Opinion: Osborne’s NIC must deliver substance over stunt

Politicians are, of course, political, and seeking advantage over your principal opponents is part and parcel of politics.

Although it was inaccurately and excitedly spun as a defection (temporarily stepping down from the Labour whip in the House of Lords is exactly what both Chris Smith as chair of the Environment Agency and Jeff Rooker at the Food Standards Agency did to signal political neutrality while holding those posts), George Osborne’s appointment of former Labour cabinet member Andrew Adonis to lead an independent Infrastructure Commission may just be a sign of that rare phenomenon in politics – an idea that most agree makes sense.

John Armitt’s review of infrastructure, undertaken on behalf of Ed Balls and the Labour treasury team before the general election, recommended the new Commission. A body independent of politics, to determine priorities and press the government to decide, was deemed crucial to the future successful delivery of large infrastructure projects, and was a part of Labour’s manifesto in May.

While David Cameron said it wasn’t needed, it seems George Osborne might have now recognised the significance of the intent behind the policy, and the urgency of the case.

Much of our infrastructure needs to be renewed. There is a continuing need to not only rebalance the economy sectorally, but also geographically away from the south east corner of England. This is as true in transport and housing, as in energy and water. There have rarely been better economic circumstances to make the investment while capital is available and relatively affordable.

With the availability of new technology to make grids more efficient and flexible, the appalling standard of energy efficiency of much of our building stock, and need for low carbon generation to replace ageing plant – in energy alone, there is much to do. While it is an unfair reflection that politicians don’t like making decisions, it is true that political cycles make it difficult for governments to take long term decisions for which they may derive no immediate benefit.

The temptation is to delay what is difficult and look only to the next election.That often means limited choices, at higher costs, at a later date which the taxpayer and consumer will ultimately foot the additional bill for. 

Extending the horizons of government, and giving investors a sense that there is long term commitment, is part of the picture.

So, too, is giving trustees of pension funds the confidence that investing in infrastructure projects here is in the interests of their scheme’s members. Despite Danny Alexander making noise about this when he was in the Treasury, the record of UK pension schemes investing in infrastructure here is poor.

Osborne’s other announcement of bundling up schemes into larger units for investment might give them scale, but that is not the only barrier to making investment decisions. So too is the high risk profile as a result of sudden surprise changes in the government’s policy framework. Without clarity of intent and predictability of policy (expecting policy certainty is always going to be a forlorn hope), then many of those investments will not even be contemplated. And in energy policy, the driving force for the latest succession of sudden changes that have undermined investor confidence has been the very same George Osborne.

There is always the risk with his known delight in political chess moves, that Osborne is more interested in the stunt than the substance of his new take on infrastructure policy and Adonis’ appointment. I hope that suspicion is ill-founded, and he now understands the need for a stable policy framework alongside the independent commission.

If so, not only will many welcome a Conservative government implementing a Labour policy, but we could really begin to make progress towards meeting our significant national infrastructure needs.

Former MP Tom Greatrex held the position of shadow energy minister in the previous parliamentary term