7 September 2017

  |  CBI Wales

News

Infrastructure delivery is key to future economy

The emergence of the UK Industrial Strategy is a reminder that the Welsh Government’s forthcoming economic development strategy is not the only show in town writes CBI Wales Director.

Infrastructure delivery is key to future economy

Written by Ian Price for the Western Mail 

UK Industrial strategy is back with a bang. Brexit may be on the tip of everyone’s tongue at the moment, but setting a long-term strategy to make British industry more competitive is, once again, firmly in the foreground of British politics and it’s a reminder that the Welsh Government’s forthcoming economic development strategy, however vital, is not the only show in town.

The economic rationale for a UK-wide Industrial Strategy is sound – four in every ten pounds spent in the UK is spent by the Government. So it’s all the more crucial that business in Wales and the UK government work together on a shared vision for our future economy at this crucial stage in the UK’s history.

And that shared vision should at least partly be about unlocking regional growth. The UK has one of the most uneven regional income distributions anywhere in the western world.

Industrial Strategy must be the antidote for this - raising productivity and spreading prosperity across the whole UK. This is especially important for Wales which, as stated in a recent article in the FT, “In 2015, the most recent year for which official figures are available, workers in London produced 63 per cent more output per hour than workers in Wales, the least productive part of the UK.”

Having excellent quality infrastructure lies at the heart of productivity growth, and so our chance to really boost living standards, in the UK.

The good news is that the Government understands that infrastructure matters. And we’ve seen positive progress, with commitments on major projects like Heathrow, Hinkley, Great Western mainline electrification and the M4 Relief Road. But commitments are one thing. Seeing spades in the ground is another.

Infrastructure delivery also means much more than decisions on high profile projects. It means the government keeping its foot on the accelerator across the whole of our infrastructure pipeline. Now is the time to step up a gear – we need action, not words, and delivery, not delay.

The CBI’s infrastructure survey, conducted with AECOM, last year showed that almost half (46%) of firms were dissatisfied with the infrastructure in their region, and two thirds thought the UK is unlikely to be more internationally competitive in 2050 than it is now.

This demonstrates that we need to step up the pace, and that progress is needed, in four key areas:

Firstly, the UK needs to stay focused on delivering a third runway at Heathrow. Now that the UK government have made the right call on committing to building a new runway at Heathrow, we need to make sure progress stays on track. That means diggers in the ground by 2020 and seeing the runway up, running and operational by 2030. But it is equally important that we see a national strategy to ensure all our airports can thrive.

Developing a successful aviation strategy for all parts of the country has never been more important, connecting people and businesses to more regions and cities across the UK and around the world – the practical face of global Britain.

Second, we must deliver the road and rail improvements that will better connect the UK. One of the surest ways to boost productivity and achieve real regional growth is to invest in the networks that link our towns and cities.

We are seeing strong progress with electrification of the Great Western Mainline on course for the end of 2018 and the M4 Relief Road which, subject to the public inquiry, could be open by 2022.

More widely, we are due to break ground on HS2 shortly, which is good news, with legislation also in the pipeline to build a connection to Crewe. But firms are already itching for more progress on projects like Northern Powerhouse Rail – with its knock on benefits for North Wales. It’s vital that projects in different parts of the country are not seen as “either or”.

Improving the North of England’s infrastructure should come at the same time as enhancements in the South, like Crossrail 2. A determined focus on delivery will ensure the widest possible benefits are spread right across the United Kingdom.

Third, the UK government must set out a ‘future fit’ energy policy framework. The case for investment in the low-carbon economy has already been won, now the challenge is to get on with the job. But whether or not Britain has a clean, smart, efficient energy system in 2030 depends on choices taken today, so decisions to give investors certainty beyond 2020 now means there are huge, and exciting, opportunities for businesses and households in the future.

Fourth, we need to see a long-term strategy for digital communications. Digital infrastructure is simply going to be absolutely fundamental in connecting businesses and households to the economy of the future.

The UK has already made big strides in the quality of it digital networks, but to stay ahead of the international competition we need to do a much better job of connecting towns, cities and, especially, rural areas. The Welsh Government should continue to work with the UK government on this to ensure we are at the heart of future progress.

So, with these areas high on the priority list, it’s time to get to work. If we don’t get spades in the ground on existing plans, it’s clear we could put a major dent in the competitiveness of British business – and the UK itself. This is something we cannot afford do, especially during this period of uncertainty as the UK leaves the EU. Firms are ready and willing to work with the UK Government to develop the skills and capacity to deliver on plans.