When you hear the term ‘quantitative easing’, what do you think of?
If you’re a normal member of the human race, the answer may well be: not a whole lot.
And even those with a more economic mindset might not readily associate it with left-wing monetary policy, given its most recent iteration in this country was designed to stimulate business lending.
But QE has been resurrected by an unlikely new champion in the form of Labour leader Jeremy Corbyn.
Monetary policy is not particularly glamorous, so it’s no surprise that Mr Corbyn’s idea of a ‘people’s QE’ to fund infrastructure projects was somewhat lost among the headlines of railway renationalisation and who he may (or may not) have gone on a motorbike tour across East Germany with in the 70s.
To put it simply, Mr Corbyn wants to use quantitative easing to create funds for a National Investment Bank, which would then invest in projects including housing, roads, rail and digital infrastructure.
In theory, the policy could work – there has long been a case for direct investment in infrastructure from the government, and experts have called for a long-term strategy to be put in place to encourage strong infrastructure growth over the next parliament.
Of course, this is purely hypothetical – it relies on Mr Corbyn being elected prime minister, which, according to pretty much anyone you ask, seems at this early stage in his leadership a litte far-fetched.
Besides, the consensus seems to be that this policy, while potentially viable, has so many holes it might as well be a colander.
Aside from the issue of how it would be financed (Mr Corbyn has not yet explained this part), there is the danger that it could add to the already-high inflationary pressures being felt by businesses within the construction industry by bringing new projects forward at times of capacity constraints.
On top of this, there are also real concerns that, in a market where capacity is already stretched, contractors would struggle to deal with a sudden influx of work, meaning that many projects would go unfulfilled.
There is also the argument that ‘People’s QE’ would only work if the National Investment Bank made sound investments in infrastructure projects that had not already been spoken for by private investors.
Labour’s ‘Project Corbyn’ does seem to be about looking at alternative ways of doing things rather than coming up with answers - but have they missed the mark this time?
Or will conditions have changed sufficiently by the time the next general election comes to pass?
Read more analysis of how ‘People’s QE’ might play out for the construction industry here.
Trying for 90%
One business that might welcome more government-backed housebuilding is Galliford Try. Chief operating officer Ken Gillespie told Construction News that the group will aim to win 90 per cent of its contracts through frameworks, rather than aiming for the “high-risk” strategy of bidding for a range of work with new clients. Read more on his outlook for Galliford Try here.
Tomorrow, look out for features editor Daniel Kemp’s exclusive interview with HS2 design chief and architect Sadie Morgan, who will be leading a panel responsible for the look and feel of track, stations and even tickets on the £40bn+ project.