10. Daniel Ben-Ami, 'Deflation: inflated concerns', spiked, 14 January 2003, and posted on www.spiked-online.com

11. Phil Mullan, 'Propping up the private', spiked, 31 October 2002, and posted on www.spiked-online.com

12. David Pearce, The social and economic value of construction: the construction industry's contribution to sustainable development, Construction Industry Research and Innovation Strategy panel, 2003, Chapter 3

13. Nigel Howard, Sustainable Construction: The data, Centre for Sustainable Construction, Building Research Establishment, 2000, and posted on www.bre.co.uk, and cited in James Woudhuysen, Miles Glendinning, Stefan Muthesius and Ian Abley, Why is construction so backward?, Wiley-Academy, Chichester, 2004, table 2, page 14

14. Philip Beresford with Stephen Boyd, The Sunday Times Rich List 2004, 18 April 2004, page 10

15. Simon Targett, 'Investment enjoys a renaissance', Financial Times special report on property fund management, 4 June 2004, page 2

16. Ken Livingstone, Keynote speech to Guardian conference, 'Key worker housing: building on foundations to crack the crisis', Institution of Electrical Engineers, London, 25 May 2004

17. National Audit Office, Improving public transport in England through light rail, 27 April 2004 and posted on www.nao.gov.uk

18. Austin Williams, introduction to a Transport Research Group Debate, 'Infrastructure: what infrastructure?', Bloomberg Auditorium, London, 20 February 2003

19. John Smith, Speech to a Transport Research Group Debate, 'Infrastructure: what infrastructure?', Bloomberg Auditorium, London, 20 February 2003

20. Paul Barker, 'Hello, Ken. Goodbye, Oxford Street', New Statesman, 7 June 2004, page 29 to 30

The continuance of Victorian Britain - continued

Writing prior to the joint Hill & Knowlton and spiked! seminar Mind the Gap about the backwardness of construction and transport, James Woudhuysen takes a look at the decrepit state of British innovation.

As Daniel Ben-Ami has argued, Britain is '... perhaps the most financialised of the main world economies'. (10) Indeed the City of London plays such a leading role in the British economy, the country's building and transport problems largely centre on it, and certainly on greater London and the nation's South East. Similarly, the City relies, for its continued physical existence, on big modern trading floors and big antiquated transport systems.

But perhaps of even greater significance than this is the fact that the City relies for its everyday financial survival on big, often state-backed schemes in construction and transport.

Banks and building societies have had to move into mortgage finance - so much so, the annual pace of mortgage borrowing has hit an 11-year high. And banks, investment banks, consultants, lawyers and others have moved into the construction of schools, hospitals, and rail infrastructure. Through myriad partnerships and through the Private Finance Initiative (PFI), corporate parasites with the appearance of dynamism have 'shared the risk', as they like to say, with stateised sectors that exude backwardness from every corner. They are the grateful beneficiaries of Gordon Brown's major spending programmes.

Of course, in today's whingeing media mythology, building societies like Abbey National rip off mortgage owners. Meanwhile, a venal conspiracy of firms like Goldman Sachs and Jarvis is supposed to do the same to passengers, through an all-too willing state apparatus run by corrupt New Labour politicians.

But the reality is rather different.

Abbey National - slogan 'Because life's complicated enough' - runs at a loss. The corporate locusts that cluster round Britain's Victorian public buildings and railway track are better at filling out state contracts than making a real difference to infrastructure. They cannot make a decent profit independently of the state.

It is very one-sided to represent New Labour simply as a pliant, hapless or corrupt tool in the hands of bent builders, shyster developers and fast-buck operators.

What about the growth of state bureaucracy and regulation? Among firms in construction and transport, New Labour consciously or unconsciously weaves, what Phil Mullan calls '... a widening web of state-capital links'. (11) By the same token, New Labour also seeks, through regulation, ever more points of control over private individuals - otherwise known as consumers, homeowners, tenants, motorists and passengers.

Apart from making money through transactions today, the City is sometimes interested in tomorrow, in the sense of technological breakthroughs in pharmaceuticals and defence. Much more often, however, financiers in Britain are nowadays fascinated with property. That shows how much the country has had to fall back on its ageing, largely Victorian installed base of buildings and transport routes.

If one defines construction narrowly, in terms of the 170,000 contractors working on-site, it is worth a very significant five per cent of GDP. Defined, more broadly as the 350,000 contractors handling all aspects of the construction supply chain (on-site construction plus materials, products, assemblies, and services, including land and facilities management), construction is worth a colossal 10 per cent of UK GDP. (12)

But however one measures it, the construction sector is largely engaged in remedying the past.

In 1997, when new building was stronger than it is today, it represented just 24.1 per cent of UK construction output. The refurbishment of Britain's ageing residential and non-residential building stock was 38.1 per cent of output. Repair of the total stock accounted for the remaining 37.8 per cent. (13)

Only in Britain can multi-millionaires in land and property make up no fewer than 190 of the top 1000 richest people in the UK in 2004 - an increase of dozens on the figure for 2003. (14) Only in Britain can there be an orgy of discussion on the putative takeover of Marks & Spencer, at the same time that so few commentators really bother with the fact this £8-10bn 'fashion retailer' sits on a High Street portfolio worth £2bn.

It is not UK commercial pioneers in biotechnology that interest the City. Most, despite their innovatory prowess, are just allowed to fail - when they are not being bought by overseas concerns. The Belgian group UCB bought Celltech, the Great White Hope of British biotechnology companies, in May. No real City excitement surrounds breakthroughs in nanotechnology, chemicals, or even in IT.

The City is preoccupied with the chance to make a paper profit on something that, crucially, the state ensures is always in short supply - Space.

More than a century after Cecil Rhodes led the imperialist scramble for Africa, major investors are in a scramble for Space, UK. What interests the City is lending money to people buying houses and other property whose values are inflated - inflated by a state regime of town and countryside planning that is restrictive and that dates from the 1947 Town and Country Planning Act.

What also interests the City is a new financial instrument, property investment funds, or Pifs - New Labour's answer to the USA's fashionable Real Estate Investment Trusts (REITS). Pension funds, in particular, are set to move further out of conventional stocks and shares and into Pifs: while they had 6.4 per cent of their funds invested in property in 2003, the figure could perhaps go to 15 or 20 per cent. (15)

Life insurance companies also regard Britain's £450bn market in commercial property as an important 'asset class'. The City is just as interested in clipping coupons around transport, in the sense of the construction and operation of spatial links. Just before his re-election as Mayor of London, Ken Livingstone waxed lyrical about one solution to London's housing crisis in the property that lies above the capital's railway stations. (16)

Or take London & Continental Railways' Channel Tunnel Rail Link. The CTRL is routed through an intermediate station at Ebbsfleet, an obscure enclave in Kent that is of no use to anyone. But the decision for Ebbsfleet did not just reveal, behind it, the usual lash-up of financiers, land sharks, big building contractors and Westminster PR firms that specialised in lobbying ministers during the last Conservative administration. It also revealed how much store modern capitalist interest sets by state decisions on the spatial location of transport nodes - even if the decisions turn out to be completely irrational.

Once the state acts irrationally on this scale, it cannot be a surprise that transport chaos in Britain has become a way of life. We need not dwell on the London Underground. Instead, let's take, trams as an alternative. With trams, passenger numbers on nearly all the tram systems built since 1980 have fallen short of forecasts, while construction costs have in many cases gone over budget. (17) In the UK, even the smoothest transport projects take forever.

Between October 1998 and September 2003, Section 1 of the CTRL, from the Channel up through Kent, was built and opened on time and on budget. Work on Section 2 began in July 2001 and completes the new line into London's St Pancras. Section 2 is scheduled for completion by the end of 2006, but will only open in 2007. In Section 2, much of which goes through and under London, saw no fewer than eight tunnel-boring machines.

Nevertheless, as Austin Williams and the Transport Research Group have pointed out, this line is the only serious piece of new track construction in Britain for more than a century. (18) Altogether, to build just 68 miles of railway will have taken more than 10 years since the passage of the CTRL Act in 1996.

Read Austin Williams' review of Why is construction so backward?

Inside a dense space like London, the potential for irrational state policy and action in transport is finally realised. A complete set of working drawings and documents for Crossrail, the £10bn link between Liverpool Street and Paddington Station, was ready in 1994. (19) The Hackney-to-Chelsea tube featured in Ken Livingstone's election manifesto for 2000 is, today, at least 25 years in the future: as such, it will worsen London's prospects of siting any of the 2012 Olympic Games in the Lea Valley. Last, Hackney, the one London borough without a tube station, will lack an East London Line extension for years to come. (20)

Yet the City is prepared to stump up perhaps £2bn to finance Crossrail. City employers need employees to arrive on time; more importantly, they want to make money out of transport projects. Even Tony Blair keeps saying he wants Crossrail.

He has yet, however, to authorise it.

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