Grasping the case for growth in the UK starts with clear political decisions - today not tomorrow.

Jo Valentine
26 February 2014

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As the UK’s economy picks up, one of the stranger sounding complaints is that we are suffering the wrong kind of growth, says London First chief executive Baroness Jo Valentine.

There’s a concern that businesses aren’t investing enough to boost the economy and we are relying too much on consumer credit.

That maybe the case elsewhere but it’s certainly not true that businesses in the infrastructure sector are desperate to hoard cash.

In fact there is a stampede of investors from around the globe wanting to put their money into UK infrastructure. That is because the UK is seen as a stable environment.

We privatised key infrastructure assets like water, energy and airports decades ago and led the world in establishing independent economic regulators to guarantee a fair and predictable return on investment. 

So if you are a pension or sovereign wealth fund and want a steady rate of return then UK infrastructure is a good bet. Just look at recent overseas investment in London’s existing water, electricity and airport infrastructure for example. 

But this rosy picture darkens when it comes to opportunities to invest in the new infrastructure so essential to support the UK’s continued growth. 

In too many sectors the UK is positively myopic when it comes to grasping the case for growth. Political decision makers continue to underperform in taking the clear and consistent long-term strategic decisions that are so badly needed.

The Japanese have made a virtue of ‘Just In Time’ manufacturing, where everything works just the moment it needs to, making for highly efficient output.

Meanwhile the UK too often runs a Just In Time system of its very own – where things happen at the last possible moment and only when the terrible consequences of inaction finally get too close for comfort.

We have seen, time after time, Parliament after Parliament, a lack of clarity from successive governments over the country’s long term aims. Take Heathrow and Gatwick: global investors are clamouring to invest right now in new – and badly needed extra capacity – but until the government decides on a national strategy nothing will happen.

Yes, we have the Airports Commission, but it won’t report until 2015 and, if 50 years of inactivity is anything to go by, it’s going to be one heck of a fight to get our politicians to sign up to a growth plan that will stick.

All the while investors and firms watch the rest of world getting on with it and wonder if there isn’t somewhere more dynamic and progressive that they might put their money.

We’ve seen similar indecision in energy generation. Do we want nuclear? Do we want gas? Do we want renewables?  For the first time since the 1970s we’re now faced with demand exceeding supply. 

We still have time to take the right decisions, but short term concerns about the cost of living have encouraged our politicians to join a race to the bottom of gesture politics and symbolism.   

Instead of erecting barriers to potential investors we need to welcome them with open arms and grasp just how damaging this political hand wringing and gnashing of teeth is.

And therein lies the right kind of growth.

Baroness Jo Valentine is chief executve of London First

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For details of the forthcoming London First Infrastructure Summit on 27 March click here.