It’s being billed as the Budget of No Surprises – a chancellor sticking firmly to the austerity course in his final Budget of this parliamentary session tomorrow despite an election barely six weeks away.
We’re told it will be the George Osborne we well know: deficit reduction, sticking to the course, long-term economic plan, no giveaways, etc.
Believe that if you may.
But he is on course to spring arguably the biggest surprise of all by the standard of post-war chancellorships: the emergence, behind the deficit-cutting rhetoric, of George Osborne, defender of infrastructure spending, champion of the great Northern regional powerhouse, friend of railways and bridges and roads – the Isambard Kingdom Brunel of public works.
The most memorable passage of his speech tomorrow will not be on the latest adjusted figures for budget deficit reduction as a share of GDP. It is more likely to be the outline of an infrastructure spending boom that would make latter-day Keynesians blush.
It’s not so much Plan B as Plan A Triple Alpha.
Bold plans for transport connectivity, new projects pledged as well as acknowledgement of those nearing completion: Osborne wants to be remembered not by fiscal numbers but by monuments – and Big ‘Uns.
One of the most remarkable features of his chancellorship is not, as Labour and SNP opponents have portrayed, an unyielding grind of austerity. The foot was taken off the austerity pedal back in 2012 – which is why deficit reduction targets were missed and why so much remains to be done to eliminate government borrowing by 2018-19.
The fact is that during his chancellorship government debt has soared – from £932 billion in 2010-11 to £1.48 trillion today.
Back in 2010-11 he forecast that annual government borrowing would be down to £37 billion by this financial year. The out-turn is likely to be around £91 billion.
The fact is that under the guise of Plan A he has pursued an un-proclaimed, unannounced, Plan B.
Indeed, the spending and borrowing trajectory is closer to what Alistair Darling advocated than the coalition Treasury set out to achieve.
Now he presides over plans for the greatest investment in railways since the Victorian era of railway mania. And he has gone out of his way to champion the northern cities Powerhouse plan, nicknamed “Devo Manc”
Only a fortnight ago we set out here on Scot-Buzz the full extent of the infrastructure spending revolution under the heading ON ITS WAY – A SPENDING BOOM LIKE NO OTHER.
We are, under the night and fog of “austerity economics” now standing on the threshold of a regeneration of our infrastructure running into hundreds of billions of pounds and the biggest upgrade to our power, roads and railways for decades.
Add up all the scattered, disjointed bits of news about road projects, rail upgrades, nuclear plant refurbishment, flood mitigation and plans to transform transport connectivity and it comes to a massive sum.
More than 1,300 miles of road will be laid through the major cities of London, Birmingham, Manchester, Leeds and Liverpool.
In Scotland there’s the new £1.4 billion Forth road crossing now well underway. All told, Scotland’s five largest transport projects will total more than £7.5 billion over the next three decades.
Last year Osborne gave his backing to the creation of the “northern cities powerhouse”.
The plans of economist Jim O’Neill are gaining traction. His vision to revive the great English cities with infrastructure investment has inspired hope and catalysed cross-party sympathy. The cities of Liverpool, Manchester, Leeds, Sheffield and Newcastle believe their proposals for investment in road capacity, a new high-speed rail link across the Pennines and better access to Manchester airport – a £15 billion programme over 15 years – would create a “connected region” powerhouse that would challenge London.
Elsewhere the go-ahead has been given for the two biggest nuclear projects in Europe.
Just as with the transformation of our roads, the contracts have already been signed. The work IS going ahead – the £24.5 billion project at Hinkley Point C in Somerset and the new Moorside plant in Cumbria, signed in December last year and due to come on line in 2024.
It will create up to 21,000 jobs and generate enough power for 6 million homes.
Once these power plants are both operational, they’ll supply 14% of our electricity, providing cheaper energy for decades.
The Crossrail project is pushing ahead – and even if the High Speed Rail proposals are abandoned, it’s likely that other rail upgrading and uplift will be approved.
Investment writer David Stevenson has itemised this and similar projects, hailing all this as an infrastructure boom without parallel in modern times.
Might it be that we are indeed on the brink of a capital spending boom?
All this not before time, you may think.
London and the southeast have received the lion’s share of infrastructure spending in past decades. According to KPMG, the capital spends as much on infrastructure every two days as Manchester does in a year. There is now wide cross-party recognition that this imbalance must be addressed – and reversed.
Tomorrow’s budget deficit numbers will be helped by more numbers in work, growth in tax revenues, lower inflation and lower than expected debt interest costs. Osborne should be able to stick to his previous projections on deficit reduction but with between £5 billion and £7 billion extra available to give some substance to his spending plans.
Truly, Isambard Kingdom Brunel would clank his chains in appreciation of the financial construct Osborne is set to unveil.