Rishi Sunak’s dithering and doubting over key infrastructure projects and the green agenda is damaging the UK’s prospects for economic growth and our global reputation, writes Richard Steer
One of the privileges I enjoy in my role is having the opportunity to meet business people from around the world who shape the built environment on a global stage. In these situations, the reputation of the UK is paramount.
With limited exceptions, we are regarded as an important and relatively stable market in which to invest and operate. London alone had a GDP of around £497bn in 2020 and output is now 4.4% above pre-pandemic levels. It is by far the fastest growing part of the UK.
This position is by no means guaranteed, however. The prevarication and debate over HS2 has the potential to considerably upset the apple cart and is not something I welcome. The scope of the project has already changed three times in three years – with each change drawing criticism at home and disparaging glances from investors abroad.
Rumours of overspend and complaints of project drift are all to be expected with a programme of this scale, but they should not deter the government from providing a high-speed link that can act as a bridge between the more prosperous South-east and aspirational North.
Take the London 2012 Summer Olympics, rightly regarded as a triumph which boosted the perception of UK plc. Recent numbers from the UK department of trade and industry suggest that the UK economy gained over £13.3bn in benefits from its staging. Most do not now refer to the fact that it also came in nearly three times over budget!
HS2 has even greater potential to deliver economic benefits in the long term if the government is able to hold its nerve, address the issues and proceed with the original blueprint.
To continue its growth, London needs input from the likes of Birmingham, Manchester and Leeds – and those cities need faster, more reliable and fluent access to their neighbours and the capital to enhance their development. That is to say nothing of the needs of the 30,000 people already working to deliver the project and the businesses investing in these areas, based on the promise of improved connectivity.
The tone for business is set by our politics and when policies are debated to death and revised or revisited so often it creates jitters
I will admit that I am pleased I am not a politician seeking to balance financial priorities, and I understand that it is impossible to do everything all at once. But the yo-yoing and U-turns are not good for business.
Our global partners hate indecision and uncertainty. This has been the modus operandi of much less developed economies than our own and for it they have paid the price. The tone for business is set by our politics and when policies are debated to death and revised or revisited so often it creates jitters.
Tom Wagner, the American chair of Birmingham City FC, has already evidenced this point, writing to the PM to urge the government to “honour its commitment” to deliver on HS2 in full. He warned that “any deviation could result in a loss of investor trust and this would have a considerable negative impact on the UK”.
I agree. The reputational damage of scrapping a transformational project such as HS2 would be enormous, and the suggestion that the PM was initially thinking about announcing his decision during the Tory party conference in Manchester would have been an act of political self-evisceration not seen since Liz Truss and Kwasi Kwarteng gave their first and only budget.
In Rishi Sunak’s previous, recent U-turn last month, he appeared to row back on the UK’s commitments to invest in the green economy. I do not wish to make a political point, rather one of economics and perception.
To use the US as an example: it has initiated a huge green recovery plan with an investment of $370bn to create jobs and reduce carbon emissions by 40% by 2030. This plan certainly did not have universal support but it is tying American economic self-interest to the sustainability agenda; a kind of eco-camouflage.
In the UK, we have a large EV battery plant planned for Bridgwater in Somerset and car manufacturers are moving jobs here on the back of the green economy. It therefore seems paradoxical to start quibbling about green refuse bins and ULEZ charges.
We do still have a huge well of goodwill and brand equity from which we can draw
The issue ultimately is not whether it is right or wrong to introduce perceived “green taxes”, but the fact that UK policy seems flaky and changeable. This is not good for our image as a safe investment opportunity. Its perversity annoys our EU neighbours and bemuses our American allies.
Having an outside perspective on the way the world views the UK is both helpful and revealing. From my travels I can assure you that we do still have a huge well of goodwill and brand equity from which we can draw. Let’s not fritter it away with short-term thinking, shallow sound-bites and reverse-ferret policies.
Richard Steer is chairman of Gleeds Worldwide