Infrastructure yes, but no plans to cut fiscal mandate

Posted on 2 Oct 2012

Ed Balls’ speech on day two of the Labour party conference underlined Labour’s commitment to infrastructure but the Shadow Chancellor could not guarantee that a Labour government would reduce taxation and increase public spending.

Shadow Chancellor Ed Balls confirmed the Labour party’s pledge to housing and infrastructure yesterday, telling the party conference that a Labour government would build 100,000 homes.

It would use the money from the 4G mobile phone network auction, which is expected to raise about £3bn for the government. Commentators have pointed out that most of this money would be spent by 2015, when the next general election takes place.

Mr Balls also reiterated his party’s conviction for infrastructure investment that, with house building, was the best method to create jobs and growth in a flatlining economy.

On Monday the conference and fringe events referred to poor and delayed decision making by the Coalition on key infrastructure projects like the Heathrow third runway, and the High Speed 2 rail link.

Shadow business secretary Chuka Umanna also backed an industrial strategy for the UK and empahised the need for long term policy certainty in government, although he fell short of providing details of key policy areas like decarbonisation.

“There is now a long-overdue and welcome political consensus between the government and Opposition about the need for the UK to adopt an industrial policy and a long-term approach to the economy,” said Terry Scuoler, chief executive of EEF. “Nonetheless, we still need to see all of the Parties set out a clearer vision of what that economy should look like.

John Cridland, CBI Director-General, said: “The CBI welcomes more action on housing investment, which would give a much-needed boost to growth. But such action must compliment continued efforts to reduce the deficit. The two must go together, it cannot be an either or.

“This speech firmed up Labour’s plans for investment in infrastructure, but there will clearly be tough choices ahead in their zero-based spending review, and we will need to hear more of the detail.”

Participants at one fringe event, ‘Going for Growth’, yesterday agreed how the education system did not offer an adequate ‘interface’ between core teaching and employment. More schools needed to devote resources to allow children from 14 to 18 years to spend time in companies, understanding employers’ needs.

Two businessmen at the fringe event said there was not enough effective collaboration between universities and companies in Britain, where often expensive research was not being provided to companies. One, who worked in the food industry, said that there was a “massive missed opportunity [for business] from misspending public funding.”