Party manifestos: Reckless spending doesn’t pay off

Spend, spend, spend. It doesn’t matter which of the main parties you intend to vote for, they are both set to turn on the taps. If the claim that Labour’s plans add up to £1.2 trillion is true then the Tories are not far behind. It’s the inverse of when Tony Blair promised in 1997 to keep to the Conservatives’ prudent plans if only the electorate would give him the keys to No 10. This time Labour is brazenly saying it can outspend the Tories and the Tories say they will not be far behind – but whereas Labour will tax you, the Conservatives say they will borrow the money to finance it.

All this capital spending could lead to a round of mega construction price inflation with consequent high interest rates to control it

To put this in context, public spending under the Blair government averaged about £450bn and maxed out at £580bn a year. Its borrowing ranged from paying back (yes, paying back) £16bn to a maximum borrowing of £47bn a year. Currently, borrowing is about £49bn a year, down from a high of £160bn in 2009 and public spending is already at a massive £820bn a year – yet both the Conservatives and Labour plan to increase this drastically.

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So, a by-product of three years of Brexit misery and economic paralysis is to kiss goodbye to fiscal prudence and say hello to a spending round on the NHS, infrastructure, housing and – well, you name it. Not that we don’t need investment. The NHS may be a prized possession, but we have some of the worst child mortality and cancer recovery rates in western Europe and anyone with ageing parents will know just how desultory the care can be. I’ve had my mother left on a trolley overnight in a hospital corridor in A&E on more than one occasion. 

We should be having a referendum to resolve Brexit first, then a general election to address domestic issues

We were a country that led on rolling out modern infrastructure, but now it is threadbare – astonishingly, people even doubt the wisdom of high-speed rail. And the housing shortage has produced Generation Rent, intergenerational resentment and doused down labour mobility.

All this spending on capital projects sounds great for our industry, but severe capacity issues, a clampdown on immigration and higher import tariffs on materials and components mean it could well lead to a round of mega construction price inflation with consequent high interest rates to control it – and the return of the boom and bust economy.

And why are we having a general election, anyway? It’s about Brexit. But general elections should not be about single issues. In this case, if you want Brexit you may have to vote in the most right-wing Tory government of modern times and, if you would like a second referendum, you have to vote in the most left-wing Labour party in 30 years, with the extreme domestic policies that go with either of those. 

Perhaps with party politics being split open, we might get a Labour/Liberal Democrat pact leading to a referendum and yet another general election after that. Logically, I think we should be having a referendum to resolve Brexit first, then a general election to address domestic issues, so maybe that would be the best outcome. But it would take some pretty deft tactical voting to get a centre-left coalition.

Instead of these blatant bribes to the electorate, which will end with an overheated, inflationary economy, we need a careful 10-year “big picture” plan of investment in the country’s ailing sectors, along with the political decisions to implement it and radical reforms in management and systems. 

The NHS is clearly dysfunctional in its organisation and has no convincing funding mechanism. Our ability to carry out infrastructure projects to time and budget is laughable. I hear stories all the time of inefficiency, indecisiveness and managerial incompetence – and our planning permission system is a drag on the economy and contributes to housing shortages, along with the land supply issue.

There is a huge amount to do in the construction industry to get our country back in shape, but I don’t see it happening in the right way. However, what will be will be – enjoy the post-election boom, if we get one, while it lasts and put the profits aside to get you through the bust that follows.

Jack Pringle is principal and EMEA regional director at Perkins+Will