UK government's infrastructure spending plan unveiled

Danny Alexander: "Over many decades we have underinvested in our infrastructure"

Related Stories

The government has unveiled its infrastructure spending plan for the next two decades, describing it as "a blueprint for Britain".

The National Infrastructure Plan (NIP) includes the government selling off its 40% stake in the Eurostar rail service.

About £375bn of investment in energy, transport, communications, and water projects is planned, although no new money will be forthcoming.

The insurance industry also plans to spend £25bn over the next five years.

Speaking at the Institute of Civil Engineers in Westminster, Danny Alexander, Chief Secretary to the Treasury, said the plan was "a blueprint for Britain" that would lead to "long-term sustainable growth".

"Underground, overground, on shore, offshore, wired or wireless, tarmac or train track. You name it, we're building it right now," he said.

Earlier, he told the BBC that the UK had "underinvested... over several decades".

Start Quote

Scheme after scheme has been announced to great fanfare, but then little actually delivered”

End Quote Chris Leslie Shadow chief secretary to the Treasury

He denied that there was a north-south divide in how spending was being allocated, saying: "There are projects going on in every part of the country."

Last month, Eurostar posted a rise in revenues and passenger numbers compared with last summer, but Mr Alexander said no final decision had been made on the proposed sale.

Previous infrastructure spending programmes have been criticised for slow progress, but he said that of the 646 projects outlined in this plan, 291 had already been started or completed.

Katja Hall, chief policy director of the employers' organisation, the CBI, said: "With the majority of national infrastructure projects earmarked to be delivered by the private sector, the insurance industry's £25bn investment is good news."

Wylfa Nuclear Power Station The current Wylfa nuclear power station is due to cease work next year

But Chris Leslie, shadow chief secretary to the Treasury, said: "With the country facing a cost-of-living crisis we need to invest in infrastructure to create jobs, boost living standards, and strengthen our economy for the long term."

National Investment Plan in brief

  • Further £50m for a redevelopment of the railway station at Gatwick Airport
  • Government guarantee to support finance for the development of a new nuclear power station at Wylfa, North Wales
  • Confirmation that a UK guarantee has now been agreed for the £1bn Northern Line extension to Battersea in London
  • Funding for improvements to the A50 around Uttoxeter, in Staffordshire, to start no later than 2015-16
  • Improvements to the A14 around the strategically important port of Felixstowe in Suffolk
  • Target for the sale of corporate and financial assets will be doubled to £20bn between 2014 and 2020, including the government's shareholding in Eurostar

The government's record on infrastructure had been one of "complete failure", he said.

Jeremy Blackburn, UK head of policy for the Royal Institution of Chartered Surveyors (Rics), said the government should prioritise regional transport infrastructure investment.

"The better connected those areas are, the easier it is to move passengers, freight, goods and services," he told the BBC.

This would attract investment and help create jobs, he argued.

Rics also called for more investment in commercial and residential property, and reiterated its support for the HS2 rail project.

Insurance spending

Simultaneously to the NIP announcement, the insurance industry unveiled plans to invest £25bn in a range of infrastructure projects.

The decision by insurers L&G, Prudential, Aviva, Standard Life, Friends Life, and Scottish Widows to invest in infrastructure follows changes in European rules pushed for by the UK which incentivise investment in a wider range of assets.

Prudential has already invested £40bn in UK infrastructure, including property.

Felixstowe harbour Felixstowe, the UK's largest container port, should benefit from the proposed improvements to the A14 trunk road in Suffolk

Group chief executive Tidjane Thiam said: "As a major long-term investor in the UK, Prudential is pleased to commit to harness our financial strength for the benefit of the UK economy. This initiative will help achieve sustainable economic growth."

Legal & General, which has invested £3bn in the last two years on various infrastructure projects, including university accommodation, said it was keen to spend more on construction.

Chief executive Nigel Wilson said: "We are very keen to help fund the creation of more housing - for sale, for private rent, and in the social sector - as having enough decent housing at sensible prices is crucial to the UK's recovery."‬

'Political will'

In September, CBI director general John Cridland said the government's infrastructure policy was "faltering" amid fears that it lacked the "political will" to deliver.

Critics have pointed to data showing infrastructure spending falling in recent times, not rising.

Labour said that despite schemes being announced with great fanfare, little was being done.

"The Office for National Statistics says that infrastructure work is down 3.7% in the last year, and fell by 10% in 2012. Scheme after scheme has been announced to great fanfare but then little actually delivered," said Mr Leslie.

Chart showing UK infrastructure investment since 1997

More on This Story

Related Stories

More Business stories

RSS

BBC Business Live

  1.  
    10:16: TESCO EARNINGS BBC News Channel
    analyst

    Jasper Lawler, retail analyst for CMC Markets, is on the News Channel, talking about Tesco's results. "I think the one box that's been ticked is the chairman will step down," he says. But there are no signs of selling any assets like blinkbox, the supermarket's video on-demand service, "there's no signs of strategy but maybe that's to come," he adds

     
  2.  
    10:00: TESCO EARNINGS
    Philip Clarke

    Former Tesco boss Philip Clarke's reported £10m severance package is being withheld until the outcome of the Financial Conduct Authority (FCA) investigation into the supermarket's accounting practice has been concluded it's also emerged. In case you're wondering the Guardian reported the pay advisory group Manifest summed this up as his £1.1m salary and share awards, although it didn't cover his pension pot. When he resigned in July Mr Clarke was expected to continue to be paid his £1.1m salary for one year.

     
  3.  
    09:45: RETAIL SALES
    Retail sales graph

    Retail sales volumes fell 0.3% in September compared with August. But September were 2.7% higher than the same month a year ago, marking the 18th consecutive month of year-on-year growth, official figures show.

     
  4.  
    TESCO EARNINGS Via Twitter Kamal Ahmed BBC Business editor

    tweets: Three big takeouts from Tesco numbers - accounts problem cost £263m, went back to 2013, chairman to leave, sales down 4.6%

     
  5.  
    09:21: MARKET REPORT

    European markets have opened down. The FTSE in London has lost 0.54% to 6,365.10, while Frankfurt's DAX dropped 0.01% and the French CAC declined 0.09%.

     
  6.  
    09:05: TESCO EARNINGS

    In fact things might be so bad that Tesco has decided not to provide full year profit guidance blaming "a number of uncertainties which limit visibility of future performance." It adds the "commercial income overstatement" will affect its second half results as it revisit its "plans with new management"

     
  7.  
    08:49: TESCO EARNINGS

    Tesco has also warned on its full year profits outlook. It says it is "reviewing all opportunities that exist within the group to generate value and create headroom. Full year profitability could therefore be further impacted by actions we choose to take." In other words, don't expect a turnaround over the next six months.

     
  8.  
    08:35: FOXTONS FALL
    estate agent

    Estate agents Foxtons' shares have fallen 18% after it said its earnings would fall due to a sharp drop in demand in the London property market. Foxtons said its third quarter sales fell 3% to £39.3m and said political and economic uncertainty in Britain and more restrictive rules on mortgage lending were the cause. This is the Foxtons who were told in 2009 their "renewal" commission from a landlord if a tenant stayed on past the initial tenancy period - even if the agency had played no further part in arranging or managing the extended tenancy - was unfair.

     
  9.  
    08:21: TESCO EARNINGS BBC Radio 4

    Brian Roberts of Kantar Retail is talking Tesco on the Today programme. He says some retailers -Aldi - have a far simpler business model than Tesco. They buy things to sell to their customers. But most supermarkets make more money through buying. And Tesco has been the biggest sinner here, he says by "extracting its profitability from suppliers" over the last few years as opposed to its customers. That's as a result of these supplier rebates we've been hearing about recently, which mean supermarkets get a discount on the goods they buy from suppliers if they hit certain sales targets. Hope that's clear.

     
  10.  
    08:07: TESCO EARNINGS Radio 5 live

    Jane Clark, author of the blog Frugal Queen has been talking Tesco on 5 live. "I do find it a bit pricey... they are more expensive than my local fruit and veg shop for greengrocery." Tesco "will have to price match with the discounters and be aware of how little money people have." She says they need to ditch buy one get one free on junk food because people want cheaper basics.

     
  11.  
    08:06: TESCO EARNINGS
    Tesco share graph

    Tesco shareholders have reacted badly to its interim results. The supermarket's shares have opened 6.5% lower to 171p.

     
  12.  
    07:54: TESCO EARNINGS

    Tesco's rather dramatic fall in statutory pre-tax profits is the result of one-off items totalling £527m, including an adjustment relating to "prior years' commercial income" of £145m, stock write-downs of £63m, impairment charges of £136m in the UK and Europe, restructuring costs of £41m, and another £41m retrospective charge relating to a Valuation Office ruling on ATM rates plus a £27m increase in the Bank's provision for customer redress.

     
  13.  
    07:44: REED ELSEVIER

    Media firm Reed Elsevier said underlying revenue growth for the first nine months of the year was 4%. It bought 25 firms for £294m.

     
  14.  
    TESCO EARNINGS Via Email

    Winston Collinge from Carlisle writes in: "Notwithstanding the upsurge of Aldi and Lidl, isn't it just the case that there is overcapacity in the food retailer sector and they are now fighting like dogs?"

     
  15.  
    07:31: DEBENHAMS EARNINGS
    Debenhams

    And now for something completely different. Department store Debenhams says like-for-like sales rose 1.0% for the year to 30 August. Profit shrank 24% to £105.8m as profit margins narrowed.

     
  16.  
    07:21: TESCO EARNINGS

    There's an update to the Deloitte investigation into Tesco's overstatement of its expected half year profit too. The amount overstated is up - a bit - and it's no longer a singular overstatement. Tesco now says the overstatement amounted to £263m in total. The impact on its trading profit for the first half of this year is £118m. But there is a further £70m overstatement from the previous financial year and £75m from before the 2013/14 financial year. Both of those have been treated as one-off items within this set of results.

     
  17.  
    07:12: TESCO EARNINGS

    Tesco chairman, Sir Richard Broadbent, has also announced his resignation although there's no timetable yet. He says: "My decision reflects the important principle of accountability on behalf of the Board and will support the company to draw a line under the past as it enters the next phase of its development." He has come under pressure to stand down since Tesco revealed that it had mis-stated its profit outlook for the first half of 2014/15 in September.

     
  18.  
    07:08: TESCO EARNINGS

    ... are out. UK like-for-like sales excluding petrol are down 4.6%. Statutory pre-tax profits are down 91.9% to £112m. The underlying profit figure for the period (26 weeks to 23 August) is down 46.6% on the same period a year earlier to £783m.

     
  19.  
    06:55: LLOYDS JOB LOSSES BBC Radio 4

    Mr Hahn tells Today the UK banking industry needs to do more in the way of community banks. He adds banks are beginning to link up with supermarkets as a way of doing this but local communities are likely to suffer as more bank branches close. He says it has been "an error" of government policy that "we keep thinking in terms of challenger banks". What the UK banking industry really needs to think much more about is community banking and how to provide banking services to small communities, he adds.

     
  20.  
    06:41: LLOYDS JOB LOSSES BBC Radio 4
    A Lloyds Bank logo

    The 9,000 job losses at Lloyds Banking Group amount to about 10% of its total workforce. It is also expected to announce a series of branch closures. Cass Business School banking analyst Peter Hahn tells Today the way we buy things from banks has changed. That's putting pressure on bank branches. He says we'll see "fewer but better bank branches". "We'll see them more principally located, so big cities and market [towns]," he says. Mr Hahn suggests they will be slicker operations, more sales-oriented, but not used as much for "regular transactions."

     
  21.  
    06:28: GLAXOSMITHKLINE Radio 5 live

    Newspapers are reporting GlaxoSmithKline may spin off its HIV business. Holly Cook, managing editor of Morningstar's website for UK investors tells 5 liveWake Up to MoneyGSK's respiratory drug, advair is under "intense competition" and a sale through a public offer "will allow GSK to streamline itself" as its HIV drugs see "huge demand".

     
  22.  
    06:15: TESCO EARNINGS Radio 5 live

    "Like-for-like sales is the first number analysts will look at, followed by the accounting problems," says Holly Cook of Morningstar on Wake Up to Money. The online business may have done well while the supermarkets will be a "weak spot." Looking at Tesco, "a lot of customers find it a bit overwhelming and you are bombarded by information and you can't find what you want."

     
  23.  
    06:07: TESCO EARNINGS Radio 5 live
    A Tesco trolley

    "When the CEO is on gardening leave the chairman should step up and that's not happened," says Mr Roberts on Wake Up to Money, talking about the performance of Tesco chairman Sir Richard Broadbent. The supermarket discovered a £250m profit black hole. "I'd be remarkably surprised if it's limited to a 6-month period," he adds.

     
  24.  
    06:01: TESCO EARNINGS Radio 5 live

    Brian Roberts of Kantar Retail is on Wake Up to Money talking about Tesco's results, out today. "There's lots of hoops you have to jump through" as a shopper at Tesco, he says. Buy one get one free, the loyalty card, driving a car and buying the petrol. "With Aldi you just have to turn up... Tesco used to have the shopper at the centre of the business and now they've replaced the shopper with the shareholder."

     
  25.  
    06:00: Howard Mustoe Business reporter

    Good morning. Get in touch via email bizlivepage@bbc.co.uk and twitter @BBCBusiness

     
  26.  
    06:00: Matthew West Business reporter

    Morning all. Now we could try and pretend that there is other news going on (and in fairness there is some) but let's face it, the focus today is all going to be on Tesco's half year results. We'll bring you them as soon as they drop, plus all the reaction and the rest of the day's news as it happens.

     

Features

From BBC Capital

Programmes

  • St John's, CanadaThe Travel Show Watch

    It’s a ships’ symphony – listen to these freighters in Canada play music with their horns

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.