Expert Blog

The benefits of infrastructure

On one of the northernmost points of Anglesey, where North Wales meets the Irish Sea, there’s a collection of concrete blocks and towers. This is the old Wylfa Nuclear Power Station. Its two reactors pumped out electricity for over 40 years, until the first was shut down in 2012, and the second last December. It’s now being slowly decommissioned.

But Wylfa’s days as a powerhouse haven’t come to an end. There are currently plans for a second nuclear power station, just to the south of the old site, called Wylfa Newydd. Horizon Nuclear Power, a wholly-owned subsidiary of Hitachi Ltd, is working to bring it into being.

It’s yet another example of the boom in major infrastructure projects. Almost everywhere you go nowadays you’re within spade-reach of some construction site with its attendant collection of hi-vis workers. HS2, Crossrail, the Government’s £15 billion scheme for renovating Britain’s roads, the plans for improving transport links in the north of England… the list goes on.  

It didn’t used to be like this. Back when the economy was struggling, so too was the construction industry. There wasn’t much money sloshing around for infrastructure, and the Government wasn’t too eager to contribute any of its own. One of George Osborne’s first decisions as Chancellor was to match the Labour administration’s planned cuts to capital spending, which were rather severe. Conquering the deficit was seen as more important than doing some building work.

But as the economy started growing, so did the Government’s munificence. Osborne had a change of heart. We’ve already told the story in some detail on this blog, but the basic version is this: the Chancellor began to realise that, of all the public spending he can do, capital spending is among the best. It employs people and leaves Britain with the infrastructure it needs. It boosts the economy and, by doing so, can even help to bring the deficit down. It is a mechanism for growth.

Economists talk about the “multiplier effect” in this context, but the rest of us might call it “bang for buck”. Investing in infrastructure gives you a lot of bang for your buck. That’s why there is now £119 billion of Government money committed to some 2,262 projects. 

The Wylfa Newydd project demonstrates all this in microcosm. Already, Horizon Nuclear Power has committed about £270,000 to a local college’s apprenticeship scheme, designed to develop its participants’ energy and construction skills. Perhaps some of these skilled-up young people will end up helping to build the plant itself. It’s estimated that between 4,000 and 8,500 workers will be needed to get it up and running.

And that’s to say nothing of the benefits that will come if the Wylfa Newydd project is brought to completion. That little corner of Wales will house a world-class power station with a permanent workforce of about 1,000 people. It will be connected to the rest of Anglesey, and beyond, by improved transport links. Local companies will partake of the fruits of this endeavour.

It’s intended that major construction at Wylfa Newydd will begin in 2018, with the first sparks of electricity following in the early 2020s. We shall certainly track its progress on this blog. We know it’s a project that Hitachi is involved with, but we’re happy to see any like it. Infrastructure is, after all, as I said above, a mechanism for growth.

- Jonathan Southall, Marketing Business Partner at Hitachi Capital Vehicle Solutions

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