Monday, February 09, 2009

LibDems All Over the Place on Infrastructure Investment

Having praised the LibDems earlier today for setting out where they want to cut public spending, I am afraid that I am now going to revert to type. A Conservative MP has just sent me a link to the Hansard of their Opposition Day debate last Monday on the recession titled GOVERNMENT CAPITAL EXPENDITURE. The motion in the name of the economic guru (at least in the media's eyes) that calls himself Vince Cable ...
.... calls on the Government to immediately bring forward funding for capital projects, particularly for schools, colleges, social housing, public transport and environmental works, all of which will create assets for the taxpayer and generate future income as well as countering recession in the short run.

During the debate, Vince Cable said...
Why is public investment so important in a recession? Partly because it creates employment. There is a big opportunity cost to the alternative of not investing: people remain unemployed. Some 100,000 construction workers have already been laid off in this recession. The figure was 300,000 at the peak of the last recession in the early 1990s, and there is a reasonable expectation that the number of unemployed construction workers in this recession will be even bigger than that.
Indeed. And yet only four days later Nick Clegg wants to cut £3 billion out of capital expenditure by slashing the roads programme by 90%. A case of the left hand not knowing what the right hand is doing? It would be interesting for an economist out there to calculate how many jobs would be lost by this irresponsible action.

I look forward to LibDem MPs and candidates explaining to their constituents why the bypass for which they campaigned won't be built, or why, for example, the last remaining stretch of single track of the A11 in Suffolk won't be dualled, or why the A47 in Norfolk won't be upgraded. There will be many other examples.

Essentially, the Lib Dems advocated additional expenditure on capital projects in a recession because it ‘creates jobs’ and ‘leaves us with an asset’. I am not quite sure how this approach is consistent with scrapping roads building.

10 comments:

Colin said...

Vince Cable - economic guru my aunt's a*se.

As I've said before - more flip flops than Gandhi's cobbler

Advanced Media Watch said...

The Lib Dems are a fantastic party, so long as they stay in opposition

Antony said...

And yet the LibDems on Norwich City Council voted in favour of dualing the A11 ...

martin day said...

LD LD LD - Out Out Out!

They are the ultimate say one thing to one crowd and then another message to the next! LD's need wiping out at the next election!

Maybe Yoda Cable is going to go back to Labour after many years in the LD wilderness?

See below for the reasoning of Cable's possible lurch to Labour!

http://nickcleggneilkinnock.blogspot.com/

lordrosemount said...

Does anyone know whether the 90% cut in road budgets they're now proposing means that they've effectively scrapped their national road pricing policy? National road pricing, whatever we think of its merits or demerits, would clearly involve significant upfront costs, and presumably these fund part of their plans for what to spend the road budget on - so if they're cutting the budget, does that mean they're scrapping that policy also?

It's possible, I suppose, that they're planning on paying the road pricing costs from a different budget - but if that's the case, they'd still have to find the money for that extra budget from somewhere, which already undermines the claim to have found genuine savings.

percepied said...

Nick Clegg was interviewed on Five Live this afternoon and was pressed on his policy of canceling the road building programme. Unless i misunderstood him, he seemed to suggest he could find money for this later by canceling Gordon's VAT cut and the 12.5bn this will squander. Either he is very optimistic that there will be an election in the next 3 months - and that the Lib Dems will win it - or he doesnt grasp the fact that the VAT cut money has already been pissed away and can't be redirected (unless he plans to increase VAT above 17.5% to try to get some back)

Beowulf said...

The Lib Dems plan to invest in UK infrastructure - it just so happens that their focus is on public transport, and particularly high speed rail. This obviously ties in with their stance on environmental issues, unlike the Tory/NuLab approach - a true example of opportunistic and fragmented policy-making.

Lola said...

It's economic bollocks whatever they propose. I quote:

"Again, here is my argument in three sentences.
1. Bailouts and stimulus plans must be financed.
2. If the financing takes the form of additional government debt, the added debt displaces other uses of the same funds.
3. Thus, stimulus plans only enhance incomes when they move resources from less productive to more productive uses.
Are any of these statements incorrect?"

Eugene F Fama.

If the State sepnds money on something, its people cannot. Is the State better at the efficient allocation of capital? No it is not.

Dan Hassett said...

Does this mean that they will stop taking photos of each other sitting next to potholes demanding more money should be spent on roads? Thought not.

Simon Gardner said...

Lola said... “If the State sepnds money on something, its people cannot.”

Err no. Did Keynes teach you nothing?