1.2 The UK's public services have historically suffered from a sustained legacy of under-investment. The UK experienced a steady decline in public investment as a proportion of Gross Domestic Product (GDP) between the 1970s and 1990s with consistently lower levels than in other G7 economies. Public Sector Net Investment (PSNI) fell by an average of more than 15 per cent each year between 1991-92 and 1996-97, and represented only 0.6 per cent of GDP in 1997.
1.3 Under-investment in new assets necessary for the effective delivery of public services was accompanied by a damaging backlog of repairs and maintenance and hampered the ability of public servants to deliver high-quality services:
• in 1997 the backlog of repairs in schools was estimated at around £7 billion;
• the backlog of maintenance in NHS buildings in 1997 was over £3 billion; and
• the public transport sector had suffered from decades of under-investment.
1.4 In response, the Government has, since 1997, significantly increased levels of public investment, consistent with meeting its fiscal rules and maintaining macroeconomic stability. In cash terms this has seen public sector net investment (PSNI) rise from £5.4 billion in 1996-97 to £25.8 billion in 2006-07. The 2007 Comprehensive Spending Review (2007 CSR) announced that PSNI will rise to 2¼ per cent of GDP compared with 0.6 per cent of GDP in 1997-98, locking in the step change in investment over the past decade. Over the three years of the 2007 CSR (2008-09 to 2010-11) PSNI is projected to grow at a real rate of 4 per cent per year.