The Duchess of Hamilton with Mallard at the National Railway Museum in York. Photo: Robin Stevens (under Creative Commons)

Railway infrastructure: a no-brainer for Britain

12 Sep 2016, by Geoff Tily in Public services

Since at least the financial crisis the TUC has argued for increased infrastructure spending as part of a coherent industry plan. From 2010 the coalition government did the opposite, cutting spending with no coherent strategy.

In economic terms the consequences of culling investment has been obvious, as economic growth has slowed and wages have seen the biggest and longest decline since Victorian time. The damage has been unfairly shared across the UK, with London moving further and further away from the rest of the country on both jobs and the scale of economic activity.

With the vote for Brexit, the urgency of a reversal of this self-defeating strategy is becoming obvious: the TUC has set its latest proposals in ‘Working people must not pay the price of Brexit’.

In the case of railways, some relief has been on the cards for some time. In 2014 the government announced a five-year investment programme worth £38bn. The aim of this investment is to

“generate growth, create jobs and boost business while delivering faster journeys, greater comfort and better punctuality for passengers across the UK”

The plan includes electrifying over 850 miles of track; the Thameslink programme; and investment in stations such as Birmingham New Street and Manchester Piccadilly. As was the government’s way before the Brexit vote, this came only in the wake of mounting public discontent and political pressure. As has also been the way with railways, privatisation did not deliver the promised investment; instead the taxpayer is footing the bill.

If it wasn’t for the blatant double standards at play, this would be all well and good.

For the public sector should play a leading role in planning and implementing projects that support the UK’s infrastructure.

The benefits are obvious and operate at many levels.

Better infrastructure improves the way economic activity is conducted and can lead to higher output and growth. Higher output means any borrowing to fund that spending can be repaid. Empty political promise or not, it was not wrong to put improved rail links, such as north-west electrification, at the heart of plans for the ‘Northern Powerhouse’. But it is unfortunate that completion of the Transpennine electrification will be delayed until 2022.

No less importantly infrastructure spending provides an immediate boost to demand in the economy with contracts for firms meaning new employment, and workers spending newly earned (or increased) salaries. The government have claimed that the construction of the HS2 line, its maintenance and new station hubs driving surrounding commerce and regeneration, will create a total of 100,000 jobs.

(In the case of this kind of expenditure, the TUC has argued that the government should be able to aim contracts at UK firms. Just as British steel should support the British defence industry.)

These effects can be material and sustained. The golden age of the railways from 1840 through to the First World War supported the British economy throughout. (And, as John Hobson famously argued in 1902, so did British ‘Imperialism’: bringing rail contracts back home to UK firms … )

These lessons are dawning on international organisations, who have finally woken up to the reality that cutting infrastructure spending was an act of economic self-harm. In their February 2016 interim Economic Outlook the OECD emphasised:

A commitment to raising public investment collectively would boost demand while remaining on a fiscally sustainable path. Investment spending has a high-multiplier, while quality infrastructure projects would help to support future growth, making up for the shortfall in investment following the cuts imposed across advanced countries in recent years. These effects would be enhanced by, indeed need to be undertaken in conjunction with, structural reforms that would allow the private sector to benefit from the additional infrastructure; notably in the Europe Union, cross-border regulatory barriers are a significant obstacle. Collective public investment action combined with structural reforms would lead to a stronger GDP gain, thereby reducing the debt-to-GDP ratio in the near term.

But aside from abstract economic gains, improved infrastructure spending improves the quality of life. Rail travel should be a pleasure not an ordeal. The golden age of railways a source of great pride – the Flying Scotsman and the art deco Duchess of Hamilton – true industrial marvels. Take a trip to the national railway museum in York and find out – here’s how rail.co.uk sees it:

For over one hundred years, steam has its golden age in the UK. And with it, some of the world’s engineering triumphs. Much of the network’s core infrastructure is still with us, from the sweeping curves of Brunel’s Great Western line to the majesty of the Forth Rail Bridge. Britain’s great rail works, from Swindon to Springburn, take steam to the world. And the great railway companies – from GWR to LNER, LMS and beyond – create enduring brands whose memory lives on today.

As well as all that, rail travel is safe, reduces roads congestion, and is beneficial to the environment.

When it comes to railways there is much to complain about, and the TUC continue the fight against the phoney privatisation which once more hits the public with the losses while the rich enjoy the profits. Really, rail is too important and too wonderful to be carved up like that.