The government could boost the economy by more than £33bn per year and alleviate the housing crisis if it increased spending on national infrastructure projects, according to a new report commissioned by the mayor of London.
The research, carried out by Greenwood Strategic Advisors, shows investment in projects in the capital could add 400,000 new jobs and a “similar number” of new homes. The report examines a number of infrastructure schemes in London, including Crossrail 2, the extension of the Croydon tram network and the extension of the Bakerloo line, and concludes that increased investment would lead to £33.8bn added to the economy each year, and £9.8bn in additional Treasury tax take per year.
Craig Stephens, deputy chief executive of Greenwood, said public infrastructure investments are currently stuck in a vicious cycle.
“Funding constraints delay or prevent such investments and the public benefits and tax revenues they bring. This perpetuates the funding constraints that are limiting investment,” he said.
Part of the solution to this problem can be solved by calling on the resources available in the capital, said Jasmine Whitbread, CEO of London First.
“Money is tight for the Chancellor but London can help bridge the gap, as we’ll do for Crossrail 2 by matching central government investment pound for pound. The problem isn’t that government has over-invested in London, it’s underinvested across the UK,” she said.
Sadiq Khan, the mayor of London, said the report shows that investment in infrastructure should not be a “zero-sum game”, as it highlights how increased spending outside the capital could lead to new jobs, homes and prosperity across the UK.
“It also proves that increasing infrastructure investment in the short term will reap enormous benefits in the long term,” he said.
“As a country, we need to move from a system of underinvestment, low growth, reduced tax take and constrained public funding toward a new philosophy of sensible investment in high-growth schemes that deliver economic prosperity, more homes and higher tax revenues.
“Good quality, modern infrastructure, including new roads and railways is crucial if this country is to remain a global economic powerhouse – so it is vital that we see increased investment across the country and not just here in London.”