By stewartb

The Chancellor of the Exchequer’s recent announcement of major infrastructure investments to catalyse UK growth seems to have received little attention from the mainstream media that supposedly ‘serves’ Scotland. However, what’s been lacking here is in contrast to commentary elsewhere, notably in the north of England.

An article in Bella Caledonia (February 3) by Neil Blain reflects on the news coverage in Scotland of the Chancellor’s big speech, or rather its near absence from most of the mainstream media in Scotland: ‘Reactions to the Silicon Valley and Heathrow announcements were more evident in England than Scotland, in the context of the ‘north vs south’ debate. (Which generally means England).’

The left/centre think tank, IPPR North based in Manchester commented on the Chancellor’s announcements: ‘… we need a growth strategy that unleashes that same dynamism in the Midlands and across the North.’ (And yes, ’the North’ in this context means the north of England!)

‘Growing airports mostly in the Southeast isn’t the growth story it’s stacked up to be.’

‘Overheating the South East in the pursuit of upticks in growth that are felt by the few won’t work. We urge the government to ditch the defaults and lean into a regionally roaring economy. It’s time for take-off – but not from Heathrow’.

Sources:  IPPR North (January 29, 2025) Rachel Reeves speech reaction: ambition for Oxford-Cambridge corridor must be extended across UK says IPPR’ and IPPR North (January 29, 2025) IPPR North reacts to Rachel Reeves’ growth speech (https://www.ippr.org/media-office/ippr-north-reacts-to-rachel-reeves-growth-speech )

By way of contrast, the London-based, left/centre Resolution Foundation commented (January 29): Chancellor adds concrete to the Government’s economic plans, but still lacks a Euro-vision (https://www.resolutionfoundation.org/press-releases/chancellor-adds-concrete-to-the-governments-economic-plans-but-still-lacks-a-euro-vision/ )

‘The Chancellor added plenty of concrete to the Government’s nascent economic strategy, setting out plans to build new railway lines, road tunnels and runways.’

‘This focus on rebuilding public assets – from a new Thames Gateway road-crossing to boosting transport links between Oxford, Cambridge and London, and within many of our major cities outside the South East – is long overdue, given the UK’s long-standing failure to invest in its future.’

I’m still looking for the Chancellor’s speech referring to new investments in ‘many of our major cities outside the South East’. I noted a reference to Manchester. Any others, anyone?

The Research Director at the Resolution Foundation is quoted: “The Chancellor today added concrete to the Government’s nascent economic strategy, with plans to build new railway lines, road tunnels and runways. The overarching theme of rebuilding Britain’s infrastructure is welcome after successive governments’ failure to invest in our future.” (my emphasis).

It’s notable how the director of this London-centric think tank interprets investment in SE England with ‘rebuilding Britain’s infrastructure’!  The Director adds: “And while attention has centred around building a third runway at Heathrow, successfully building 1.5 million homes across Britain will make a much bigger difference to people’s living standards, and to growth – if those homes can be built in areas with high economic potential.”

The IPPR North commentary reflects a concern about the south-east locus of the Chancellor’s announcements. The Resolution Foundation’s commentary is peppered with references to all the good things they presage for ‘Britain’. 

What Labour in government intends

The BBC News website (January 29) had a helpful article under the headline: ‘At a glance: what was in Rachel Reeves’s speech?’ In setting out what she announced regarding new infrastructure investments, it cautions: ‘many of the projects still need to go through a formal planning process so it could be years before building starts and the economy sees any benefit.’

Much delayed or deferred ‘gratification’ seems to be a characteristic of what the British Labour Party in government requires of the UK economy and voters. Recall the chair of GB Energy in the last few days confirming that Labour’s election promises of significant additional employment and a reduction in energy bills attributable to GB Energy would in reality be ‘a decades long project’!

Here is a summary of the places name-checked in Labour’s infrastructure investment initiatives, taken from the lengthy BBC report:

Heathrow Airport; City Airport, London; Stansted Airport; Luton Airport; Gatwick Airport; Doncaster Sheffield Airport; Manchester, including Old Trafford ‘football campus’; Oxford; Cambridge (including a University of Cambridge ‘innovation hub’; 4,500 new homes plus schools; new Cancer Research Hospital); an East-West Rail line in south east England; road upgrade between Milton Keynes and Cambridge; new towns in south east England; nine new reservoirs, including for Oxford and Cambridge; Lower Thames Crossing, Tilbury in Essex to Gravesend in Kent; investment in Cornish Metals; offshore wind farm developments off East Anglia and Yorkshire.

The BBC article also has this understatement together with an odd, perhaps a telling, implied justification: ’Most of the announcements were focused on England, where the government has greater controls over planning and infrastructure.’ So the focus is on England because elsewhere there is devolution?

Should we trust the British Labour Party in government NOT to follow Boris Johnson? Recall: “My argument to the Treasury is that a pound spent in Croydon is far more of value to the country, on a strict utilitarian calculus, than a pound spent in Strathclyde.” And “Indeed, you would generate jobs and growth in Strathclyde far more effectively if you invest in Hackney or in Croydon or other parts of London”.

However, perhaps as a sop to the UK outside England, the BBC article shares two additional extracts from the Chancellor’s speech:

1. ’Reeves claimed government backing for the Wrexham and Flintshire Investment Zone in Wales, announced last year, would attract £1bn to the area. Backed by the likes of Airbus and JCB, Reeves said the investment would create up to 6,000 jobs.’

Business News Wales (January 30) has this headline: ‘Investment Zone to ‘Transform North Wales into Hub of Advanced Manufacturing Excellence’. It reports a UK government investment of ‘up to £160 million over 10 years’.  For scale comparison, from the BBC’s review of Reeves’ speech: ‘The National Wealth Fund (NWF) announced a £28.6m direct equity investment into the mine’s owner, Cornish Metals Inc, on Tuesday’: this is one of the smaller announcements in financial terms which nevertheless exceeds by some way the Chancellor’s own chosen exemplar for Wales.

2. The BBC piece also has: ’Glasgow will be one of the first city regions to benefit from “provide deeper more focused” investment from the National Wealth Fund.’ ……. no me neither!

How has the BBC reacted?

The BBC News website (January 31, 2025) had this headline: ‘Is Rachel Reeves abandoning the North?’ The article, written by the BBC’s ‘Political editor, North East & Cumbria’, opens with this: ‘As I listened to coverage of Chancellor Rachel Reeves announcing her backing for airport expansion and a UK Silicon Valley in the south-east of England, I was driving through crumbling northern infrastructure.’

It goes on: ‘If you add in Labour’s decision to abandon plans to upgrade part of the A1 in Northumberland to dual carriageway, you can forgive the region for casting a rather envious glance at Rachel Reeves’ push for growth in the south. Never mind a third runway, we wouldn’t mind having a functioning flyover.’ (This BBC editor’s use of ‘we’ here is remarkable for someone more used to BBC  gaslighting ‘us’ in Scotland!)

The article goes on: ’Northerners are used to disappointment, but have we really been abandoned again in favour of the apparently easier growth hits available in the South?’

The BBC journalist look for crumbs of comfort:

• ‘Odd as it seems, Heathrow expansion at least could offer benefits. Newcastle has a daily link to the airport and, so it’s argued, can enjoy some collateral boost. And when it was last proposed, the new runway was set to offer a service between Teesside Airport and London.’

• ‘The chancellor has also talked about the role Teesside can play in manufacturing the new sustainable aviation fuels that will be needed to make the case for airport expansion.’

• ‘… it is the passing of powers and funding to Conservative Tees Valley Mayor Ben Houchen and Labour’s North East Mayor Kim McGuinness that she (i.e. the Chancellor) has sold as key to growth here.’

And the article acknowledges: ’The North still has no recent investment to compare to the billions put into London’s Elizabeth Line, and expecting southern success to trickle up the country has not worked for more than a century now.’

Meanwhile in Scotland ….

The nature of the Chancellor’s announcements for SE England – whilst newsworthy in a candidly negative way for the BBC Political Editor for North East & Cumbria,  prompting nothing less than a cri de coeur for his own patch  – appears to be of little or no consequence for the BBC’s equivalent in Scotland!

And let’s not forget the wider context. Remember the Westminster government’s long procrastination over support for the Carbon Capture Usage and Storage (CCUS) project Acorn in north-east Scotland, whilst pressing on with support for the HyNet cluster (North West England and North Wales), and the East Coast Cluster (Teesside and the Humber, NorthEast England).

The BBC News website (October 4, 2024) had this headline regarding these latter two CCUS projects: ‘Nearly £22bn pledged for carbon capture projects’. The BBC piece adds: ‘The government said the move would give industry confidence to invest in the UK, attracting £8bn of private investment, directly creating 4,000 jobs and supporting 50,000 in the long term.’

Then there is the imminent closure of the Grangemouth oil refinery.

From Insider magazine (January 22, 2025) ‘Grangemouth closure a ‘shining example of how not to do anything’ – Just Transition Commissioner says this ‘litmus test’ for the energy transition ‘didn’t do particularly well’. (https://www.insider.co.uk/news/grangemouth-closure-shining-example-how-34531989)

The Just Transition Commissioner, Richard Hardy is quoted from evidence given to Westminster’s Scottish Affairs Committee: “There needs to be, in our view, conditionality around the provision of public funds to people, particularly very rich people living in tax havens who own football teams who take public money and then spend that public money on divesting jobs in communities that are very precarious.”

(As an aside: you will recall that the Chancellor made mention in her speech of a development at Old Trafford, Manchester. The Manchester Evening News (January 29) quotes the Chancellor: “We are supporting key investment opportunities across the UK. The government is also backing Andy Burnham’s plans for the redevelopment of Old Trafford which promises to create new housing and commercial development around a new stadium, to drive regeneration and growth in the area.” And ‘Trafford council bosses backed the ‘once in a generation opportunity’ £4.2bn redevelopment plans this week.’ And more on scale: ‘The Old Trafford Regeneration Task Force is being chaired by Lord Sebastian Coe, who headed the London Olympics in 2012. He has said the project ‘could easily be the largest regeneration project in Europe’, eclipsing the redevelopment around the London Olympics.’ Presumably, the government will not fund a football stadium renewal but details of any synergies with their financial implications are scarce in the public domain: ‘Rachel Reeves says she’ll back Old Trafford plans, but doesn’t say how’!)

Back to CCUS, from the Acorn project website back on July 9, 2021: ‘Acorn CCS project to partner with INEOS and Petroineos at Grangemouth to capture and store up to one million tonnes of CO2 by 2027.’ (See https://www.theacornproject.uk/news-and-events/acorn-ccs-project-to-partner-with-ineos-and-petroineos-at-grangemouth-to-capture-and-store-up-to-one-million-tonnes-of-co2-by-2027 )

However critical environmentalists and others may be about CCUS technology, back in 2021 there was ‘optimism’ in Scotland’s industrial sector. From the same web link: ‘The Acorn project is currently in the detailed engineering and design phase of development and is planned to be operational by the mid 2020’s, with the potential of achieving more than half of the 10Mt/yr of CO2 storage targeted by the UK Government’s Ten Point Plan for a green Industrial Revolution by 2030. Acorn has received match funding from the UK and Scottish Governments and has benefited from two rounds of Connecting Europe Facility (CEF) funding from the European Commission.’

The CEO of Storegga, the lead developer of the Acorn Project is quoted: “The Acorn Project partners (Storegga, Shell and Harbour Energy) are delighted that INEOS and Petroineos have entered into an MOU with Acorn, which is a really significant step in managing Scotland’s industrial emissions. The Acorn CCS and hydrogen project is advanced, highly scalable and has clear visibility of a large CO2 customer base. Acorn provides critical carbon reduction infrastructure to the growing Scottish Cluster of emitters and to the wider UK.” 

Ultimately not good enough for Acorn to win priority support from Westminster alongside the CCUS projects in Teeside and Merseyside.

And don’t forget Westminster’s U-turn on a major investment in computer technology at the University of Edinburgh. You may know of other similar examples.

And the even bigger picture …

Below is a description of this ‘better together’ Union which shows no evidence of being ‘changed’ from the only seat of government with the power to begin to do so:

‘… by the 2010s the UK had become one of the most regionally unequal of the world’s industrialised economies in terms of GDP per capita, productivity, and disposable income’.

‘ Today, the gap between London and the South East, vs. the rest of the UK, is extremely

large in international context: larger than the gaps between East and West Germany – despite the legacy of the GDR – or North and South Italy.’

‘The UK’s transport infrastructure investment, as a share of GDP, has been relatively low

by international standards. Road investment, in particular, has been among the lowest of any industrialised economy over the last three decades according to OECD data ..’. And: ‘Within the UK, this infrastructure spending has been heavily tilted toward London: per capita transport infrastructure spending in London and the South East was nearly twice as high as in other English regions over 1999-2019, with the gap diverging even more in more recent years.’

Source: Stansbury, Turner and Balls (2023) Tackling the UK’s regional economic inequality: Binding constraints and avenues for policy intervention. Mossavar-Rahmani Center for Business & Government, Harvard Kennedy School (https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/files/198_AWP_final.pdf )

So all the factors set out by these authors were well established prior to Labour’s latest investment decisions! ‘Change’? (I chose the above source – there are many making similar assessments – as one of the co-authors is Ed Balls, ex-Labour shadow Chancellor.)

And more: the map on the left (below) has been in circulation to show the location of the Chancellor’s infrastructure investment locations. It seemed to me to ‘benefit’ from the context provided by the map on the right, derived from the UK’s National Energy System Operator (see https://www.neso.energy/document/304756/download ).

Let’s not become like so many countries in thrall to Britain/England in the past, the source of a natural resource – in our case nowadays, ‘green’ electricity – exported to where the significant ‘value added’ occurs and the major economic benefit accrues. As one of the BBC’s more astute political editors has judged: ‘expecting southern success to trickle up the country has not worked for more than a century now’!

End note

There is of course a differences between NE England and Scotland. In the wake of Labour’s investment plans for SE England, the Scottish Government should be entitled to receive funds via Barnett consequential payments. This assumes HM Treasury does NOT take the view that the SE England investments are for UK-wide benefit: the Welsh government’s inability to obtain a financial settlement following Westminster’s prior spend on HS2 exposes how uncertain and controversial these matters can be. What HM Treasury decides can be hard to change.

Even with a generally favourable outcome, lack of certainty – over precisely how much funding will be delivered and crucially, when – must constrain strategic decision making and subsequent project implementation by the Scottish Government. And while uncertainty remains, it can’t foster the spillover positivity in Scotland exemplified by this: Property Investor Today (January 30) Where to invest to take advantage of Reeves’ growth plans.