Boris Johnson Urged to Look Beyond Big Ticket Spending in Budget

(Bloomberg) --

U.K. Prime Minister Boris Johnson should look beyond large transport projects to ensure the billions of pounds of planned extra spending boosts the whole U.K. economy, according to the Resolution Foundation.

Johnson's budget next week is expected to raise capital spending by 20 billion pounds ($26 billion) a year, taking investment to levels last sustained in the 1970s. The boost is aimed at “leveling up” poorer regions in the north and midlands that backed his Conservative Party for the first time in December's general election, and is expected to include significant spending on national transport infrastructure.

But the Resolution Foundation said Wednesday that the government needs to go further to help heal the glaring disparities between regions. Public investment per person in London and southeast England combined are currently more than a third higher than the average elsewhere while, on a region-by-region basis, the differences are starker still. The capital's spending per head of 1,456 pounds is more than double that of the East Midlands, Yorkshire or the South West.

Fixing the problem will also require a radical change to the way governments go about delivering projects. The think tank said that investment has been plagued by volatility in spending, poor selection of projects and a unwillingness to devolve management to bodies outside central government. As a result, Britain loses 10% of the potential value of its investment relative to Germany, the most efficient advanced economy.

“While an ‘infrastructure revolution' is desperately needed, it's equally important the government get its priorities right and ramps up the focus on delivery as much as it ramps up investment spending, otherwise it risks wasting billions of pounds,” said Cara Pacitti, a researcher at the Resolution Foundation.

Johnson's administration should also tackle years of underinvestment in hospital equipment and social housing, and spend more to achieve a government target of net zero carbon emissions by 2050, the Resolution Foundation said.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, David Goodman, Jill Ward

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