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| Is government spending on roads and railways a good idea? | Is government spending on roads and railways a good idea? |
| (about 1 hour later) | |
| The Conservative government seems to be taking a new tack. | The Conservative government seems to be taking a new tack. |
| It is already planning to spend lots of money on big projects like HS2, a new Hinkley nuclear power station, and maybe even a new airport runway in south east England. | It is already planning to spend lots of money on big projects like HS2, a new Hinkley nuclear power station, and maybe even a new airport runway in south east England. |
| Now the new Chancellor, Philip Hammond, is in favour of spending more money on houses and transport. | Now the new Chancellor, Philip Hammond, is in favour of spending more money on houses and transport. |
| It seems that spending on infrastructure, as part of a plan of economic management, is back in vogue. | It seems that spending on infrastructure, as part of a plan of economic management, is back in vogue. |
| So, BBC news asked some experts to ponder the vital question: is this a sure-fire way to boost the economy, or can it be a waste of money? | So, BBC news asked some experts to ponder the vital question: is this a sure-fire way to boost the economy, or can it be a waste of money? |
| Professor Michelle Baddeley, UCL | Professor Michelle Baddeley, UCL |
| Michelle Baddeley is a professor of economics at University College London. | Michelle Baddeley is a professor of economics at University College London. |
| She points out that money spent on big projects gives an immediate short-term cash boost to the economy, which can last a few years. | She points out that money spent on big projects gives an immediate short-term cash boost to the economy, which can last a few years. |
| But even if the projects seem obviously beneficial, the longer-term effects can be much harder to measure, with many unknowns. | But even if the projects seem obviously beneficial, the longer-term effects can be much harder to measure, with many unknowns. |
| "That's part of the debate about HS2 for instance. How is access to high speed rail going to affect people's productivity at work?" she asks. | "That's part of the debate about HS2 for instance. How is access to high speed rail going to affect people's productivity at work?" she asks. |
| "If they are sitting on a train doing nothing them it is not going to be good for their productivity, so the quicker the train journey and the quicker they get to work, the better. | "If they are sitting on a train doing nothing them it is not going to be good for their productivity, so the quicker the train journey and the quicker they get to work, the better. |
| "But if they work on the train that changes the calculations a bit," she adds. | "But if they work on the train that changes the calculations a bit," she adds. |
| The economic benefits of infrastructure spending can even be hard to spot, let alone measure, even if you are sure they must be there. | The economic benefits of infrastructure spending can even be hard to spot, let alone measure, even if you are sure they must be there. |
| So what should a government, with competing demands on its money, do? | So what should a government, with competing demands on its money, do? |
| "The idea of an infrastructure commission is a good one," says Prof Baddeley. | "The idea of an infrastructure commission is a good one," says Prof Baddeley. |
| "You can get people who are as impartial as possible to look carefully at each business case." | "You can get people who are as impartial as possible to look carefully at each business case." |
| Professor Nicholas Crafts, Warwick University | Professor Nicholas Crafts, Warwick University |
| Nick Crafts is a professor of economic history, and he thinks that the results of spending on economic infrastructure have been a mixed bag. | Nick Crafts is a professor of economic history, and he thinks that the results of spending on economic infrastructure have been a mixed bag. |
| Some projects, like the Channel Tunnel, have been extremely expensive compared with their benefits. | Some projects, like the Channel Tunnel, have been extremely expensive compared with their benefits. |
| And he says there are obvious question marks about the benefits of HS2, the planned new rail link between London, Birmingham and the north of England. | And he says there are obvious question marks about the benefits of HS2, the planned new rail link between London, Birmingham and the north of England. |
| Short term spending may pump money into the economy and then be re-spent, but Prof Crafts thinks this benefit can be overstated. | Short term spending may pump money into the economy and then be re-spent, but Prof Crafts thinks this benefit can be overstated. |
| So what about improving the economic capacity of the economy, long term? | So what about improving the economic capacity of the economy, long term? |
| "It is possible to work out roughly what the right level of public spending is to sustain the growth of the economy and prevent bottlenecks," he says. | "It is possible to work out roughly what the right level of public spending is to sustain the growth of the economy and prevent bottlenecks," he says. |
| "Before the banking crisis the right number was about 2.5% of GDP spent on public capital each year and since then we have been spending about 1.5% of GDP. | "Before the banking crisis the right number was about 2.5% of GDP spent on public capital each year and since then we have been spending about 1.5% of GDP. |
| "But since the crisis, the economy has not grown very much, so the question that is unresolved is whether there is a "new normal" in which the economy will never grow more than quite slowly - if so, the economy will not need so much public capital," he explains. | "But since the crisis, the economy has not grown very much, so the question that is unresolved is whether there is a "new normal" in which the economy will never grow more than quite slowly - if so, the economy will not need so much public capital," he explains. |
| Dr Alex Trew, University of St. Andrews | Dr Alex Trew, University of St. Andrews |
| Alex Trew, lecturer in economics, says that government money spent on infrastructure is not always a good thing and can certainly be wasted . | Alex Trew, lecturer in economics, says that government money spent on infrastructure is not always a good thing and can certainly be wasted . |
| For a good example he suggests looking at China where six-lane interstate motor ways have been built but which are hardly used. | For a good example he suggests looking at China where six-lane interstate motor ways have been built but which are hardly used. |
| That points to a greater truth. A top-down approach can lead to wrong decisions. | That points to a greater truth. A top-down approach can lead to wrong decisions. |
| "It is hard for a government to know what to spend its money on when it comes to infrastructure, which is why it gets into such a pickle when it comes to decide," he says. | "It is hard for a government to know what to spend its money on when it comes to infrastructure, which is why it gets into such a pickle when it comes to decide," he says. |
| "It doesn't know how to pick the right areas or best parts of the country to connect up." | "It doesn't know how to pick the right areas or best parts of the country to connect up." |
| Fundamentally, Dr Trew says, it is very complex to work out what the long term impact will be of any big spending decision. | Fundamentally, Dr Trew says, it is very complex to work out what the long term impact will be of any big spending decision. |
| "We still see the impacts today of investments made in the industrial revolution, so the effects can be very long-lasting" he says. | "We still see the impacts today of investments made in the industrial revolution, so the effects can be very long-lasting" he says. |
| "But there are lots of complex relationships between things, because people's decisions about where to live, and business decisions about where to put factories and offices, change," he adds. | "But there are lots of complex relationships between things, because people's decisions about where to live, and business decisions about where to put factories and offices, change," he adds. |
| Christian Wolmar, transport writer and campaigner | Christian Wolmar, transport writer and campaigner |
| Christian Wolmar, likes to point to the most recently opened new railway in the UK as a good example of the public good that can come from infrastructure investment. | Christian Wolmar, likes to point to the most recently opened new railway in the UK as a good example of the public good that can come from infrastructure investment. |
| He is referring to the resurrected Borders railway line which runs south from Edinburgh, through Midlothian, to Galashiels and Tweedbank. | He is referring to the resurrected Borders railway line which runs south from Edinburgh, through Midlothian, to Galashiels and Tweedbank. |
| It opened a year ago with passenger numbers already much higher than predicted. | It opened a year ago with passenger numbers already much higher than predicted. |
| Mr Wolmar says it is a good example of how railways create wider economic wealth. | Mr Wolmar says it is a good example of how railways create wider economic wealth. |
| "For tourism, it has been highly successful in attracting more people," he says. | "For tourism, it has been highly successful in attracting more people," he says. |
| "The northern bit of the line has clearly led to greater used by commuters so house prices are higher, making houses more desirable and stimulating housing demand. | "The northern bit of the line has clearly led to greater used by commuters so house prices are higher, making houses more desirable and stimulating housing demand. |
| "It has reduced the amount of traffic on the roads, which helps even those people who don't use it. So it has done everything a railway line is supposed to do," he adds. | "It has reduced the amount of traffic on the roads, which helps even those people who don't use it. So it has done everything a railway line is supposed to do," he adds. |
| Professor Anne Power, London School of Economics | |
| Anne Power, professor of social policy, argues that the bigger the investment project, the larger the delays and thus the more problems that can be created. | |
| As a result, she thinks that investment in smaller scale projects can in fact bring more benefits. | |
| "Programmes such as Labour's Decent Homes investment, or investment in energy saving for existing housing stock, would be much more managed and dispersed," she argues. | |
| "The work can be done at ground level by local companies and so there is more local impact on the local economy. It leads more directly into local jobs. | |
| "Another example is investment in train rolling stock," says the professor. | |
| "More modest investment in existing stock would have a much better economic impact than HS2 for example, the impact of which may not be felt for many years and the costs of which are huge." |