has engendered. But there is no sign that a new Labour government would result in private investment suddenly flowing into British infrastructure. It’s possible that in time, a new administration might get things moving, but as we have previously reported, as it stands there is unlikely to be a sudden seismic shift towards PPPs.