Coffee House

Nick Clegg: We made a mistake on infrastructure spending

24 January 2013

9:29 PM

24 January 2013

9:29 PM

The GDP figures for the final quarter of 2013 are out tomorrow morning, and with them will come the usual round of commentary from government and opposition. They’re not expected to be good: Citi predicts that the ONS’s first estimate will show a contraction of 0.1 per cent in Q4. So perhaps that’s why Nick Clegg decided to get in early and taken a shot at his own government’s economic policy this evening.

Speaking to Paul Waugh and Sam Macrory in the House magazine, the Deputy Prime Minister had the following to say:

‘If I’m going to be self-critical, there was this reduction in capital spending when we came into the Coalition government. I think we comforted ourselves at the time that it was actually no more than what Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop-off in capital investment. But I think we’ve all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible.’


He then adds that if tomorrow’s figures do suggest Britain is going into a triple-dip recession, one of the big things the government should do is on capital investment:

‘And secondly, wherever we can we’ve got to mobilise more capital investment into productive capital because the economic evidence is overwhelming. It helps create jobs now, people go onto construction sites, it raises the productive capacity of the economy in the longer run.’

It’s difficult not to read this as an attempt by the Deputy Prime Minister to distance himself from the Treasury, which, even in these days of differentiation, is significant. While the Coalition partners are becoming more relaxed at having their own stance on an increasing number of policy areas, they have, until now, continued to make the effort to remain united on the economy, save the odd bit of freelancing from Vince Cable. They repeated that this was their central mission when launching the mid-term review at the start of January. It will be interesting to see whether Clegg’s Lib Dem Treasury colleague Danny Alexander repeats the criticism in the next few days, too.

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Show comments
  • HJ777

    I’m not so sure that Clegg is right.

    In the longer term, the infrastructure spending he is talking about MAY generate faster economic growth. But in the short-to-medium term, in a recession or immediately post-recession, investing more in roads and railways won’t help as it takes a long time for these to come into being (and in any case, if you could do them quickly, there is less demand for them in a recession). Similarly for hospitals – it may sound callous to say so, but they primarily cater for the old and sick who are no longer economically productive, so they generate little economic return.

  • Chris lancashire

    I would be extremely wary of suddenly boosting public sector capital expenditure having seen, at first hand, the waste that Balls’ Building Schools for the Future created. Perfectly good facilities were bulldozed to make way for this Balls masterplan. A pity that, at the time, that CapEx wasn’t directed better towards decent infrastructure projects such as roads or power stations.
    If Clegg wants a boost to CapEx it’s easy – grant 100% first year relief on all CapEx up to, say, £500k for plant, machinery and buildings – and let the private sector get on with it.

    • Ian Walker

      CapEx projects are, in a basic Keynesian way, a good way to grow the economy – borrow money now, invest in the country, tax receipts increase, pay off the borrowing.
      The only problems are when a) You don’t use local contractors to do the work, so the ‘investment’ disappears from the targetted area rapidly (the Keynesian Multiplier effect, or rather the absense of it) and b) You don’t pay off the borrowing in good time (the Brown Doctrine) for political reasons
      Sadly, British govermnets of either stripe have been spectacularly bad at this, often awarding contracts to German, Canadian, American, French or Indian companies who steadfastly refuse to pay taxes, and then when the time comes to pay the piper, metaphorically hiding behind the sofa until the bailiff clears off.

  • George_Arseborne

    Cameron on the air:the national debt is falling from 800bn to 1.111trn. FALLING? Is it an economic ignoramus or having a PM who can not distinguish between debt and deficit?. Then come along “I am sorry Clegg. Clegg, we pull off the drips just when the patients started healing. I am sorry it was a mistake. The economy big beast Ed Balls warned them and predicted triple dip recession which the nation is not fsr from now.

    • kyalami

      Big Beast Balls buggered it up in the first place. You can safely ignore anything he says. Indeed, you are strongly advised to do so.

  • Daniel Maris

    Triple dip….doesn’t sound too good. Long gone are the days when Fraser used to entertain us with those lovely coloured graphs showing zooming growth from the OBR and others – all in the future of course.

    • kyalami

      It all goes to show how effectively Brown sabotaged the economy, being spendthrift throughout. The Austerity Generation can thank good old Gordon for his unremitting efforts.

      • telemachus

        No no no
        We were growing in May 2010 until Osborne choked it off

        • kyalami

          We were GROWING DEBT to levels not seen in peacetime since Henry VIII’s reign. Debt so great that INTEREST on it alone exceeds the combined budgets for education and police. This was economic vandalism. If Brown had won another term, we’d be just like Greece now.

          • Colonel Mustard

            Indeed, but that disaster might have given birth to real change. As it is it appears that we only have more unaffordable big state and another Labour government to “look forward” to.

        • HJ777

          The so-called growth amounted to rather less than the rapid increase in borrowing and spending that the Labour government used to create it.

          In other words, they generated a negative return on the spending increase. How long do you think that could have continued for?

    • Noa

      A triple dip? And Clegg, like Brown, thinks the solution is to max out on the card and reach for another packet of Doritos?
      He should get off the couch, cut up the card and cut public spending by half, then halve it again and reduce taxation.

      But he just wants to follow the tried and tested route to failure.

  • HooksLaw

    The recent Autumn Statement announced additional infrastructure projects.
    I believe that shortfalls in departmental spending were going to be channelled into infrastructure spending as well
    The govt are also providing 40 billion of guarantees for infrastructure project.
    All this announced 3 months ago.

    There is nothing in what Clegg is quoted as saying that is materially different from what Osborn either did or said in his Autumn Statement.
    We await the next Spectator scare story with impatient interest.

  • lee taylor

    WTF? Why Isabel has my previous comment been removed?

    • HooksLaw

      Disqus is a bit of a pain – not least putting in extra blank lines

      Meantime unemployment is falling employment is rising. Car production/registrations rising. Funny old recession.

      You do wonder if aspects like on-line shopping is being taken into account.
      4Q for Germany was a contraction of 0.5%….

  • lee taylor

    Ahh so ITV edited his comments to exclude the bit where he compares it to the so called Darling plan. I wonder why?
    I don’t know about others on here but some on ITV seem to be as left wing as the BBC.

    • dalai guevara

      zzz…what about Jon Snow, he must not be to your liking either. You will find that it is Sky that is the only purveyor of red top news nowadays. Is that a bad thing?

      Have you ever studied the blog roll column next to your comment? Read out the name at the top of that list, and then ask yourself which shows he currently runs. I’ll make it easy for you: he’s got one on every day of the week, even (and especially) on a Sunday. And guess what hot shot, it’s on the BBC.

      So you are talking bollocks.

      • Vindice

        Sorry, are you arguing that Andrew Neil is both responsible for and typical of the character of ITV news, Newsnight, the breakfast program, the 6 and 10 o’clock news, the Andrew Marr show, Radio 4’s Today, the BBC comedy that passes political comment, the internal culture and governance of the BBC etc? Many unique men have prospered in all sorts of institutions. Some people will succeed anywhere because they’re too good to ignore.

        If you really believe what you’ve written, why not read Rod Liddle’s piece about Will Self becoming writer in residence at Radio 4 – specifically where Liddle recounts his experiences editing R4’s Today and his attempts to maintain a fortnightly counterpoint to Will Self from the Right.

        As for John Snow, he’s hardly quiet about his politics.

        • jazz6o6

          I watch the Daily Politics from time to time to see how Andrew Neil’s hair is getting on. It’s a trichological marvel.

        • dalai guevara

          My first point was that unlike some might believe, the BBC is not necessarily a ‘lefty-stance’ broadcaster. You list some shows, but how about the shows you care to omit, those of a gardening, dance, singalong and antiques trading and property chain line of nature? The messages here are subliminal, do not undervalue their impact.

          My second point was that as far as the news reporting is concerned, Channel 4 equally demonstrates that political positioning has nothing to do with who pays for program making. They both attack life from the same angle – if you want red top stuff, stick to Sky.

          You haven’t seen any ‘lefty’ TV yet – care to check out RT, notably Kaiser Report for some proper business intel? It will shock you how the rest of the world sees this corrupt excrement hole that is the Square Mile.

          • Colonel Mustard

            It’s a cultural thing rather than ‘lefty’ but since the leftist advance has been by a stealthy cultural revolution the distinction is probably academic. Even BBC drama contains subliminal propaganda messages that conform to leftist cultural stereotyping. Some of it is probably down to an anachronistic luvvie desire to be “edgy” which has now become just tedious and predictable. So we can expect full-on gay kissing wherever it can be contrived into a script, gay Alien queens, ethnic minority ‘placement’ (my favourite was the hijab wearing typist in MI5 whilst the Spooks went after Christian fundamentalist terrorists), and slants on history to discredit entrepreneurs, toffs, and other demonised class and cultural enemies whilst eulogising heroes of the people. And the inevitable dumbing-down so that various identity groups can “identify” with or “relate” to the programming as well as that horrible term “access”. It’s pretty much rotten to the core simply because the culture of the BBC is so conformist. If they were to take diversity seriously their ‘edginess’ would translate into presenting a balance of controversial viewpoints, including those from the right and other sexual and ethnic minorities. A cliché itself they have become a stodgy establishment of bien pensant, middle class, London-centric cultural Marxism.

            What is surprising is that BBC 4 still manages to push out a few objective programmes. And we have not yet been treated to Channel 4’s earnest promotion of Sharia law for us all by a Musim businessman.

            • dalai guevara

              Hahaha – you worry too much. As long as Kirstie Allsopp hosts a show or two on Channel 4, you’ll be catered for, Colonel. You make one good point of merit, which is the ‘London-centric bubble’ argument. Will we see a change for the better if Salford one day took over? Or would you rather see Canterbury indoctrinate us that it is somehow alright to be gay (if you abstained), but not a woman?

              • Colonel Mustard

                Well, I’ve never had an expectation of being “catered to” by TV! And with no disrespect intended to Ms Allsopp I’m afraid she does not “cater” to me either! I’d rather be provoked, challenged or enlightened which was rather my point. The BBC masquerades as supposedly doing that whilst churning out tedious and predictable conformity, probably because it precisely believes it has to “cater to” the audience and does so in the full panoply of lefty identity group politics! Rather than a stodgy diet of the left and the thick I’d appreciate a bit of the right and the cerebral now and then.

                • dalai guevara

                  I guess you have misinterpreted my initial comment in that regard. Cerebral activity is ‘catered for’ by the BBC, quite clearly for both sides of the spectrum, as in fact does the entire news landscape of Britain.

                  Everyone is free to consume vast quantities of content -whether it’s from Randall, Neil, Allsopp, Marr, Kaiser, parliamentary broadcasts or indeed the red top sector. It is up to you to feel ‘challenged’ by what is on offer – I personally would be inclined to seek that from opposing views, not from those which I in essence agree with.

                • Colonel Mustard

                  I seldom feel challenged by any of it. Most of it is hogwash or dumbed down pap. There is a complete lack of honesty and incisiveness. That was demonstrated to me last night when BBC 4 transmitted segments of the 1970s ‘Old Grey Whistle Test’ without Whispering Bob Harris in situ.

                  Contrary to your fevered presumption I don’t mind opposing views and am always set to be persuaded but lefty groupthink bilge and newspeak, backed up by girly squeals of “Racist! Racist! Bigot” if I should dare to dissent really doesn’t cut it. Don’t forget I am old enough and with an extensively adventurous global experience to compare the quantity of what passes now with the quality that passed before.

                • dalai guevara

                  That is of course appreciated. You will thus have come to realise that Russian TV is rather dull, or that the Germans run TWO competing ‘BBCs’, one centre-right, one centre-left, or that on the surface, the idea of American media pluralism actually resulted in an unbelievable amount of locally and nationally produced brainwash which is hard to take for someone who wishes to be challenged…

                  I guess what it all boils down to is that we are still getting a comparably good deal – but of course, some always see room for improvement.