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CBI warns against infrastructure spending cut mistakes

The Government is in danger of repeating past mistakes with the Comprehensive Spending Review if it fails to give the necessary priority to investment in infrastructure, the Confederation of British Industry (CBI) said today.

The employers’ group believes that key ministerial decisions on infrastructure spending are imminent.

In a speech to businesses in the East of England, CBI deputy director-general John Cridland said the UK already lags well behind its competitors in its spending on infrastructure such as roads and rail.

He pointed out that, in the years when government spending rose between 2000 and 2007, the UK’s investment in transport was the lowest of all OECD countries.

“The UK’s infrastructure is poor by international standards and is a serious barrier to greater efficiency and to economic growth.”

John Cridland, CBI

He urged the coalition Government to make some “smart choices”, return capital spending to 2.25% of GDP − rather than the planned 1.1% of GDP by 2014-15 − as soon as possible, and “appreciate the consequences of not giving infrastructure the attention it deserves”.

Cridland said reducing spend on transport links might seem a politically saleable option, but it is not in the country’s long term interests.

He said: “The UK’s infrastructure is poor by international standards and is a serious barrier to greater efficiency and to economic growth.

Relentless drive for value

“Infrastructure investment can contribute to the urgent task of reducing the deficit if there is a relentless drive for more value for money in the way it is delivered, as is being demonstrated by Crossrail.”

Cridland also said there are some “question marks” over certain areas of government policy. These include energy, regional policies and planning, and the new Local Enterprise Partnerships.

“Plans for new Local Enterprise Partnerships are a cause for concern,” he said. “We need assurance that the LEPs should not become too fragmented to offer adequate strategic direction, and as to whether they’ll be genuinely business-led and focused on sustainable economic growth.”

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