For perhaps the first time since the global financial crisis, the upcoming General Election has not seen any of the major parties put an emphasis on infrastructure. With Brexit, austerity and funding for frontline services such as healthcare dominating the agenda, infrastructure has apparently slipped down the list of priorities for all parties.
However, with productivity continuing to be stubbornly low and construction projects traditionally being a good source of boosting the economy – not to mention the need to refresh infrastructure across the country – whoever takes office will need to take infrastructure investment seriously.
Below, we take a snapshot of the main parties’ plans in the sector.
Conservatives – Big plans for health
Theresa May has been so consistent in her ‘strong and stable’ message that she has begun to be ridiculed for it in some quarters.
However, when it comes to infrastructure, there is plenty of reason to believe that a Conservative win would see stability in terms of what we have been used to from the party over the past seven years.
A programme of investment in the NHS, which has been pragmatically developed by Community Health Partnerships under the ‘Project Phoenix’ banner, looks likely to get the go-ahead as the Tory manifesto pledges to build and upgrade “primary care facilities, mental health clinics and hospitals in every part of England”.
It adds: “Over the course of the next parliament, this will amount to the most ambitious programme of investment in buildings and technology the NHS has ever seen.”
On housing, the manifesto commits to meet the target of building one million homes by the end of 2020, working with private and public sector housebuilders “to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing”.
It also commits to the National Productivity Investment Fund, which was first created in November’s Autumn Statement. This will include £1.1bn for local transport improvements and £740m for digital infrastructure development.
However, critics have been quick to point out that the manifesto appears to drop the Conservative support for the Crossrail 2 project in London. While that could be bad news for the scheme, it could also be a reflection of the Tories’ desire to appeal beyond the capital and not appear as London-centric in its proposals in the wake of the Brexit vote.
Another apparent omission was any reference to PF2, despite having promised in the Autumn Statement to deliver a pipeline of deals during the first half of 2017. While this could be a political move to avoid negative associations with PFI and public debt, many in the industry will be hoping that, should the Tories win, Philip Hammond will return to Treasury, where he had seemed largely behind the PF2 concept.
On a wider economic front, the manifesto says that the party will work towards a “balanced Budget by the middle of the next decade” – suggesting more austerity to come.
Labour – No private money
Under Jeremy Corbyn, Labour’s move to the left has been no secret, and the party’s proposals for infrastructure certainly reflect this.
PFI remains a dirty word in Labour’s high command these days and shadow home secretary Diane Abbott has previously talked about setting up a fund to buy out existing health PFI deals.
Overall, Labour would borrow £250bn to invest in new infrastructure projects – but this would be entirely publicly funded rather than having any private sector input. Although it remains unclear how this would be accounted for, it could be that a Labour government would seek to reclassify such debt as ‘good debt’ – something that the New Zealand government is currently looking to do.
This investment will also have to be shared around the country, to prevent the bulk being lavished on London. To this end, while the manifesto still promises to support HS2 and Crossrail 2, it also pledges to deliver a ‘Crossrail of the North’.
In transport, a Labour government would renationalise the entire rail system, scrapping the existing franchises to run trains and presumably excluding private finance from being used to develop stations, improve lines or deliver new rolling stock.
A similar approach is outlined for energy, where certain elements would be renationalised and brought under central government control, including “the natural monopolies of the transmission and distribution grids”. This suggests that a Labour government would end programmes such as the offshore transmission owner (OFTO) schemes and their onshore equivalents, CATOs.
In health, Labour would immediately halt the sustainability and transformation plans (STPs) in the NHS, arguing that these have been chaotic and driven by Conservative efforts to cut costs rather than improve services. The STPs are expected to have a huge influence on the future organisation of the NHS estate and efforts to bring better care into the community.
Like all parties, Labour is keen to boost supply of housing and would create a new Department of Housing tasked with building 100,000 new council houses and housing association homes per year by the end of the next parliament. To do this, the Homes and Communities Agency would be restructured as a housing delivery body.
And on PFI, the party pledges to "require repatriation" of all PFI contracts that have been "subsequently relocated to tax havens".
Liberal Democrats – A ‘major programme’ of investment
Tim Farron’s Liberal Democrats continue their rehabilitation following virtual annihilation in the 2015 General Election, but have tended to focus their efforts on wooing so-called remainers with their anti-Brexit message.
Top of the party’s priorities for building the economy, however, is the promise of “a major programme of capital investment”. This will include education and healthcare. In education, there is a commitment to spend £7bn on improving pupils’ education – albeit with little explanation in the document where money might be spent on capital projects and how new investment in the school estate might be delivered.
In health, increased spending on the NHS and social care will come from a 1p rise in income tax – although again how this or any other investment might relate to the estate is not explained.
Unsurprisingly for a party that has long touted its green credentials, one of the Lib Dems’ key messages on infrastructure is that they would ensure the National Infrastructure Commission “takes fully into account the environmental implications of all national infrastructure decisions”.
And as a party that has also consistently urged greater powers for local communities, the pledge to “devolve significant infrastructure spending to local areas” should also come as no surprise.
Like the other parties, the Lib Dems have put much effort into trying not to be too London-centric. This is particularly notable in their transport plans. The manifesto promises to continue championing the Northern Powerhouse and Midlands Engine – although like Labour it also backs HS2 and Crossrail 2. Sticking with the North, it says the Lib Dems would deliver the Transport for the North strategy.
Another of the party’s eye-catching infrastructure promises is to create a new Housing and Infrastructure Development Bank, which would provide loans and guarantees to underpin the delivery of new infrastructure and 300,000 new homes per year by 2022. This bank would build on the creation of the UK Guarantees initiative, which was pioneered during the Lib Dems' time in coalition government with the Conservatives.
SNP – An alternative to austerity
While the party may only field candidates in Scotland, under Nicola Sturgeon the SNP has become an important part of the Westminster landscape, having been the third largest party at the last election. Sturgeon has repeatedly highlighted the fact that Scotland overwhelmingly voted to stay in the EU last year, with many seeing this as a pretext upon which to launch another bid for Scottish independence.
There was no surprise, then, when Sturgeon unveiled a manifesto promising a second referendum on independence at the end of the Brexit process. Many in the industry said that the first referendum had created uncertainty in the market, and fears that Scotland could this time vote in favour of leaving the Union would likely reduce willingness to invest in the country.
The SNP document is placed squarely in opposition to the Westminster government’s policies of recent years. While Theresa May has consistently rejected calls for a second referendum (it should be noted she also resisted calls for a General Election for some time), the SNP also attacks the current policies of austerity.
Instead, it offers an “alternative to austerity” that would release nearly £120bn for public spending over the course of the next parliament. While day-to-day spending would be balanced by the end of the next parliament, the SNP would borrow only to invest.
The SNP has a strong track record of using private finance to invest in new infrastructure, through the NPD and Hub programmes, but whether it would look to leverage private sector financing on top of the £120bn is not clear.
While there are no specific discussions on the NHS estate, the SNP’s health plans call on the new UK government to increase health spending per head of population in England to the current Scottish level, which is 7% higher and would increase the health budget in England by £11bn more than inflation by 2022.
On education, the manifesto pledges to prevent selective grammar schools in Scotland – something that has been touted for the UK by the Conservatives. There is no mention on building new schools, but the party has long used private finance models to deliver schools in the country.
The SNP would continue its current housing policy, with Scotland having the highest house building rate in the UK. It has used the National Housing Trust in the past to inject private finance into public sector-backed housebuilding.
Unsurprisingly, the transport section of the SNP’s manifesto sees connecting HS2 to Scotland as a priority and argues that construction should begin in Scotland as well as England so that the two sides can meet more quickly. It also urges a high-speed connection between Glasgow, Edinburgh and the north of England.