Whatever you think of the merits of HS2, it is unquestionable that the project suffered from stops, starts, redesigns and complications – all of which contributed to the spiralling costs. That shouldn’t surprise anyone. Uncertainty increases risk and costs then rise as parties try to mitigate the risk or be compensated for accepting it.
The alternative to these rising costs is inertia, when the risk of doing something does not outweigh the potential gain, or translocation, where activity is moved to a different geography or sector where the risk is less prevalent.
Sadly, businesses in the UK have suffered all three of these effects in recent years, with rising costs, instability and lacklustre growth – all driven by the uncertainty that has gripped our political and economic environments.
After the uncertainty of five prime ministers in six years, 2024 looks to be no different, offering yet another year of change when all businesses are crying out for some certainty.
With local and mayoral votes and, almost certainly, a general election due in the next 12 months, 2024 promises to be another year of change, which will make it hard for businesses to plan with any certainty.
Even the timing of when the general election might be held is far from certain, with feverish speculation of whether it will be May or November, or whether the parliament will go to full term (the last possible date is in January 2025). And, whilst the Labour Party is currently enjoying a significant poll lead, ushering in a change of government after more than a decade also brings with it more uncertainty.
We are effectively already in a campaign, and with that will come policy announcements galore as the parties look to shape their retail offer to win votes. We’ve seen lots of it in recent months, with ideas for tax cuts, reforms to education or new plans for investment floated in the press to gauge the reaction. Some of them might survive into a manifesto, and some might even be good ideas, but the continual drip of ideas to find something that works only leads to confusion.
As a business looking to invest, should you invest now or should you wait until after the Budget? It’s hard to say with any degree of confidence. As an international business that chose to invest in markets across the globe,
could you really make the case for the UK at
the moment?
Which brings us back to HS2. Yes, the scheme’s costs had grown out of control, but if we are serious about getting the country growing again, then we need to make decisions and stick to them – not re-engineer them every time the external environment changes or every time we get a new prime minister.
Over the coming years and decades, we face having to make repeated infrastructure investment decisions that will make HS2 look like a small fry – from transitioning to net zero, upgrading our ageing transport infrastructure and building the homes that we so badly need. All of these will be long-term programmes that need certainty if they are to succeed.
But it’s more than just the big shiny infrastructure projects; it’s the startup that wants to take the plunge and hire its first employee, it’s the small business that wants to expand by making a capital investment or the medium-sized business looking to upgrade its office to accelerate their growth. They all need confidence in the economy, in our politics, and in the country.
With lots more uncertainty to come, 2024 might not be the year where this confidence returns, but we have to hope we get there soon. Uncertainty may be good for journalists, but it’s bad for business.
