finance

The £3bn hole in the Tory manifesto


The Tory party likes to pitch itself as the party of prudence. It fixes the roof while the sun is shining. It lives within its means. It spends sensibly, explaining to the masses that any expenditure now will be borne by our children in the future.

This party line has led to a collective mania in British politics where each party has to “cost” its manifesto with savings and spending spelt out in ridiculous detail. As if the future is certain, or the government is like a household saving for a Spanish holiday.

Which is why Alphaville was surprised to read this in the Tory Manifesto, released at the weekend (with our emphasis):

Our first Budget will prioritise the environment: investing in R&D; decarbonisation schemes; new flood defences, which will receive £4 billion in new funding over the coming years; electric vehicle infrastructure including a national plug-in network and gigafactory; and clean energy.

A gigafactory eh? Those are expensive. Tesla and Panasonic’s one in Nevada, not even half complete, has cost $4.5bn to date. The one announced in Germany a fortnight ago is mooted to cost $4.4bn.

So we quickly flipped to the Tory’s own costings document to see if it had factored in this expenditure. After all, Chancellor Sajid Javid said in the document that:

. . . we won’t gamble with taxpayers’ money or this country’s economic future. That is why we have set out clear rules that will keep borrowing and debt under control. As you can see in this document, our plans are responsible and fully costed.

Yet, turn to page 8 and only £400m has been set aside for Electric Vehicle Infrastructure:

At a gigafactory cost of £3.4bn ($4.4bn) that’s £3bn of expenditure not accounted for. That’s assuming, of course, that all of the £400m is spent on a gigafactory, and not a “national plug-in network” or “clean energy”. It’s also worth noting that the Nevada gigafactory got a potential $1.3bn in tax incentives, and that land in the UK is more expensive than in both Germany and the US.

The Tories have left some wriggle room; new rules about capital spending means there’s a “possible” extra £80bn available over the next four years. If interest rates don’t rise, that is.

But for the party of parsimony, it does seem odd that the Tory’s would spell out a direct investment in their manifesto, and then not fully cost for it. It makes you wonder if they thought about the use of the word “gigafactory” at all.



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