There won't be enough money in the post-Covid19 economy to chuck at a project like a full re-doubling, but maybe that won't stop it being spent, as a stimulus now, for our great grandchildren to pay for when they inherit all this "free money" debt
What money is available for post-Covid is rather more complex than people seem to think.
Firstly we are talking about macro-economics rather than the usual micro-economics and that rather depends on which brand of macro-economic theory our politicians are signed up to.
Secondly just as a business does we need to differentiate investment from day to day expenditure.
Looking at macro-economics first.
1) If a business is loosing money it can cut its costs by making people redundant. It no longer bears the cost of paying them. However, unless they get another job government must now not only pick up the cost of paying them benefits, but it has also lost the money they paid in tax. In addition they will spend less money (because they do not have it) so the overall economy looses out (see point 2).
2) When the likes of you and I receive a salary we immediately (through PAYE) pay some of it to the government. We then pay a lot more of it out to other businesses to provide for our essential needs and some luxuries. These businesses in turn pay a proportion of that out to their employees who in turn pay taxes and buy more things part of which goes to employees of other businesses ans so on. The effect is that putting say £1M into the economy creates many £millions of economic activity and quite a lot of that comes back the the government in tax. This is the whole basis of Keynesian macro-economic theory.
3) The amount by which this £1M is multiplied depends on what you spend it on and where. If I spend my salary at the local farm shop and other local business then it benefits the local economy. If I spend it on imported Chinese electronic goods then the economy of China benefits from that part and the taxes on that component go to the Chinese government. From a government point of view stimulus money gets most benefit when the highest proportion of it is spent on local (
UK▸ ) wages. One of the best ways to do this is to spend it on public works and this was the reason for the massive road and rail construction programmes of the 1930's which included major improvements to the
GWR▸ .
4) Another form of stimulus is to reduce the amount of taxes people pay and this leads to one of the more controversial aspects of macro-economic policy. Tax breaks only benefit those who pay tax so they tend to disproportionately benefit the more wealthy. The theory is that this still filters down to the poorer people through the so called trickle down factor as they spend this money. However the evidence is that the more wealthy don't spend that much more when they get a tax cut, they simply save more, which does not benefit the economy. So look for which approach the Chancellor takes in his next budget.
Turning now to the difference between investment and day to day expenditure.
5) In some ways this is no difference to business investment. So a business that is expanding may take on more staff or it may invest in plant to increase the productivity of its existing staff (I generalise here). In a recession businesses are unlikely to do this as they have no guarantee of a return on their investment. Governments, on the other hand can choose to invest for a more general public good. The advantages of increasing capital spending (investment) is that it is only committed for a set period of time and can be turned off when the economy recovers. Increasing day to day expenditure (for example by employing more doctors and nurses) is that this becomes in practice an indefinite commitment to the increased expenditure.
6) Deciding on what to invest in to stimulate the economy also needs to take account of timescales. It could choose to invest in some totally new mega projects - but these are likely to take years to plan and design before most of the money is spent. A plan to build a new hospital where there has been no prior work will probably only start spending significant money in 5 to 10 years time. I am not sure how long it took to plan and design the Dawlish cut off in the 1930's but it was too long as although construction started in the spring of 1939 it was almost immediately stopped in the autumn of the same year! So government will be looking for "shovel ready projects". That is why I think there is almost no likelihood that
HS2▸ phase 1 will be cancelled.
This is a very round about way of responding to your point. But I will now come back to it.
I think there will be a significant amount of money available for projects that can show a public benefit provided that they can be started on the ground well before the next election. Local authorities know this so the most astute of them will be trotting out the projects they have been working on for some time like Metro West and the Cotswold line improvements. The rail reopening projects could also be part of this though I wouldn't like to bet on the ones where there has been little planning. A small improvement like additional double track over a short length and a new platform at Worcestershire parkway I would not rule out either if a case can be made.
The cynic in me also suggests that some of the money will be targeted where it can have the most electoral benefit so those who live an safe Tory seats should start making them look more like marginals in order to get more of the funding!
