Lucy Parsons: Freeing up Britain's infrastructure markets in areas such as road, rail and renewable energy will make them more successful

Lucy Parsons is Senior Economics Researcher at Reform and co-author of  Road To Recovery, which is published today.

At a Reform fringe event last week in Manchester, Jeremy Hunt advocated a more open approach in the UK’s telecommunications industry.  He proposed an alternative to the Government’s £175 million tax on consumers to fund high speed broadband roll out – BT’s competitors could lay fibre in existing ducts, as is happening in France.

Reform’s new Road To Recovery report on infrastructure published today suggests that this is the kind of approach needed across the whole of the UK’s infrastructure.  A recent competitiveness study ranked the UK 34th on the quality of its infrastructure, behind countries including Namibia and Spain. Strong infrastructure is a powerful driver of growth and critical for the next period of prosperity. But the UK is in the infrastructure slow lane.

Politicians have been blinded by the “green heat of technology”, moving towards a more interventionist approach in infrastructure markets. This comes at a high cost. In energy, £2.6 billion is being spent on Renewable Obligation Certificates and climate change levies which reflect a political desire to advance certain technologies and to create thousands of “green jobs”. Much like Harold Wilson’s “white heat of technology revolution” in the sixties, this green corporatist approach will fail to address the real problems: over-zealous bureaucracy and planning sclerosis.

Departments have been clawing back their powers in infrastructure markets. Civil servants in the transport department are now ordering trains and specifying timetables. The new energy department is using public money to finance four demonstrations of carbon capture and storage. Reform’s research finds that the UK’s most successful infrastructure markets have been the most free – energy, telecoms and water. While the most heavily regulated – road, rail and renewable energy – have got stuck in bureaucratic treacle.

Lucy Parsons: Young people could provide a way out of the credit crunch

Lucy Parsons is Senior Economics Researcher at Reform.  The full report “Money’s too tight to mention: will the IPOD generation ever trust financial services?” is available at www.reform.co.uk.

David Cameron and George Osborne have for some time highlighted the problem of debt in this country, both public and personal.  Reform’s latest report shows that there are some clear policy ideas to be grasped around financial responsibility.  Improving the financial capability of the next generation could help start an era of "living within our means" and assist the economic recovery.

The finances of Britain’s young adults are looking as critical as the Government’s.  The “IPOD generation” - Insecure, Pressurised, Over-taxed and Debt-ridden 18-34 year olds – have run up huge credit card bills and smashed their piggy banks.  The mean debt among young adults is around £6,000, and 60 per cent have either no savings or less than £1,000 worth.

The credit crunch is adding to the financial pressures.  New or soon-to-be graduates are wondering if their student debts were worth it as companies cut back on recruitment.  Those already on the housing ladder are struggling to meet repayment increases.  First-time buyers can no longer get a mortgage six times their salary at a cheap rate.

One of the key causes is that this is all so new to this generation.  Britain’s young have grown up in a time of economic growth, easy credit and high consumer expectations.  They lack the instinctive fears of previous generations which come from experiencing double-digit inflation, 30 per cent unemployment levels and food rationing.  This far less risk averse generation has been happy to use financial products without fully understanding them – nearly half of young people do not know the rate of interest they are charged on their main credit card or overdraft.

Elizabeth Truss and Lucy Parsons: Moving from a "why bother" to a "can do" economy

Elizabeth Truss is Deputy Director at Reform and Lucy Parsons is Economics Researcher at Reform. Reform’s full report “Shifting the unequal state: from public apathy to personal capability” is available here.

There is much political concern about the parlous state of Britain’s social mobility. However little acknowledged is the role successive governments have had in enforcing and embedding the divide, through public spending programmes and a failure to enact effective education reform.

Reform’s latest report finds that while the UK is no longer the “sick man” of Europe, it could be called Europe’s “divided society” and lays significant blame at the doors of government.

The social costs of low social mobility and persistent poverty have been well covered. Less so the economic cost of wasted talent that afflicts the UK’s economy. Reform’s research suggests that there is an economic cost of up to £1,300 per household or £32bn, an amount that dwarfs the worst impact of removal of the 10p tax rate which is £232 per year. This is the cost of the UK population having skills levels that are worse than key competitor nations, namely France, Germany and the US.

Andrew Haldenby and Lucy Parsons: Higher spending does not equal better services

Andrew Haldenby is Reform’s Director and Lucy Parsons is Reform’s Economics Research Officer.

What should we make of Gordon Brown’s call this morning for a new “stage” in the Government’s policy on public services reform?  Writing in the Financial Times, the Prime Minister identifies two new goals: “no tolerance of under-performance” and “empowering the users of services themselves”.  He ends by repeating the call for “investment and reform” that has underpinned the Government’s policy since the first Comprehensive Spending Review in 1998.

We should first be pleased that the Government is committed to reform.  The message from today’s Reform report – A lost decade: Counting the opportunity cost of public spending 1999-2008 – is that such a commitment is essential.  So many social trends point towards public services with more individual and less government input: greater consumerism, prosperity, educational attainment, connectivity, for example.  At the same time greater globalisation will make it much harder for governments to solve problems with higher taxes.  As Sir Gus O’Donnell, the Cabinet Secretary, said recently:

“We are going to have real problems.  Because of the competitive nature of globalisation, it is going to be hard to put tax rates up.  The increasing demand for spending more ... means that we are going to have to do more with less.” 

Second, we could ask the Prime Minister to look again at the progress so far.  In his article he says that the Government is about to launch “the third stage” of the reform programme.  Stage one was extra spending, to repair under-investment.  Stage two was on a “greater diversity of providers and more choice”.

Today’s Reform report suggests that there is still much to do if those stages are to be completed (let alone left behind).  Spending has certainly been increased but as a flash flood rather than a planned irrigation.  Its greatest impact has been to increase the costs of existing programmes rather than transform them.  Where it has happened, reform has been marginal and uncertain.