Has the Government really thought through how it's paying for its Grand Infrastructure Designs?
Ever heard of costing? Or budgeting? The idea that if you are going to buy or build something new that you have to make sure you have enough money to pay for it? Most people have grasped this uncomplicated concept, but unfortunately the Chancellor of the Exchequer, George Osborne, it seems, has not. A new report from the National Audit Office (NAO) has said that ministers didn’t think through the possibility that the huge investment would have to be paid for, at the end of the day, by us, UK consumers.
George unveiled huge plans last month to spend £310 billion over the next 2 years on ‘infrastructure’ projects, including road, rail, energy and flood defence work. The problem I that George doesn’t actually have £310 billion and is planning to fund the work through a 2/3 investment by private companies.
Now private companies, much like the Conservatives, are known for selfless investment in society, wanting to make the world a better place for all of us, and wanting nothing in return. Either that or, as private companies in a capitalist society, these businesses are going to want a return on their investment. And how are they going to get this return? By charging us more.
You see, we can’t win. If the Government foots (any part of) the bill, we pay for it as taxpayers. If private investors cough up, we’ll be paying through the nose for it later as consumers. Train users have already been warned they could have to cover the cost through (even) higher fares, while road improvements could be paid for by vehicle duties, road tax and fuel duties. More than half of the un-paid-for sum, £176billion, is being spent on energy projects, and this is what worries the NAO most, as this is “where affordability pressures are the greatest”.
The NAO report criticised the Government for failing to carry out an “overall assessment” on the “full impact of spending on economic infrastructure in the years ahead” describing “a failure to take into account the cumulative impact on consumers of funding those infrastructure projects where the costs are recovered by charging users.”
“Increasing the burden on consumers may increase the risk of financial hardship, or the need for unplanned taxpayer support,” it warned, portentously.
So are the future benefits of improved infrastructure worth the financial pain, or is George, like everyone who has ever appeared on Grand Designs, ploughing ahead with a Really Good Idea despite having little regard for paying the bill? Of course not- "ensuring affordability for consumers is a key concern for Government. Value for money and affordability are key considerations in all Government policy.” A Treasury Aide told the Telegraph that “we’re on track to reduce the cost of infrastructure delivery by £2-3 billion which will save consumers money.”
Just the £307 billion to find now then.