Why does the UK underinvest in public service infrastructure – and how can the problem be fixed?

Revelations about the widespread use of – and failure to replace – reinforced autoclaved aerated concrete (RAAC) in schools have put government capital spending in the spotlight.  For decades the UK has invested less than other wealthy nations. Government departments receive relatively ungenerous capital budgets, consistently underspend, and in some cases use capital budgets to cover day-to-day spending shortfalls. This has impacted on public service productivity and led to serious concerns being raised about the safety of some public buildings – with the concrete crisis in schools the most recent example. So why has the UK government historically set relatively low capital budgets and why do departments consistently underspend capital allocations? How can government provide public services with higher, more stable capital settlements and ensure that public service infrastructure is adequately maintained and renewed? What can we learn from other countries?  To discuss these questions and more, the Institute for Government brought together a panel of experts including: Anita Charlesworth, Director of Research at the Health Foundation Chris Giles, Economics Editor at the Financial Times Edwin Lau, Head of the Infrastructure and Public Procurement Division Public Governance Directorate at the OECD Lord O'Donnell, former Cabinet Secretary and Permanent Secretary for the Treasury The event was chaired by Dr Gemma Tetlow, Chief Economist at the Institute for Government.