(12 years, 2 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Danny Alexander)
I beg to move, That the Bill be now read a Second time.
We are introducing the Bill because a number of key infrastructure projects in this country that are close to starting construction are being held back as a result of the difficulties they face in accessing finance. These difficulties are not because of poor commercial or economic viability of projects, but because of temporary capacity constraints in debt markets and significantly longer lead times to secure lending commitments. Accordingly, we are expediting this Bill so that we can provide the necessary financial assistance as quickly as possible and provide confidence to the markets that the Government will be in a position to do so. Once Parliament approves the Bill we will be able to complete formal negotiations with project providers over financial assistance, which we would like to do as quickly as possible to prevent costly and unnecessary delay. I therefore thank Opposition Members and the Opposition’s Front-Bench representatives for agreeing to expedite the Bill.
The measures that the Bill will make possible—financial assistance to infrastructure and housing projects worth tens of billions of pounds—have received widespread support, particularly from the business community. They are supported, for example, by the Confederation of British Industry, which says that our approach
“marks a big step towards unlocking the…investment needed to renew our national infrastructure,”
and that our proposals
“will provide a much-needed tonic for the construction sector, getting diggers on site and people into work. It will make a difference to households across the country.”
Mr Denis MacShane (Rotherham) (Lab)
I support the main thrust of the Bill, but on Sunday last week I drove my son to start his studies at Edinburgh university and the A1 between Newcastle and Edinburgh, which is a single-carriageway road, was clogged up with tractors and hay balers. It is extraordinary that, in contemporary Britain, the access road to one of our main capital cities belongs to the back of beyond in Bangladesh. Can we do anything to dual-carriageway that road? It is close to the Chief Secretary’s constituency as well as mine.
Danny Alexander
I think that my constituents in the highlands would say that describing it as close to my constituency might be a misuse of the word “close”, but none the less I recognise the right hon. Gentleman’s point. I gently observe that his party had 13 years in office to deal with that project, although I mean no disrespect to him in saying so.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Will the Chief Secretary give way?
Danny Alexander
Let me answer the intervention made by the right hon. Member for Rotherham (Mr MacShane) and then I will gladly take a further intervention. I will deal with them one at a time, if I may.
I certainly will pass on the right hon. Gentleman’s concerns to the Department for Transport, which is aware of the matter. I have received representations from Members of all parties in the north-east of England about that particular project.
Mr Robinson
On road projects that would be advantageous, such as the one mentioned by my right hon. Friend the Member for Rotherham (Mr MacShane), is the Chief Secretary aware that not a single one of those announced in the autumn statement has yet got under way?
Danny Alexander
I would point out to the hon. Gentleman that one of the announcements in the autumn statement was about local authority major projects. He will know, for example, that the Kingskerswell bypass is under constructions, that the A164 Humber bridge to Beverley improvements are under construction, and that the east of Exeter scheme improvements to the M5 junction 29 are under construction. I could carry on, but I will save the rest of the list for further interventions.
Danny Alexander
I will give way one more time and then I will make some progress.
Kelvin Hopkins
The fact is that public sector investment fell by 29% between the last year of the Labour Government and this year, and that it is forecast to fall further to 32%. Given that borrowing money is as cheap as it has ever been, surely the decision is just a matter of reversing what the Government have been doing.
Danny Alexander
The hon. Gentleman will know that the headline plan set out by the previous Chancellor and Government included cuts to capital spending that were substantially greater than those being implemented by this Government.
Danny Alexander
I will gladly take another intervention after responding to the hon. Member for Luton North (Kelvin Hopkins). He will know that the low interest rates to which he has referred are in part a consequence of the fiscal credibility that this Government have established. It is precisely because we wish to use the strength of this country’s balance sheet which comes from that credibility that we are able to announce this guarantee scheme, which I will go on to describe in a moment. However, I shall take an intervention from the shadow Chief Secretary first.
Rachel Reeves
The right hon. Gentleman will be aware that the Office for Budget Responsibility has forecast that the previous Labour Government’s plans would have led to £6.6 billion more investment in infrastructure than that planned by this Government over the next three years. Will he confirm those numbers?
Danny Alexander
That is not my understanding of the position. In 2010, we added a little more than £2 billion in every year of the spending review to the capital headline figures set out by the previous Government. We added to that further in last year’s autumn statement by switching some money from current spending to capital spending, precisely because of the value that we ascribe to infrastructure projects.
In addition to the CBI, the proposals are supported by the British Chambers of Commerce, which said:
“Business will appreciate the pace with which the government is moving to put its new housing and infrastructure guarantees in place”.
They are supported by the National Housing Federation, which speaks for registered social landlords in this country. It said:
“This can play an important role in helping reduce development risk, boost returns and attract investors once the development is complete.”
John Howell (Henley) (Con)
I wonder whether my right hon. Friend has seen the survey that was published today by the CBI and KPMG, which shows that 97% of business leaders see the planning system as a big turn-off to allowing infrastructure to go forward.
Danny Alexander
I did see that survey. I note that it was conducted before the Government announced the guarantees plan. However, a subsequent snap-shot poll showed a widespread welcome from the business community for the Bill. My hon. Friend will know that we have made significant changes to the planning system, including in the announcements last week, that relate directly to the threshold for infrastructure projects. Those will allow more projects of a slightly smaller scale to go through the national process, rather than getting tied up in local processes.
Danny Alexander
I will take one more intervention, then I will make some progress.
Geraint Davies
The right hon. Gentleman will know that there are schemes in America where, with the support of pension funds, the private sector builds houses on land provided by the public sector. That provides a mixed asset with social and private housing, and a revenue stream for the public sector at no cost to it. When such schemes are available, why are the Government instead saying to the private sector, “Forget about social housing for a while. Just build private sector housing”? That will have a long-term impact on the demography of an area.
Danny Alexander
The hon. Gentleman, with the greatest of respect, has misunderstood the Government’s message. Part of the guarantee programme will extend the benefit of Government guarantees to housing associations, to enable an additional 15,000 affordable properties to be built. That is why it has been welcomed by the National Housing Federation, which speaks for housing associations in this country. Housing associations recognise that they will benefit from the guarantee, because it will reduce the cost of finance and help them to build many more homes for the sadly limited amount of money that is available to this country at the moment.
The plans are also supported by the Home Builders Federation, which said:
“Government now clearly understands the constraints on delivery and has outlined action to address them.”
The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and geographical regions; to moving away from an economy focused exclusively on the south-east of England, which is reliant on financial services and unsustainable debt, towards an economy supported by a wide variety of industries across the United Kingdom; and to making the UK one of the best places in the world to do business, attracting foreign investment and promoting our exports. To achieve that vision, the Government are committed to delivering world-class infrastructure, thereby giving firms access to the communication and transport networks that they need, wherever in the UK they happen to be.
Roberta Blackman-Woods (City of Durham) (Lab)
Will the right hon. Gentleman give way?
Danny Alexander
I am going to make some progress, but I will come back to the hon. Lady.
We want to allow Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map for delivering on that vision. There is a pipeline of £200 billion of upcoming investments in major necessary projects, most of which will be delivered through the private sector. In addition, we want to see billions of pounds of investment in housing and infrastructure to support our public services.
Even in more favourable circumstances, raising the private finance that is necessary to deliver on those goals would be a challenge. Given the disruption caused by the instability of international markets and the eurozone, and its adverse effect on capital markets, it is clear that decisive action is necessary to enable these projects to be delivered. The Bill will allow us to take that action and to bring forward the investment that is required.
Roberta Blackman-Woods
Will the right hon. Gentleman explain why it has taken so long for the Government to recognise that additional investment in infrastructure is needed if the economy is to grow?
Danny Alexander
Again, I do not agree. By looking at the way we use capital moneys across Government, the decisions we took in the 2010 spending review have enabled us, for example, to devote more capital moneys to the Department for Transport for investment in our transport infrastructure over these four years than our predecessors were able to devote over the previous four years. The same could also be said of communications and broadband infrastructure. This Bill is a major development along that road. Labour could have put in place a guarantee scheme at any point in the previous 13 years, but it chose not to.
Andrea Leadsom (South Northamptonshire) (Con)
I have a business breakfast club in my constituency. A group of business people told me recently that the big challenge for them is not being able to move into decent premises so that they can expand and the inflexibility of the system. Can my right hon. Friend tell me whether there is anything in the Bill for those businesses? Surely they are the real engines of growth, operating at the sharp end of our economy.
Danny Alexander
By offering guarantees to a wide range of infrastructure projects that might otherwise be delayed because of lack of access to finance—thereby bringing those projects forward, or in some circumstances accelerating them—the Bill will, I hope, help to ensure that the businesses my hon. Friend is describing can access the quality of infrastructure they need to deliver their growth plans. In that sense, I think the Bill will make a big difference.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I have been listening carefully to what the Chief Secretary has been saying. I understand the argument in principle, but he has been short on specific illustrations. He will know that the national infrastructure plan identifies a significant number of schemes. Can he now tell us which schemes that are currently stalled and not proceeding he would anticipate getting the go-ahead as a result of the Bill being passed?
Danny Alexander
I have a good deal more detail to get to in my speech, and I shall do so as soon as I have got through the various interventions that have been made. However, I shall not list individual projects before we have agreed guarantees for them, for the very good reason that it would be wrong to set out in this House those projects that could potentially benefit from the Bill, as doing so could either disturb the commercial position of some of the finance that has already been secured or undermine the discussions that we are engaged in to put in place such guarantees.
Joan Walley (Stoke-on-Trent North) (Lab)
When the Minister gives the details of where the investment will be going, will he tell the House what regard will be given in the decision-making process to the Climate Change Act 2008 and the work of the Committee on Climate Change? It would be short-termism and completely the wrong way to go about the policy if, for example, his infrastructure investment locked us into greater use of carbon rather than reduced use.
Danny Alexander
The hon. Lady makes an important point. Of course, the Bill will not discriminate between projects on policy grounds. We have set out some criteria, which I shall come to, but there are many energy projects—particularly in the renewables field—that are being brought forward in this country as a result of that framework and the policies that have followed from it. Some of those projects may well fall into the category that needs the support from the guarantees that the Bill will provide. In that sense, the Bill should give us an extra tool to ensure that the renewables investment that we need can go forward in a timely fashion, which I hope she would welcome.
The House will know that the Treasury already has wide powers under common law, not limited by statute, to issue guarantees, make loans and give other financial assistance in support of infrastructure. In some cases, Secretaries of State have statutory powers to support infrastructure; in others, they would need to rely on common law powers. However, many Members will also know that there is a long-standing convention, dating back to 1932, that the Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. Accordingly, in order to offer the support that we want to see, the Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities, should they be called on to do so. Today we seek authority for the Treasury, or the Secretary of State where appropriate, to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK.
Hazel Blears (Salford and Eccles) (Lab)
In drawing up the agreements for such significant expenditure, what account will the Chief Secretary take of the Public Services (Social Value) Act 2012, so that we can secure a social, environmental and economic impact from such contracts—in particular, through employment and training opportunities for young people—and ensure that the money makes a difference on the ground in our communities?
Danny Alexander
The right hon. Lady is referring to an important piece of legislation, which, generally speaking, will have been taken into account in the process of giving consent to a project. The guarantees will be offered to projects that meet a number of criteria, one of which is that they already have the necessary consents in place to get going within 12 months. The objective is to bring forward and accelerate the development of infrastructure, and it would be inappropriate to impose additional obligations on people delivering projects. This is about enabling projects that are already slated to happen to get going quickly.
Mr Robinson
This is a huge sum of money that the Treasury is undertaking to guarantee. I cannot imagine what some officials must think about it, but I know that there will be a strong case for ensuring that all guarantees are immediately and unconditionally added to the public sector borrowing requirement. Is it the case that any guarantee will be counted as public expenditure and be part of the PSBR?
Danny Alexander
It is good to hear from someone on the Labour Benches who thinks that £50 billion is a lot of money, given the freedom with which the Labour Government borrowed such sums during their time in office. The hon. Gentleman will know that these guarantees will not score to the PSBR, except to the extent that one makes an assumption about them being called, which causes a bit of immediate public expenditure. It is only at the point at which a contingent liability is called on that it scores as public spending. He will also know, because I suspect that he was involved in these matters when he was a Minister at the Treasury—
Danny Alexander
If the hon. Gentleman will let me finish my answer, I will give way to him again. He will also know that we recently obtained the agreement of Members on both sides of the House to introduce a new process known as the whole of Government accounts. That process, in addition to covering the national accounts that relate to immediate expenditure, also reports on off-balance-sheet expenditure of all sorts. Contingent liabilities of the kind that might be entered into under the Bill will be reported in the normal way.
The hon. Gentleman will also observe that the Bill includes significant reporting requirements. These will require the Treasury—or the Secretary of State, where appropriate—to report to the House in circumstances in which guarantees are issued under the terms of the Bill. I hope that that satisfies him—but perhaps it does not.
Mr Robinson
There was a long-standing Treasury tradition—I do not know when it was last breached, or whether it has been discarded—that a guarantee was counted as expenditure when it was given, not when it was called. The Bill seems to provide yet another easy way for the Government to find some off-balance-sheet expenditure in a way that they swore not to do.
Danny Alexander
I am advised that that is not correct, but if the hon. Gentleman wishes to enter into correspondence on the matter, I shall gladly follow it up.
Dan Rogerson (North Cornwall) (LD)
I am pleased that the Government are doing more to build on the work that they have done to invest in infrastructure and to encourage investment for other projects. I hope that many hon. Members visited Cornwall over the summer. If so, they might well be familiar with the Temple to Higher Carblake stretch of the A30 on Bodmin moor, which is not dualled. The road on both sides of that stretch is dualled. Local proposals have been made to come up with funding that can be put with Government funding to take the dualling scheme forward. I hope the Chief Secretary will ensure that this legislation will help to unlock local sources of funding to take such projects forward.
Danny Alexander
I had the pleasure of spending some time in Cornwall earlier this year, and of driving down that stretch of road. I understand the case that my hon. Friend makes. It has been made to me by Cornish colleagues from both coalition parties, and we will of course look sympathetically at any requests that might be made. It is always welcome to see local funding coming forward, and to see a local area taking responsibility for what it wants to do.
Charlie Elphicke (Dover) (Con)
The way in which the guarantees will be structured will be incredibly important for the planning by the financiers who wish to unlock these important projects. Will this involve credit support for the land or undeveloped infrastructure, credit support for the development finance piece, or credit support for the off-take or use of the infrastructure at the end of the day?
Danny Alexander
As I shall explain, we are not seeking to circumscribe unnecessarily the nature or structure of the guarantees, either through the Bill or through the announcements that the Government have made. We are willing to have discussions with those involved in projects that meet the criteria that have been set out, and it might well be that different structures of guarantee will be appropriate for different projects. I do not wish artificially to circumscribe the flexibility of the scheme in advance of the discussions with the individual projects. I am sure that those involved in the projects will be well able to have discussions with Infrastructure UK about the nature of the guarantee that would suit them best.
I was explaining the convention that the Government should not rest significant expenditure under common law powers on the sole authority of general supply legislation. Accordingly, to offer the support we want to see, Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities should they be called upon.
Today we seek authority for the Treasury to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK. That financial assistance might take the form of guarantees, loans, indemnities or other support backed by public funds. It could be used—
Danny Alexander
I am going to make some progress; I will come back to the hon. Gentleman later.
It could be used to support investment in utilities, transport, other infrastructure for the provision of economic and social public services or housing.
Danny Alexander
No. I am going to make some progress.
The Bill does not affect any existing authority to incur expenditure that might already have been conferred on a Secretary of State; nor will it cover expenditure by a Secretary of State that can properly rest on the authority of annual supply legislation, without requiring specific statutory authority.
Where costs connected to the guarantee are incurred by the Exchequer that cannot reasonably be absorbed by the funds already provided by Parliament and where it is not possible to seek authorisation of Parliament for the additional expenditure—for example, because the House is not sitting—the Bill allows provision to be made from the Consolidated Fund. This is to cover the commercial reality of situations in which payments need to be made very quickly following an unforeseen obligation. Without this provision, any guarantee could lack commercial viability.
Danny Alexander
I am going to make some progress; I shall take some more interventions later.
The Government intend to offer assistance in the form of guarantees, although the Bill makes provision for other forms of assistance that we intend to use only where unforeseen urgent provisions are required. We believe that up to £40 billion of investment in infrastructure could be brought forward or accelerated under the UK guarantee scheme, using the powers in the Bill. That will help to deliver core infrastructure that supports growth, to improve the UK’s energy, transport, water, waste and telecommunications, and it includes about £6 billion-worth of public-private partnership projects delivering essential public service infrastructure. We will issue guidelines and scrutinise proposals to ensure that any proposal that receives an infrastructure guarantee is nationally significant, financially credible, good value for the taxpayer, requires a guarantee to get under way and is ready to start within a year.
Danny Alexander
I am going to make some progress, as I say, but I will take some more interventions at a later stage.
Since the projects we expect to back will be structured to minimise the potential of losses to the Exchequer, there will be minimal impact on public sector net borrowing as a result, except in the extreme circumstance that a guarantee is called upon or other forms of financial assistance are provided. We intend to levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive, and that the taxpayer receives a fair price for any risk being taken. We also plan to use these powers to support up to £10 billion-worth of investment in housing.
Danny Alexander
Now might be a good time to give way to the former Minister for Housing.
Mr Raynsford
I am grateful to the Chief Secretary for giving way, although this intervention is not on a housing matter, but relates to his earlier comment about “schemes of national significance”. As he will know, this was part of the original blueprint, yet I searched in vain through the fine print for any definition of “national significance”. Is the absence in the Bill of any such reference to nationally significant schemes a significant omission, or not? If not, how are the Government going to ensure that their objective of supporting schemes of national significance is met?
Danny Alexander
It is not an omission from the Bill, which puts in place broad and permanent powers to issue guarantees for infrastructure projects. The Government expect that under the UK guarantee scheme, which will be the first manifestation and use of the Bill’s powers, nationally significant projects will be the sorts of projects able to apply. That means projects listed in the national infrastructure plan or other such projects as may come forward, but the Bill gives a broader authority to the Treasury to issue guarantees in other circumstances. What I am describing is how the Government intend to use the powers in the Bill.
Danny Alexander
I will give way to the hon. Gentleman, who has not intervened in the debate so far.
John McDonnell
On that specific point, I hope that the right hon. Gentleman is going to deal with clause 1(2)(b), which is one of the provisions defining the range of facilities that will be funded in this way. It refers to
“railway facilities (including rolling stock), roads or other transport facilities”.
Will he clarify whether those “other transport facilities” include airport expansion and runways? Although the third runway at Heathrow, or perhaps elsewhere, is not listed in the national programme and will not be brought forward in the next 12 months, there are no sunset clauses, so this Bill could be used to that effect.
Danny Alexander
The hon. Gentleman is right: there is no sunset clause. That is because we think that it is important to introduce these powers, not just for now but for the future. By circumscribing the financial limit of the extent of the powers and also by establishing strong requirements for reports to be made to Parliament, we can ensure that Members continue to be informed on how they are used. As the hon. Gentleman says, no such proposals are on the table at present, but in principle, should a major infrastructure scheme arise in the transport sector but be unable to attract the necessary finance because of conditions in the funding markets, it could be eligible in the future. However, that would be a decision for the Government of the day.
Henry Smith (Crawley) (Con)
Will my right hon. Friend join me in congratulating London Gatwick Airport Ltd on the £2 billion that it is investing in the upgrading of the facility, including the rail infrastructure?
Danny Alexander
The hon. Gentleman has cited the airport that I use most, apart from Inverness airport, because it services Inverness. I probably use it a couple of times a week. I have observed the investment programme, and it is certainly improving the facility. We hope that that improvement will continue.
Joan Walley
I am grateful to the Minister for giving way a second time. Does he agree that it is important for the Bill to provide for proper environmental impact assessments? Given that consultation is taking place in the House now that the Government have got rid of the regional spatial strategies, there is a requirement for us to ensure that environmental impact assessments take place. Will the Minister explain how that is linked with the requirement in clause 3?
Danny Alexander
I think it important for legislation to contain provision for appropriate environmental impact assessments, but this Bill is not the proper place for such a provision. Such assessments will have already taken place as part of the consenting process. As I have said, the Government will offer guarantees only to projects that can get under way in less than 12 months and have secured the relevant consents.
Kelvin Hopkins
Private companies in Britain are sitting on a cash surplus of £700 billion, but they are, in effect, on investment strike. They will not invest because the economy is depressed and they see no possibility of a profitable return. Is it not the case that only the Government can drive us into growth again, and that the Government must take the lead to unlock that money for the private sector?
Danny Alexander
One of the things that the Bill will do, which I hope the hon. Gentleman will welcome, is help to generate private investment in this nation’s important infrastructure, which has suffered from under-investment for so many years. Perhaps that is the answer that he was seeking.
The Government will use their hard-earned fiscal credibility to pass on lower costs of borrowing to support the long-term delivery of new affordable and private rental homes. We plan to issue debt guarantees for a private rental housing scheme and the affordable housing scheme to give institutional investors the assurance that they need to invest in housing. Under those schemes, the Government would enable providers who commit themselves to investing in additional new-build rented homes to raise debt with a Government guarantee. Housing proposals will be scrutinised and approved on the basis of presenting low-risk, high value-for-money investments.
As with UK guarantees, there will be a minimal impact on public sector net borrowing, as the developments we expect to back will be structured to minimise the potential losses to the Exchequer. For the private rented sector guarantee, we intend to levy a commercial charge to reflect the benefits that companies receive and to cover the risk taken by the taxpayer.
The actions made possible by the Bill would provide enormous benefits across the UK. We expect the boost to housing construction, combined with our recently announced planning reforms, to generate about 140,000 jobs in the construction sector, and the infrastructure unlocked through UK guarantees could provide hundreds of thousands more. However, this is not just about a near-term boost. The projects that go ahead as a result of the action that we are taking will provide major long-term benefits for individuals, firms, households, and the whole UK economy. They could help businesses to take better advantage of 21st-century technology by improving broadband and mobile speed and connectivity. They could help businesses to connect with consumers, employees and each other, and allow workers to gain access to new job markets by improving our major ports, airports and corporate centres, and the transport links between them.
Damian Collins (Folkestone and Hythe) (Con)
I am grateful to my right hon. Friend for giving way. He is being very generous with his time.
The planning system has an important part to play. Two years ago, the local authority gave Lydd airport, which is in my constituency, permission to expand. A private investor is willing to pour in millions of pounds so that the work can start immediately, but the decision is still locked up in the planning system awaiting the Secretary of State’s approval. Is there any advice that my right hon. Friend can give his colleagues in the Government that might make it easier for people to invest in the kind of infrastructure that he is describing?
Danny Alexander
The Secretary of State will have to make a decision in the normal way. I am sure that he will have heard my hon. Friend’s comments, and I shall ensure that they are passed on.
Danny Alexander
I must make some progress, but I will give way again later.
Housing guarantees, alongside a wider package of housing and planning reforms, will contribute to the construction of up to 70,000 homes, including affordable housing, and opportunities for first-time buyers to get on to the housing ladder. That will ease conditions in overcrowded and overpriced residential areas, and will enable people to locate near to jobs.
The steps that we plan to take, and which the Bill enables us to take, will help more companies in a wide range of sectors to grow and flourish, not just in the south-east of England but throughout the UK, and will give more people access to a wider range of opportunities. The benefits will also be felt in Scotland, Wales and Northern Ireland. The UK’s hard-won fiscal credibility should benefit the whole of the UK.
Danny Alexander
I have a bit more to say. I have been generous with my time, but I must now make some progress. The hon. Gentleman’s Front-Bench colleagues are becoming restless.
The Bill will enable major infrastructure projects to secure finance regardless of where they are based. We will work closely with the Northern Ireland Assembly, the Welsh Assembly Government and the Scottish Government to ensure that the authority conferred on the Treasury or the Secretary of State by the Bill can be used effectively to help to deliver for people in Scotland, Wales and Northern Ireland.
I shall now give way to the hon. Member for Swansea West (Geraint Davies).
Geraint Davies
In certain areas of Wales—such as Swansea, part of which I represent—the cost-benefit ratio is not always as strong as it might be. Will the Minister support, for instance, super-connectivity for Swansea, given that it has been granted to Cardiff, and better links to Cardiff airport? Passenger numbers are not great at present, but that is simply because the infrastructure has not been there in the past.
Danny Alexander
I hear the case that the hon. Gentleman is making. We have made important announcements recently, particularly in relation to rail links in and to Wales, which I hope he welcomes. I will not support specific projects that may be in gestation, but we will work with the Welsh Assembly Government, who are principally responsible for such proposals. If there are projects for which a guarantee is appropriate, we will consider that very positively in the light of the representations made to us.
As the hon. Gentleman will know, great interest has already been expressed by investors and those involved in projects since the UK guarantees idea was launched six weeks ago. Since then, about 40 companies and project sponsors have come forward, responsible for projects worth well over £5 billion and covering high-priority investment in areas such as energy, transport, water, waste and telecommunications. Detailed discussions are already taking place with, for example, those involved in the Mersey Bridge Gateway project, which is considered to be one of the world’s top 100 infrastructure projects. We have also indicated that we would be willing to consider a guarantee relating to the green deal.
There should be no doubt that the Government are in a position to deliver this policy, and the investment it will unlock, only because of the decisive action that we have taken to reduce the deficit, and the credibility that that has secured for this country. When we came to office, the UK taxpayer was paying interest rates comparable to those of Spain and Italy. Were that still the case, the course of action that we are taking now would be impossible. Because we made tough decisions to regain control of our public finances, we now enjoy interest rates of only about 2%. That is the result of a responsible approach to spending and a credible long-term commitment to regaining control of the public finances.
Despite those tough decisions, we are already spending more on critical transport and communications infrastructure directly as a Government than was spent at the height of the spending boom. We are providing £18 billion-worth of rail investment, supported by the spending review, and a further £9.4 billion of infrastructure enhancements for the rail network was announced in the summer. Ten super-connected cities—the hon. Member for Swansea referred to super-connectivity—will enjoy ultrafast broadband and high-speed wireless connectivity as a result of Government investment, with funding set aside for a further 10. We are also focusing on how we can reduce burdens and keep costs low so that investment, whether public or private, goes as far as possible.
Last week we announced a package of measures to reduce burdens on business still further, including the reform or removal of more than 3,000 regulations to reduce their impact. That constitutes the most ambitious action ever proposed by a modern British Government to set business free. Our spending plans have prioritised capital spending that supports balanced sustainable growth across the country, and our efforts to reduce burdens on businesses mean that investment has gone even further. That approach is producing results despite difficult conditions. More than 1 million private sector jobs have been created under this Government, and this year we rose from 10th to eighth in the World Economic Forum rankings of international competitiveness. The Bill could allow us to unlock even more investment without placing material additional burdens on the public finances, enabling the Treasury to support infrastructure delivery so that we can make better use of private sector finance, skills and incentives, while also managing exposure to the taxpayer.
Under the previous Government, the UK fell in the infrastructure world rankings from seventh in 1998 to 33rd in 2009—behind Namibia, Slovenia and Cyprus. We are now up to 24th and taking the necessary steps to make the further improvement this country needs. There can be no argument with the view that we are delivering far more than under the plans we inherited from our predecessors.
The Bill contains appropriate safeguards and checks to ensure transparency and accountability to Parliament for actions taken under it. It imposes an upper limit on the amount of expenditure that the Treasury and Secretary of State may incur, which can be increased through affirmative resolution. It also requires the Treasury to update the House regularly. In answer to a point that was made earlier, where expenditure is charged on the Consolidated Fund, the Bill requires the Treasury as soon as practicable to lay a report before Parliament specifying the amount paid. Any expenditure or contingent liabilities will be reported in the whole of Government accounts.
Charlie Elphicke
One of the key sensitivities is that one does not want a guarantee to end up like quantitative easing, whereby guarantees are issued and nothing actually comes out the other end. To what extent and how will the Treasury monitor the situation, to ensure that this is a results-based guarantee that brings forward such projects and really makes them happen?
Danny Alexander
I am not sure I accept my hon. Friend’s characterisation of quantitative easing. One of the strengths of the tight fiscal policy that this Government have run and will continue to run is precisely that it allows the monetary activism that we have seen in this country and, indeed, in other parts of the world. However, he is right that the purpose of the Bill is to enable infrastructure projects to come forward quickly. That is why one of the key criteria by which we will decide whether to issue a guarantee to a particular project is that it can get under way within 12 months of the guarantee being issued, and that it has the necessary consents in place. This is about bringing forward projects now; it is not about offering guarantees now for projects where nothing will happen for many years to come.
Stella Creasy (Walthamstow) (Lab/Co-op)
Many Members will want to follow where the public money is spent, and we should consider the role of the Public Accounts Committee in understanding these measures. Will the Minister say a little more about when a liability will go on to the balance books, and the impact of the value for money assessment of the Public Accounts Committee of any of these projects? What will be the impact on those decisions and on any future liability that might be incurred?
Danny Alexander
Of course, the Public Accounts Committee will be able to undertake scrutiny in the normal way. Clause 3 sets out detailed reporting requirements to Parliament for the guarantees, and the PAC will want to scrutinise such matters. As I was explaining earlier, these contingent liabilities will be reported through the whole of Government accounts process, which is the appropriate way to report such things. They will manifest themselves as public spending only as and when the liabilities are called, or where an assumption has to be made about the likelihood of a guarantee being called; otherwise, they are contingent liabilities, as the hon. Lady will well understand.
The Bill contains measures that will support growth, jobs and families, all at minimal expected cost to the taxpayer. It will support the UK’s construction sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business, and to support sustainable growth balanced across sectors and regions.
Rachel Reeves (Leeds West) (Lab)
We will not oppose the Bill on Second Reading, but we do not think it remotely adequate to meet the scale of the challenge we now face: the longest double-dip recession since the war, record levels of youth and long-term unemployment, dangerously low levels of business investment, and as a result, deficit reduction way off track, with borrowing up by a quarter this year. The longer this situation continues, the higher the price for businesses, taxpayers and working families in the future: permanent damage to our long-term productivity and competitiveness, and billions of pounds in additional unplanned Government borrowing.
The Opposition have been urging the Government to act and we have repeatedly identified infrastructure investment as an urgent priority. However, this is not the plan it purports to be. The Prime Minister said that he would “cut through the dither”, but he has simply created another distraction—a fig leaf for their own inaction; a peashooter where we needed a big bazooka. At a time when we need to be bold if we are to boost business confidence, to come out with something half-hearted and hesitant risks making things worse.
Before proceeding, I would like to apologise for that fact that, as Mr Speaker and the Chief Secretary to the Treasury are already aware, I cannot be present for the winding up of this debate.
Let us remind ourselves of the background to the Bill. Over the summer, we learned that the UK economy had entered its third quarter of negative growth—the longest double-dip recession in British post-war history. Unemployment remains unacceptably high; youth and long-term unemployment is a national disgrace; and headline employment figures conceal endemic under-employment. Record numbers are working fewer hours than they want to, and record numbers are trapped in temporary work. The Chancellor’s promise of expansionary fiscal contraction has come to nothing.
A Government who proudly proclaimed on page 1, paragraph 1 of their coalition agreement that eradicating the deficit and securing the recovery were their No. 1 priority are now midway through their term of office. What do they have to show for themselves? They have an economy that is smaller than when the Government’s measures began to take effect and, at the last count, £150 billion in additional debt—a figure that is likely to rise further, with borrowing up by a quarter this year. As the former US Treasury Secretary writes in this morning’s Financial Times,
“the reality is that the primary determinant of fiscal health in both the US and UK over the medium term will be the rate of growth. An extra percentage point of growth maintained for five years would reduce Britain’s debt-to-GDP ratio by close to 10 percentage points whereas austerity policies that slowed growth could even backfire in the narrow sense of raising debt-to-GDP ratios and turning debt unsustainability into a self-fulfilling prophecy.”
Hazel Blears
Would my hon. Friend describe this as plan A, plan A-plus, or plan B? [Interruption.]
Rachel Reeves
From a sedentary position, my hon. Friend the Member for Nottingham East (Chris Leslie) suggests “plan F for fail”, and I could not agree more. I wish this was a plan B, but I do not think it is. It is more words, when what we require is action. Yet the Government do not listen to the evidence—they just plough on with a plan that everybody else knows has failed.
Charlie Elphicke
Can the hon. Lady clear up a bit of confusion? Today, she wrote in The Guardian that the Labour party would fix all this with a bankers bonus tax to build new affordable homes. However, it seems that this tax has been spent a number of times. Back in March, the Leader of the Opposition said it was going to be used to fund the young unemployed. Which is it?
Rachel Reeves
The bank bonus tax is being used to do two things: first, to create 100,000 jobs for young people; and secondly, for the construction of 25,000 new affordable homes. The Opposition believe that the priority right now is construction and getting young people back to work. The Government believe that the priority is a tax cut for the bonuses. That just shows how out of touch this coalition Government are.
Nothing better illustrates the long-term costs of this Government’s short-sighted complacency than the shocking shortfall in infrastructure investment. If we want to build a productive, competitive economy for the future, we need to invest in the road and rail systems that keep this country moving; in the energy supplies that power our industries; in the information and communication networks that turn ideas into real innovations. With study after study confirming Keynes’s original insight—that construction projects can maximise the multiplier effects of new investment, creating skilled jobs in the construction sector as well as in engineering and design—there is no better time than now.
Instead, we have had from this Government countless speeches, statements and strategy documents. People are asking, “Where is the delivery?” As the CBI is asking, where are the diggers on the ground? When are we going to start turning blueprints into bricks and mortar? It was the Prime Minister who said,
“This autumn, the government is on an all-out mission to unblock the system and get projects underway”.
That sounds promising—until we realise that he said this a year ago. Since then, what have we seen? None of the road building projects in the autumn statement package have begun construction. The number of housing starts is down on 2011. Planning applications are taking longer to approve. I agreed with the Prime Minister when he said:
“In terms of job creation today, getting construction projects off the ground is critical.”
But in the year since he told us that barely one in 10 of the projects listed in the Government’s construction pipeline have moved forward to procurement or construction, and almost as many of them have moved backwards. Total UK construction output is down by more than 10% and last week’s jobs figures showed that the number of jobs in the construction sector has fallen by 89,000, bringing the total number of construction jobs lost since this Government came to power to 120,000.
The Deputy Prime Minister has promised that support for infrastructure and other private sector projects from the regional growth fund would offer a
“boost to business, which will jump start growth and create jobs that last in the places that really need it.”
That sounds like just what we need, but that was said a year ago. We know that since then just £60 million of the promised £1.4 billion has been released to businesses, creating barely 5% of the 37,000 jobs promised.
The Chancellor of the Exchequer announced £20 billion in new infrastructure investment to be funded by the pension funds—that was a year ago. We now know that this scheme will be launched next year, with funds amounting to only a tenth of what was promised back then. As the failure of this Government’s promises increases, their rhetorical displays have become ever more strident. Two weeks ago, in response to questions from my right hon. Friend the Leader of the Opposition, the Prime Minister said:
“If we look at what is planned by this Government, we see that between 2010 and 2015 we will be investing £250 billion in infrastructure.”—[Official Report, 5 September 2012; Vol. 549, c. 230.]
It is true that the national infrastructure plan sets out £250 billion-worth of projects— would government not be easy if you were judged only on what you had planned? If we look instead at what has been delivered, we see that the picture is rather different. The Office for National Statistics shows that new infrastructure orders since the second quarter of 2010 average less than £2 billion a quarter. At this rate, it will take not five years but more than 30 years for the Government’s grand plan to be delivered. The latest construction output figures released last week show that progress is slowing, not accelerating. It is no wonder that the director general of the British Chambers of Commerce has described the national infrastructure plan as
“hot air, a complete fiction”.
Geraint Davies
My hon. Friend will know that the Prime Minister boasts of an extra 1 million jobs in the private sector. Does she agree that many of those jobs are where people are moving into part-time work having lost full-time work? It is wrong that the Government penalise people who are now working less than 24 hours but used to do more, by cutting their working tax credits by £3,750. The Government are saying, “Get some more work” but these people have just come down from full-time employment.
Rachel Reeves
I thank my hon. Friend for that intervention. He will know that there are 1.42 million people working part time who wish that they were working full time. As of April, about 200,000 families lost support through working tax credits because they could not find the additional hours that they need to still be eligible for that extra support to help them when they are in work; that support helps them to avoid poverty.
It is no wonder that people are asking whether they can have faith in anything the Government are saying, given that in every area we see dither and delay. In communications, the Government have put back the 2012 broadband target to 2015 and may not meet that new deadline. In house building, recent statistics show that new housing starts are down by 24% on a year ago. In waste management, the plan promised for spring this year will now not be delivered until the end of 2013. In energy, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy”.
In transport, we still await the long-promised national policy statement on transport networks and aviation, and tough decisions on airport capacity have been kicked into the long grass. Instead of the drive, decisiveness and clarity of vision that businesses are crying out for, what do we get in sector after sector? We get dither and delay; we get initiatives and announcements driven by the desire to hit headlines rather than to deliver results.
The Bill—the Government’s latest scheme—is a strange piece of legislation. It is being fast-tracked through Parliament, with the justification that the situation is immediate and urgent. However, given this need for speed, we are bound to ask whether legislation is necessary, particularly given that, as the House of Commons Library note explains, such commitments
“do not typically require…legislation”.
The UK guarantee scheme at the centre of the Bill was first announced by the Prime Minister in a speech in May. It was re-announced by the Chancellor in a speech in June. The press release came from the Treasury in July. It is therefore hard to resist the conclusion that the Bill is designed more to create the impression of activity and delivery than to get real results in the quickest way possible.
However, the Opposition’s biggest concern with the Bill is that it is simply inadequate to meet the challenge we face. Many in industry are sceptical that it will make any difference. Even where it is taken up, the tight criteria of economic and commercial viability may mean that it amounts to only a deadweight subsidy, aiding projects that would have gone ahead in any case. The best anyone has been able to say for it is that it might help some schemes at the margin, but that is hardly commensurate with the challenge we face.
The schemes that have been most frequently mentioned as strong candidates for assistance are those the Government have announced are going ahead several times already. Let me cite one example, which the Chief Secretary mentioned in his speech. Earlier this month, he said:
“Detailed discussions are already taking place with the Mersey Bridge Gateway project”.
We certainly welcome progress, but many may experience a strange sense of déjà vu, given that a year ago the same project was announced by the then Transport Secretary, who noted that although some transport plans are long term, this one could be
“implemented more quickly…creating jobs when they are needed most.”
What happened in the past year? It is no wonder the Government are gaining a reputation for more talk than action. As the director general of the CBI said today,
“firms fear initiative overload and are becoming impatient with delivery, leaving many companies still sceptical about the overall impact on investment.”
Mr William Cash (Stone) (Con)
Does the hon. Lady accept that this Bill is, in effect, pure Keynesianism? If she had the opportunity to read Nicholas Wapshott’s recently published and excellent book on the arguments between Keynes and Hayek, she might conclude that elements in this hoped-for infrastructure programme carry with them the germs of really serious difficulties if we pursue a policy of pure Keynesianism and do not take into account the arguments of Friedrich Hayek.
Rachel Reeves
I look forward to reading the book that the hon. Gentleman mentions, but I do not think that the Bill is pure Keynesianism—that would be doing things that Labour Front Benchers are recommending, such as introducing a temporary reduction in VAT, a tax on bank bonuses, genuinely bringing forward infrastructure investment and a national insurance holiday for small businesses. Those are the things that would kick-start the economy, get people back to work and get the deficit down in a sustainable way, because there would be more people in work and more businesses succeeding, unlike what we have from this Government, which is £150 billion of additional borrowing because more people are on welfare and fewer businesses are succeeding.
Kelvin Hopkins
I compliment my hon. Friend on her excellent speech and may I say that Friedrich von Hayek has caused more damage in this century and the last than any other economist in the history of the world? Nevertheless, she is absolutely right; this is about a supply-side measure which is not Keynesianism. Assisting and providing a little bit of investment with a little bit of Government subsidy is not Keynesianism. Keynesianism is direct spending to create demand in the economy. The private sector will not create demand. Only government can restore the demand where there is the vacuum at the moment.
Rachel Reeves
I thank my hon. Friend for that intervention. Of course he is agreeing with something that the Business Secretary said, which is that the real problem in the economy is a lack of demand. Supply-side measures will not do very much to help with that. When the Chief Secretary was asked in intervention what projects would be supported by this Bill he could name not one. That is the problem; this is a guarantee scheme, but we do not know what it guarantees. This is a project to help infrastructure investment, but we hear no announcement about which infrastructure investments will go ahead that would not have done previously. No wonder businesses and Members are sceptical and no wonder we are still in recession, if this is as good as the Government can get.
We will not oppose the Bill, but nor will we allow the Government to use the scheme as a substitute for the real plan that the economy and businesses so desperately need. Instead of devoting themselves to the task of getting our economy moving again, the Government have put before us an infrastructure investment guarantee that guarantees no infrastructure investment—fast-track legislation that has had the effect of getting the scheme stuck in the slow lane. The Government are preoccupied with distracting us from their fundamental failure and inaction, but people’s patience is wearing thin. We have had enough of initiatives and announcements: no more excuses, no more evasions—the Government need to get serious.
Two years ago, we warned that the Government’s economic plan would choke off recovery, shatter business confidence and add to borrowing, and that it would make it harder, not easier, to balance our books and pay our way in the world. A year ago, we called on the Government to bring forward infrastructure investment; we called for a bank bonus tax to fund the construction of 25,000 new affordable homes and to deliver a programme of youth jobs. If the Government had taken our advice then, just think how much progress we could have made by now.
Jane Ellison (Battersea) (Con)
Before the hon. Lady reaches the end of her speech, perhaps she will comment on this point. If all the things that have not been done are so bad, why did Madame Christine Lagarde say that she shivered to think what would have happened had the Government not taken the action they did?
Rachel Reeves
Olivier Blanchard and the International Monetary Fund have been saying for a year that if growth does not materialise the Government should think again. How much longer do we need to be in recession? How much longer must we have rising youth unemployment and rising long-term unemployment before the Government act? The IMF now forecasts that the economy will shrink this year and will barely grow at all next year. That is evidence that the Government need to rethink their strategy, and it is a shame that they have not heeded the advice of the IMF.
Geraint Davies
Does my hon. Friend agree that the reason consumer demand is so awful is that the Chancellor announced that 700,000 people in the public sector would lose their jobs? People in the public sector do not know whether it will be them or their neighbour, or whether it will be this year or next year, so they are saving not spending. That is why there is no growth.
Rachel Reeves
I thank my hon. Friend for that intervention. It is not just people in the public sector; people in the private sector, particularly in construction, which has shed 120,000 jobs since the Government came to power, are also worried about their jobs and futures and about how they will get the money to feed and house their families. There is real concern and a real lack of confidence among households and businesses.
This summer showed that things could be done differently. The Olympics showed what can be achieved with an inspiring vision—the right combination of public, private and social enterprise, with the nation united behind it. We delivered on time and on budget, and it was a perfect platform for Britain at its best. Let us hope that the Olympics provided a much-needed boost for our economy, but the lesson to learn is not that we can now rest; if we really want to seize the economic opportunities before us and build a better future, we need to repeat that effort on a much bigger scale, with a nationwide plan for jobs and growth. Let that be the lesson for today and let us get to work on laying the foundations of the economy we need to build for the next generation. Let us have a Government who follow up their rhetoric with real action.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the next speaker, I inform the House that the limit on Back-Bench speeches will be nine minutes.
Mr Crispin Blunt (Reigate) (Con)
I fear I shall use them, Mr Deputy Speaker.
I am grateful for the welcome I received from my hon. Friend the Member for Northampton South (Mr Binley), who said how glad he was to see me. It has taken me 15 years to arrive on the Government Back Benches and this is my first speech as a Back Bencher for more than eight years. I enjoyed the fact that the first constituent to seek my help after I was relieved of my responsibilities as one of Her Majesty’s Ministers was a gentleman who needed assistance at an employment tribunal in a case of unfair dismissal. I was able to look him squarely in the eye and tell him that he had to take whatever he got from the employment tribunal, and once that was done, he must put matters behind him and get on with the rest of his career and his life. I have every intention of doing that, and enjoying the freedoms of the Back Benches.
It was interesting to follow the Gatling gun-like delivery of the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), who rattled through her speech. When I sat on the Opposition Benches, I heard similar speeches from colleagues about Government announcements that were made but not immediately delivered. When they relate to infrastructure, things take a tiresome amount of time.
I wondered about the economic analysis that underlay the hon. Lady’s critique. What kind of economic la-la land are the Opposition living in that they think the financial markets would have confidence in underwriting the Government’s debt if it continued to be managed by Labour? They had got us into the most appalling trouble by May 2010. It took the formation of the coalition and the urgent need for all Ministers to attend to their departmental expenditure to drive down debt so that the Chief Secretary could deliver credibility to the financial markets and our nation could continue to enjoy borrowing rates that are at an historic low. The difference between us is that if Labour had been in charge, we should probably have been enjoying borrowing rates something like those of Spain, which would be costing us £40 billion a year in the extra interest charges we would have to pay on the monumental national debt that was built up under the previous Government.
Having achieved a level of market confidence, it is absolutely proper that we now look to capital expenditure. That is why in principle I welcome the Bill and the fact that under the so-called Baldwin convention the Government are seeking specific authority for capital expenditure of this type. However, better explanations are required of the detail.
Hugh Bayley (York Central) (Lab)
If business confidence in the previous Labour Government was as bad as the hon. Gentleman suggests, it would have been reflected in interest rates, yet in fact when his party came to power we had interest rates at a record low. I acknowledge that they have continued at that level, but it was a record low that his party and the coalition Government inherited from Labour.
Mr Blunt
That would be fine if the markets had not entirely discounted the prospect of the hon. Gentleman’s party being retained in office in 2010. It was perfectly clear that Labour was being sent firmly through the exit door. I assure the hon. Gentleman that if the markets felt there was any chance of the former Prime Minister and his henchmen remaining in office, we should have faced a quite different picture.
Having just held a Ministry of Justice portfolio, I turn to the subject of prisons, which are mentioned in the Bill as a potential source for capital expenditure. There is a case for measures that enable capital expenditure on prisons. There is a very strong case, which I shall continue to press from the Back Benches, for building new prisons, not to increase the number of prison places but to modernise the prison estate and make it fit to deliver rehabilitation, work and security at a sensible, affordable price in a prison infrastructure for the 21st century.
Oakwood prison offers an example. It was built with running costs of more than £10,000 a prison place less than other category C training prisons of its type. With capital expenditure at about £100,000 per prison place, one can easily see the rough order of magnitude in a 10% return on that scale of investment. If we then take into account the fact that we could sell off the old prison sites, that we will not have to deal with the accumulated maintenance deficit in the older parts of the prison estate and that we will get much better implementation of policy in prisons that are built with work, security and rehabilitation in mind, we can see that the case for including prisons in the Bill is extremely strong.
I am, and will remain, an advocate of wholesale reinvestment in our prison estate. It means new prisons that will be more efficient and older ones closing so that we end up with the estate we should have for the 21st century. There is currently a competition process for nine prisons, the second such round of competitions—eight are currently in the public sector and one is in the private sector. All the bids I have seen, from both the public and private sectors, show the enormous benefit of competition in coming forward with better ideas on how to run our prisons.
At this point it would be appropriate to pay tribute to the officials in the Ministry of Justice and to Michael Spurr and all the people at the National Offender Management Service with whom I have had the privilege of working over the past two and a half years. I put on record my gratitude to them and, as prisons are in the Bill, to Peter McParlin, chairman of the Prison Officers Association, the biggest trade union representative in the Prison Service. In an era of considerable change in the service, I commend the constructive relationship and dialogue I had with him and with other union officials and staff, including those from the National Association of Probation Officers.
I turn from my former responsibilities to the application of the Bill to my constituents. Reigate plays host to some serious national infrastructure. We have two prisons, but we are adjacent to Gatwick airport, the M25 runs through the middle of the constituency, and the London to Brighton main line is another key piece of infrastructure. The constituency has been under constant developmental pressure throughout my time as Member of Parliament. The borough of Reigate and Banstead has more than met the housing targets imposed by the previous Administration. It is not housing we are short of; it is infrastructure. For example, we are woefully short of primary school places, the M23 has yet to be finished and brought to an end at the Hooley interchange, and there needs to be a reorientation of the railway line that cuts across the London to Brighton main line and runs between Guildford and Tonbridge.
I share the criticism of others about the delay in the decision over the future of airport capacity in the United Kingdom. For me, the answer is blindingly obvious: we need an airport in an estuary that can operate 24 hours a day and that has the capacity to deal with the primary needs of the United Kingdom, which is to have a proper hub airport. That has been fairly obvious since people were looking at Maplin Sands about 50 years ago. Frankly, it is about time we got on and made the decision. I seriously regret its being put off for another three years.
I will conclude by expressing my concern about housing appearing as infrastructure in the Bill. I do not think that housing is infrastructure. The financing of housing should come from other mechanisms. I hope that my right hon. and hon. Friends will understand my concern about housing appearing in the Bill in conjunction with the Chancellor’s remarks about the green belt and the potential threat to it. I will be examining the Bill very carefully.
John Healey (Wentworth and Dearne) (Lab)
I am glad that I was in my place to hear the hon. Member for Reigate (Mr Blunt) make his first speech from the Government Back Benches. He was a very serious Minister and brought a very serious mind to his brief, as he has done in this afternoon’s debate.
I see borrowing guarantees to help fund investment in Britain’s infrastructure as a good, if overdue, use of the power of government. It is creative, innovative and active government, if it works. Using the strength of the public balance sheet to underwrite private investment makes sense, especially at a time when public funding is limited and private bank lending is constrained. It should improve the credit rating of, and attract investors to, infrastructure projects, and I see those as two key tests for the policy and the legislation before us.
I welcome the Bill and want it to work. The country needs it to work. However, I say to the Minister and to the Chief Secretary, who is no longer in his place, that there are two big questions behind the Bill that, even after his long speech this afternoon, remain unanswered. They are about urgency and clarity. The value of the legislation and the Government’s borrowing and funding commitment will be felt when the first project is chosen, the guarantees are in place and the work begins. When will that be? As always with a new policy, the devil is in the detail. We have no detail and we have no idea how the arrangements allowed for in the Bill will work. The Government have already asked for expressions of interest for funding and borrowing guarantees but have published no guidance. When will that be done?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I make a quick point? The hon. Gentleman is making a lot of interventions and obviously wants to speak later in the debate. If he moves down the list of speakers, I presume he will understand why.
Geraint Davies
You have many very good points, Mr Deputy Speaker.
Does my right hon. Friend agree that, given that the Building Schools for the Future programme was in place and ready to go before the Government cancelled it, it would be a good idea to reinstate it and get productivity through our children as well as through the construction industry?
John Healey
My hon. Friend is right, and I hope that he gets a chance to make a speech. I will move on in a moment to some of the changes in policy and cuts since the general election that have made infrastructure projects and that sort of investment harder, not easier.
There are big causes for concern behind the two big questions I mentioned. First, there are questions and concerns about speed and how serious the Government are about getting infrastructure work going. It is almost a year since the Prime Minister promised
“an all-out mission to unblock the system and get projects underway”.
It is almost two years since the Government published their first national infrastructure plan and almost two and a half years since they set up Infrastructure UK in June 2010 in the Treasury. Most seriously, since the Government’s second infrastructure plan in November 2011 the economy has shrunk by nearly 1% and Britain has become one of only two G20 countries in a double-dip recession.
On the point of concern about clarity and simplicity, the Infrastructure Investor journal recently conducted a survey of 200 industry investors. Lack of finance, poor regulation and procurement weakness are all problems they face, but some 60% said that confusion and lack of clarity from the Government are a far greater disincentive. What matters most is confidence in the pipeline of projects, often based on clear Government policy decisions and commitments. The Government are failing that test over big projects and policies such as High Speed 2, aviation capacity and power generation. Their record on other policy decisions that at first sight have nothing to do with infrastructure is also making it harder to put in place the funding required. The abrupt change and then change again in the solar feed-in tariffs, the benefits reforms and cuts, the tripling of student tuition fees, creating “core and margin” university course places, and the rebanding of renewables obligation certificates have all changed the risks and the costs of long-term capital—so much so that a senior figure in the industry recently said to me: “Investors are now asking for the first time how you can price in public policy risk.” The guarantee scheme needs to be flexible and straightforward. The devil is in the detail, and Government revel in the detail. Is every Department going to introduce and run its own scheme with its own rules? Who in Government will be accountable for the programmes and the problems on the guarantees?
On housing, let me take issue with the hon. Member for Reigate, because the Chief Secretary and the Government are right and he is wrong. I welcome its definition as infrastructure. It is basic to people’s lives and to a good society, and central to wider economic growth and to productivity. Above all, it is a long-term good. We are still getting rent from Bevan’s post-war council housing a long time after the cost of the capital to build them has been paid.
I am looking to the Government for reassurances on four questions, especially in relation to housing. First, the Chief Secretary said that he did not want to prescribe and would not circumscribe the stages of projects that credit guarantees can support. The Treasury has said that guarantees can cover key project risks including construction, performance and revenue risk. Will that apply equally to housing as to the other categories set out in clause 1(2)? Secondly, some housing associations already have a presence in the capital markets and can raise finance in their own names, so will such organisations with significant project proposals be able to push ahead without the creation of any intermediary or aggregator?
Thirdly, the best housing developments are mixed and help to support mixed communities. The Government have said that the guarantees will support private and social housing. Will those building new homes be able to source guarantees for both sectors from the same fund scheme? Fourthly, I expect that security requirements will be part of the arrangements for the borrowing guarantees. Will developers building homes be able to provide the security on completion of those homes rather than in advance? If the Government want these guarantees to work, and to work rapidly, to boost housing, jobs and the economy, they need to provide answers and reassurance on all four points.
The Chief Secretary mentioned the 1932 Baldwin agreement, which emphasises that where financial liabilities that last beyond the term of one Government or one financial year are introduced, they should be backed by specific legislation. I believe very strongly that improved long-term infrastructure should be a shared endeavour of all parties, because infrastructure projects do not fit neatly within the political cycles and are damaged by the chopping and changing of Government policy.
Kelvin Hopkins
On my right hon. Friend’s point about infrastructure investment covering more than one Government and different parties, there was a time, when I was young, when Conservative and Labour Governments used to compete on the number of council houses they could build during their term of office. We should get back to that kind of arrangement.
John Healey
I do not think I have ever heard my hon. Friend advocate competition in any circumstance on any policy before, but I am happy to say that he is right, and I support him. I hope that we may get back to those days. Just before the election, when I introduced the local authority new-build scheme, which boosted and supported local council housing for the first time, we had very strong bids and very strong support from 73 councils, including many Conservative councils that wanted to build council homes but were not, until then, getting support from Government to do so. They are certainly not getting that support now.
Since the election, this Government have done too little for too long on new infrastructure. This Bill could make an important difference. It deserves all-party support, and the Government will get it if they get this right.
Graham Evans (Weaver Vale) (Con)
It is a pleasure to see you in your place, Mr Deputy Speaker, and I am grateful for a chance to contribute to this debate. I welcome the Bill, which clearly shows that the Government are serious about growth, about rebalancing the economy, and about investing in infrastructure, especially in the north of England.
I want to start by addressing some of the bleating from Labour Members. It is easy for them to criticise the Government, but what infrastructure projects would they deliver? It is difficult to see what policy they have on anything. Their blank piece of paper remains blank, as far as I can tell. I am very concerned about what appears to be Labour’s thinking on investing in infrastructure. At last year’s “March for the Alternative”, when asked where Labour would make the £14 billion-worth of cuts that it said it would make that year, the party’s deputy leader, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), explained that it would
“hold back on capital investment”.
Given that the total level of capital investment planned is far less than the amount that Labour says it will cut, and given that it has failed to specify any other areas for cuts, one might be entitled to assume that the right hon. and learned Lady intends to scrap all capital investment. Nobody seems to know whether this is official Labour policy; even Labour Members do not know. Perhaps they will take a more middle-of-the-road approach and scrap only half the schemes in the national infrastructure plan. However, it appears that, at the very least, Labour’s deputy leader wants to do the very opposite of what this Bill is designed to achieve.
Investing in Britain’s infrastructure is essential for delivering growth and ensuring the long-term competitiveness of our economy. Such projects can in themselves create thousands of new jobs and generate huge numbers of orders for hundreds of businesses. The benefits of the completed projects are almost impossible to quantify, but they include improved road, rail and communication links, and more reliable, clean and affordable energy supplies. They can help to bring people, money and ideas into parts of the country that desperately need it. They make Britain a more attractive place for people to do business in, and bring even more jobs, talent and energy to our shores. Infrastructure projects in the right locations can help to rebalance our economy away from dependence on the City of London and towards more manufacturing, perhaps in places in my constituency such as Runcorn or Northwich.
A lot of exciting infrastructure projects are planned which will bring huge benefits to my constituents in Cheshire. I could happily drone on for hours about High Speed 2, but today I wish to focus on other projects so will simply re-emphasise that HS2 is essential if we are going to solve the west coast main line capacity challenge. The northern hub rail plan will dramatically improve connectivity between northern cities such as Manchester, Liverpool, Leeds and Sheffield. It will also make life considerably easier for a huge number of commuters, improving the rail network and easing road congestion. Such improvements do not just make our cities more attractive places to do business and encourage external investment; they help to improve the quality of life for many of our constituents too.
Another vital piece of infrastructure that I hope will benefit from the Bill is the Mersey gateway project. The fact that this project is going ahead at all is a testament to the Government’s commitment to Runcorn, Merseyside and the north-west region as a whole. Despite years of hand-wringing, the Labour Government failed to approve the bridge. I remember that in the period immediately after the general election there were many fears that it would never happen. Thankfully, those fears were misplaced and this Government have come through. For those Members who are unaware of the scheme, allow me to explain. The project is about building a much-needed extra bridge across the Mersey between Runcorn and Widnes. We have the Silver Jubilee bridge, which is past its best. If it were ever to collapse—heaven forbid!—we would be in real trouble. The new dualled three-lane bridge and associated link roads will form a major new transport route, improving links from the Liverpool city region, north Cheshire and the wider north-west to the rest of the country. Combined with the new enterprise zone at Daresbury, the project will help to bring many new businesses and jobs to Runcorn and the wider north-west.
I am pleased to support the Bill, which will help to finance important infrastructure projects and allow work to commence on them as soon as possible. I hope it receives the support of the whole House, because that will tell the world that we are investing for the future and that Britain is open for business.
Hazel Blears (Salford and Eccles) (Lab)
It is a pleasure to follow the hon. Member for Weaver Vale (Graham Evans). I thought the beginning of his speech was unusually partisan. He is normally a man who seeks consensus, and I hope that for the benefit of the north-west region we can agree today about what is important.
Members of all parties welcome the Bill, but it is frankly too little and too late, to reformulate what is now an established mantra. It is the product of two pretty much wasted years. There has not just been wasted investment, which could have started to move the country forward, but the result of the delay has been far too many wasted lives, particularly in my constituency and among young people. I hope that the Bill will not be a mirage, as the regional growth fund has been—I will come to that a little later.
The Chancellor can call the Bill plan A, plan A-plus or plan A-plus-plus, and we can call it plan B—I do not really care. However, it shows real acknowledgment by the Government that cuts alone will not get us where we need to be so that our economy can start to fire, people can be employed and we can produce the growth that our country so desperately needs. It is too little, too late, but it is certainly welcome.
The reality of our economy is stark. It shrank by 0.5% in the second quarter, we are back in recession and growth has flatlined for the past two years under the coalition. In the north-west, unemployment was more than 9% between April and June. Only in the north-east and Yorkshire is the figure higher. Employment has to be our top priority, because we are in danger of seeing another lost generation of people who cannot get into work. Long-term unemployment is at a 16-year high and the number of people working part time has gone up by 2% in the past year. Many people are desperate for full-time work but simply cannot find it. In my constituency, 2,350 young people are currently unemployed, of whom 1,500 have been unemployed for up to six months, nearly 500 for between six and 12 months and 360 for a year or more. We all know from our previous experience what happens when a generation feels that it has no hope for the future. We have seen the impact that it has on our communities, so we need to get moving.
The regional growth fund, which was heralded as something that would provide investment in infrastructure and jobs, particularly in the north-west, has been an absolute disaster. It simply has not worked. After two years, only 88 of the 236 offers of funding—a third—have been finalised, and just £60 million out of what was going to be £1.5 billion has got to the front line. Some of the projects carried a cost of more than £200,000 for each additional job created. In short, the scheme has been too expensive and too lengthy, and the National Audit Office has said that the administration of it has been pretty much a disaster. If this infrastructure programme has any of the same qualities, it will not achieve what the Government, and certainly the Opposition, want it to.
Where should the Government focus their support? Certain areas are crying out for attention. I disagree with the hon. Member for Reigate (Mr Blunt), because I think housing is a key part of our infrastructure. In Greater Manchester we have 100,000 people waiting for homes, and we have 25,000 empty homes, including 6,000 in Salford. I do not just want new build; I want us to be able to refurbish those homes, which people are desperate to occupy. The sooner we can do that, the better.
Let us be careful, however. Reforms to the planning system have been discussed over the past few weeks, but we have to build not just houses but communities. We have seen what happens when we build houses on barren estates without putting in place schools, shops and leisure facilities. The use of section 106 agreements will be reduced, and we will not have the community infrastructure levy. I am seriously worried that we will just have a lot of boxes, which do not make communities. That must be taken on board in the changes to the planning system.
Mr Blunt
I have heard the remarks that the right hon. Lady and the right hon. Member for Wentworth and Dearne (John Healey) have made about housing, but housing is not infrastructure in any strict sense of the word. Infrastructure is there to support the people who live in that housing and the businesses in which they work. Does she accept that if we bring housing into the definition of infrastructure, we reduce that definition ad absurdum? I completely accept her points about the importance of building communities, but that should be addressed in a proper housing and planning strategy. Infrastructure, in a proper sense of the word, is different.
Hazel Blears
I understand the hon. Gentleman’s concern about his local green belt. If he can encourage his party’s Front Benchers to invest more in brownfield sites in the north-west, where we can build communities, I will take on his housing allocation tomorrow to ensure that we can house our people.
Mr Brian Binley (Northampton South) (Con)
May I introduce Northampton into the discussion of brownfield sites? We could build between 35,000 and 40,000 houses on brownfield sites there, and I would rather do that than destroy our green belt.
Hazel Blears
The hon. Gentleman obviously supports a Labour policy, which has always been to build on brownfield sites. If he is at all tempted to come over to our side of the Chamber, I am sure he will be welcomed.
The public and private sectors need to work together to make investment effective. When we started to develop Salford Quays 15 years ago, the city council bought the site for £5 because it was a liability rather than an asset. Now we can see what the public and private sectors working together have made happen in that area. The ratio of private to public sector investment there is 9:1, because the £50 million of public sector investment drew in £450 million from the private sector, creating 15,000 jobs and the fabulous developments at MediaCity. Peel Holdings has just submitted its phase 2 planning permission application for further development in four phases over the next 20 years, which will bring at least another 15,000 jobs to the area. If the Government are looking for projects to fund, MediaCity is up and running as a fabulous example of what can be achieved when the public and private sectors work together.
On that point, bids are now in for superfast broadband from cities across the country. Salford’s bid went in this morning, and MediaCity is a well placed platform to provide the developments that are envisaged through the superfast broadband programme. When the Economic Secretary winds up the debate, will he indicate his warm welcome for Salford’s bid, and hopefully his support for it?
As the hon. Member for Weaver Vale said, transport is a pressing need. We welcome the northern hub, but why do we not build High Speed 2 from the north down towards London? That would mean that the initial investment would go into the areas of greatest need and highest unemployment, where planning permission may well be easier to obtain than in more controversial areas. I have talked to some of the companies involved in the construction of High Speed 2, and they feel that it would be a very good idea to do that rather than to build from the south to the north, as always happens with such projects. Perhaps the Economic Secretary could indicate his support for that idea as well.
I am delighted that the Government are going to review aviation capacity in the south-east, but why not consider Manchester airport and our regional airports across the country? Why can we not have other hubs to provide us with the connectivity that we will need? The north-west is a confident area with great business people and local authorities that want to get on with the job. When I was Secretary of State, we made the 10 local authorities in the Association of Greater Manchester Authorities area the first city region with powers over planning, housing, transport and skills, to try to ensure that we could draw in inward investment. In Victorian times we had that type of confidence about our economy, and we can do exactly the same thing now to get our young people back into work.
I am worried about where the Government are going with the planning system. When I took the Planning Bill through the House three or four years ago, the whole point was to have national planning policy statements so that we could get major infrastructure projects through the planning system more quickly in the days when it took seven years to get a power station and 10 years to get a major railway interchange. The Conservative party and the Liberal Democrats fought the Bill tooth and nail because it provided for too much of a national plan and did not have the localism that they wanted. They cannot have it both ways. They must recognise the need for national policy to get infrastructure through.
The same is happening with housing policy. We are tearing up planning policy statements, some of which were made only three or four months ago, and we have talked about localism and going along with what local people want. However, when that does not suit, the policy seems fragile indeed. We tear up at our peril a planning framework that has been in place for 50 years, trying to get the balance right between development and local communities.
The Bill as it is currently worded represents a huge missed opportunity. The criteria in it for the projects make no mention of how the funds will be spent. In an intervention, I referred to the Public Services (Social Value) Act 2012. If we spent the money so that we got social value as well as infrastructure projects, had local procurement, employed local people and got extra impact for the expenditure, we could have a transformational effect on some of the poorest communities in our country.
When we built MediaCity, we had conditions about using local labour and had twice the number of jobs that building the Olympic site provided. By including conditions in the Bill on training, apprenticeships, local procurement and local supply chains, we could make a huge impact on those areas of the country such as the north-west, where unemployment is shockingly and unacceptably high. I say to the Government: “Think again about this massive infrastructure programme, and spend the money wisely and well.” We could thus ensure that we made a difference to the lives of those young people who are being betrayed and let down by the Government.
James Morris (Halesowen and Rowley Regis) (Con)
I support Second Reading. It has become a cliché to say that, in terms of the global economy, the world is getting smaller. Modern communication technologies and better transport links have made it relatively simple to do business across the world. It is therefore a sad irony that in our national economy, the gap between the south-east and the rest of the country has, in many ways, grown wider.
Like the rest of the west midlands, the black country, part of which I represent, enjoyed little benefit from the artificial boom that the previous Government created. Gross value added in Dudley and Sandwell fell from 88% of the national average in 1997 to just 74% in 2008. While Labour’s boom may have passed the west midlands by, people and businesses in the black country certainly felt their share of the pain caused by Labour’s bust.
As we work towards recovery, it is essential that we address the regional imbalances that have held back large parts of the country, preventing the economy from achieving its full potential. As the Prime Minister said, we cannot afford to rely on just a few industries and a few regions. I believe that the Bill will help create the essential infrastructure that we need to unlock private investment and help transform our regional economies.
As Dieter Helm of Oxford university wrote in 2009:
“Few would choose to locate in Britain because of its infrastructure”.
Professor Helm went on to describe Britain’s infrastructure as
“not fit for the digital age”.
Addressing that obstacle to growth in the context of the overriding need to tackle the record deficits built up by the previous Government is key to getting the economy back on a sustainable path. In particular, we need measures to stimulate investment in the transport infrastructure that will bring our cities closer together and closer to business centres overseas.
As someone who has set up businesses in London and who now works closely with businesses in the west midlands, I know from personal experience that too great a premium is placed on businesses being based in London. For many new businesses, and particularly for inward investment in Britain, London almost becomes a default location because of the proximity to major clients and the ease of travel to major cities abroad. Overseas investors are much more likely to invest where there are global links relevant to their businesses. If we want to rebalance our economy, we need to make sure that those global links are easily accessible from our regional centres.
The media recently got worked up about whether London needs greater airport capacity and where it should be. I recognise many Members feel very strongly about that, whichever side of the argument they may take. However, for many of my constituents—and for the businesses I meet—the issue has very little relevance to them, their jobs and the future of their companies. By focusing so strongly on Heathrow and other London airports, we risk giving the false impression that London is the sole gateway to Britain.
Instead, we should invest in transforming our regional airports into world-class facilities, linking our major cities with business opportunities around the world. I know that my hon. Friend the Economic Secretary will recognise the importance of Birmingham international airport to the west midlands region, mid-Wales and parts of the north-west.
The Bill would allow for the fiscal credibility achieved by the Government’s policies to be used to support major infrastructure projects of national significance. Without wishing to put words into the Minister’s mouth, I can think of few projects that would be of more truly national significance than the expansion of international air services at Birmingham airport. Building a second runway there would increase spare capacity at Birmingham to 50 million passengers a year.
In the short term, that project could be expected to create or sustain 50,000 jobs, providing a significant boost to the construction sector and associated industries. In the medium term, by acting as an additional hub airport, it would help relieve some of the pressure on Heathrow. Most significantly, it would transform the midlands as a place to conduct international business, creating effective and efficient transport links to emerging markets around the world without the need to go via London.
High-speed rail will help bring our major cities closer together as places to do business, linking the midlands with London, the north-west and Yorkshire to build a network for growth. Expanding Birmingham airport would connect that network to markets around the world, making the midlands a more attractive place to do business and helping address the regional imbalance that has held back the economy for far too long.
I know that Members of all parties will have their own priority projects—schemes that could make a big difference, but are being held back by lack of credit. The Bill will make it possible to unlock private investment in the projects that our communities and our economy desperately need. It is hard to imagine a more worthwhile use of the benefits gained from the hard work of tackling the deficit—and hard to imagine a greater contrast than with the Labour party’s commitment to over-tax, overspend and over-borrow. While Labour Members’ dogmatic attachment to the failed policies of the past would lead to higher interest rates—hurting businesses and families, and making it even more difficult and expensive to secure credit for investment—the UK guarantees programme uses the resources and economic credibility of Government to underwrite essential investment and support exports.
I am pleased that the Government have decided to fast-track the Bill so that the measures can be implemented and the benefits delivered quickly and effectively, and I am glad that the Opposition will support the measure. Our constituents will not look kindly on those who choose to put political posturing ahead of this much-needed action to boost the British economy.
Mr Geoffrey Robinson (Coventry North West) (Lab)
I am pleased to follow the hon. Member for Halesowen and Rowley Regis (James Morris), a fellow west midlands MP who sits on the other side of the House. I did not, however, agree with much of what he said, and certainly not about the Government’s great success in reducing borrowing. Figures from the last quarter of this year show that £6.9 billion more was borrowed than in the previous quarter. However, now is not the time to go into such matters.
Although we could question the need for this Bill, its focus is rightly on increasing infrastructure expenditure in the UK. I do not, therefore, want to enter into the rather arcane and intricate argument about whether housing is infrastructure investment. The point was made in a nutshell when it was said that after the war, there used to be competition between the parties over who could build more houses. I do not like to admit it, but I think Harold Macmillan showed the way by building 300,000 houses in one year. He found a way round the problems that the present Prime Minister seems unable to get over—of course, that building was coupled with a boost to the economy, increased spending power and confidence. Once a house is built, it still needs to be sold and people still need to buy it. That point was raised by my hon. Friend the Member for Luton North (Kelvin Hopkins) who has just left the Chamber. As he said, if we want successful infrastructure, we need demand in the economy.
It strikes me that this Government are one of the most incompetent in delivering their plans. They announce and reannounce plans again and again, yet they get nowhere. We need only look at what the Prime Minister has repeatedly said and what the director general of the British Chambers of Commerce thinks about that. As far as I am aware, the director general is not a political fan of the Labour party, yet he has called the national infrastructure plan “hot air” and “a complete fiction.”
I remember the Prime Minister saying in this House that there is nothing wrong with the Government machine or the way they are organised, and that they must say what they want and make sure they get it. He has been saying that for a long time, but the situation gets worse and worse. He repeated that point recently, but we know that the more the Government repeat things, the more desperate they get. Now they have presented this plan for guarantees. Strictly speaking, we do not need such guarantees, but they are a sign that the Government want to do something and I would be the last person to stop that. Nevertheless, they are not doing anything yet; they are providing guarantees that could be there if needed.
Let us look at the national infrastructure plan. It is dedicated to projects of national significance that are critical for growth. How many projects in that plan have the Government delivered? Fewer than 20% ever saw the light of day. The Government are still asking businesses, “Where is the project? Where are the diggers?” but, of course, they are not there yet.
I hope we can manage to get some useful infrastructure projects under way, and I want to make two points. The first concerns a project that I am greatly in favour of, and the other a scheme I would like the Government to drop—HS2. I know that HS2 was begun by the Labour party; it is a bright idea, a lovely, high-profile project and all the rest, but it is simply not value for money. The Treasury must look at the return on it, which has gone from over £2 for every £1 spent, to £0.90—below the established Treasury allowance for a return on a capital project. It is not as if HS2 is a small capital project; it costs £17 billion for a line that will go from London to Birmingham—no further—and shave quarter of an hour off the time. With improvements to our national railway, we could get that journey down to an hour by having four tracks between Coventry—my own city that I am proud to represent—and Birmingham. That would take 10 minutes off the journey time, and eliminate many causes of delay. HS2 will cost a huge amount of money for an elitist project that will go up and down an already well-established corridor. Other reasons for and ways of dealing with the situation are much cheaper and involve a much better cost-benefit ratio.
Why are the Government going ahead with HS2? I do not understand. The Treasury has warned people, yet the Bill contains a guarantee of £50 billion and will allow £17 billion for HS2. No guarantee is needed—nothing at all—and the cost-benefit ratio has gone down and down. One can imagine what the Government have had to do just to maintain that ratio—they could not even keep it at £1 and it has reduced to £0.90. I hope that the Government will reconsider HS2 and put their foot down. After all, the Treasury should be the guarantor not only of how much we spend or the balance of spending, but for the return on that spending. The HS2 project does not stand up on any of those grounds.
The Prime Minister might be happy because he thought there was cross-party support for HS2. However, so much has he lost his self-confidence and the guts for the battle, he is prepared to commit to something only when he has cross-party support. Until there is cross-party support on Heathrow, he does not want to do anything. What has happened to this man? He has lost it; he has lost his bottle. Does he expect Opposition Members to come along and bail him out after what he has said about us and others? I do not get it. What world is he living in? I will not be part of that.
The Prime Minister does not want to face up to Heathrow. He says that we will discuss the issue in 2016-17—despite the urgent need to do so now—because he has not got cross-party support. He is steaming ahead—perhaps racing ahead is the right word for aircraft—with the one issue on which he has got cross-party support and about which he can do something. He can be seen to be acting by saying, “Oh, we’re fully committed to that.” I think it is pathetic. The trouble with the Government is that they never had competence and they have now lost their confidence. By introducing a Bill that we do not strictly need, they are—more intensively than ever before—trying to give the impression that they are doing something. I am sure that the Bill will be quite embarrassing for the mandarins at the Treasury. I cannot describe the problems that the Labour Government had to get one small, £2 billion guarantee not counted in their borrowing figures—although we should have counted it.
I am pleased to have spoken in this debate. We should press ahead with Heathrow. Even though I know that it is unpopular, the Government should have the courage of their convictions. I believe that we should stop HS2. Many projects are ready to go, and hon. Members cannot understand why they are still on the drawing board—or just off it—or have been discarded. This is a Government of shambles and without the conviction or the drive to remain in charge of the country.
Mr Brian Binley (Northampton South) (Con)
It is a pleasure to follow the hon. Member for Coventry North West (Mr Robinson), whose comments are always thought provoking. Today, they were also rather brave, which is not usually his style, but he is clearly moved by these matters.
I welcome the opportunity to debate this Bill. It aligns with the priorities of the electorate and, thankfully, sends a clear signal that the Government have, I hope, understood the importance of growth. We must accept that our nation’s infrastructure is nowhere near as good as it needs to be. A little more understanding of that point on the part of Labour Members, and of the fact that they did not do their job with regard to infrastructure in their 13 years in government, would not have gone amiss. As many hon. Members have said, infrastructure is vital.
International surveys now paint a gloomy picture, and most parliamentary postbags offer individual testimony to the day-to-day infrastructure inadequacies that hold our constituencies and businesses back, harm our competitiveness and the image we project to inward investors, and act as a drag on commercial development. Congested roads, expensive railways, imperfect utility markets, and vast tracts of the country with relatively poor broadband and other communications connections, all present substantial costs to the economy that impact disproportionately on small business and hold back the quality of life of the people we represent.
I therefore welcome the Government’s proactive approach, especially to HS2. I should also point out my gratitude for the money that is forthcoming for a new station in my constituency. We are delighted, but we are also leading the way in 15 projects to regenerate our town—recreating the structure and fabric—allied to a programme substantially to increase jobs for those not in education, employment or training.
However, local efforts take us only so far, which is why the national reach of the Bill is fundamental. In that context, the Bill is to be welcomed in principle, but it is easy to spot the problem that needs to be fixed: who will pay to upgrade our infrastructure, which is essential to how we better configure our economy? The Exchequer clearly has a limited appetite and capacity to fund the solution to those problems. There is also a legitimate question about the desirability of the Government being intimately involved. The comprehensive spending review conclusions were clear. Reductions in capital spending were relatively extreme—by 2014, capital spending will be almost a third of what it was in 2010. The arguments on the necessity for the public purse to play a diminished role are well rehearsed, but surely the Government can do better. A 3% reduction in revenue expenditure would enable us to maintain capital spending at 2010 levels throughout the period of the comprehensive spending review. Is that truly impossible?
In the absence of public money, we also need to find ways to attract alternative forms of investment. However, in a failing financial market, that is not easy to accomplish. Previous efforts to find a solution to that dilemma do not have a happy history. Most recently, the private finance initiative has been subject to the robust critique that, under it, the private sector takes the rewards of risks borne by the Exchequer. Originally, PFI was supposed to encourage the private sector to bear risk as well as provide funding, but sadly, that target somehow lost its way. What is the point of the taxpayer funding PFI projects when the Government can borrow in the money markets far more cheaply? Does PFI not just create a very high price, to be borne by future taxpayers, merely so that the Chancellor can pretend he is not borrowing money? That is what we had under the previous Government; if we have it again, it will be just as much of a nonsense.
Infrastructure investment must be seen as enabling growth, but we should moderate the claims that we make about the scheme. It is not a silver bullet. Infrastructure development cannot be delivered quickly. The Bill is a strategic enabler to facilitate the growth needed for decades and generations to come; to position ourselves in a more comfortable place to compete in an ever-more challenging global market; and to strengthen the ability of small businesses to get the access to the market that they so badly need to thrive.
The coalition has not been short of such initiatives, which include the publication of the national infrastructure plan last year. However, that only reaffirms that our approach should be a cautious one. The proposals raise many questions. What will be the impact of the Bill on the programme, cost and timetable for the schemes in the plan? How does the Bill sit alongside the infrastructure costs review programme, which promised potential benefits of between £2 billion and £3 billion? What analysis has the Minister conducted to test the propensity of the market to engage with the type of support that the Bill could provide? If the Bill is to be fast-tracked, what confidence can the Minister give us that the measures will resonate with investors? Perhaps the Minister will answer some of those questions in his summing up, and I wish him well in that task—I believe it is his first visit to the Chamber in his new position.
Even if the Bill delivers—I hope it does—it will need to be accompanied by other measures. Infrastructure measures have relatively long lead times, but growth is needed now. Infrastructure alone is not enough. The Government could adopt a number of measures to stimulate private sector demand, which could deliver results far more quickly. The measures in the Bill provide a modicum of confidence that the medium and long-term predicaments are in the Government’s mind, but we need short-term measures to get consumers spending and small businesses selling.
I and a number of hon. Members have pressed for measures to stimulate private sector demand for some time. Alongside a proactive approach to export potential, that offers the best route out of recession. We have heard encouraging words from the Government of late, but we need action, and we need it quickly.
Whatever the long-term benefits of improved infrastructure delivery—which, I repeat, are vital—if the Government fail to deliver growth, we risk the country being dragged back into the dark days of increased public spending, financed by the reckless borrowing advocated by the Opposition. Let us never forget that the former Chief Secretary to the Treasury left the bill—a little note—saying, “We’ve run out of money.” Government Members know the score. We know that the previous Government borrowed £1 in every £4 spent, and this Government are desperately trying to get it down and have cut the deficit. Let me say this to the Opposition: the vision of another Labour Government is too horrific and expensive to contemplate. That is why we need growth now, so that we do not impose a burden on our children and grandchildren, which, frankly, would be immoral.
Chris Williamson (Derby North) (Lab)
We have had almost two and a half years of this Government pledging one thing and delivering another. As we have already heard from the shadow Chief Secretary to the Treasury, my hon. Friend the Member for Leeds West (Rachel Reeves), the reality of the Bill is different from the rhetoric. Although it hints at activity, everyone knows that, behind the hyperbole, Ministers are driven by a laissez-faire ideology that is resulting in economic indolence.
The Chief Secretary to the Treasury suggests that the Bill will trigger economic growth, but the backdrop to the Bill is the Government’s failed austerity programme, which is resulting in economic strangulation. The damage has already been done.
I suppose hon. Members should be grateful that Ministers are at least taking a few tentative steps in the right direction, but the Government’s economic incompetence has left a mountain to climb. The Bill hardly represents a damascene conversion. I know from personal experience that if I put half a tank of petrol in a diesel engine, I will damage the car. I cannot fix it by topping it up with a half tank of the right fuel. To make the car work again, I must repair the engine before applying the diesel.
That is a simple metaphor, but we need to speak in simple terms to help Government Members to understand the error of their ways. Let us remind ourselves that they are responsible for two and a half years of counter-productive and damaging cuts; two and a half years of hurting this nation’s most vulnerable people; two and a half years of sucking the lifeblood out of our economy rather than breathing new life into it; and two and a half years of destroying employment, creating a housing crisis, killing off opportunities for young people, devastating public services and driving forward a dangerous economic and social experiment. That is the Government’s legacy after just two and a half years.
Commendable though it might have been two and a half years ago, the Bill is in danger of being too little, too late. In any event, where is the guarantee that the Government will deliver on any of what is proposed in the Bill? Let us be honest: given the Government’s dismal track record to date, people are not exactly holding their breath in anticipation. We have already heard mention of the Government’s abject failure to bring about any of the road-building projects announced in the autumn statement. Promises to deliver on housing have been followed up with statistical proof that up and down the land there has been a dramatic fall in the number of new housing starts. Away from infrastructure, the Government have fared little better, having pledged to hand control to communities but then producing legislation taking power back to the centre.
Although the Bill would authorise the Treasury to incur costs in order to support infrastructure, please forgive me if I am a little hesitant in believing that it will yield many positive outcomes. That lack of clarity will continue to hinder true economic recovery. Half-baked legislation will not address the carnage left behind by the Government’s reckless ambition to shrink the role of the state. The British people are crying out for a fundamental change in direction from the Government. Plan A has been an utter disaster. For goodness’ sake, let us at least consider some of the alternatives. It is blindingly obvious to anyone with a modicum of common sense that only real investment will bring about the jobs and growth that the country desperately needs. That is the only way to extricate ourselves from the double-dip recession that Downing street has inflicted on the nation.
Labour has said it from day one; more and more political and economic commentators are saying it; and the public realise it too. It is only the stubborn, dogmatic attitude of this supercilious Tory-led Government that is holding Britain back. Unlike Labour’s five-point plan, the Bill is not joined up, is not part of a bigger picture and will not go anywhere near far enough to fix our economy. It is another example of the Government flattering to deceive, rather than delivering anything meaningful.
We need look no further than the plans to amend building regulations to facilitate the Government’s flagship green deal. It has been reported that the Prime Minister intervened to block the proposed changes, and that his intervention could prevent about 2.2 million homes from taking up the flagship green deal. And for what? So that a few more conservatories and extensions can be built with less control from local authorities. And that is supposed to drive forward construction. Do me a favour! Pardon my scepticism, but I would have rather put my money on insulating 2.2 million homes to help Britain’s builders get back to business, than on making it easier to build a few more extensions around the country.
The Government need to restore confidence by demonstrating that they are committed to investing in the economy, rather than playing around the edges, which, sadly, is all the Bill does. Of course we need to invest in infrastructure if we are to help our economy to recover, but we need to do so with much more vim and certainly more vigour than the Bill is capable of delivering. I am not fooled by it, and British people will not be fooled by it either. Actions speak louder than words, so the Government will be judged on their ability to grow the economy. They have failed spectacularly so far, however, and I regret that the Bill will do little to reverse the damage they have already done. I hope that I am wrong, but I do not believe that I am.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I welcome the opportunity to contribute to this vital debate, because the Government are putting their money where their mouth is—long gone are the days of make do and mend. I have, dare I say it, a 12-year-old British-built, Japanese-designed Toyota that has done 199,000 miles. It deserves credit for lasting, but I am sure that with a newer model—which this Bill will be encouraging across the country—I would be using less oil and petrol. The point is that we need to get more bang for our buck when the Government spend taxpayers’ hard-earned money.
Sadly, there were too many examples of the previous Government’s seeming to throw money away without getting value for that money. Even the hon. Member for Liverpool, West Derby (Stephen Twigg), as reported by The Guardian in July 2012, suggested that they wasted money on school buildings—he did not regret that the buildings were built, I appreciate, but suggested that they got poor value for money. There was outcry initially, at the beginning of this Parliament, over the reduction in the amount of money available for Building Schools for the Future, but actually it was right to tell industry that we needed better value for money. For a scheme in my constituency, we had to go back to persuade the Government, and instead of the £31 million blank cheque—we should remember that at the start of this Parliament we were told that there was no money left—we managed to get a cheque for £18 million, and there will still be a good academy building built in my constituency. I consider that better value for money.
One of the biggest white elephants was probably the road sign project along the A14, signed off not long before the election and on which £70 million was spent. For a couple of years, there were no messages at all, and about three months ahead of the Olympics, one of the most helpful messages was still, “Plan your Journey Early for the Olympics”. It felt like a complete waste of money. It was probably symptomatic of a conversation I had with a senior Government adviser not long after the election, when he suggested that the best thing the Government could do was pay one lot of people to dig holes in the road, and pay another firm to refill them. Those were the exact words of the head of a senior government agency. I thought, “Oh my word, if that’s been the attitude and the level of desperation so far, no wonder we’re in this mess.”
The Bill is a great opportunity to consider areas where the Government are keen to develop infrastructure. One is telecoms. I am sure that everybody welcomes the money that the Government are giving to broadband in rural areas and for super-connected cities. I know that there are still one or two problems with state aid that the Government are working hard to solve, but it is vital that everybody in the country is connected to a good speed network, if not a superfast network, because it will help to diversify jobs and enable people to work from home. Every part of the country must be connected. That could help not only with wealth and job creation but with public service reform by enabling better value for money in the delivery of public services. That is something we all need to do.
I am conscious that the A143 in Suffolk, which is not in my constituency but which is still an important artery, is one of the roads nominated for improved mobile coverage. It is vital that we roll out that programme. The roll-out of 2G masts will also benefit 4G coverage, on which we need to keep pressing Ofcom to ensure that the auction goes ahead as soon as possible. I give credit to other telecoms operators that have already started to use their research and development to ensure that 4G can start to be rolled out on existing frequencies, and to Ofcom for allowing that to happen, despite the law suits that could have been launched because it was perceived to be unfair. It is right that every barrier to innovation in the use of infrastructure be removed.
In their update to the national infrastructure plan, the Government rightly refer to the preparations at Hinkley C. As a result of that work, a significant chunk of change has already been spent in the north Somerset economy. I hope that the same will follow in my constituency at Sizewell. I ask, however, that all Departments work together—I asked my right hon. Friend the Chancellor this the other day—and strain every sinew to enable these investment decisions by our partners, including EDF and others, and ensure that they can go ahead with certainty in respect of the next stages of development of nuclear power stations. I have not looked at the other projects, but I draw the attention of the House to the inquiry by the all-party group on off-gas grid that is about to be launched. At the moment, we are still not connecting enough people to the mains gas grid. Perhaps we should consider that as part of our inquiry in providing the Government with ideas.
I know that my hon. Friend the Member for Witham (Priti Patel) will speak adroitly about rail. There is no question but that we need to invest in the infrastructure of the east of England, which we all believe has the opportunity to become the California of Europe, with its diverse economic centres, its focus on research and development, innovation, manufacturing and software, and its position as a key link to London. One of the things that the Government have to do—I am sure that they will under the new Transport Secretary—is continue the journey towards how we reduce costs. Rail desperately needs to be done in a cheaper way. I do not have the time to tell a story about the amount of time and cost involved when three MPs tried to be part of the ground-digging at a platform with our county councillors. It was all done in the interests of safety when common sense would have dictated otherwise for something that should have been as simple as walking along a pavement. There are orders for rolling stock and other franchises, and we want to see some of that on the great eastern main line.
The A14 is a critical road connecting the midlands to the east of England. I know that the Government have been considering different options, but I would offer a word of caution. I do not think that many Conservative Members of Parliament are opposed to tolling for new capacity, but I am concerned, because we do not want the people of the east of England to end up as the sole pilots if those in other ports or key infrastructure areas throughout the country are not subject to potential tolling in the future. It is not just about the port of Felixstowe, in which Hutchison Whampoa has invested a lot of money, creating the deepest berths in the country and taking the biggest boats from around the world, but about ensuring that there is a level playing field when we introduce the plans, which I hope the Secretary of State will announce before the end of the year.
It is key that money is spent on assets that will be used. That may seem like a ridiculous thing to say and I may be a lonely voice, but business people regularly complain to me about empty property rates. I have been trying to persuade the Government that they should put their scarce resources—while allowing for some time to find new tenants—into assets that generate wealth, not assets that are sitting empty and not producing. That is a key point.
One of the most inspired decisions of the Government reshuffle was the appointment of Paul Deighton, the chief executive of the London Organising Committee of the Olympic Games and Paralympic Games who presided over the great delivery of the Olympics and Paralympics, of which we are all proud. He is certainly not a bulldozer—I see him as a bridge builder—but I notice that he has been given a remit to do whatever it takes to clear away not the cobwebs but the barriers, in order to make sure that the national infrastructure plan is delivered. The Government may also wish to take note of his friend, Sir John Armitt, the chairman of the Olympic Delivery Authority, which built the infrastructure that put in place as many small projects as possible, not just the big games in town. On that note, I am delighted to support the Bill’s Second Reading.
Roberta Blackman-Woods (City of Durham) (Lab)
It is always a pleasure to follow the hon. Member for Suffolk Coastal (Dr Coffey), but I am afraid that I do not share her lack of recognition of the value of investment made by the previous Labour Government or her optimism about this Government.
I am pleased to be able to participate in this debate, even though the Bill is overdue. The Government seem to have come very late to the idea that we need investment in infrastructure if the economy is to recover from a double-dip recession. I must remind Government Members that the double dip of the recession was caused by the failed economic policies of their parties and their Government. Having come late to the realisation that investment in infrastructure is necessary, will their Bill deliver what is needed?
We know that the Government are trying to rush the Bill through as fast-track legislation. Surely this is a panic measure. When the economic recovery is nowhere to be seen, the Government are trying to rush through the Bill to create the impression that they have a plan. That is further emphasised by the existence of the Bill itself; it is not entirely clear whether new primary legislation is really necessary to authorise such expenditure. It could be argued that the Bill is seeking to create an impression that the Government have a sense of direction, when in reality they do not.
The Bill as drafted raises a number of questions. It allows for financial assistance to be made available to a range of project types outlined in clause 1(2), but there is no guidance or indication whatsoever about how projects and areas of expenditure will be prioritised. The lack of guidance means that we have no idea, in a strategic sense, in which area the Government want to see investment. I am deeply concerned that the Bill and its consequences could fall into the same trap that has been set for the regional growth fund. There is no strategic direction to the investment in the RGF and, as we know, delivery has been incredibly slow—only about a third of round 1 projects in the north-east have actually received their money and we have no idea when some of the round 2 money will come through.
My right hon. Friend the Member for Salford and Eccles (Hazel Blears) highlighted in her excellent speech the problems with not addressing procurement issues. There are no such measures in the Bill and the absence of guidance means that we do not know whether any priority will be given to projects that demonstrate social value and that would enable jobs to be created in areas with high unemployment.
Clause 1(2)(c) notes that infrastructure includes health and educational facilities. Are we to understand from this that Building Schools for the Future projects, which are much needed in constituencies such as mine and which were pulled by this Government only two years ago, can now be resurrected? The same could surely apply to hospitals. If those projects are to be resurrected, how will local authorities go about doing so? There are a number of issues. Surely it is atrocious public policy to pull projects in 2010 and then seek to bring them back in 2012. It is also really bad economic policy.
Although the main thrust of the Bill is to underwrite loans to the private sector, clause 1(4) appears to sanction direct expenditure from the Treasury. Will the Minister clarify whether that is the case? What does he think the balance will be between guaranteeing loans and funding projects directly? We need that direct expenditure.
In my constituency, the number of claimants continues to rise month on month. The north-east is in particular need of investment, with a claimant rate in August 2012 of 7.9%, which is much higher that the UK average of 5.3%. We need good-quality infrastructure projects in the north-east because of its high levels of unemployment and because of the high level of job losses in the public sector.
The Prime Minister pledged that his Government would go on an “all-out mission” to get infrastructure projects under way, and the Chancellor promised to lay the foundations for future economic success, but unfortunately this Government have so far not delivered on their promises. The Chancellor said in his autumn statement that there would be £20 billion in new investment from the UK’s pension funds, but a year later there are no signs of the infrastructure we were promised or of the economic growth that we were told it would create. When challenged on their failure to carry through their promises, the Government admitted that only a small amount of investment would come from the UK’s pension funds and that the rest would be left to the private sector. Even that investment will not start until next year.
It is also not clear how much of the promised support will go into housing. The number of house building starts fell by 24% between the second quarter of 2011 and the second quarter of 2012. As well as having a negative economic impact, that will have worsened the housing shortage in many areas, including in my constituency.
The most recent construction market survey by the Royal Institution of Chartered Surveyors, which is for the second quarter of 2012, shows that infrastructure work loads in the north-east declined by 11%. That lack of investment can be seen across all sectors and across the UK. Similarly, public sector gross investment fell by 29% between 2009-10 and 2011-12. I am concerned about this matter because the north-east has seen the greatest drop in jobs in the construction sector, with a massive 30% loss. There have been job losses across the country, but the 4% loss of jobs in London contrasts very well—or very badly, depending on how one looks at it—with the loss of jobs in the north-east.
If the many stalled regeneration projects in my constituency are to start again, what we need from the Government is direct investment, and quickly. More than 2,000 young people in my constituency are out of work. That simply does not make economic sense. It is also a dreadful loss of talent. People who are leaving our universities with degrees in civil engineering are not able to apply their skills in infrastructure projects. It is time that the Government stopped using words and started taking action.
Priti Patel (Witham) (Con)
I welcome the opportunity to contribute to this debate. I congratulate the Government on showing their commitment to infrastructure investment in the UK by introducing the Bill.
For all the criticism from Opposition Members, it is worth reflecting on the fact that over 13 years—I say this as an Essex MP—there was next to no infrastructure investment in the county of Essex or even in East Anglia. I welcome the fact that the Government recognise that investment in infrastructure is vital in providing jobs, growth and long-term economic prosperity.
Despite our economy being one of the largest in the world and our having spent most of the last decade as one of the world’s five biggest economies by GDP, our infrastructure has been neglected. It is interesting to see where we stand in the international league tables. The World Bank’s logistics performance statistics place us 16th in the world, behind many other economies. Unless that tide is reversed, the consequences for our economy will be catastrophic. Poor infrastructure is not only a barrier to British-based businesses, but makes Britain less attractive for foreign direct investment, which leads to less economic growth.
Every £1 that is spent on construction generates an estimated £2.84 in total economic activity. It impacts across the supply chain through the multiplier effect. I therefore welcome everything that the Government are doing. Of course, any money that comes into the Treasury helps to bring down the deficit, finance the debt built up by the Labour party and pay for public services.
I am pleased that the Government have recognised the importance of infrastructure. That contrasts with what we witnessed over the previous 13 years. I believe that it was one of the most cataclysmic failures of the last Labour Government that they did not adequately invest in infrastructure when the economy was growing. As a result, we have been left with road, rail, airport, energy, port, water and digital infrastructure that is not fit for our country.
Hazel Blears
Does the hon. Lady recognise that during the period of the last Labour Government, 101 new hospitals were built, and that under the previous Conservative Government, not a single new hospital was completed in this country?
Priti Patel
Speaking for Essex, I do not recognise that. The county of Essex has had no infrastructure spending whatsoever. Despite Essex being the county of entrepreneurs, where thousands of new businesses are started each year, and despite it being a net contributor to the Treasury, Labour neglected it. Local and regional infrastructure in Essex failed to keep pace with national and local economic growth. That is no doubt one of the reasons why the electorate booted Labour MPs out of Essex, full stop, at the last general election. It is now a Labour-free zone.
Chris Leslie (Nottingham East) (Lab/Co-op)
Is not the Maltings academy in the hon. Lady’s constituency, which opened about a year ago, a significant piece of capital infrastructure? Surely she welcomes the investment in those new school buildings.
Priti Patel
I welcome that investment in infrastructure improvements, but it was something that I had to campaign and fight for as a prospective parliamentary candidate—not even a Member of Parliament. That says something about the priorities of the last Labour Government. My constituents look with confidence to this Government to take positive action to rebuild our roads and railways, to meet the ever-increasing demands of the growing population in the county of entrepreneurs.
I urge Ministers to consider some particular projects in Essex. The first area is rail, which was highlighted by my hon. Friend the Member for Suffolk Coastal (Dr Coffey). Commuters on the Greater Anglia franchise return £110 million a year to the Treasury on a profitable franchise, but face some of the longest delays and worst facilities in the country. For a modest fraction of the money that the Government receive from the franchise, the rail service could be upgraded from being one of the worst performing in the country to one of the best. We are lobbying the Government, in particular the Department for Transport and the Treasury, to hear our case on this. Local commuters, not only in Essex but along the route of the franchise, would welcome Government investment in the line.
Mr Brooks Newmark (Braintree) (Con)
Does my hon. Friend agree that an important piece of infrastructure to build would be a loop between Braintree and Witham? That is something for which I have campaigned for 10 years. That important link would help all those who commute from Braintree to London.
Priti Patel
My hon. Friend makes a valid point for our constituents. Branch lines are a vital part of our rail network for commuters. Let us not forget that Essex is growing. We now have more homes and commuters, so we desperately need that investment.
I also press Ministers to use the opportunity presented by the Bill to invest in the road network. Anyone who is familiar with Essex will know that the A12 and the A120 are vital economic links for the county. They are at the heart of Essex, connect London to Great Yarmouth and Hertfordshire to the port of Harwich, and pass Stansted airport. Their importance to the region cannot be understated. The A120 is the country’s 10th most dangerous road. It is regarded as such a vital economic link that it has been designated as part of the trans-European road network, yet it has not received the investment that it needs to deal with capacity, in particular for freight. Upgrading those roads would send out a powerful signal that Essex is at the heart of the economic engine room of our country and will continue to be so. It would support traffic going to our ports and airports, leading to more jobs, growth and prosperity in the county, from which the Treasury would benefit.
The Bill is about financing options. The debate has touched on the financing issues of the past, in particular with respect to the private finance initiative. I would welcome an insight into the Treasury’s thinking on the progress that has been made on alternative investment vehicles, including infrastructure bonds, direct foreign investment, pension funds and sovereign wealth funds. How can we strengthen our links with pension funds and sovereign wealth funds overseas to support infrastructure investment in this country?
I want to highlight the London gateway, in south Essex, as a good example of foreign direct investment. If the Minister has the opportunity, I would urge him to visit this amazing project, which is run by DP World, as it provides a clear insight into what can be done when foreign investors commit to building major infrastructure projects in Britain. Dubai Ports has invested in building one of the world’s leading deep-sea container ports. The level of job creation will be immense. The project is situated at the gateway to London, and although it came with some bureaucratic hurdles—that goes without saying with big projects—there are lots of insights that we can learn and benefit from when it comes to ambitious infrastructure investments.
This Bill has the power to transform our nation’s infrastructure beyond anything we have seen for a long time, whether it is through road, rail, planning or energy projects. I urge the Government and my hon. Friend the Minister to rule nothing out and to be ambitious in their thinking. Naturally, I urge Ministers to send a powerful message to my constituents and the county of Essex by effectively applying their commitment to infrastructure renewal and helping to get our county moving. It goes without saying that I support the Bill’s Second Reading.
Hugh Bayley (York Central) (Lab)
This Bill is a small but necessary step in the right direction. The hon. Member for Witham (Priti Patel)—and not just her, but many members of both coalition parties—has repeated the mantra, which we hear time and again, about Labour’s borrowing being the cause of all evil. They sound like a record stuck in a groove. It is not surprising that the public are losing confidence in the coalition parties. Two years ago they told the public that the Government were borrowing too much and that they would clear the deficit by the end of this Parliament in 2015. My party agrees that the deficit, which was necessary to stop the 2008-09 meltdown, has to be cleared, but we warned the coalition that if it cut too fast, it would snuff out growth, which would reduce tax receipts and increase the national debt.
Let us look at the debt figures. When the coalition came to power, the national debt stood at £779 billion. The latest figures, for July this year, show that in just over two years under this Government’s stewardship, the national debt has risen by 33% to £1,032 billion—above £1 trillion for the first time in this country’s history, as a result of the economic policies that the two Government parties have been pursuing, and this from a party that is worried about borrowing. There is no prospect whatever of the deficit being eliminated by the end of this Parliament. That was a brave promise, but one that will not be met. According to the Office for Budget Responsibility, the national debt is set to rise to £1,437 billion by 2015-16—getting on for double what it was when the coalition parties came into government.
Mr Newmark
But under the hon. Gentleman’s party’s proposals the national debt would be increasing by even more, so what is the logic in what he says?
Hugh Bayley
No, it would not, and that is the central fallacy. If we snuff out growth, we snuff out revenues and the Government spend more on benefits for people who are unemployed. If we promote growth, we increase the Government’s revenues and we are thereby able to reduce the deficit.
I would acknowledge that the UK went into recession in 2008. Labour policies, including our policy to go for short-term borrowing to jump start the economy, pulled the UK out of recession in the middle of 2009. By the time of the general election, under Labour there was a recovery that had delivered four quarters of growth. Since the general election, there have been three further quarters of growth and five quarters, under the coalition Government, in which the economy has been shrinking—quarter 4 in 2010, quarters 2 and 4 in 2011, and the first two quarters of this year. It is therefore quite clear to me that plan A has failed.
This Bill represents a U-turn, and it is a U-turn I welcome. I wish it had come earlier, but the Government are right to bring forward these proposals. However, if the Bill is to make a significant difference to growth, and therefore to the Government’s ability to reduce indebtedness, they will have to drive forward investment with real determination and vigour. I therefore have some questions that I would like to put to the Minister. First, last year, in 2011, the value of new orders in the construction industry was £46 billion. Clause 2(1) permits the Government to commit a further £50 billion to infrastructure, but I would like to know against what time scale they expect that level of investment to be committed. Are the Government going to commit to £5 billion in new orders for the construction industry—a 10% increase in round terms—in the year to come, or do they hope to commit the lot in one year and thereby double the level of investment? These are crucial questions. Will the Government provide a quantum change in the level of infrastructure investment in this country, or will they tinker at the edges?
My second question relates to clause 2(2), which we have already discussed a bit, which says that the £50 billion ceiling will apply to expenditure and contingent liabilities. However, despite the Chief Secretary’s clarification, I am still not quite clear whether the Government intend to count the full value of the loan guarantees against the £50 billion or a lower figure, tied to their estimate of a proportion of the guarantees which they expect would be drawn down in hard cash.
Thirdly, will the Government guarantee that their assistance will go to all regions, with extra help for those parts where infrastructure investment has taken the hardest hit? I have looked at the change in the value of orders for new construction in Great Britain between 2009 and 2011, and the figure varies enormously from region to region. In London, infrastructure investment in 2011 was up 18% on what it had been in 2009, in the last year of the Labour Government. In the south-east the figure was up by 6% and in the north-east it was up by 14%. However, in all other regions of England, as well as in Wales and Scotland, there was a decline, with infrastructure investment down 3% in the south-west, 9% in Scotland, 15% in the east midlands, 21% in the west midlands, 23% in the east of England, 31% in Yorkshire and the Humber and in the north-west, and 32% in Wales. Will the Government target money on those regions, including my region of Yorkshire and the Humber, that need help most?
Fourthly, clause 1(3) defines “provision”—the uses to which the £50 billion will be put—to include design and construction, as well as operation and repair. It looks to me as though the Government intend this new vehicle to be the substitute or replacement for the PFI model. If that is their intention, I would like the Minister to describe a bit more what the Government have in mind.
Fifthly, the Government’s national infrastructure plan, published in November last year, included flood defences and communications in its definition of “infrastructure”. We have heard that the Government would regard it as possible to use the resources that the Bill will make available to improve high-speed broadband, for instance, in rural areas such as north Yorkshire. However, flood defences are not mentioned in the Bill. I would therefore welcome a clarification from the Minister about whether flood defence schemes will be seen as infrastructure under the terms of the Bill, and therefore fundable from the £50 billion that is being set aside.
My final point relates to apprentices, a subject that I asked questions about when the Government first started to introduce measures to promote capital investment, in the autumn statement last year. The use of £50 billion of extra public money—or more, if the Government are successful in using their contribution to leverage in more resources from the private sector—to support infrastructure investment will provide a tremendous opportunity to boost the number of apprenticeships in the UK construction industry. We could end up with far more people being trained in the skills that our economy needs, now and in the future, and become less reliant on bringing those skills in from abroad. Will the Minister explain what conditions the Government will place in contracts for which they provide guarantees or loan finance to ensure that the contractors increase the number of apprentices they take on and train?
Neil Carmichael (Stroud) (Con)
Thank you, Mr Deputy Speaker, for calling me to speak in this important debate. This is a necessary piece of legislation, not least because we need to stimulate growth by showing that we are interested in developing our infrastructure. Such infrastructure investment has taken place in the past, but we need more, and it is important to understand what kind of investment is needed and how the process needs to unfold. We do not always remember that organisations involved in civil engineering, for example, want to see a little more confidence in the world of infrastructure investment, so that they can start to prepare for projects that are in the pipeline or that are urgently needed. We must recognise that some of those projects will stimulate further economic activity. Transport and energy are classic examples of sectors in which more investment is needed, as a stimulant to create even more exponential economic activity.
Let us take transport as an example. By investing in more transport infrastructure and ensuring greater connectivity, we give businesses a better foundation from which to grow. I know that from experience in my own constituency, where the news of the investment in the redoubling of the railway line between Kemble and Swindon on the Stroud to Swindon line has had an enormous impact. There is a real feel-good factor for the medium term in relation to the connectivity of my constituency. We need to see much more of that kind of signalling, and I welcome the thrust of the measures that relate to transport.
Another critical area whose importance we do not always recognise when we talk about investment is the energy sector. Again, the word “connectivity” is important, but we must also understand the need to provide a framework for the right kind of investment, as well as ensuring, as the Bill does, that guarantees can be put in place for those investments. For example, in the renewable energy sector, we need to think about the infrastructure required to get the energy from where it is created to the place where it will be used.
We must also encourage new technologies by providing the right policy platform to enable them to be developed and promoted. A good example is energy storage. In some sectors, we have the kind of technology that could make energy storage a realistic prospect. I have told the House before about liquid air, but I will tell it again. Liquid air provides a significant way of storing energy, but we need the infrastructure to achieve that. The Bill could provide the necessary encouragement for that to happen, and for an interest in energy to be developed.
Neil Carmichael
It is certainly not hot air. It is very cold. The technology is well worth looking into; it is all about the transfer of pressure.
The hon. Member for York Central (Hugh Bayley) talked about the proximity of the Bill to private finance initiatives and public-private partnerships, and I agree that that proximity exists. We need to learn lessons, however, from our experience of the more complicated and convoluted PFI schemes. We need more flexibility, and we need to give the public and private sectors the confidence to think, “Let’s get this done”. We need to generate a can-do approach, and the Bill will go some way towards achieving that.
Mr Newmark
Does my hon. Friend agree that the Government should not do all the heavy lifting when it comes to funding these projects? It is important that the private sector should play its role in ensuring that public projects get funded, and that it should act as a partner in any funding of infrastructure projects.
Neil Carmichael
My hon. Friend is absolutely right. The Bill provides a comfort zone for the private sector that will enable it to get involved and to work as a partner with the public sector to deliver the kind of infrastructure that we desperately need.
These arrangements have worked before; the Hoover dam was a good example. It involved hydro-electricity, a relatively modern form of energy, and it is still generating electricity today. No one would claim that it was a panacea, but it was certainly an example of the right kind of investment, and the right kind of relationship between the public and private sectors. We can look to other examples and say, “Yes, this is the way forward to enable the private sector to give comfort.”
In parallel to the Bill, we also need the appropriate policy frameworks to give the sectors a sense of the direction in which we are going. I have mentioned energy, but that applies to transport as well. For example, I hope that the Government will come up with a realistic solution to the question of airport capacity, and that we can be bold enough to recognise that more capacity is needed. We should be thinking big-time about some sort of solution in the Thames estuary or elsewhere. That solution should also include regional airports, and we need a policy framework and the necessary medium-term planning to allow all that to happen.
That brings me to local authorities. It is no good simply saying that we are entering happy times for investment if local authorities do not recognise that they have a role to play in delivering the necessary planning outcomes, and that they need to work together to determine where the most important infrastructure projects should be placed. There must be relationships between local authorities as well as within them if we are to deliver the desired outcomes.
The Bill will motivate the private sector to get involved; it should encourage those who are interested in infrastructure to feel that forward planning is taking place and that they should get involved in the process. I hope that the Government will continue to develop the idea that we need co-operation between the private and public sectors, and that together we will end up with some worthwhile outcomes.
Geraint Davies (Swansea West) (Lab/Co-op)
I am grateful to follow the hon. Member for Stroud (Neil Carmichael), and, indeed, my hon. Friend the Member for York Central (Hugh Bayley), who laid out some of the background. It is important to see the issue in context. We hear the mantra from Government Members that it is all somehow Labour’s fault that we are in this mess, but if we track back as far as 1997, we have seen all this before—mass unemployment so that money is spent on keeping people on the dole and there is no growth. From 1997 to 2008, we saw sustained growth, people in employment paying tax, ensuring that debt was kept down and service provision up.
Then, of course, in 2008, we saw the financial tsunami—due to sub-prime debt—washing our shores. Two thirds of the debt we eventually saw in 2010 was from the banking community; the other third was from the Labour Government investing beyond earnings to sustain growth. As was graphically described by my hon. Friend the Member for York Central, we had fragile growth going into 2010, but then the new Chancellor simply announced that he would cut 500,000 public sector jobs—it is now 700,000—so it is hardly surprising that people in the public sector thought that they might lose their jobs, resulting in less spending and more saving; and we have seen pay freezes as well. This has had a knock-on effect on consumer demand—hence we have zero growth.
In terms of the public accounts, reducing a deficit is, as with any business, about both increasing revenues and tightening savings, but the focus of the new Government has been almost exclusively on massive cuts and austerity measures. Instead of focusing on growth, we now see an imbalance and a belated attempt to try to pump-prime a bit of growth. I welcome that belated attempt, but enormous problems with consumer confidence remain, making it important that infrastructure investment is focused on productive capacity.
When it comes to public accounts, it is worth remembering that, as with any business, spending on infrastructure is not like revenue spending; it is spending on assets, building up the balance sheet of UK plc. That is why I would like the Government to think positively again about spending some of this money on something like our Building Schools for the Future programme. That was about building assets to increase the skills and human capital of Britain for the next 10 or 20 years. Instead, the Government are busy trying to price people out of universities with excessive fees. Their latest announcements have generated uncertainty among the business community about the future value of GCSEs and the whole route map of education. They are saying to people, “Well, you may have GCSEs or other qualifications that are the currency of education”, but what they have done is suddenly to devalue that currency.
The main issue for today is how to spend the money on infrastructure in a public accounts-effective way. Through their massive spending on procurement, the Government need to ensure that they are focusing as much as possible on small and medium-sized enterprises. I say that because SMEs tend to employ local people and they tend to pay income tax, corporation tax, VAT and so forth. If we look at the history of this Government’s procurement in England, we find that only 6% of the money is spent on SMEs, so the great majority of it is spent on large foreign companies that do not pay tax in Britain and often do not employ local people. In Wales, by contrast, over 60% of the procurement goes to SMEs, regenerating the money, and it is all one business. We need to think carefully about how this money is contained or otherwise leaked abroad.
If we are serious about building industrial infrastructure for jobs, we need to think about the wider tax regime as well. A day or so ago, I visited an aluminium manufacturer, Aleris, which melts down scrap aluminium. The Minister may know that the energy needed to produce aluminium from scrap is 4% of the energy it takes to produce it from raw materials. No surprise, then, that China buys 20% of our scrap, yet puts penal taxation on foreign countries attempting to buy their scrap. It is the same with Russia, where the marginal tax rates are at nearly 50%. In other words, there is a strategic awareness of the value of raw materials, so why are we now in a position where we send scrap to China, which comes back as manufactured goods so that China makes the money from it?
We need to think very carefully about how the tax system works in relation to infrastructure. Tata Steel, which I am going to visit next week, provides another example. It has said, quite rightly, that it is one thing to have a European tax on carbon emissions, but if that means that steel manufacturing leaves Europe, goes elsewhere and produces more emissions, is that a good thing? To superimpose the UK’s carbon tax makes things worse.
I would also like to see more support for transport in my local area, particularly Neath, Port Talbot and Swansea ports, so that they become recognised by Europe as a core port. That should trigger, in turn, the trans-national European transport funding available. We need to think carefully about how we engineer ourselves so that we maximise the money available from Europe. Indeed, next week, Swansea university is announcing a multi-million pound investment from the European Investment Bank, which will lever in private sector money. Rolls-Royce, BP and Tata are supporting this, as are the Welsh Government. The issue is how we work together to make the most of the money available.
I mentioned in an earlier intervention that I am in favour of spending on social housing and housing in general. As I said, there is scope for some facilities to come from the private sector. For example, it could do the building, with the public sector providing the land. That allows for joint ownership of assets and a mixture of social housing and private housing. Local authorities could provide social housing on that basis, and we benefit from the rental revenue streams created.
In Swansea, Neath and Port Talbot, we have pushed ahead with the concept of the city region, which has been encouraged by the Welsh Government. Again, it amounts to having a joined-up view—it is not just for public-service delivery to make efficiencies—and it also means a genuine joining up with the private sector. That is why I have been in talks with Hewlett-Packard, which has a skills cluster in Swansea and is keen to get the work from the Government in the form of outsourcing from the Department for Transport. That would have a strategic impact on the area, which would be much better than the contract going to, say, a German company that is also bidding for that work.
We need to think in the round about what is good for Britain. My hon. Friend the Member for York Central mentioned flood risk management; I used to be the chair of Flood Risk Management Wales. The flood defence in north Wales is a railway and part of the defence in south Wales is a road. There is talk of the Severn barrage; it would be a flood defence too if it were allowed to develop. We need to get out of the silo mentality and think about UK plc in order to do what we can to build a stronger future for us all. I shall leave it there. I am grateful to have been called to speak and I hope that some of my ideas will be taken forward.
Penny Mordaunt (Portsmouth North) (Con)
Let me explain to Members who do not know Portsmouth well that there are three roads leading to the island. Those who take the western road will enjoy a plum view of an area called Stamshaw and Tipner on the left as they head into the city. It is part ships’ graveyard and a dumping ground for disused troop carriers, part Ministry of Defence shooting range, part former dog track and part disused industrial site. Local people have been desperate for the area to be regenerated for decades.
Before I became a Member of Parliament I met one of the landowners, who was keen to invest in cleaning up the site and proceeding with plans to build more homes and community facilities. The council had written to him saying that it would not welcome the seeking of planning permission while it did not have a vision for the whole site, and that the issue of road infrastructure was still in question. He produced that letter for me. He then produced a second letter which had been written to his father in 1973 by the same local authority. Apart from the fact that the former letter had a jazzier logo on the header and an Arial font, and the latter had been typed on an old-fashioned typewriter, the letters were the same, almost word for word.
Local residents were fed up with having endless discussions about opportunities resulting in no delivery. That has changed now that the go-ahead has been given for the new motorway junction on the M275 at Tipner, as was announced in a statement last year. That has enabled the whole area to be regenerated. The new road will provide access to the development site, and will greatly reduce the impact of construction traffic on local roads. At present, the only access to the site is via narrow Victorian streets which are heavily and unavoidably used for street parking, servicing and local access,
Regeneration of the Tipner area would bring major benefits to Portsmouth, most notably the cleaning up of former industrial land and the creation of new open spaces, parks and waterside walks, and much-needed homes and jobs. The master plan for the area includes 1,600 new homes, 30% of which are to be affordable housing, 25,000 square metres of business accommodation for 1,500 new jobs, and a new hotel complex. The transport infrastructure will not just enable development to take place, but help to ease congestion and parking pressures which, in the most densely populated city in the UK apart from London, are considerable.
A new, additional bus priority lane on the M275 will improve public transport between Tipner and central Portsmouth, and bus reliability. As it will be an additional lane, it will not remove any capacity for general traffic. There will also be a new means of access to a park-and-ride site from the new motorway junction. That is all good stuff, and I am happy to report that work started this summer. The Homes and Communities Agency has begun the cleaning up of the land that it owns, along with some owned by the council, as the first phase of the scheme, and contractors have begun work on the old PD Fuels site off Twyford avenue as part of their work to clear and prepare the other three plots for development.
I have been struck by the ambition that exists in our city. Business has challenged the local authority to do more to enable the whole harbour to be developed and to make best use of MOD unused sites, creating a destination port for cruise ships and potentially achieving world heritage status. I have been impressed by the collaboration between the different sectors in the city and the emerging of a shared vision of the exploitation of the heritage and natural assets possessed by Portsmouth, as a deep-water harbour. I am very pleased by what the Government have done to remove obstacles in order to enable those complex partnerships to flourish, and especially pleased by the pragmatic steps that they have taken to enable us to use former MOD land. I urge the Government to continue to build on the pathways that they have created between the Treasury and English Heritage in that area in particular.
I have some sympathy with the Opposition, because the job of this Opposition is a difficult one. They do not have a plan themselves that they can articulate, and they cannot criticise the Bill or the investment that it would allow—investment that would come either directly from the public purse or from the private sector, the Bill serving as a catalyst in the latter case. Instead, they say that the Bill is not required. I would argue that good financial management and parliamentary scrutiny suggest otherwise. The Opposition are also in denial about the rate at which work is proceeding, and, in their criticism, are sending the message that Great Britain is closed for business.
In the coming years, £1 billion will be invested in Portsmouth through a pioneering partnership between business and civic leaders. That will be made possible by the infrastructure projects that the Government have announced. Members need not take my word for it: by happy coincidence, today’s edition of the Financial Times contains an article by James Pickford about that £1 billion investment, which includes the Tipner scheme.
The Opposition have no credibility in this regard. The infrastructure projects that I have described were not advanced under the last Labour Government. They promised a £200 million investment in school buildings for Portsmouth, and not a brick was laid. More peculiar still, when I submitted a freedom of information request to the Department for Education after I had become a Member of Parliament, asking what correspondence had taken place on that major investment project, I was told that none existed. I found that extremely suspicious: I had thought that at least a couple of letters would have been written. Let us not forget, as well, that Labour presided over a private finance initiative contract for our local hospital that provides very poor value for money for the local health economy and forced the closure of wards.
If we are to judge a Government’s infrastructure plan on the basis of value for money, return on investment and “cracking on with it”, the Opposition will not fare well. I urge them to show a little humility today, and, if not to reflect on their record—I realise that that might be painful—at least to support our communities in their ambitions. Portsmouth’s ambitions require both positive thinking and positive action, and I urge all political parties, their Members of Parliament and their councillors to get behind our communities’ plans for growth and help to attract that investment. The whole House should support this Bill.
Grahame M. Morris (Easington) (Lab)
I was hoping to open with some generous comments about the contributions from Government Members, and although I have agreed with some of them, I have found others that dealt with the Opposition’s view a little unpalatable. Make no mistake: our commitment is to jobs and growth, and to a credible plan to stimulate investment in infrastructure.
As my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) has already said, a number of sectors in our region could benefit considerably from investment in housing and construction. I did not quite understand the point the former Prisons Minister, the hon. Member for Reigate (Mr Blunt), was making in saying that housing should not be considered as infrastructure. It is absolutely vital. As many as 25,000 new jobs in the north-east could be created through low-carbon investment and a proposal from the North East of England Process Industry Cluster. We should also consider superfast broadband, communications and transport. Although we are not a direct beneficiary of High Speed 2, there is a plan to locate the train-builder, Hitachi, within County Durham, which could generate many thousands of new jobs.
In the time available I want to talk about the important and often neglected role of regional airports as part of our regional economic infrastructure. In the north-east, that is the Newcastle and Durham Tees Valley airports, which I want to thank, along with the Airport Operators Association, for their assistance in providing information. As Members will appreciate, airport infrastructure projects are generally entirely private sector funded. More than £100 million has been invested in new facilities and infrastructure at Newcastle airport since 2000. A terminal, a runway, instrument landing systems, an air traffic control tower, a fuel farm—all have been improved or replaced during the intervening period. More than £3.2 million has been spent on the terminal in the past year. Plans further to improve the airport include additional investment in the terminal, aircraft parking stands, freight offices and access.
However, this is not simply a question, as the Minister implied, of overcoming ownership and planning constraints. Other Government policies influence the ability to take forward infrastructure projects, one of which is investment in complementary infrastructure in other modes. Here, I am thinking of the importance of improving the A1 western bypass, which is seen as an obstacle to further growth at the airport. That would be of considerable benefit in terms of gross value added and improving journey times. I hope the Bill is an indication that the coalition now recognises the importance of aviation policy to the UK economy. We need to ensure that the UK can compete in both established and emerging markets. That requires investment in airport infrastructure, and not only to enhance connectivity right across the country; the UK needs vibrant, point-to-point airports and sufficient world-class hub capacity.
I do not propose to get involved in an argument about whether the right thing to do is to expand Heathrow; but it is absolutely clear that that is a decision for Government to make. It is up to the Government to decide where hub capacity, if it is to be increased, should be. As with all infrastructure improvements, there is a long lead-in time and people need certainty in order to invest in new facilities. The hon. Member for Halesowen and Rowley Regis (James Morris) suggested that an alternative would be to expand Birmingham airport, but I do not necessarily agree that that would be the best decision. However, the Government should consider the matter, as our regional airports are suffering as a result of this uncertainty.
These airports have considerable potential as engines of sustainable economic growth. As I mentioned, Newcastle airport supports 7,800 jobs, with more than 3,000 of those on site. The benefits go not only to Newcastle, but to the whole north-east region. The benefits to the regional economy are put at some £646 million. The airport contributes £57 million gross value added for tourism, it handles 4.7 million passengers a year and generates £48.8 million a year in air passenger duty from passengers flying from Newcastle. Aviation is a huge benefit to the UK economy, contributing about £50 billion, of which the Chancellor takes about £8 billion, as I understand it.
I wish to remind the Minister that the recent global crisis and the associated recession has caused the biggest fall in activity at UK airports since the 1950s. In the north-east region, the number of passengers at Newcastle airport has reduced from 5.5 million in 2007 to 4.7 million in 2012. Even more dramatically, the number for Durham Tees Valley airport has decreased from 1 million in 2005 to 200,000 in 2012.
As this is a Treasury Bill, it is reasonable to ask the Minister about the role of the Chancellor and the Treasury in the context of our regional airport infrastructure. Is this another case of perpetuating a north-south divide? I understand that passenger numbers at Heathrow, and indeed for much of the south-east, have recovered to their levels before the financial crisis. To use a northern expression, this seems to be a no-brainer. Why do the Government not see investment in airport infrastructure as a key driver of growth and jobs?
There have been notable critics of the approach being taken, and not necessarily from the Labour party. Mr Olivios Janovec, director general of the pan-European airport operators association, says that the UK has the worst aviation and aviation tax policies in Europe. Perhaps that is because of a lack of continuity; we seem to have had more Transport Secretaries and aviation Ministers than Chris Hoy has had gold medals, and I do not think that that has helped.
The Government are not doing enough to make regional airports flourish. There is considerable potential, and a major boost could be provided to jobs and growth in the north-east. That is important because the number of unemployed claimants in Easington in August 2012 was 3,307, or 9.9% of the economically active population. The number of claimants was up by 441 compared with the figure for the previous year and it was 14 higher than the figure for July 2012.
It is important that the Government examine what is happening on air passenger duty, as this country has the highest rates in Europe and possibly the world. It is a regressive tax that takes no account of people’s ability to pay. I also urge the Government to move ahead and recognise the important role of Government in stimulating demand.
Mr William Bain (Glasgow North East) (Lab)
The Chief Secretary today attempted to portray this Bill as a sign of the country’s economic strength, but instead these very limited and serially re-announced proposals are the strongest indicator yet of this Government’s weakness on jobs and growth. We should have had a Bill that put to work for productive investment the under-used corporate surpluses in this country and that brought forward more of the capital spending which has been back-loaded for later in this Parliament, but we have a damp squib set of proposals instead.
After two infrastructure plans have failed to deliver programmes on the ground, and after two failed attempts on bank lending—Project Merlin and the credit easing scheme—which have resulted simply in decline after decline in the pitiful rates of bank lending to small and medium-sized businesses over the past six quarters, the proposed plans could scarcely be more ineffective. The Government must know from the fact that two thirds of British businesses now believe that UK infrastructure will become weaker in the next five years that they must do substantially more to tackle the underlying issues that have diminished demand for bank lending, as well as its supply.
The Government pledged to grow the economy and cut national debt, yet in two years they have achieved the very opposite. Last week, Citigroup predicted that the Government’s borrowing will balloon by an additional £48 billion in 2015-16, a year in which the Chancellor is banking on 3% growth to come anywhere near his supplementary rule on debt falling as a percentage of national income. Citigroup also said that public borrowing may reach 90% of gross domestic product in the same fiscal year, as unemployment is much higher and growth is massively reduced from the original Office for Budget Responsibility predictions on which the Chancellor has staked so much of his fiscal credibility since June 2010.
Just a year ago, the Chancellor said that Opposition Members were joined only by the Hungarian communist party in believing that easing fiscal policy was necessary to create more output and more jobs in the economy, yet now the IMF, the OECD, the CBI and the British Chambers of Commerce all say that in the absence of growth the Government should change course on fiscal policy, and that in particular they should invest more in infrastructure. Even among the 20 leading economists who backed the Chancellor’s fiscal consolidation plan ahead of the 2010 general election, the New Statesman found only one who is now willing to support the Chancellor’s plans, and nine have urged him to change course and boost spending through increased infrastructure investment. As Roger Bootle said recently in his response:
“The key thing is to try and get the private sector to spend its money and that may require a bit of government spending to prime the pump.”
Oh that the Chancellor would listen.
We see from the latest British social attitudes survey, published today, that two years of the Chancellor’s reckless and self-defeating austerity has done more than anything else in the last decade to promote public support for additional public investment to boost the growth rate. As the chair of the Federal Reserve, Ben Bernanke, said on Friday:
“Monetary policy, particularly in the current circumstances, cannot cure all economic ills.”
Only this morning, Larry Summers, the former US Treasury Secretary, who knows a great deal about how to grow an economy while balancing a budget, called for slackening in the pace of fiscal consolidation in this country, saying that
“output lost from this British downturn in its first five years exceeds even that experienced during the 1930s.”
With evidence as powerful as that, what will it take for the Government to change course and boost infrastructure investment in a way that the Bill fails to do on the public side?
As the TUC has shown, for every £2 of cuts and tax rises imposed by the Chancellor, the deficit fell by only £1. His policy has failed even on its own limited and blinkered terms. We see 3.3 million people in our country in involuntary self-employment or part-time work because our economy is too weak to generate good numbers of effective full-time jobs. The TUC has also shown that with growth anaemic and consumer and private sector confidence at rock-bottom, by 2015-16 the Government could end up borrowing £175 billion more than predicted by the OBR in June 2010. It is the Chancellor who is now on the wrong side of the argument, and in failing to temper his austerity policies amid the continuation of weak demand with falling real wages and mass under-employment, he is now on the wrong side of history too.
Let me turn to the situation in Scotland. Tomorrow morning I will take part in a construction industry conference at North Glasgow college, which is opposite my constituency office in Springburn. There will be strong support for Government at all levels taking urgent action to support the construction sector. We face a social housing slump in Scotland, with a shortfall of 156,000 homes and according to Shelter Scotland a seven-year waiting list for a social rented property. In the second quarter of this year construction work fell in the rest of the UK by 6.14%, but in Scotland there was a drop of 8.91%. There was a 7% drop in Scottish output on repairs and maintenance, compared with the same time last year. Surely that provides the clearest support for the argument that the Opposition’s policy of cutting VAT to boost demand is the right one for jobs and growth at this time.
Ahead of their budget on Thursday, the Scottish Government, too, must bear their share of responsibility for a substantially weaker construction performance in Scotland than in the rest of the UK. In the 12 months to June this year the number of construction jobs in Scotland fell by 6,000, or 3.5%, compared with an overall UK average drop of 1.2%. Construction is doing worse under the policies that the Scottish Government are following. I must say that I am somewhat surprised; the Scottish National party is always very keen to show its support for shovel-ready policies, yet no SNP Members are in the Chamber today—perhaps an absence of shovel-ready speeches is the deficit they are struggling with today.
The SNP must also recognise that in following its plan to decouple fiscal policy from monetary policy it would be doing the very opposite of what Keynes said was necessary to counter a slump of such length and severity. With its potential plans to separate fiscal policy from monetary policy, emphasising short-term profit taking rather than long-term investment, through corporate tax cuts, it jeopardises long-term investment in infrastructure in Scotland.
The Government should change course now before they do permanent damage to the economy, to the living standards of ordinary people under the most unprecedented threat for 90 years and to the employment prospects of the long-term jobless and young people. The evidence is clear and the case for decisive steps now is overwhelming. If they do not act, they will be a Government who will be out of time, out of excuses and, at the next general election, will deserve to be out of office.
Stella Creasy (Walthamstow) (Lab/Co-op)
With every piece of legislation we are asked to consider in this House it is important to apply the test of why we are here. I believe that all Members across the House are here because they wish to improve the communities they represent and forward the causes they care about. The test for me tonight is whether this Bill will deal with the issues that my community and others across the country currently face.
The economic crisis across the nation cannot have passed anybody by. Given current levels of debt, disappointment and fear, many companies and families in our communities are struggling. When that happens, people look to their Governments as the first line of defence. Many of us in opposition fear that, in some of the ways the Government are approaching legislation, rather than being the home front, they seem to be saying, “Don’t panic, Mr Mainwaring.” I think that that is what we are seeing tonight. The Bill is designed to give the appearance that something is being done, but the critical question we must all ask is this: what is the something that needs to be done for the communities we represent?
Our communities are suffering from a toxic mix of several factors. First and foremost, there is a crippling lack of confidence in our country’s economic condition. The figure that should challenge the Government the most is the £750 billion-worth of assets that companies in this country are sitting on, which they have been stockpiling over the past four years. Frankly, companies in this country do not need credit; they need good reasons to spend. We have to give them those good reasons to spend credit and get demand going again.
When that demand is going, we know that that means jobs for communities such as mine, where there has been a stubborn 5,000 people out of work over the past year. It means tackling the long-term unemployment that is pock-marking too many of our young people. It means tackling the issues that my hon. Friend the Member for Glasgow North East (Mr Bain) mentioned, as people are having to work in different ways that do not suit their needs, setting up their own businesses and hoping against hope to make the money to keep a roof above their heads. It means tackling the low level of vacancies in our economy. It means tackling the third part of the trifecta of issues affecting the rising costs of living in our communities—families who are struggling with unemployment and wage freezes are also struggling with the increasing costs of transport, housing and food.
We have to ask ourselves whether the Bill will do more to advance the issues that people need to be advanced, and can be tackled, or will simply pass them by. We have to ask how it will help to restore our economy. We all understand the impact of choking off investment infrastructure, because we have seen it over the past two years. We have seen the fall in housing construction, which has resulted in 120,000 jobs disappearing from our economy. We have seen the dithering over our transport infrastructure, which has affected the discussions on aviation, high-speed rail, and, in my part of the world, London Transport, trains and electrification. We have seen the consequences for companies that are reliant on the internet and for communities who needed the broadband promise to have been implemented in 2012, not by 2015. We have seen decimated new industries that could offer great hope to our economy —in particular, the solar panel industry, decapitated by this Government through the choices they have made.
The Government have failed to understand the crucial link between the public and private sectors and the consequences of investment in one for benefits to the other. That is what the Bill must address. To give an example from my constituency—I am sorry that the hon. Member for Suffolk Coastal (Dr Coffey) is no longer here—Willowfield school was good to go under the Building Schools for the Future programme and is now finally being rehabilitated. Not only have the children in my constituency had to wait—and are still waiting—for the quality school environment that they need to achieve their potential, but young people who were out of work could have been put to work on building that school, which we all recognise we need.
It is a false economy not to see infrastructure investment as part of a growth strategy. I welcome the fact that the Government have now understood the potential that that has to make an impact on my community, let alone the other struggling communities across the country. It is also something that businesses would support. Two thirds of companies are worried about the standards of our local roads; 95% of them believe that congestion has impacted on their business; and a quarter feel that they have lost at least £1,000 in the past year alone because of problems with their internet connectivity. Most crucially, two thirds of businesses have no confidence that there will be improvements to address the problems, despite the Government’s proclamations.
The Bill must pass that test if it is to be part of the economic revival that our communities and our country need. Frankly, as many Labour Members have pointed out, it does not pass muster because of the restrictions that it places on spending. As the shadow Chief Secretary said, it is, in effect, deadweight funding for schemes that would get support in any case. I hope that Ministers will deal with that issue, because they have yet to identify the schemes that should receive funding—the so-called perfect schemes that have all the requirements in place and are good to go, but that for some mysterious reason are not moving forward. There is no clarity about when these projects might be chosen so that we know when and how they might make a difference. We might look to the national infrastructure plan, but we are already on version 2 and are promised version 3 shortly. One can understand why the businesses sitting on the £750 billion do not have confidence in the situation.
I encourage Treasury Ministers to think again about how they use the Public Accounts Committee. The Chief Secretary brushed off the argument that the PAC has an important role to play in value-for-money questions, especially in deciding what projects are invested in or what constitutes good value for money. As other Members have pointed out, there is lack of clarity about how the decisions on which schemes are invested in will be made, which Department will make those choices, and how the schemes will fit in with other spending priorities and, indeed, other priorities across Government.
I endorse the words of my right hon. Friend the Member for Salford and Eccles (Hazel Blears), who talked about the social value test and the importance of looking at investments in the round. We should not merely ask, “Can we get the road built?” We should also ask, “Can we get our young people back to work? Can we skill them up so that this money does not just pay back once but repeatedly?” That is the social return on investment that we should all look for.
Ministers also need to answer the question that occurs to many of us when we examine the current economic climate. One in four public sector organisations have reportedly said that they are planning to cancel investment projects in the next four months. If there is not clarity about which investment projects will be taken forward, when, and how that will be decided, what confidence can we have that the decision making process has not already corroded the possibility of those projects happening? Businesses that rely on work that they know is not going to come about will not get the comfort that the Bill should offer.
That is why the shadow Chief Secretary was right to talk about the Bill being a peashooter when we needed a bazooka. Frankly, it is a peashooter when we are facing a tank of a problem, because we know that there are worse things to come in our economy if the Government do not change course. We know that the cuts to benefits will kick in next year and that the cost of living will continue to rise as the cost of transport, energy and housing goes up. The impact of any investment that the Bill brings forward will not be felt for years to come, so it does nothing to address the challenges that my community and others around the country are facing now, about which I talked at the start of my speech.
I urge Ministers to consider what more they can do for the real wealth creators in our communities. We know that two thirds of jobs come from small businesses, so I make the same plea that I made in the Queen’s Speech debate for the Government to look again at what more they can do to help small businesses and unlock the money that is sitting in companies’ bank accounts, which could be invested in Britain’s future entrepreneurs. They should consider how we could use time-limited tax breaks to get our economy moving now, so that we can give real hope to families who are in debt.
We all want to get Britain back to work and reverse the current toxic cycle. I say that in a week when we have heard of one company doing fantastically successfully. It would not be a speech in the House by me were I not to point out that legal loan sharks are the one blooming industry in our country—we heard this week that Wonga’s profits are up 300%. We cannot have another year in which the only people doing well in this country are the legal loan sharks.
I ask Ministers not just to invest in infrastructure but to think again about what they can do for communities such as mine, Ealing North, Nottingham and Portsmouth. They should consider how they can bring jobs back to those communities, because the people we represent need and deserve nothing less.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I draw attention to my interests as declared in the register.
There has been a paradox in this debate. We have heard a series of speeches by Members on both sides of the House setting out a persuasive case for increased infrastructure investment. Many have highlighted particular schemes in their constituencies that are fundamental to the future of their areas. At the same time, however, the Chief Secretary was either unable or unwilling to identify a single project that was likely to benefit from the Bill. Despite all the hyperbole that we have heard from the Government about its benefits, no Member will be able to go home tonight any more confident that the schemes that they desperately want and need for their constituency will go ahead. That is the conundrum in the Bill. It is not a bad Bill, and I and the Opposition will not oppose it, but there is deep scepticism about whether it will deliver all that is expected of it.
There is no question about the need for increased investment in infrastructure. Construction has been hit more severely by the recession than almost any other sector of the economy. Output has been falling quarter on quarter for the past year, and the situation is worsening, not improving. The forecasters in the industry are deeply pessimistic. The Construction Products Association forecasts two more years of decline and states:
“Between now and 2014, total construction is expected to lose £10 billion as public sector construction activity falls away sharply. Although this has been expected for some time following the government’s deficit reduction plan announcements, the hoped for recovery in the private sector, which was expected to offset these falls, has not materialised.”
Experian’s latest forecast, which is significantly more pessimistic than the previous one issued in March, states:
“The prognosis for construction is significantly weaker than in March…Significant recovery is now postponed until 2015”.
The problem is spread widely through all sectors of construction—industrial, commercial, residential, health, education, housing and infrastructure. All are looking very fragile, and almost all are at levels of activity substantially below those seen before the credit crunch.
Ironically, infrastructure was the sector of construction that best withstood the initial impact of the recession. In part, that reflected the fact that investment in infrastructure schemes takes a long time, so schemes that are in place are likely to roll on for some time. Although I shall be critical of the Government in many ways, I pay tribute to them for agreeing to maintain investment in Crossrail because there was doubt about that when they came to office, and it would have been catastrophic if they had pulled the plug on that scheme. Of course, it is now a major part of the ongoing infrastructure investment that brings real benefits. However, the latest Experian report confirms that infrastructure is no longer an engine of growth, and its September forecast is much more pessimistic than the one in March about the future prospects for infrastructure.
Housing is equally badly affected. In the 12 months that ended in June, just 98,000 homes were started, compared with 109,000 in the previous 12 months, which ended in June 2011. That is a 10% fall in the latest year, and the most recent figures imply that the situation is worsening. The second quarter of 2012 showed just 23,500 starts, compared with 29,900 in the second quarter of 2011—a fall of 22%.
It is worth recalling that the Treasury set out the criteria in July for schemes to qualify for backing under the Bill as being: nationally significant; ready to start—“shovel ready” is the informal way of putting it; financially credible; dependent on a guarantee and not otherwise financeable; and good value for the taxpayer. As my hon. Friend the Member for Walthamstow (Stella Creasy) said in her excellent speech, that implies that the schemes are almost perfect, but not quite perfect enough to get funding on their own, which raises a question about why they are otherwise unlikely to succeed. Many commentators have made that point.
Let me consider the first criterion—“nationally significant”. I intervened on the Chief Secretary—I am glad that he is back in his place—to ask whether there was any significance in the fact that the first criterion in the Treasury list is not repeated in the Bill. He assured me that I should not read anything into that. I remain slightly puzzled because, looking at the breadth of the definitions in clause 1(2), I am astonished at what is included. Many schemes that are in no way nationally significant could qualify under those criteria. I am therefore a little surprised that nationally significant schemes, which, I am sure, we all support, are not precisely defined as one of the priorities in the Bill. The lack of clarity on that and on the schemes that are likely to qualify make it hard to believe that the new guarantees will provide a rapid response to the problem of delayed or stalled infrastructure schemes.
In July, Lord Sassoon said that there were £40 billion-worth of projects in the national infrastructure plan that could be eligible for support under the scheme. He expressed the hope that the first guarantees would be granted this autumn. We are now only days from the official start of autumn, and just three months from its official end. Can we feel confident that Lord Sassoon’s expression of hope will be realised? [Interruption.] It is a very flexible autumn.
On housing, I am sceptical about the very ambitious targets for new homes. I think that the Chief Secretary referred to the possibility of up to 70,000 homes being started as a result of guarantees facilitated by the Bill. If we consider what is happening in the private sector, the problem is not supply, but lack of demand because people are nervous about their jobs and the economy, and because of the tight lending criteria that most lenders apply. The idea that simply facilitating additional supply by increasing loans will be a solution is somewhat optimistic. In the social housing sector, there is already a relatively well developed market for housing association bonds. Indeed, the trade magazine, Inside Housing, suggested that
“offering underwritten paper brings in uncertainty when it comes to take-up.”
According to an article in the magazine on 7 September, Legal & General, one of the biggest buyers of social housing bonds, reportedly said that it
“‘may look elsewhere’ if government guarantees drove down the price of housing association bonds.”
Other questions are highlighted in the latest issue of Inside Housing from 14 September:
“The social housing regulator is concerned that some housing associations are mistakenly planning to use the government’s commitment to underwrite borrowing to fund existing development plans or refinance more expensive debt already on their books”,
and the regulator is worried that that may result in schemes being delayed that otherwise would proceed while housing associations look for possible alternative funding sources. All in all, there are serious question marks about the scheme, and the Government’s confidence in unleashing a great quantity of new infrastructure investment seems to be misplaced. Having said that, it is not a bad Bill and the Labour party will not oppose it. We are, however, sceptical about whether it will deliver what it promises.
Nic Dakin (Scunthorpe) (Lab)
I am pleased to follow my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), who, as always, spelt his argument out cogently and with great clarity. My hon. Friend the Member for York Central (Hugh Bayley) said, very precisely, that the Bill is a small but necessary step. He is right, but so is my hon. Friend the Member for Walthamstow (Stella Creasy), who said that the legislation is an inadequate response to the economic crisis. How right she is.
The Government inherited an economy that was growing, and they now preside over one that is shrinking. We have the third quarter of negative growth, a double-dip recession made in Downing street, and we are one of only two G20 countries in such a parlous position. Part-time working is at its highest level since 1992, and unemployment among women and young people is at an all-time high. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) made clear the waste and loss that can follow if young people do not get work when they leave the education system—a waste not only now but into the future.
Due to a lack of growth, the Government are on target to borrow more in five years than the Labour Government borrowed in 13 years. The economy badly needs growth now, and that requires demand. When I asked small businesses in my constituency what they needed, I was surprised by their response—a cut in VAT to stimulate retail sales. Labour’s policy to reverse last year’s damaging VAT rise for a temporary period would give spending an immediate boost and put cash in people’s pockets—£450 for a couple with children. People would spend that money in the high street, boosting businesses at the same time as helping struggling families and pensioners. Labour’s other policy of a one-year cut in VAT to 5% on home improvements, repairs and maintenance would also boost home owners and small businesses, and stimulate demand in the economy.
Large businesses and companies in my constituency say that infrastructure projects need to be brought forward as that would stimulate demand in the economy. They include Clugston Construction, which this year celebrates 75 years of business, and Tata Steel, which sadly had to lose 1,200 jobs this year owing to a collapse in demand for construction steel in this country, as well as in the rest of the world.
The problem is not new; it has been around for a long time. The other day, I was reading Hilary Mantel’s “Bring up the Bodies”, which has been shortlisted for the Man Booker prize. I was struck by Thomas Cromwell, musing on the situation:
“England needs roads, forts, harbours, bridges. Men need work...honest labour could keep the realm secure. Can we not put them together, the hands and the task?”
Thomas Cromwell’s fictional words, through the voice of Mantel, grasp the issue. [Interruption.] We may not need forts now, but we need all those other things. Having listened to what hon. Members have said, there are many projects across our constituencies where we could put hands to work and make things happen.
Local people who work in the construction industry tell me that work is drying up. It has been tough in the real world in the past two years, but as Building Schools for the Future projects are completed and run out, and even supermarkets slow down their investment in new projects, the order books are emptying. Sadly, many construction companies have gone out of business. That is what is happening in the real world owing to the lack of demand.
As a leading local industrialist said to me at the weekend, it is time to get on with things. He is a practical man. He said, “It’s time to get the diggers in the ground and cranes on the skyline. What we need is work. We need jobs now.” Bringing infrastructure projects forward and getting jobs done that need to be done will put cash in the pockets of construction workers, who will spend that money in the real economy and therefore provide jobs for other workers. As Thomas Cromwell said:
“Can we not put them together, the hands and the task?”
Putting the hands and task together is a win-win.
The Government’s record on infrastructure is not yet a pretty one. I hope the Bill helps bring projects forward and that it is not just another re-announcement. Let us look at the record. None of the road building projects announced in the autumn statement package have begun construction. The value of orders for infrastructure investment made by the private sector fell by a fifth—from £7.3 billion to £5.9 billion—from 2010 to 2011. Output in the construction industry fell by 3.9% in the second quarter of 2012. The number of house building starts is down since the start of 2011.
Alison Seabeck (Plymouth, Moor View) (Lab)
Does my hon. Friend have a sense that the Bill, although utterly laudable, promises jam tomorrow? We do not have the clarity that the construction industry needs for planning and getting new jobs into the industry.
Nic Dakin
My hon. Friend echoes my right hon. Friend the Member for Wentworth and Dearne (John Healey), who said that the Bill is a laudable measure, but insufficiently urgent in responding to the crisis with which we are confronted.
We need action now to create growth. We need deeds, not words. We need action, not dither. Indeed, the CBI said recently that 2012 should be the year to deliver on infrastructure to “translate ambition into action” and to ensure we get people working on infrastructure projects
“that will help deliver a long-term return for the UK economy in the decades to come.”
Many things need doing. We have heard about the houses that need to be built, and transport projects in all hon. Members’ constituencies would transform their localities. The A160 in north Lincolnshire badly needs upgrading. It will be upgraded, but why not bring it forward so it happens now, giving confidence to business and everyone?
The messages from the Government on low-carbon investment have been confusing—including on the change to feed-in tariffs and on renewables. They do not create the confidence necessary to encourage private sector investment and development, and the private sector is looking at the Humber in respect of developing such initiatives. We had a debate last week on broadband in which all north Lincolnshire MPs, on a cross-party basis, agreed that broadband projects and infrastructure should be brought forward.
We are not short of projects, we are just short of will. Money has been pumped into the banks in quantitative easing, but they have not lent to anybody. Would it not be better to give the money to a national investment bank that invests directly in companies and gets things going?
As many hon. Members have said, it is not clear to which projects the Bill would give the green light. The Chief Secretary said that there were ongoing discussions with individual projects, but was vague about what would and would not get the green light. It is time to stop dithering and time to start doing. There is much to do. Let us get on with it.
John McDonnell (Hayes and Harlington) (Lab)
This debate, on a Bill that most people agree with, has been fascinating. The last five speeches, by my hon. Friends the Members for Easington (Grahame M. Morris), for Glasgow North East (Mr Bain) and for Walthamstow (Stella Creasy), my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) and my hon. Friend the Member for Scunthorpe (Nic Dakin), are worth reading. They were superb. I do not usually follow the parliamentary convention of saying, “It is a pleasure to follow”, but it was a pleasure listening to their speeches. My hon. Friend the Member for Easington demonstrated a commitment to, and deep knowledge of, his constituency. My hon. Friend the Member for Glasgow North East set out the implications for Scotland and the overall economic situation. My hon. Friend the Member for Walthamstow was passionate about the problems and returned, as ever, to Wonga. My right hon. Friend the Member for Greenwich and Woolwich displayed his ministerial experience, while my hon. Friend the Member for Scunthorpe demonstrated his passion.
A succession of MPs have stood up and urged the inclusion of particular projects in the Bill. May I be a contrarian and suggest one that should not be included in the Bill—the expansion of Heathrow airport? I am worried because although the Bill is meant to account for ready-made projects—those on the drawing board and ready to be implemented over the next 12 months—there is no sunset clause. Furthermore, it can be renewed and additional sums can be bestowed simply by statutory instrument. Now, I am not a conspiracy theorist, but my constituents might start to believe in conspiracies: we had 12 months of intensive lobbying by the aviation industry; after that, the Chancellor expressed scepticism about existing Conservative party policy, which was against a third runway at Heathrow; then the Prime Minister announced a review of that policy by someone who was director of the CBI, which had lobbied for a third runway; and now we have a Bill that would go on the shelf as almost suitable for funding the expansion of Heathrow. It is no wonder, then, that my constituents are anxious about the attitude of the Government to that measure.
The measures in the Bill would perfectly suit Ferrovial, the Spanish company established by a fascist in the 1930s who made his profits as a result of contracts awarded to him by Franco. It would ideally suite Ferrovial to come forward and seek funding for the infrastructure expansion at Heathrow. I am sure it would be willing to pay for the tarmac, but not for all the infrastructure that goes with it, particularly the road and rail network needed to support a third runway. I fear that Ferrovial will come forward seeking Government guarantees to fund and back up the expansion. I say that because its construction company globally is in serious difficulties, or certainly is in doubt.
I give notice that despite the cross-party support for the Bill, which I also support, I will be moving amendments to ensure that the expansion of Heathrow is not part and parcel of it. I expect coalition support for that on the basis of the existing coalition policy, sworn in this Chamber by the Prime Minister, that the Government will not bring forward the expansion of Heathrow during the lifetime of this Parliament.
Stephen Pound (Ealing North) (Lab)
I am not entirely sure if Ealing North and Hillingdon constitute a coalition but, if it does, may I say that that coalition is solid and that we are as one on this?
John McDonnell
Interestingly, the coalition against the expansion of Heathrow has been cross-party up until now. If I remember rightly, the Government’s deputy Chief Whip committed to lying down in front of the bulldozers if it ever came about, and he was not moved in the reshuffle, so I take that as another commitment to opposition to the policy. I hope that the Government will support an amendment to prevent the Bill from being used to give guarantees on the funding of the expansion of Heathrow, certainly during the lifetime of this Parliament. We can then debate the matter with the subsequent Government.
Like everybody else, I am desperate for infrastructure investment in my constituency, which is suffering from a housing crisis on a scale not seen since the second world war. Housing should be included. The hon. Member for Reigate (Mr Blunt) argued for the funding of prison cells, but was not willing to argue that housing be funded. Housing my constituents is just as important as housing prisoners, given the housing crisis.
My schools also need to be renovated, because Hillingdon council pulled out of Building Schools for the Future at the last minute and pupils in my constituency are now being educated in crumbling schools. The buildings that are being built for new classes are portakabins, which are substandard for the long-term future.
On alternative energy, I want the green new deal to be implemented in my constituency as rapidly as possible. It has ground to a halt as a result of the Government’s measures on solar panels and on the funding of alternative energy in general.
As my hon. Friend the Member for Leeds West (Rachel Reeves) said, there has been an element of déjà vu to this debate. I remember Alan Milburn arguing in favour of private finance initiatives in 1997. We were told then that PFI was the solution to our infrastructure and investment problems and that it would transfer the risk from the public sector to the private sector. With the greatest of respect to a number of my hon. Friends, that did not happen. What we saw instead was profiteering at vast expense to the taxpayer and profligate expenditure that produced very little for the amount that we invested.
The bizarre thing about the plan under discussion, which will introduce another scheme to keep expenditure off the books and within the parameters set by the European Union with regard to public expenditure, is that it will transfer the risk back from the private sector to the public sector, so now the public sector will take all the risk for schemes. My hon. Friend the Member for York Central (Hugh Bayley) raised a number of detailed points that need to be answered and I have an additional question. If we look at the briefing paper for the Bill, we will see that it will also be able to fund revenue expenditure. Therefore, in addition to the capital expenditure, I take it that if some of these capital schemes go wrong, we will fund the revenue consequences as a result. There needs to be a detailed analysis—my hon. Friend the Member for Walthamstow mentioned the Public Accounts Committee—and it needs to take place now, before the next debate on this Bill. We are almost entering into another PFI-type situation whereby a grab of short-term resources will result in long-term costs.
That is all because no Government will grasp the real nettle, which is that there is no lack of resources in this country; the problem is that they are in the wrong hands and are not being used productively. The crisis in the economy was not caused by over-expenditure by the previous Government. The only time borrowing went up dramatically was when they had to bail out the banks and bring in large-scale quantitative easing. In fact, the level of public expenditure in relation to GDP just about met the John Major levels. The problem was that we never balanced that expenditure with an appropriate taxation regime. What we need to do now is introduce a fiscal package that includes a wealth tax, a financial transaction tax, land valuation taxation and measures to tackle tax evasion and avoidance, so that we can fund public expenditure and not have to create devices that in the long term will cost us more and produce so much less.
I regret that we may well be here in five years’ time—I do not look forward to it—as a result of this Bill, counting the cost as we did with PFI. Members need to consider the Bill’s detail as we move to the next stage, because it is the detail that will cost taxpayers dear and result in profligate spending and some abortive spending on some of the projects that have been mentioned tonight and that we all hold dear on behalf of our constituencies.
This has been an interesting debate, but I worry that when everyone agrees that we need to speed up and expedite the Bill, we will not give it sufficient consideration. That is what happened to the PFI legislation and we lived to regret it. I hope that we do not live to regret this Bill.
Chris Leslie (Nottingham East) (Lab/Co-op)
This has been a thorough debate on not just infrastructure, but the state of the economy in general. I am afraid to say that little light has been shed on the Bill’s details, although we have yet to hear from the Economic Secretary, whom I heartily welcome to his new post as a Treasury Minister. Perhaps he will illuminate matters for us. As things stands, it looks to be a curious little piece of legislation. My hon. Friend the Member for Coventry North West (Mr Robinson) said that the Government’s policies on infrastructure were embarrassingly thin. As most hon. Members have noted, there seems to be more spin than substance in this Bill. Perhaps that is why the Government ran out of people to speak in favour of it almost an hour ago.
It occurred to me that this legislation is perhaps a classic example from the book by the new Conservative party chairman, “How To Bounce Back From Recession”, which was written under the pseudonym Michael Green or Sebastian Fox—I cannot remember which. It is all about a presentational drive to be seen to be doing something. The Government cannot specify precisely what it is that they want to be seen to be doing, but it is definitely Shapptastic.
It is the lack of detail in the Bill that worries many people. My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) questioned who will be given financial assistance and what will be defined as nationally significant infrastructure. My hon. Friend the Member for York Central (Hugh Bayley) questioned the time scale of the £50 billion for underwriting and guarantees. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) noted that the Government are coming late to the benefits of infrastructure, and have reannounced over and again the concept of UK guarantees. They were mentioned first by the Prime Minister in May and were reannounced in June by other Ministers. Only now are we getting the Bill that is supposedly necessary to underpin them.
There are dangers of making policy on the hoof in this way. However, for the time being, we will give the Government the benefit of the doubt that they will specify in Committee which projects they envisage need this level of support. We will seek safeguards for taxpayers’ money against losses that are not spelled out in the Bill, supported, I hope, by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who mentioned this issue. We need to ensure, for example, that there is reasonable consideration of clawback provisions, which are normal contractual arrangements that might be needed to safeguard best value for the taxpayer.
It is unclear whether the Bill will aid social housing, particularly in parts of the country where the council housing stock has not been transferred to housing associations—those arm’s length management organisations —such as Leeds and Nottingham. I disagree with the hon. Member for Reigate (Mr Blunt) and think that housing should be considered to be part of our nation’s infrastructure. Opposition Members feel strongly about that.
There are other issues that the Minister needs to address. Will the Government run into state aid clearance issues if they are simply providing financial assistance to the private sector? Such contractual questions may come up. How will the Government overcome them?
My right hon. Friend the Member for Salford and Eccles (Hazel Blears) and my hon. Friend the Member for Walthamstow (Stella Creasy) pointed out that the Bill lacks any mention of social value. We need to leverage jobs and benefits for communities out of infrastructure schemes. The real and tangible economic consequences that should flow from infrastructure ought to be at the heart of this Bill.
One cannot look at this small set of clauses without wondering whether the Bill is sufficient for the task at hand. Guaranteeing private loans will not come close to addressing the scale of the infrastructure problems that we face because of this Government’s inactivity. It is not certain whether this technique will be successful. There are no details of which projects will be guaranteed or when they will be guaranteed. My hon. Friends the Members for Swansea West (Geraint Davies) and for Scunthorpe (Nic Dakin), among others, rightly emphasised that the country is crying out for infrastructure investment, especially to create confidence and to strengthen productivity and competitiveness in our economy.
The Government have a pretty woeful record on the delivery of infrastructure, but there has been a great deal of hot air. The hon. Member for Stroud (Neil Carmichael) spoke about the industries that he wanted to be supported in his constituency. Who can forget the Chancellor’s much-vaunted “The Plan for Growth”, which he said was
“an urgent call for action”?
He stated:
“If we do not act now, jobs will be lost, our country will become poorer and we will find it difficult to afford the public services we all want.”
Eighteen months later, that plan for growth is looking a little forlorn.
The Prime Minister himself said,
“this autumn the government is on an all-out mission to unblock the system and get projects under way”—
except, of course, he was talking about autumn 2011. My favourite was the rhetorical flourish from the Chancellor of the Exchequer, who, in his Budget speech 18 months ago, promised
“a Britain carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
Since then, the economy has, of course, shrunk into a double-dip recession.
The Government’s policies have not been helping; in fact, they have been harming. They have been causing more delay to projects that ought to be under way. My right hon. Friend the Member for Wentworth and Dearne (John Healey) talked about the risks that can arise from sort of the public policy vacillations that we have seen from the Government. He mentioned, for example, the uncertainties in planning policy, where a national planning policy framework was announced a few months ago, only for the Government to change their minds. They say they are going to suspend section 106 agreements, but they have not yet done so. A number of developers are saying, “We’ll hang back for the time being. We’ll wait rather than get on with applying for planning permissions right now.” We want the Government to make their minds up about how to move forward, but we have our concerns about their strategy.
In transport, we are still awaiting the long-promised national policy statements on transport networks and aviation, as my hon. Friend the Member for Easington (Grahame M. Morris) mentioned. In waste management, the national waste management plan was supposed to be announced this spring, but it will now not be finalised until the end of 2013. In low-carbon investment, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy.”
The Government have undermined or pulled the rug from under many infrastructure schemes. The same can be said of their approach to the green investment bank and broadband targets, which they have deferred, notwithstanding the strong campaign by my right hon. Friend the Member for Salford and Eccles for superfast broadband at MediaCity in her constituency, which she mentioned in her speech.
We need a renewed focus on the plans that the Government themselves put forward in their national infrastructure plan in 2011. None of the road-building programmes in that plan has started construction. Only one in 10 of the projects mentioned in it have moved forward, while one in 10 has moved backwards. House building starts are down 24% from the same period last year, and, on Friday, infrastructure data from the Office for National Statistics showed that the volume of new work was also down 24% on the same period last year. The statistics get worse and worse, not to mention the woefully inadequate approach to the regional growth funds, which many of my hon. Friends mentioned.
Indeed, the pace of capital investment under this Administration has slowed, contrary to the claims of the Government. The Office for Budget Responsibility’s forecasts show that under Labour’s public service net investment plans, investment would have been £2.7 billion higher than under the Government’s plans in the key year of 2010-11, £2.6 billion higher in 2011-12 and £1.3 billion higher in 2012-12. That is a difference of £6.6 billion over that three-year period between Labour’s trajectory on capital investment and the cuts implemented by this Government. That is something that even the hon. Member for Northampton South (Mr Binley) mentioned in his contribution. Reductions in capital expenditure have been relatively extreme, and I agree with him that the Government should certainly be doing better.
There are ways in which underwriting and guarantee schemes should be investigated. We do not oppose the Bill before us today, but we are a little cynical and sceptical, given the number of schemes that the Government have promoted with great flourish but then failed to deliver. My hon. Friends will remember the claim that they were going to reach into the pension funds of large fund managers across the country and take £20 billion of investment to help to support public infrastructure schemes. However, a year later we have seen only £2 billion secured, and again, it will not be forthcoming until 2013-14. Indeed, the Government’s chief construction adviser, Paul Morrell, said,
“there won’t be a barrel-load of funding coming in from pension funds for greenfield infrastructure. It’s not their business and I don’t know anyone who thinks it is.”
The Government promised a whole set of new revenue sources for new investors in the national infrastructure plan, but they have not been forthcoming. The Government have also been indecisive over the use of tax increment financing.
The Government also promised a new Cabinet committee, chaired by none other than the Chief Secretary to the Treasury himself, which was set up last year to “show decisive leadership”. A year on, we are still waiting for the Chief Secretary’s decisive leadership. I am sure that the Cabinet Committee meetings are extremely interesting, and it would be helpful if he could share with us some of the decisions that have been taken.
Businesses and those in the wider country are increasingly frustrated by the progress that this Administration are making. We have already heard quotes from key business figures. John Longworth, the head of the British Chambers of Commerce, has described the national infrastructure plan as “hot air” and a “complete fiction”. John Cridland, the director general of the CBI, has warned that
“firms fear initiative overload and are becoming impatient with delivery”.
Richard Threlfall of KPMG has said:
“Business confidence in our infrastructure is ebbing away”.
And we have only to look at the opinions of businesses across the country, as expressed to The Financial Times, to get a flavour of what is happening. It states:
“British business is fast losing any remnant of confidence in the government’s infrastructure strategy even though investment in transport, telecoms and energy has been at the heart of its growth plans since it came to power two years ago. Two thirds of British companies fear UK infrastructure will deteriorate over the next five years, according to a survey by the CBI…and KPMG”.
The Bill lacks not only substance but evidence that the Government understand what is happening in the economy and more broadly. My hon. Friends the Members for Glasgow North East (Mr Bain) and for Walthamstow made that point in their speeches. It contains nothing to address the lack of demand in the economy, and it proposes no change of direction to prevent the Chancellor’s tax rises and precipitous cuts from exacerbating the contraction in the economy. My hon. Friend the Member for Derby North (Chris Williamson) rightly pointed out the economic strangulation that the Government’s policies were exerting on the confidence and demand that ought to exist in the economy and more broadly. My hon. Friend the Member for York Central highlighted the five quarters of negative growth that have occurred on this Chancellor’s watch.
There is no recognition from this Administration that the lack of growth is resulting in a rise in welfare spending; it is up by 7% in the financial year so far compared with the previous financial year. We have also seen borrowing rise in the first quarter of this year, compared with the previous financial year. These proposals lack substance. We need immediate action rather than warm words. We will table amendments to the Bill, to test the Government’s commitment to their infrastructure plans. Either this Administration are ignorant of the causes of recession or they are wilfully ignoring our decline, for politically obstinate reasons. They are flailing around for initiatives, and they are racked by dithering, hesitancy and coalition divisions. We need action now; we cannot wait until the Chancellor’s Christmas statement on 5 December. The Bill is a fig leaf for their indecision. It is not an adequate substitute for action. Notwithstanding my welcoming the Minister to his new post, I would like to see whether the Prime Minister’s reshuffle and his appointment of this particular Minister have changed a single thing.
The Economic Secretary to the Treasury (Sajid Javid)
I thank the shadow Financial Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), for his warm words of welcome. This has been an excellent debate. It has highlighted the areas on which we agree—the importance of safeguarding the flow of investment into this country’s critical infrastructure, for example—as well as those on which we differ. I would like to thank those on the Labour Front Bench for backing the Bill so that we can get on with the important investment that this country needs. There have been some excellent contributions to the debate—I have counted 22 of them—and I will comment on them shortly.
First, I want to make one critical point. As my right hon. Friend the Chief Secretary to the Treasury said, the action that we are taking, which this legislation makes possible, is possible only as a result of the decisive action taken by this Government to deal with the economic mess that we inherited. In the decade before we came to power, Government debt had risen from £346 billion to over £900 billion; that represents almost a tripling of the national debt. That created the conditions for the severe economic crisis that we are all now suffering from, and mortgaged the future for our children and grandchildren.
Because of the lack of a credible plan from the Labour party, on general election day in 2010, 10-year gilts were 3.8%—the same as those of Italy and Spain. Because of the tough decisions we have taken, however, and the responsibility and credibility of our long-term fiscal plans, the UK is now a safe haven from the global debt storm. The 10-year gilt interest rates are now 1.9%—less than half what they were when we came to power. We are now in a position to unlock private sector infrastructure investment only because of the immense strength of the UK Government’s balance sheet.
Opposition Members seem to be under the illusion that this credibility has come at the expense of infrastructure investment, so let me clear up that misconception. We are spending more on transport and communications infrastructure than the previous Government decided to spend at the height of the boom. That is despite the fact that they ran deficits every year for eight years, including when times were good. Now that Britain is restrained and is responsible in the face of a global debt storm, we are nevertheless delivering the public investment that Opposition Members say they want to see, while we are making tough decisions and taking control of spending, such as welfare, where we can.
We announced £18 billion in retail investment in the spending review and a further £9.4 billion of infrastructure enhancements in the summer. In the Budget, we announced that there will be 10 super-connected cities across the UK that will enjoy ultra-fast broadband and high-speed wireless connectivity. On top of that immense investment, we now propose to unlock potentially billions of pounds of further investment from the private sector.
Let me deal with Back Benchers’ contributions to the debate. I start with one of the most thoughtful speeches, from my hon. Friend the Member for Reigate (Mr Blunt). This was the first time that I, as a new Member of Parliament, have heard him speak from the Back Benches. He made an extremely thoughtful speech, which was a great contribution to the debate. He suggested using the facility put in place by this Bill to invest in prisons, and I hope that that will take place. He also drew attention to the economic credibility that the Government have won, as did my hon. Friend the Member for Weaver Vale (Graham Evans).
A number of hon. Members referred to particular projects in their constituencies. For example, my hon. Friend the Member for Weaver Vale mentioned the Mersey Gateway project, while my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) mentioned the Birmingham international airport, and the right hon. Member for Salford and Eccles (Hazel Blears) raised the issue of MediaCityUK and superfast broadband. My hon. Friend the Member for Witham (Priti Patel) mentioned roads in Essex as another example. Strong cases were made, and they were all duly noted. If the promoters of these projects have not already done so, they should start the discussion immediately with the UK infrastructure team in the Treasury.
There were a number of other good contributions. My hon. Friend the Member for Suffolk Coastal (Dr Coffey) raised an important point about how Labour’s investment in infrastructure paid very poor attention to value for money.
Some Labour Members made some interesting contributions. The first, from the right hon. Member for Wentworth and Dearne (John Healey), was thoughtful, and I welcome his support for the Bill. His experience as a former Minister shows. I believe that he was once a Housing Minister—he raised the issue of housing—and also a Minister in the Treasury. Indeed, I think he once held my job. The hon. Member for Coventry North West (Mr Robinson), who is not in his place, also raised the issue of housing. It was strange that he raised that subject—I think he was talking about whether the Bill should back investment in housing, but financing housing is something he has great experience in.
The right hon. Member for Salford and Eccles raised a number of important issues; I am pleased that she welcomed the Bill. The hon. Member for Derby North (Chris Williamson), who I do not see in his place, made a speech that would have fitted well with a Labour conference in the 1970s. For a moment I thought that I was listening to Derek Hatton. The speech made by the hon. Member for Scunthorpe (Nic Dakin) towards the end of the debate was in a similar vein.
The hon. Member for York Central (Hugh Bayley) asked a number of good questions. He asked, for instance, whether flood defences would be included. I am advised that there is no reason for them to be excluded, and we envisage their being part of the infrastructure that is being considered. I hope that that is helpful to the hon. Gentleman.
My hon. Friend the Member for Portsmouth North (Penny Mordaunt) made some excellent points about Portsmouth’s infrastructure needs, which were duly noted. The hon. Member for Glasgow North East (Mr Bain) did a very good job of following his Whip’s brief, but he asked one interesting question: where were the members of the Scottish National party? I was asking myself that as well, especially given that the Bill is UK-wide and is intended to support infrastructure throughout the United Kingdom, including all the devolved regions. It was surprising that we did not hear much from SNP members. I had thought that they would be here today, fighting for the interests of their constituents.
John Healey
Given the absence of Scottish and Welsh nationalists, may I ask the Minister whether decisions on projects in Scotland and Wales will be made in Scotland and Wales?
Sajid Javid
All decisions covered by the Bill will be made by the United Kingdom Government: by the UK Treasury, or by relevant Secretaries of State. However, when projects clearly relate to devolved regions, the Government will work very closely with the relevant Departments in those regions.
The hon. Member for Walthamstow (Stella Creasy) made a thoughtful speech containing some very good points, but I must take issue with one of her closing comments. I believe she said that one of the problems with the Bill was that it placed restrictions on spending. It does place restrictions on spending, because this Government are very keen on restrictions on spending. The previous Government lost sight of that, which is what got us into this mess in the first place.
Stephen Pound
Let me add my voice to those of Members who have already congratulated the Minister.
The Minister has rightly called the House’s attention to the absence of members of certain political parties. May I remind him that the Democratic Unionist party, one of the parties representing Northern Ireland, has a strong interest in the Bill, although much of the material that we are discussing today is devolved? The issue of infrastructure development in Northern Ireland is essential. Will he assure me, and silent members of the Northern Ireland parties—unusually silent—that he will continue that dialogue?
Sajid Javid
I agree with the hon. Gentleman: they are unusually silent, although they are welcome to intervene on my speech. However, I can tell the hon. Gentleman that people in Northern Ireland should be assured that the Bill is intended to help infrastructure investment throughout the United Kingdom. I agree with him that there are often some special cases in Northern Ireland, which suffers from a relatively higher level of unemployment than other parts of the UK. I look forward to receiving applications from the Province.
Two issues—two myths, I should say—arose again and again in the speeches of Labour Members. The first—
Geraint Davies
Are the Government going to become involved in the brokering of deals and the forming of partnerships with the private sector? I am thinking specifically of easyJet’s move to Cardiff airport and its discussions with First Great Western about the provision of more passenger links to ensure that when the two come together it makes sense for everyone. Are the Government willing to become involved in that?
Sajid Javid
The purpose of the Bill is to establish a structure to provide guarantees for credit-worthy projects in the private sector. Of course the Government will work very closely, step by step, with the private-sector promoters of each of the projects, and if one of the companies feels that it has a viable project that the Government should consider, it will be encouraged to discuss it with the Treasury. A specific Treasury team called Infrastructure UK, which was set up a couple of years ago, is full of specialists who understand infrastructure and have a great deal of experience. It will be keen to look at every single project, and if the hon. Gentleman has one in mind he should please present it as soon as possible.
The two myths that I heard from the Opposition—
John Healey
I am very grateful to the Minister for giving way; he is answering the questions that come up. Will Infrastructure UK look at every project and proposal for these borrowing guarantees?
Sajid Javid
It will consider every project that comes its way, but that does not mean it will agree to support every one. However, it is willing to look at every project and to come back with an answer on each.
Priti Patel
Can my hon. Friend confirm for the Opposition that the Infrastructure UK team has contributed a great deal more than the euro preparation team that Labour created?
Sajid Javid
As always, my hon. Friend is absolutely right. [Interruption.] I must plough on.
On a number of occasions the Opposition suggested that this Government were spending less on infrastructure than they would have if, by some miracle, they had won the last election. Let us look at the facts. After the last election, the right hon. Member for South Shields (David Miliband) said in his leadership hustings bid that they were going to halve the share of national income going into capital spending. Plans presented by Labour to this House at their last Budget, in March 2010, showed net investment falling from £50 billion in 2009 to a projected £23 billion by 2014-15, a figure lower than the one this Government have planned.
We heard from the Opposition about Britain’s growing debt. However, they forget, conveniently, that when this Government came to power, our budget deficit was 11% of GDP, higher than any other nation in the G7. According to the Institute for Fiscal Studies, if the plans of the right hon. Member for Edinburgh South West (Mr Darling) had been implemented, this country’s debt would be £200 billion higher than under the plans of this Government. They just do not get it—more spending, more borrowing, more debt.
Members on both sides of the House have recognised the scale of capital required to realise some major infrastructure investments.
Sajid Javid
I will absolutely be writing to my hon. Friend. The questions he raised were characteristic of him, showing the experience he has brought to this House from the business sector. They were just the right type of thoughtful questions.
Sajid Javid
Please sit down; sorry.
The Bill contains measures that will support growth, jobs and families. It will support the UK’s infrastructure sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Infrastructure (Financial assistance) Bill (programme)
Motion made, and Question put forthwith (Standing Order No.83A(7)),
That the following provisions shall apply to the Infrastructure (Financial Assistance) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on consideration and Third Reading
2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.
3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
Programming committee
5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee, any proceedings on consideration or proceedings on Third Reading.
Other proceedings
6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or any further messages from the Lords) may be programmed.—(Mr Evennett.)
Question agreed to.
Infrastructure (financial assistance) bill (money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Infrastructure (Financial Assistance) Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of expenditure incurred by the Treasury, or by the Secretary of State, in giving, or in connection with giving, financial assistance to any person in respect of the provision of infrastructure; and
(2) the payment out of the Consolidated Fund, in certain cases, of expenditure which would otherwise be paid under the Act out of money provided by Parliament.—(Mr Evennett.)
Question agreed to.