Swift infrastructure investment needs to focus on road network

Poor state of transport network cost small firms £5,000 over a year, says FSB

Government should target the road network for its plans to speed up investment in infrastructure as the poor state of the transport network has cost small firms up to £5,000 over the last 12 months, according to the Federation of Small Businesses (FSB).

The news comes after deputy prime minister Nick Clegg last week announced plans to “accelerate” government capital spending projects, conceding the government must now perform a “gear shift” to ensure state spending and infrastructure play their part in Britain’s economic recovery.

In a speech at the London School of Economics, Clegg said chief secretary to the Treasury, Danny Alexander, will take charge of the execution of already announced capital programmes, which if delivered on time can boost growth by “stimulating demand and raising productivity.” Alexander has been appointed to “handpick” 40 of the biggest infrastructure projects “important to growth” that will be given “special priority status”.  The spending reflects money already committed by the chancellor in his comprehensive spending review and Treasury sources said there was no question of bringing forward funds from future years to invest in the economy earlier. Clegg has been working on the drive with Transport Secretary Philip Hammond with the statement signed off by the cabinet yesterday.

Included in the 40 projects are the roll out of high-speed broadband; the efficiency of the national grid; major rail improvements, such as Crossrail and Great Western electrification, and projects to reduce road congestion which are targeting pinch points, including those on the M1 and the M25. Not all infrastructure projects will be expedited – mainly those investments that “transform growth potential”.

The FSB welcomed the government’s approach but warned that more needs to be done to address the problem of congestion and the state of repair of UK roads, in order to get businesses moving and growing. At a time when small firms’ cash-flow is already being squeezed, the cost to small firms in lost productivity and damage to their vehicles is one that significantly hampers their growth.

In a new report, ‘Small Business and Infrastructure: Transport’, the FSB is calling on the government to rebalance the funds collected from road users and the amount invested back into improving the road network, to prevent the poor state of roads and high levels of congestion from costing small firms.

Currently, HMRC collects £48.2 billion through taxes such as fuel duty and vehicle excise duty, but only spends £4.8 billion of that on network improvements and £5 billion on road maintenance. The FSB believes this is a huge imbalance. Road users, including small businesses, are seeing little benefits in maintenance and improvement of the road network.

 

To view a copy of the report, ‘Small Business and Infrastructure: Transport’, go to www.fsb.org.uk/policy/Publications