A leading infrastructure firm has added to the chancellor’s suggestion that he will back ‘modest, rapidly deliverable investments’ with a call for a new, broader type of economic modelling for infrastructure projects.
In a report published on Thursday, Balfour Beatty points to ‘a number of challenges which must be addressed in order for the “small scale big impact” strategy to succeed’, highlighting in particular the way the value of schemes is calculated.
It states 'assessments tend to underestimate the demand and economic and regeneration benefits new transport investment could bring' and also argues that the way the impact and value of flood defences is calculated skews the system towards wealthier areas where property prices are higher.
The river Aire in Leeds
The report recommends giving consideration to alternative economic modelling, ‘which makes a more robust economic case for infrastructure investment more broadly across the country’.
The report describes Mr Hammond's preference for ‘investment that will not only deliver short-term demand stimulus but will also address longer-term, structural problems in the economy’ as a two-part test to determine the viability of any new infrastructure investment.
Among the type of schemes suggested by the report as meeting the two-part test are road, rail and flood defence schemes, with investment not directed solely towards new infrastructure.
It argues that maintenance also generates significant economic benefits, including repairing and improving local roads, railways and flood assets, as well as public realm work to support regeneration.
The report says there are a number of ‘shovel-ready’ flood defence schemes across the UK, such as the £190m flood alleviation scheme in Leeds.
In September, Mr Hammond, who will make his Autumn Statement on 23 November, told MPs: ‘Often it is modest, rapidly deliverable investments that can have the most immediate impact, particularly on the road network, but also in some places on the rail network.’
In its report, Balfour Beatty urges ministers to ‘take advantage of the current ultra-low government borrowing costs’ to finance spending on 'shovel ready' infrastructure.