Britain's Prime Minister Boris Johnson after delivering a speech during his visit to Dudley College of Technology in Dudley, on June 30 2020. Picture: PAUL ELLIS/REUTERS
Britain's Prime Minister Boris Johnson after delivering a speech during his visit to Dudley College of Technology in Dudley, on June 30 2020. Picture: PAUL ELLIS/REUTERS

London — Boris Johnson set out his vision for dragging the British economy out of what may be its deepest recession in 300 years, with a programme to spend billions of pounds on infrastructure to build the UK back to prosperity.

In a speech on Tuesday, the prime minister confirmed his commitment to long-term investment in some of the country’s most deprived regions, arguing that balancing the books must wait until recovery is secure.

Reprising pledges he made before December’s election, Johnson announced the acceleration of investment in roads, schools and hospitals with a major overhaul of planning rules to speed up projects. His office said the allocations amounted to £5bn.

“We cannot continue simply to be prisoners of this crisis,” Johnson said in the speech in Dudley, central England. “We must work fast because we have already seen the vertiginous drop in GDP and we know that people are worried about their jobs and their businesses.”

In December, Johnson won a commanding 80-seat Parliamentary majority by promising to “level-up” deprived parts of the UK with spending on infrastructure and skills. But his plans were blown off course as ministers battled the pandemic, which has killed 43,575 people and plunged the economy into recession.

His speech on Tuesday was aimed at regaining the political agenda and reviving his own vision for the country. Chancellor of the Exchequer Rishi Sunak will set out more details on the economic recovery plan next week.

In his speech, Johnson:

  • Said Britain faces a “real crisis” on unemployment in the coming months
  • Promised an “opportunity guarantee” of an apprenticeship or training for young people
  • Announced a review of transport routes across the UK, including “cross sea” links between England, Wales, Scotland and Northern Ireland
  • Said his instinct is to cut taxes, wherever possible, so business has a “competitive” fiscal environment, and he doesn’t plan to launch “some punitive raid on the wealth creators”
  • Ruled out a return to “austerity” measures of the past: “We are not going to cheese pare our way out of trouble.”
  • Described coronavirus as like a “shark in the water” that is still circling, but he said social distancing rules cannot last for too long because they damage the economy.

‘Biggest bang’

The government confirmed £12bn of spending to support as many as 180,000 new and “affordable” homes over the next eight years.

But the announcement suggested spending on cheaper housing is actually being slowed. In March, Sunak announced an affordable homes programme starting next year and totalling £12.2bn over five years.

The £5bn Johnson allocated to hospital maintenance, school repairs and road improvements on Tuesday is not new money and is a fraction of the infrastructure spending announced in March.

Johnson’s office said the planning reforms he announced are the most “radical” since World War 2. They include greater freedom for developers to change the use of buildings and land in town centres without planning permission, and would make it easier to convert unused commercial buildings into homes, it said in a briefing.

The new flexible rules will not apply to pubs, libraries and village shops. But property owners will be able to extend their homes more easily.

New deal

Johnson has compared his approach to US president Franklin Delano Roosevelt’s “New Deal,” which used government spending to help the US out of the Great Depression in the 1930s. But he dropped a reference to Roosevelt included in overnight extracts from the text of his speech.

There was a reminder Monday that the U.K.’s path out of the crisis won’t necessarily be smooth when Leicester, a city in the English Midlands, reimposed recently eased lockdown restrictions and closed schools and non-essential shops after a spike in cases.

The government has already committed to increase total infrastructure spending across the next five years by 100 billion pounds to a total of £600bn. While much of that investment was designed to help reduce the UK’s long-standing regional inequalities in growth and productivity, there are questions over whether such spending is the best way to stimulate the economy’s recovery from the coronavirus.

Bloomberg