Adam Smith Institute

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Potholes policy

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potholes-policy

Inevitably, most of the focus in last week’s Budget was on the level of public sector net borrowing. The Chancellor of the Exchequer, Alistair Darling, took great delight in announcing that this year’s PSNB was down to £167 billion – an horrendous figure but slightly less horrendous than the £178 billion forecast in the Pre-Budget Report.

Normally, an £11 billion improvement in the PSNB over a matter of months would have justified nationwide rejoicing. However, we live in desperate times for public finances so the updated figures are merely less awful than previously.

But buried in the Budget Statement was a rather curious announcement on the unglamorous issue of potholes.

The Chancellor stated that ‘the bad weather of the last few months has taken a damaging toll on their (roads) condition. So I am providing £100 million to pay for vital repairs to local roads throughout the country’.

It is perhaps ironic that, just days ago, parts of the sea defences at Leith near Edinburgh - close to the Chancellor’s Edinburgh South West constituency - were breached: road repairs will presumably be required there.

And, after a gruelling winter, such expenditure is much needed nationwide. Many will argue that the actual road repair bill will far exceed £100 million. Even in parts of London, which had relatively moderate snowfall levels during the winter, potholes abound – thereby boosting the demand for new tyres.

On a more academic level, the £100 million potholes policy is pure Keynesianism. With high unemployment and low private sector investment, this policy could easily have been extracted directly from the General Theory.

Of course, in Adam Smith’s era, tarmac roads were unknown. Fellow Scot, John MacAdam, only began building such roads some years after the great man’s death in 1790.

But, if he were alive today, would Adam Smith have supported such public expenditure on potholes?