Fixing the foundations - CIHT commentary

July 17 2015  

Fixing the foundations - CIHT commentary
In the wake of last week's Budget, the UK Government released its “productivity plan”, Fixing the foundations: Creating a more prosperous nation (July 2015). Productivity is highlighted as a critical determinant of wealth generation, key to competitiveness and living standards. UK productivity has long lagged other advanced nations, with performance particularly weak in recent years.

Infrastructure and skills are seen as important drivers of productivity growth – and two areas where the UK demonstrates significant deficiencies.

Fixing the foundations aims to tackle UK's productivity challenge by:
  • encouraging long-term investment in economic capital, including infrastructure, skills and knowledge
  • promoting a dynamic economy that encourages innovation and helps resources flow to their most productive use.

A fifteen-point plan sets out the UK Government's approach to delivering against these two “pillars”, including through:
  • “A modern transport system”
  • “A highly skilled workforce”
  • “Planning freedoms, more houses to buy”
  • “A rebalanced economy and a thriving Northern Powerhouse”.
“A modern transport system

UK investment in physical infrastructure as a share of GDP has been in the bottom quartile of OECD nations for 48 of the past 55 years. The UK Government asserts that its National Infrastructure Plan (NIP) has begun to redress this, and it will complement it with a forthcoming NIP for Skills.

Fixing the Foundations highlights under-investment in roads maintenance and new construction, re-stating the Budget commitment to a hypothecated Roads Fund for England's Strategic Roads Network from 2020. However, despite citing the condition of local roads as a problem, the document is silent on measures to improve that 98% of the network.

Commitment to “take a decision” on South East aviation capacity by the end of the year is repeated, alongside recent announcements on the reform of Network Rail to help it deliver more efficiently.

“A highly skilled workforce”

Fixing the Foundations notes the UK's longstanding need to develop respected employer-led professional and technical qualifications. Plans to create three million apprenticeships were announced in the Budget, and the new document promises to reform further education, and increase focus on higher-level skills. The UK Government envisages a role for professional institutions in this task.

“Planning freedoms”

Widely-reported planning reforms are intended to see more homes developed on brownfield sites. The UK Government says it will apply further pressure to councils to adopt up-to-date plans. It will also devolve more planning powers to mayors in London's and – soon - Greater Manchester.

Little is made of the connection between land use and transport but the UK Government will consider how to encourage higher residential densities around commuter hubs, as well as strengthening the “Duty to Co-operate” across planning authority boundaries.

“A rebalanced economy and a thriving Northern Powerhouse”

Most of these initiatives were announced or re-announced in the Budget, including more powers for London and Greater Manchester, possible further deals with South Yorkshire, West Yorkshire and Merseyside Combined Authorities, and enhanced status of the new Transport for the North (TfN) body.

Substantial devolution is contingent on city-regions adopting the Government's preferred “metro mayor” model. This remains a stumbling block for some. Mayor-led regions are also promised leadership roles in an enhanced TfN, which will receive statutory status and additional funding. TfN will prioritise “Oyster-style” integrated ticketing and development of proposals for major trans-Pennine and trans-North road and rail improvements.

Fixing the Foundations pledges support for the “Midlands Engine of Growth” initiative: £5 million will be made available to develop a Midlands transport strategy. A Midlands-wide approach to skills is also being encouraged, alongside proposals for Combined Authorities. CIHT will be looking for opportunities to become involved in these initiatives.

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