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Business Case: London's infrastructure key to driving investment

Business lobby group London First is devoted to making the capital the world’s best place to do business. Chief executive Baroness Jo Valentine explains why infrastructure investment is key to this ambition.

Jo Valentine

Baroness Jo Valentine, London First

The sheer scale and diversity of economic activity across London means that for economic recovery to continue throughout the UK, business in the capital must be successful.

And while it is clearly important that this success filters out across the nation, it is also a fact that, as the UK’s premier city and focus for global trade, London remains an investment priority.

According to Baroness Jo Valentine, chief executive of London business lobby group London First, politicians from across the spectrum now accept that funnelling this investment into decent modern infrastructure is the most sensible way to promote long term growth.

“I think at the core they continue to understand that infrastructure investment matters,” she says. “In a way the philosophical campaign has been won and everyone is now in the same place. I don’t get any push back and think that Treasury understands the value of infrastructure.”

Last month, London First published a list of its 10 infrastructure priority areas for the UK (see box). The list highlights the critical investment already slated, under discussion and required as vital to a world class city in which the population is expected to reach almost 10M by 2030.

And while Valentine is slightly coy about her organisation’s impact and ability to influence the decision makers, the track record of investment in London demonstrates it must be playing a decent role.

“I’d like to think [we succeed in our lobbying] by being canny,” Valentine explains. “It is surprisingly difficult for politics to just settle in a place that appears to be the most sensible thing to do to address the problem. But what I think we are quite canny about is knowing which bit to prod at which time.”

The Crossrail project is given as an example of where the right “prodding” at the right time enabled the political stars to align and the project to get going three years ago.

“One can’t move planets,” she admits with a smile. “But there are moments when, for certain interventions, you get a better bang for your buck.”

Valentine remains concerned about a tendency to focus on “counting pennies rather than investing pounds”. However, she is also pleased to report that even the Treasury has now swung behind the notion that investing in infrastructure is good for the national economy.

“We were very surprised about the total absence of push back from Treasury when we launched our plans for Crossrail 2,” she says, referring to the work London First published in February supporting plans for a new south west to north east cross-London rail link. “It went straight into the Comprehensive Spending Review and there have since been discussions between [London mayor] Boris [Johnson] and the Treasury that are entirely positive.”

Pressing forward with plans to develop Crossrail 2, including the addition of extra capacity at Euston to accommodate High Speed 2 (HS2), is very high on London First’s priority list and the fact that money has been made available for Transport for London to progress its feasibility studies highlights the way that the capital’s business community is being heard.

All of which, she says, also bodes well for the HS2 project. Not least since Sir David Higgins joined as chairman, which, as she puts it, “completely calms the project down again”.

However, for all the political and government consensus behind infrastructure investment, Valentine points out that there is still a huge amount to do to ensure that government officials have the right competence and experience to embrace this new environment and deliver these projects.

“Part of the problem is to do with the skill sets in government,” she explains, adding that building competence is one area that infrastructure minister Lord Deighton has already latched onto. “If you spend your life talking policy then you are not the sort of person that should be building a house. Moving from theory, to deal doing, to outcome requires different skills.”

Valentine is also clear that the sheer complexity of the process and the need for political consensus means that it is not necessarily always the best projects that find themselves slated to start. And big projects usually win out over small.

“The truth of the matter is that the amount of resource it takes to get an infrastructure project going means that it is usually not worth doing it for small projects - even though that small project may be better than a larger one,” she says.

And the ability of politics to completely halt any progress on infrastructure is clearly highlighted by the current problems around the UK’s aviation policy. Although Valentine is happy to see the government commission led by Lord Davies investigating options for the long term - “necessary long grass” as she puts it - she is also clear that, for businesses, short term decisions also have to be taken to tackle the current lack of capacity.

“The Davies Commission is entirely necessary to get us back to having a chance of getting something done,” she says. “We had got into such a bad place that this is now a very necessary process,” she adds, pointing out that the critical outcome from the debate now is for politicians to accept that there is a capacity issue and to include plans in their forthcoming election manifestos do something about it.

“From the business community’s point of view we may not get a runway, and even if we do it will not be for 10 years - which is a long time in business terms,” she says. “For the business community the greatest risk is that nothing happens [to solve the short term problem].”

This concern about the risk of decision paralysis remains very real despite the new cross party passion for infrastructure. It leads to her support for a more independent planning regime to tackle such critical national issues, such as put forward recently by former Olympic Delivery Authority chairman Sir John Armitt (NCE 12 September).

“Armitt’s review is a very good thing and it is a shame in a way that he did it for the Labour Party because I don’t think that he is making party political points but very intelligent points,” she says.

“A year will pass and perhaps these thoughts will enter into the ether - the Tories will probably reinvent it and pass it off as their own.”

That said, she is also clear that making better use of existing tools such as national policy statements would go a long way towards providing the necessary clarity and confidence sought by businesses.

Such tools should, she adds, be capable of providing businesses with a clear picture of how investment will be rolled out for the long term national good rather than on any short term political whim.

“There are times in the process where the politics are completely irrelevant and should absolutely be taken out of it,” says Valentine.

“Quite often it is about just saying we are doing it - and then narrowing the discussion down to the details.”

  • London First is holding its inaugural London’s Infrastructure Summit on 27 March 2014 which is supported by NCE and includes speakers from across politics and infrastructure including the London Mayor, Lord Deighton, Sir John Armitt and Lord Adonis. For details go to www.londoninfrastructuresummit.com

 

 

 

Aviation

Aviation

Short term: Allow more intensive use of current assets at London’s airports. Long term: A clear policy framework to enable new runways to be built

 

 

London Underground

London Underground

Continued investment to upgrade the network plus go ahead for the Northern Line Extension to Battersea

 

 

Rail-pre 2020

London Underground

Completion of Crossrail and Thameslink projects; investment in capacity and improved reliability on other key commuter and overground routes

 

 

Housing

Housing

Policies to enable more than 40,000 homes to be built a year

 

 

Rail-post 2020

Rail post 2020

Go ahead for Crossrail 2 with services opening from 2030. Estimated cost: £15.7bn - 19.7bn. Go ahead for High Speed 2 - estimated cost £42bn

 

 

Telecommunications

Telecommunications

Completion of superfast broadband infrastructure and 4G superfast wireless broadband infrastructure

 

 

River Crossings

River crossings

New £600M Silvertown tunnel; new £500M Thames crossing between Greenwich and Newham, New £1.2bn to £5bn Lower Thames Crossing

 

 

Power Supplies

Power supplies

Focused policy to secure future generating capacity; completion of the National Grid super highway; expanded distribution network

 

 

Roads

Roads

Implementation of the Roads Task Force plan for at least £30bn of investment over the next 20 years. Proper consideration of the wider use of road charging

 

 

Water, Sewerage and Waste

Water, sewage and waste

Go-ahead for the £4.2bn Thames Tideway super-sewer project plus continued investment to upgrade the network

 

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