The coalition’s infrastructure shopping spree to cheer itself up after a miserable few weeks continues today. George Osborne and Danny Alexander are offering guarantees on up to £40 billion of ‘ready or nearly ready’ projects such as transport, communications and energy. They are also announcing a £6 billion temporary lending programme and a £5 billion export guarantee facility, which will give long-term support for British exporters.
Today’s announcements are clever because they don’t commit any extra money, using the government’s balance sheet purely to guarantee the projects and get them off the ground. Osborne and Alexander have written a joint comment piece for PoliticsHome, in which they point out that their efforts to secure credibility for the government on the credit markets mean they can offer these guarantees today. They write:
‘The credibility the Government has earned by tackling the deficit is already benefitting millions of British taxpayers, families and businesses through consistently low interest rates. And that creditworthiness enables us to do much more to support our economy than some other countries at present.’
Labour has argued that these announcements do not go far enough and are, to a certain extent, a bit too late given the country is back in recession. I understand that more hard cash will be available on the table in the autumn for housebuilding and other projects. But it’s the start of the PoliticsHome comment piece from the two ministers that gives the clue to why this announcement has come today:
‘The reason the Conservatives and Liberal Democrats came together in a coalition government remains as strong as ever: to put our economy back on track. Two of the three main political parties joined together to sort out the economic mess left behind by the other.’
Don’t forget that this announcement isn’t just about the government’s economic credibility. It’s also about the coalition’s credibility. Ministers need announcements like this to act as a guarantee that the partnership is going to last. The piece emphasises that the eurozone crisis has made it ‘even more important that the coalition partners work together in the national interest’. It’s almost as if they are writing to their own parties as much as they are to voters.