In a bid to divert attention from the wet blanket of Philip Hammond’s budget last week, the Establishment has been attacking Labour’s plans for borrowing (only) for investment.
Channel 4’s FactCheck issued an article criticising Shadow Chancellor John McDonnell’s supposed lack of understanding of how government borrowing works – allowing Tories to crow briefly and erroneously – only to have to issue a corrected version. Other ‘MSM’ piled in with similarly-misplaced attacks.
The push-back against this nonsense has started. A group of twenty-three renowned economists also made a firm, public statement of support for the sound economic principle of government borrowing to invest to strengthen the economy – and the tax take.
Now the impact of government investment – and the reality that it pays for itself in economic growth and improved tax-receipts – can be seen in these previously-unreleased case studies of three planned Labour investment projects:
Crossrail for the North
- Cost: £10bn
- Returns: unlock potential £85bn of additional economic growth
Labour has pledged at least £10bn to link up cities across the North with a new,
fast rail link, running west-east from Liverpool, Manchester, Leeds, Hull and Newcastle initially – dramatically improving journey times, increasing capacity on overcrowded routes and allowing for greater economic growth.
The independent Economic Review of the Northern Powerhouse commissioned by Transport For the North (a body consisting of businesses and local councils) estimated that Crossrail for the North could help unlock a potential £85bn of additional economic
growth in the North of England.
Great Western Railway electrification
- Cost: £700m
- Returns: 2.5 bigger than the original cost approx
After years of delays and cancellations, Labour will electrify the whole GWR line to Swansea, at a cost of £700m. Electrification would improve journey times and reliability, as well as reducing congestion on an increasingly busy route between the growth centres of the South-West, and London.
The Department for Transport has estimated that the economic benefits of this are almost 2.5 times bigger than the cost.
East-West Rail Link (“Science Valley”)
- Cost: £520m
- Returns: £73m annually
East West Rail is a major project to establish a strategic railway connecting East Anglia with Central, Southern and Western England. Labour’s version of the scheme would connect Oxford through to Bedford, Milton Keynes, Cambridge and Norwich.
The towns and cities connected form a major East-West growth corridor, but capacity constraints on existing transport infrastructure and the limited supply of land for building create the need for new transport links allied to further expected housing development.
Engineering consultancy Arup estimated at least an annual £73m boost to the regional economy from the East-West Rail Link, due to the significant increases in connectivity the new rail would provide.
Connectivity is reckoned by economists to be critical to economic growth, since it means (for instance) that people can travel more easily to work. This boost would be a permanent boost to the economy, including £37m of extra taxes for government annually as a result of the economic growth. Arup estimate it would take only five and a half years for the line to pay back the initial investment.
There is therefore a sound economic case for making the investment and there will be no net long-run cost to the taxpayer after making the initial investment.
These are just three of the projects that would take place as part of Labour’s plans to massively upgrade the UK’s infrastructure and boost our economy – for the benefit of the many, not just the few.
Which probably explains why the Establishment attacks on those plans have been so desperate.
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Reblogged this on sdbast.
I see Damian Green has promised this morning that the East/West line will go ahead,to open in 2023. However the one thing the Tories are good at is promises
I am not in the business of making predictions but I am able to offer one on this occasion.
Not only will this borrowing pay for itself, models have projected that John McDonnell’s strategic infrastructure programme will deliver between 3-5% growth in the UK economy by the end of Labour’s first term in government.
Sorry to let the cat out if the bag John but I think it is time to go on the offensive with the business case for a Labour Government.
Trouble is, that level of growth is unsustainable in the long term, especially with India & China (a third of the world’s population right there) wanting “in”. We live on a finite planet. What to do…?
What to do … well not voting Tory for more of the same shit would be a good start …. then a honest set of policies that help the many not the few and along with that a honest look at what can be done to stop global warming … now where have i heard these polices being espoused , hummmm sure it had a L in the title somewhere and then an A B O U R .
Sorry for the quip timfrom
I’ve never voted Tory, thanks very much, nor would I ever dream of doing so.
My point remains valid. We’re going to have to get used to a more modest standard of living. Growth of 1.5-2% is pretty much the limit if we’re to stave of the worst effects of climate change and even that’s pushing it.
Reblogged this on aspiblog and commented:
A very important post from the Skwawkbox…
John McDonald is on a winner!
While the right is throwing around lies and spin, we keep picking up their bill!
If only I had the cash to pay for my home, no I had to borrow at high fixed interest rates!
As those, who can’t manage, take out payday loans at even higher rates!
Who’s making higher profits than ever?
“Definitely not, the voting public”!
“The sooner we all vote LABOUR LEFT the Better”!
A good post SKWAWKBOX but please can we see more on the economy in a Labour Govt from many more areas as it is where Labour is being attacked unfairly.
It is one very important area as we go into election that can happen at anytime that is not clear to many and there has to be no doubt at all and the myth that Labour is bad for the economy has to be well and truly busted
You’re right. One key function of blogs like Sbox is that it provides ammunition for MP’s, councilors, or anyone else invited to speak to the media or other groups. Statistics and ideas flow from these sources and can be picked up and amplified. Tores and MSM have been doing this since the dawn of time. We can do it now through social media!
Of course, the Tories never wanted to grow the UK economy at all – Keynesian policies (which is broadly what McDonnell’s idea is about) creates inflation because of the multiplier effect (money in the hands of poor people is worth more because they actually spend it). This has the effect of making rich people less rich.
QE, which was a strange attempt to do this via the private “self-regulated” banking sector, has wrecked the economy. All that happened was poor people were forced to pay for everything. The thing is, austerity actually “worked” in the Tory sense of the word. The rich profited enormously from the financial crash. It explains why we suddenly “can’t afford” things like council housing, hospitals and further education funding, but can afford massive empty buildings for billionaires in London for the purposes of siphoning money and generating more profits from renters who work and are forced to rely on charity like foodbanks to survive.
Tory austerity is socialism for the 1%.
Everything the Tories have ever done has been socialism for their own tribe – land owners, bankers, investors and rentiers.
Pick any of these beneficiaries of inherited wealth and you can find examples of public funds – our taxes – spent to help their balance sheets.
One of their servile, semi-literate trolls recently accused me of greed & envy for pointing out the lack of justification for their privilege.
Apparently my lack of gratitude for the crumbs from the tables of their mansions and superyachts is a function of my low IQ…
Not convinced investment in rail has much of a future tbh.
Electric self-driving vehicles in possibly a decade will be capable of automatically linking like trains on the road for power savings – and separating/re-linking according to programmed destination, all under cloud control. No traffic jams, no pollution, almost silent, no stress, no need to keep housing at any great distance, no need for massive motorways because many fewer of us will be nine-to-five-ing.
I strongly believe this is what we should invest in.
UK has led the world before, only to let others develop and profit from our innovation because of lack of savvy investors and piss-poor managers. This time we should design everything for modular upgrades & repair rather than the planned obsolescence of today’s marketing-department-led production.
It’d be nice to do things properly for once and for the future benefit of the many, not just the sales department & the 1%.