Transport and the economy

Memorandum from East of England Space for Ideas Forum of business leaders

The East of England Space for Ideas Forum is a group of business leaders from across the East of England. The businesses represented are from a wide range of sectors. The group is committed to working together to address critical issues facing both businesses and our communities and to ensure the continued contribution of the East of England to UK Plc.

Our key objective is to ensure that the East of England (comprising Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Norfolk and Suffolk) continues to be an economic powerhouse. Our economy is worth £110 billion a year and we contribute £6 billion net to UK plc - we believe there are significant opportunities to grow this further. Future economic development activity must recognise and capitalise on the opportunities and challenges here in the East. It is vital appropriate resources and investment are in place to drive future activity for the benefit of UK Plc.

We welcome the opportunity to comment on two of the questions posed as part of the inquiry into Transport and the Economy. We recognise the need to tackle the deficit and deliver value for money, however, investment in transport infrastructure remains a critical national priority in improving the business environment, attracting international investment and enabling access to markets and skilled employees. The latest Global Competitiveness Report 2010-11 published by the World Economic Forum, demonstrates that that the UK is already lagging many EU competitor economies with regards to the quality of our transport infrastructure [1] . International benchmarking of the East of England economy, similarly reveals that the performance in terms of accessibility to markets is poor when compared to those places directly competing with the region for international investment [2] .

In the East of England investment in transport is a significant constraint and is currently costing the UK economy in the region of £1 billion per annum in lost productivity. This is forecast to double by 2021. Without further investment our ability to ‘do business’ effectively now and in the future is seriously impaired. As the OECD said in a report last year that investment in infrastructure increases long-term economic output more than any other kind of physical investment [1] . For these reasons, we strongly support the recent call from the CBI that despite the need for austerity measures, a return to significant infrastructure investment should be achieved as soon as possible.

What type of transport spending should be prioritised, in the context of an overall spending reduction, in order best to support regional and national economic growth?

Congestion on the East of England’s roads is a significant barrier to business productivity. Overcoming congestion and overcrowding on the East of England’s transport networks would provide benefits to the UK economy of at least £2 billion per annum by 2021 [1] . Furthermore in some parts of the region, transport congestion will cost up to £900 per worker per annum by 2021 unless action is taken.

In order to preserve and enhance the contribution the East of England makes to UK Plc, its international gateway role, including surface access connections to the rest of the UK, must be prioritised for investment. Our major airports and ports need better rail and road access to serve wide areas beyond the East of England. For example, the links westwards from Felixstowe and Harwich along the A14 and Felixstowe to Nuneaton rail corridor, and the A12 and Great Eastern Main Line corridor, are of national significance and urgently need to be addressed. The share of UK containerised traffic passing though the East of England’s ports will rise to over 54 per cent [2] with the implementation of approved expansion proposals so investment in surface access transport to support this growth will be vital to businesses throughout the country.

Another significant area which would help alleviate pressure on the region’s transport infrastructure is reliable, affordable next generation broadband (minimum of 20 Mb/Sec). This is a must for our businesses and needs a far broader footprint in the East of England than will be delivered by present commitments from private sector providers. Such investments can reduce the need to travel, lower the demand for movements on our transport networks, and hence reduce the economic costs of congestion.

How will schemes be planned in the absence of regional bodies and following the revocation and abolition of regional spatial strategies?

Given the critical importance of investment in infrastructure for businesses, we are concerned as to the mechanisms, capacity and capability to take forward strategic transport planning to enable economic growth and maintain the competitiveness of the East of England and the UK.

The regional funding advice process allowed the stakeholders in the East of England, including the private sector, the opportunity to shape strategic transport investment priorities to address current constraints on the network effecting business productivity, and also improve the long-term competitiveness of the region. Alongside this, the regional development agency has played a critical role to date in providing transport economics expertise, market-leading economic evidence to identify transport priorities, as providing leadership to bring key partners together and prepare compelling business cases for national and EU investment in our transport infrastructure.

Local enterprise partnerships are a possible vehicle for this role in the future, but they will need to be able to adopt along-term strategic view on cross-boundary issues to benefit their area, and to support delivery of key strategic interventions that are essential to wider UK plc, such as enhanced provision for cross-country rail freight. However, at present we are concerned that:

· approved LEPs may not cover the entirety of the East of England, or lack the scale to address strategic transport issues (such as key inter-urban corridors)

· LEPs based on functional economic geographies will need potentially to have traction on multiple transport plans that will continue to be based on administrative boundaries

· the functions, powers and resources available to LEPs remain uncertain and their precise role in setting or influencing transport priorities has not been clearly articulated

· business engagement in developing individual LEP proposals to date has been variable.

I would be happy to provide further evidence orally on any of these issues.

September 2010