COMMENT

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COMMENT 2020


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25 January 2020


Inevitably a change of Prime Minister means changes in policy - necessary changes in policy - and that is no reflection on predecessors. Though I have designed parts of railway stations and so have no lack of a soft spot for railways, it is hard to see how, say, severe reductions in benefits, which can cause hardship, can be combined with spaffing (to borrow the word) the same amount of money on HS2, especially by advocates of the first policy. Neither can raising taxation for it, which can also cause hardship and depress badly needed economic activity, be seen as sound. The project, interesting in some respects, is highly uncommercial and already projected to cost 10 times HS1.

The civil engineering industry has some of the least good management attitudes of all Britain's engineering industries - witness Carillion - and so it cannot be the recipient of all infrastructure spending any more than the PFI package providers can now be the recipient of all sums for new hospital building, which they are not going to be.

Some revised thinking is needed and some longstanding civil service policy has to go. The North and Midlands cannot be regenerated extensively by infrastructure spending without the bias of business taxation, indeed all taxation, switching to favour smaller enterprise.

Token schemes run by the civil service for smaller business do not really work - only making it attractive through the taxation system for people not to be employees and instead take on commercial risk will work. The civil service is a place of secure long term employment and though it contains some of the most thoughtful minds, it finds it hard to make this intellectual leap.

Brexit will mean the exit of many large companies going in a huff.

Others will arrive attracted by the reduction in EU regulations, traditionally gold plated more than in any other country by the civil service (spurring the perception of a need for Brexit) and now frequently unenforceable due to reductions in trading standard officer numbers - but they will not greatly outweigh those leaving, if they manage to do so.

Only regeneration of enterprise from below can work, otherwise consider forgetting about it.

Any immediate alternatives? Literally fix the roofs of schools and police stations, and the pavements outside, while the sun shines, training people in construction skills and putting in solar panels at the same time.

The benefits of mega-infrastructure spending alone may not endure. The bigger the contractors the less likely this is to be the case. Look at the legacy of many overseas Olympic projects for evidence.

The same will have to apply to who the banks lend to and take risk on. They can, of course, continue to skew their lending to big corporates and wait to take the big losses in the next downturn. Who wants owners of out of town shopping centres or diesel engine manufacturing plants now?

Only multiple and expanding smaller businesses encouraged by taxation policies and better non-bureaucratic lending can provide the aggregate scale of new economic activity needed everywhere in Britain.


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