18:57 - The House divided: - Ayes: 225 / Noes: 297 - Question accordingly negatived.
The Financial Secretary to the Treasury (Greg Clark)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“notes that the previous administration’s final Budget planned to cut capital investment by 6 per cent more than this Government’s latest plans, in the period 2010 to 2014; further notes that this Government has increased capital plans by £20 billion at the Spending Review and at the last two Autumn Statements, by taking tough but necessary decisions to cut current spending, with a result that public investment as a share of GDP will be higher on average over this Parliament than it was under the previous administration; further notes that this Government announced £5.5 billion of extra infrastructure investment in the last Autumn Statement, including £1.5 billion for roads, £1 billion for new schools, £900 million for science and £1.8 billion for housing and local infrastructure; further notes that it has supported the largest investment in the railways since Victorian times under the High Level Output Specification; further notes that no national infrastructure plan existed under the previous administration whereas this Government has set out for the first time a multi-year long-term strategy for the UK’s infrastructure, with over 50 per cent of the Government’s top 40 projects and programmes due to be in construction, procurement or completed by the end of 2014-15; and believes that sweeping away red tape and developing new finance initiatives such as the UK Guarantees Scheme will also support up to £40 billion of extra important projects”.
I listened attentively to the hon. Member for Leeds West (Rachel Reeves), but there is little that can be said by Labour Members that should not start with an apology. Infrastructure, more than most issues, is an area of policy in which the present is haunted by the decisions of the past. By their very nature, major infrastructure projects must be planned years in advance, capital spending budgets must be allocated years in advance and private sector investment must be secured years in advance. All those things require a Government who can look ahead, anticipate the needs of the future, and make the necessary decisions in a timely fashion.
Rachel Reeves
Plans do need to be made for the future, so why did the Government cancel the building of 715 schools under the Building Schools for the Future scheme when they came to power?
Greg Clark
I should have thought that in two and a half years the hon. Lady would have learned the lesson from that. The deficit that Labour was running was greater than the deficit in any other G7 country. We needed to sort that out, and to create confidence in our economy. If Labour Members have not learned the lesson after two and a half years, what hope is there for the future?
The economic arguments advanced from the Opposition Benches sometimes purport to draw on the wisdom of John Maynard Keynes, but Keynes recommended that Governments should run a surplus in the good times, enabling spending, especially on infrastructure, to take place in the lean years.
Greg Clark
Our capital revenue spending would have been determined by a visit to the International Monetary Fund if we had followed the course set by the Opposition.
In the years prior to the financial crisis the previous Government ran the biggest structural deficit in the G7. Despite the denials of the shadow Chancellor, that is a matter of record, and the fact that he refuses to acknowledge what has now been made very clear merits an apology.
One of the most enduring mysteries of the 13 years in which Labour was in office is what they did with the money. We would think that 13 years in which they spent, taxed and borrowed like no peacetime Government before would at least have left us with an infrastructure that we could have been proud of and that would have been world-beating.
Neil Carmichael
Does my right hon. Friend agree that the almost 30 million jobs we now have in this country will benefit enormously from the fact that we are at last getting something done about broadband, a massively important infrastructure project? We are spending a huge amount on it, and just this week I heard about how much progress we are making in Gloucestershire.
Greg Clark
My hon. Friend is right. Not just in our cities, but also in our rural areas, during Labour’s 13 years in office broadband went backwards relative to the rest of the world. We are now addressing that and making progress.
Sheila Gilmore (Edinburgh East) (Lab)
Will the right hon. Gentleman concede that during much of the Labour Government’s period in office a good deal of debt was repaid? That was one of the things that was done, and in my constituency people can point to new schools and new buildings, so there is something to be seen. Is that not the case in his constituency?
Greg Clark
The hon. Lady seems to be unaware of the fact that under the last Labour Government the national debt almost trebled. That is the legacy that they left and with which this Government are dealing. Over 13 years, they borrowed so much they left us with a deficit that was as big as that of Greece, and bigger than that of Spain, Portugal or Italy.
We would think that there would be something to show for all that money spent. We would think our roads, railways and power stations would be at least as good as those of Spain, Portugal and Italy. That, at least, would be a consolation prize: modern, up-to-date national infrastructure available to support British business and help us to generate the billions of pounds we need to pay off the deficit and reduce our debts.
Helen Goodman (Bishop Auckland) (Lab)
I have never heard such an absurd statement in this Chamber. Of course the increase in the debt in the last two years of the Labour Government did not produce new roads; that is because it went into supporting the banks, and if we had not done that, we would have had a banking collapse.
Greg Clark
The hon. Lady did not hear what I said. The structural deficit the Labour Government ran was in place before the financial crisis. That is the root of the problems we now face.
I do not for a moment want to suggest those 13 years did not result in a transformation of Britain’s position in respect of infrastructure. It was transformed, all right: the quality of our infrastructure declined in relation to that of our world competitors.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
Will the right hon. Gentleman address the issue of rail and tell the House what his party did about High Speed 1 and Crossrail when it was in government? Will he congratulate the last Government on completing HS1—the first new high-speed rail link to the channel tunnel, some 15 years after the channel tunnel was opened—and on starting the Crossrail scheme, which is essential to the future of London? How can he possibly repudiate that record of achievement?
Greg Clark
That was a good example of cross-party support, and the idea that it was some unilateral initiative by the Labour party is for the birds. We should have been more ambitious; we should have gone further and faster. It will be 15 years before we can count on the first trains running on High Speed 2. Why were those plans not advanced by the previous Government from the beginning? After 13 years we could have been looking forward to seeing progress in a couple of years’ time, rather than waiting for this Government to lay the necessary legislation.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Perhaps I can answer the Minister’s question. The investment that the previous Labour Government put into the west coast main line was swallowing up money that could have been spent elsewhere. He is right about investment in schools, hospitals and so on, but will he tell the House what the previous Conservative Government’s idea was for funding capital projects? Am I correct in saying that it was private finance initiatives—millions spent but not a brick laid?
Greg Clark
It is not clear to me whether the hon. Gentleman is criticising PFI. If PFI was initiated by the previous Conservative Government, the champion of it—the party that relied on it and put it off balance sheet, and that misused it and mortgaged the future of our country—was clearly the Labour party.
After 13 years of the Labour Government our roads were more congested, our railways were creaking, house building was at its lowest level since the 1920s and electricity customers were facing black-outs for the first time since before the war. Our great cities were as poorly connected as they had been a century earlier, while across Europe and the world, new roads and railways brought cities together in 21st-century networks of prosperity. As the excellent report published recently by the London School of Economics states,
“infrastructure has been neglected, particularly in the areas of transport and energy. For example, more than a fifth of the UK’s electricity-generating capacity will go out of commission over the next decade and Ofgem…has warned of power shortages by 2015.”
That is the reflection after 13 years of neglect of Britain’s infrastructure.
Greg Clark
Of course I will give way to my friend the Chairman of the Communities and Local Government Committee.
Mr Betts
I hope to find a bit of common ground with the Minister. He knows that local authority borrowing is covered by prudential guidelines, apart from borrowing for house building, which is covered by a separate cap imposed by the Treasury. Given that housing finance accounts are now separate, if a local authority were allowed to borrow up to the prudential limits for house building, it could potentially borrow to build another 60,000 homes without any cost to the Treasury. In other countries, that would not even count as Government borrowing. Is the Minister prepared to look at that as one way of kick-starting house building and creating more jobs in the construction industry?
Greg Clark
The hon. Gentleman knows that it does count as Government borrowing in this country, which constrains this Government as it did the previous Government. Being a fair man he will be the first to acknowledge that the work I have been doing with our eight core cities has found innovative ways through tax increment financing and other schemes to invest in infrastructure in anticipation of some of the revenues associated with that. We are doing everything we can and have had some success in being creative in that regard.
As Europe and the developing world streaked ahead, the gulf in this country between London and the north widened under Labour. Only one of the eight largest cities outside London has an income per head that is above the country’s national average, which is in marked contrast to the norm on the continent of Europe. Seven out of the eight biggest German cities outside Berlin, and six out of the eight biggest cities in Italy, have an income per head that is above the national average. In France, that is true for half the largest cities, and for the others the figure is close to the national average. In other countries around Europe and the world, great cities outside the capital are motors of growth and drive the local economy. In this country, the legacy of 13 years of Labour is that the gulf with the north and in our cities across the country has widened and is a source of shame.
Helen Goodman
I am sorry to correct the Minister for the second time, but the rate of growth in the north-east went from being the lowest of the regions during the 1990s to the second highest during the last decade. Only two English regions grew faster than the national average under the Labour Government—London and the north-east.
Greg Clark
I do not quite understand the basis of the hon. Lady’s intervention, because the point I was making was precisely about the gulf between the capital and our provincial cities, and she has pointed out that London streaked ahead. By contrast, in other countries the performance of the regional economy kept pace with the capital, and that is something I want to champion; I want to encourage our provincial cities to be the equal of the capital on growth. I know she will recognise that in the past two years, at least, the performance of my native north-east, the place she represents, has indeed outstripped the rest of the country on creating jobs.
Geraint Davies
On the basis of what the Minister has said, does he agree that Wales should get its fair share of the High Speed 2 investment? It will run from the south to the north of England at a cost of £33 billion, and our fair share would be about £1.9 billion. On the basis of what he has just said, does he not agree that Wales needs a fair deal and that extra £2 billion?
Greg Clark
The hon. Gentleman is a fair man. He will know that the plans to electrify the Great Western railway and the railways in the valleys represent an important investment—I am sure he would acknowledge that—and a big contribution to the economic revival of Wales. It is very important that they should do that.
The divergence between London and the south-east, and the rest of the country is not a record of which to be proud. In the most difficult of circumstances, this Government are having to find the money to build the infrastructure that should already have been put in place during these years of plenty, speeding Britain to recovery. By failing to control current spending in the good times, the legacy of the previous Labour Government was not just a record deficit, but an infrastructure backlog and reduced capital budgets to pay for it. We need to invest more in infrastructure. Nick Pearce, of Labour’s favourite think-tank, the Institute for Public Policy Research, has said that the
“cut…was a decision of the last Labour government which the Coalition inherited”.
We need to remember that successful infrastructure investment does not begin with the allocation of budgets, but with clear-sighted, strategic decision making.
Let me give just two examples of the way in which Labour, over 13 years, failed to address the strategic need for leadership on infrastructure, the first of which relates to roads. When Labour was first elected, John Prescott was appointed as Secretary of State and soon took charge of transport. One of his first actions was to cancel almost all approved road schemes, all across the country, including the dualling of the A21 in my constituency. The reason was not that the Government did not have the cash. I am pleased to say that my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) had left the economy in rude health and so they were in a good position. These road schemes were cancelled, along with many others, because John Prescott had fallen under the spell of a doctrine that said, “If you build more roads, they will only attract more traffic, so you should not build them in the first place.”
Andy Sawford (Corby) (Lab/Co-op)
As I have told the Minister before, Corby, in east Northamptonshire, is the most difficult place in the country for a young person to find work. The level of youth unemployment in my constituency has rocketed. Does he recognise how completely out of touch he looks to those young people when he talks about policy 15 years ago, whatever its rights and wrongs, rather than addressing the here and now? He talks about having the political will to take forward infrastructure projects. Was John Longworth wrong—I think he was right—when he said recently, speaking for the CBI, that this Government lack the political will to drive through infrastructure projects?
Greg Clark
The hon. Gentleman will know that infrastructure is particularly important to Corby, and the link road that is to be built there is very important to that. He will also know that the increase in youth unemployment of 17% that happened under the Government he supported has contributed to the situation he describes.
Let me address the point of strategic leadership. How can we have long-term leadership and long-term vision for the future of our country, when important economic contributions to success, such as road schemes, are cancelled? That lunacy persisted for years, as our roads became more congested, to the detriment of the environment as well as the economy. It was not until years had passed that that nonsense was recanted by Lord Prescott, the then Deputy Prime Minister, and we decided that, after all, more traffic required more and better roads.
Mrs Main
Did the Minister note that the list of needs for strategic infrastructure put forward by the hon. Member for Leeds West (Rachel Reeves) did not include the requirements of the location? There is no point in our having strategic infrastructure just where there happens to be a need for jobs if it is not where we strategically need to place the infrastructure. That should be crucial to our decision making.
Greg Clark
My hon. Friend is right, and what she says makes the point I am making: a long-term strategic view of where we need to invest is crucial. Unfortunately, by the time the then Deputy Prime Minister had decided that we did need to have new roads after all, he had fallen prey to a new fad, regional assemblies—remember them? Having created those unnecessary and unwanted bureaucracies, they needed to be given something to do. What were they given to do? They were given the task of reviewing and prioritising every proposed regional road scheme that had previously been about to proceed. Projects that had been about to commence were delayed for years as regional bureaucrats invented methodologies to reprioritise them. The result was that, 13 years after Labour took office, the A21 road scheme in my constituency and countless other projects around the country languished undelivered.
The Opposition motion talks about dither and delay, which is pretty ripe stuff considering the sorry saga of their roads policy and, for that matter, their stewardship of British energy policy. In July 2009, after 12 years in office, the then Government announced that they expected to have to resort to power cuts in the years ahead. They even published a chart in their strategy for energy predicting an annual shortfall of 3,000 MWh by 2017—a truly shameful and damaging admission for the Government of a developed nation after 12 years in power.
How did things reach that point? As on the economy, when it came to infrastructure, the previous Administration took a typically ostrich-like pose to the challenges of the future. They knew for 12 years that, for example, most of our nuclear power stations and most of our polluting coal-fired power stations would have to close in the decade ahead—indeed, they signed the agreement to close down those power plants—but, unbelievably, by the time they finally made up their mind about nuclear new build, it was already too late to have the new stations up and running before the old ones closed down. How is that for dither and delay? They did not even get around to the long overdue reform of energy markets on which investment in new capacity depends. That surely is something that marks the record of Labour’s first and last Secretary of State for Energy and Climate Change, whose name escapes me just now.
This Government have recognised the importance of infrastructure to the long-term prosperity of the British economy in a way that Labour never understood. We have published for the first time a national infrastructure plan, comprising £310 billion of investment in the most strategically important projects—keeping in mind the point my hon. Friend the Member for St Albans (Mrs Main) made about the importance of looking ahead and looking at where those investments are needed—in sectors such as transport, energy and communications in the period to 2015 and beyond. The man who delivered the Olympics in east London with such spectacular success, Lord Deighton, is the Minister in charge of implementing that plan.
Despite inheriting the most disastrous set of public finances that any Government have bequeathed to their successors outside wartime, we are not only investing in infrastructure, but increasing that investment. Public sector infrastructure investment from 2010 to 2012 was £33 billion a year, which is £4 billion more than during the previous Parliament, and as the National Audit Office states in its report, “Planning for economic infrastructure”:
“Future investment is expected to exceed recent levels.”
Last year’s autumn statement included a further £5.5 billion of investment, including £1.5 billion for the strategic road network. That includes upgrades to the M1, the M3, the M6 and the A60 at Immingham; £378 million to upgrade the A1 between Leeming and Barton, as part of a much-needed drive to bring the A1 up to motorway standard between Newcastle and the M25; a new link between the A5 and M1; and dualling of the A30. On 27 of the road and rail schemes announced in the 2011 autumn statement either construction has already started or work is due to begin this year, including on the A453 widening, the A11 Fiveways to Thetford improvement, and the A43 Corby link road, which will be of interest to the hon. Member for Corby (Andy Sawford).
This Government are ushering in the largest programme of investment in the railways since Victorian times, with £9.5 billion of capital investment allocated from 2014 to 2019. That includes £1 billion to electrify the Great Western line between London and south Wales, as the hon. Member for Swansea West (Geraint Davies) will recognise; £500 million for the north-west and trans-Pennine electrification scheme, for which work is already under way; £800 million to electrify the midland main line and increase its speed, which I would have thought the hon. Member for Corby would welcome; and £500 million for the northern hub, which is of benefit to all the cross-Pennine services.
This Government are committed to investing in Britain’s infrastructure for the long term. The first phase of High Speed 1 will be followed by phase 2, which will revolutionise rail travel in Britain, with 211 miles of new track. I am surprised that the Opposition spokesperson, a Leeds MP, did not mention in her speech a project that will link Birmingham to Leeds and Manchester, create five new stations, and cut journey times from Birmingham to Leeds, for example, from two hours to one hour. I should have thought that the hon. Member for Leeds West would mention that. I should have thought that northern MPs would mention the cut in journey times from London to Manchester from two hours eight minutes to one hour eight minutes. The hon. Lady talks about the time it takes to build the track. If we had commenced in 1997, when Labour took power, we could be looking forward to buying our tickets for that railway now.
Mr Rob Wilson
My right hon. Friend is delivering a powerful response. In his list of major infrastructure projects, he forgot to mention Reading station, an £800 million investment, and Heathrow rail at £600 million. He mentioned the £1 billion electrification project to south Wales. Will he join me in asking the hon. Member for Leeds West (Rachel Reeves) to apologise for her comments about Reading UTC? It was disappointing to see her laughing at such an investment in skills when I raised it earlier.
Greg Clark
It is disappointing when the Opposition treat these things as matters of levity rather than of seriousness that should be pursued. I neglected to mention the improvements to Reading station only because if I were to list all the investments that are taking place, I would detain the House for longer than I have done already.
Had Labour in government taken a greater interest in the long-term future of our railways and of our cities and begun action immediately when it took office, we could have been looking at a high-speed line to Birmingham and beyond opening before the end of this Parliament. High-speed rail is a long-term project. It takes a long time to execute, but even in the two and a half years that this Government have been in office, we have increased the pace of delivery on the ground. As well as six national road schemes funded since October 2010, 17 local transport schemes approved by the Government are already under construction, including the Mansfield interchange, the Kingskerswell bypass and the Portsmouth northern road bridge, and by May 2015, 36 of these vital new schemes will be open.
We are changing the way that decisions are made in funding infrastructure investment. Why should it be the case, as it has been for the past 13 years, that our great cities should have to come cap in hand to London to beg for the investment that they need? Our programme of city deals has given the right of initiative back to the civic and business leaders of the cities themselves. Greater Manchester is, as a result, investing over £2 billion of its own resources in transport infrastructure, and it is able to do so because it has negotiated a city deal that allows it to share directly in the increased prosperity of the area that would otherwise flow to the Treasury. City deals have been struck with each of the eight biggest English cities outside London, and I am currently examining expressions of interest from 20 more cities, from Plymouth to Sunderland, from Preston to Portsmouth.
Geraint Davies
I thank the Minister for his generosity in giving way. He mentions the city deals, where the cities invest and get a share of the economic added value. Is that something the Government might consider for Wales so that with investment in economic development, we could get a share back and reinvest?
Greg Clark
There is a Government of the Welsh Assembly led by the hon. Gentleman’s party. I commend the example that we have put forward in this country. Our close working with each of the leaders of the eight cities has achieved very encouraging results to date. I dare say the hon. Gentleman can go back to Wales and commend that to his colleagues.
The way that investments can be financed has also been transformed for the better. Labour saddled future generations with PFI debts of £279 billion, of which less than £40 billion has been paid off, and which cost at least five times and often more than the original project cost of the underlying investment.
Greg Clark
I have given way to the hon. Lady.
Our programme of infrastructure guarantees has made available £40 billion to underpin important projects, of which £10 billion of investments have already been pre-qualified only months after the initiative was begun. This will unlock vital investment, such as the £1 billion extension to the Northern line in Battersea. On energy policy, our reforms are driving investment in new capacity, not only in generation, but in energy efficiency and extraction. Our energy industry is now alive again—a new start after years of neglect under Labour.
All Governments are stewards of the country that elects them. The test of their stewardship is whether they leave their country better equipped and better prepared to prosper in the future through having taken the long-term decisions on which major infrastructure investment depends. In two short years, Britain’s reputation for infrastructure has been transformed. Having plummeted down the international league table of countries rated by their infrastructure, we are now climbing it again. The rest of the world has seen this country shaking off the torpor of the past. After more than a decade of inaction, we are once more laying the foundations of the future.
Mr Raynsford
I put it to the hon. Lady that when she reads Hansard tomorrow, she will see some pretty clear references to going slowly and not following the advice of her Front-Bench colleague, who wants to accelerate development. He has not been very successful in doing that, but at least his heart is in the right place, and I am with him on that.
The Minister chose to present a case that was, frankly, absurdly partisan—perhaps to divert attention away from his difficulties with his own party, which does not always share his enthusiasm for speeding up the development of infrastructure. The implication that there was no worthwhile infrastructure investment under the previous Government and that the arrival of the current Government has unleashed a cornucopia of new infrastructure schemes is, frankly, risible.
Let us look at the record. I tried in my intervention to point out to the Minister that it was completely unfair to say that there had been no worthwhile investment, particularly in rail, under the previous Government. Let us look at the history of High Speed 1, the link between the channel tunnel and London. That link was not constructed when the channel tunnel was built, because the then Government, headed by Baroness Thatcher, did not believe in rail investment. The French did, and there was a high-speed link between the tunnel and Paris. The Belgians did, and there was a high-speed link between the tunnel and Brussels. But there was no high-speed link between the tunnel and London because the then Conservative Government did not believe in it. Eventually, the Major Government had a last-minute change of heart and began to recognise the importance of such a link, but they could not get it together and the scheme was in a state of financial uncertainty when the Labour Government came to power. The Minister is a fair-minded man, and I hope that he will recognise that High Speed 1, an important piece of infrastructure investment, was the achievement of the last Labour Government.
I would also like to remind the Minister about Crossrail. The scheme had been talked about for a very long time, since the mists of antiquity, but it was the Major Government who introduced a Bill to enable it to be built. However, rather characteristically of them, their political management in this place was so poor that they entrusted the project to a hybrid Bill Committee, which rejected it. So the Bill never progressed, the infrastructure was not built and, once again, it was left to the Labour Government to introduce the Crossrail scheme, to take the Bill through Parliament and to begin the work.
I give credit to the current Government, because they have sustained the investment in the Crossrail scheme. I am glad that they have done so, but it is risible to argue that everything being done today is wonderful and that nothing good was done before. As the Minister must recognise, the Crossrail scheme was developed by the previous Government and is being carried forward by the current Government. Making a reality of such long-term investment schemes depends on that degree of cross-party consensus.
Greg Clark
The right hon. Gentleman will recall that I made no criticism of Labour in that regard. In fact, I said that these were long-term decisions, and that the proposals that he has mentioned enjoyed cross- party support. My particular criticism of the previous Government was the decision of the Minister for whom he worked, now Lord Prescott, to cancel 103 out of 140 road schemes. In the spirit of bipartisanship, will he now reflect on that point and accept that that was the wrong thing to do?
Mr Raynsford
Perhaps the Minister will reflect on the point ably made by my hon. Friend the Member for Corby (Andy Sawford) about Lord Prescott’s part in the creation of High Speed 1 and the praise that was given to him by Michael Heseltine, whom I am sure the Minister would accept as a colleague.
Mr Raynsford
Unlike the Minister’s, my speech is time-limited, and I have now given way twice. I cannot do so again, so I hope he will bear with me.
I want to take the Minister to task once more—I might give way to him again at that point, as this is a new subject—over the national infrastructure plan. The Government’s amendment to the motion is based on the absurd proposition that the national infrastructure plan is entirely the product of the current Government and that no such plan existed under the previous Government. He will know very well that Infrastructure UK was set up by the previous Government, and that all the preparatory work for the national infrastructure plan was done under that Government. That is why his Government were able to publish the national infrastructure plan in October 2010. If he thinks about it, he will realise that it would have been completely impossible to put together and publish the plan within four months or so of his party coming into government.
The national infrastructure plan was a bipartisan achievement, and I hope that we can continue this debate in a more mature spirit, and recognise that cross-party agreement is essential if we are to get the real infrastructure investment that we need and if we are to do this properly without the kind of problems that we have encountered too often in the past as a result of the failings of all Governments of all complexions.
I should also like to focus on the ambivalence that exists in relation to whether housing constitutes infrastructure. The national infrastructure plan does not define housing as infrastructure, but the Government have made provision in their Infrastructure (Financial Assistance) Act 2012 for £10 billion of support for investment in housing schemes. I would be interested to hear the Minister’s view on whether infrastructure should be defined so as to embrace housing and, if so, how quickly he thinks housing might benefit from that Act.
Last summer, Lord Sassoon, who was then the responsible Minister, talked about £40 billion-worth of schemes that were shovel ready—all ready to go—in the autumn. We are now well past the autumn and to the best of my knowledge not a single housing scheme has been given the go-ahead. Indeed, we have got to the point only of defining the criteria by which schemes may be assessed. This does not look like speedy progress. I would welcome some clarity from the Minister on when he expects that financial support mechanism to have any impact in the housing sector, which is facing a terrible problem of undersupply.
I personally believe that it is impossible to consider infrastructure without including housing, because accommodation is needed for people just as much they need the roads or rail for access, the power supply and all the other things essential for economic development. I would therefore include provision for housing within infrastructure development. I would do so particularly at the moment because the output of housing is appalling. In the last 12 months, only 98,000 housing starts were made. I put it to the Minister, who was critical of the previous Government’s failure in this respect, that if he goes back to 2007—the last year before the recession hit—we started 185,000 homes. If his Government get anywhere near the level of output of the previous Government, they will be doing very well. They are not there at the moment; they need to go very much further and rather faster than they have. I hope they will think about how this scheme can be used to stimulate housing development.
The one other area I want to touch on is aviation. The Minister was interestingly coy about aviation. We know perfectly well—we are constantly reminded of it, not least by the Mayor of London, who I believe is of the same party as the right hon. Gentleman—that there is a chronic problem of undercapacity for aviation in London and the south-east, and an urgent need for new investment. There are and will be differences about where we believe this increase in capacity should be located. I believe that the Thames estuary is the right location and I have advocated that for a long time—I am with the Mayor on that. Other people believe that Heathrow should be expanded, while others believe Stansted is the right location. But no one who has looked at this seriously believes that we do not need to expand capacity. What have the Government done? Kicked it into touch until after the next general election. That is simply not an adequate response. I put it to the Minister that the Government will have to be more serious and should approach this issue on a more cross-party basis if we really are to get progress in infrastructure investment, which is essential to us.
The Economic Secretary to the Treasury (Sajid Javid)
I am grateful for the opportunity to conclude this debate.
I have listened with great interest to the 11 Back-Bench contributions in the Chamber this afternoon. This is clearly an issue about which many Members feel strongly. It is also an issue that Members on both sides of the House seem to agree on in many ways. Both sides want to see a UK with world-class infrastructure and both sides recognise the importance of improved infrastructure for the nation’s economic future.
However, only one party ruined the UK economy after 13 years in government, hugely damaging the UK’s ability to invest in the very infrastructure that we all care about. It was the party that tabled the motion. That same party left the UK with the largest budget deficit in the G20. [Interruption.] Labour Members say that we should look forward. It is no surprise that they want the country to look forward, because they do not want us to remember their legacy, but the country must remember. They left a budget deficit higher than 11% of GDP. They borrowed £159 billion in their last year in government—£5,000 in each and every second of that final year.
Had the previous Government not messed up the regulation of the financial sector, they would not have had to carry out the biggest banking bail-out the world has ever seen, with £65 billion being put into RBS and Lloyds alone. Imagine how much new infrastructure that money could have been invested in. As if that was not bad enough, let us not forget the decision to sell off the nation’s gold reserves at record low prices. Had they not done that, the country would have been £10 billion richer. One thing that we did not hear from a single Labour Member this afternoon was an apology for the damage that they did to this country.
Despite that toxic legacy, this Government have restored economic confidence. We have slashed the record budget deficit by a quarter. We have restored economic credibility and opened Britain up for business again. That credibility has led to record low interest rates, with the Government’s 10-year funding costs having halved since 2010. Each of those steps has been crucial to creating an economic environment in which the Government can invest in infrastructure, and one in which investors feel their funds are secure.
Sheila Gilmore
Will the Minister explain to the House and the country why the OBR predictions at the time of the so-called emergency Budget and the comprehensive spending review have not happened, why growth has not happened, and why the deficit has not been reduced at the rate the Government originally promised?
Sajid Javid
I direct the hon. Lady to read the OBR report, which mentions a number of reasons, not least the eurozone crisis. She might like to read that report for herself.
I should respond to the points hon. Members have raised in the debate. Many accusations were made by Opposition Members. They said that, had they won the election, they would have miraculously invested more. The reality is that, had they won the election, they would have continued borrowing recklessly, which would have led to much higher interest rates. They would probably have led this country into the hands of the International Monetary Fund once again, which seems to be their speciality.
Let us look at Labour’s March 2010 Budget. It shows that the previous Government planned to cut capital spending by 6% compared with our latest plans. In fact, in nominal terms, they planned to cut capital spending by 22% between 2010 and 2014. My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) made a good point, which the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) dismissed. Let me read to her the words of the right hon. Member for South Shields (David Miliband). In July 2010, he said the previous Government would have halved the share of national income going into capital spending. That is the truth, and Labour Members want to deny it.
Meanwhile, this Government have overseen an increase in total investment in infrastructure from £29 billion a year, which was the level between 2005 and 2010, to £33 billion a year between 2010 and 2012. In the autumn statement, the Chancellor unveiled a further £5.5 billion of investment, including £1.5 billion for the strategic road network.
Hon. Members are aware that the vast majority of spending needs to come from the private sector. That is why we have taken measures to target and support investment—measures such as the UK guarantee scheme, which will provide up to £40 billion of support to critical infrastructure.
John Healey
In an answer last month on the guarantee scheme, the Financial Secretary told me:
“No project has been guaranteed under the UK Guarantee Scheme at this stage.”—[Official Report, 18 January 2013; Vol. 556, c. 981W.]
However, in the autumn statement, the Chancellor said:
“I can today confirm a £1 billion loan and a guarantee to extend the Northern line to Battersea power station and support a new development on a similar scale to the Olympic park.”—[Official Report, 5 December 2012; Vol. 554, c. 876.]
Does that not show the uncertainty and confusion at the heart of the Government’s infrastructure failures? Who is right: the Financial Secretary or the Chancellor?
Sajid Javid
The right hon. Gentleman rightly made a point earlier about the action the Government have taken to implement the guarantee scheme. Of the £40 billion of guarantees available, about £10 billion have pre-qualified but are not yet issued, and there has been an offer of a £1 billion guarantee for the Northern line extension project to Battersea. That is substantial progress since Royal Assent to the Infrastructure (Financial Assistance) Act 2012 in October 2012.
The Government are working tirelessly to encourage further investment, not just from overseas, but from pension funds. However, the debate should not focus solely on the amount of money we secure for projects. We should also focus on how to ensure the best possible return on those investments—a point made well by my hon. Friend the Member for St Albans (Mrs Main). That is why the Government are running a cost review to reduce infrastructure costs by a target 15%, and why we have reviewed and reformed PF1 and launched PF2. The Government are investing wisely, collaboratively and efficiently.
Some Labour Members would have us believe that our investment is resulting in no action. I found it strange to hear the criticism that our investment has resulted in no spades in the ground. As the Financial Secretary told us earlier, a number of projects are already up and running. For example, major flood risk infrastructure projects have been completed in Nottingham, Truro and Keswick, and four new major road projects and 16 local transport schemes are under construction.
This is a Government with a long-term strategy for infrastructure. Our national infrastructure plan—the first time a Government have set out such a plan—identifies 550 projects with a value of more than £310 billion. It has seen us publish an investment pipeline that gives certainty to investors, which is absolutely key; prioritise projects through the creation of a top 40 list; and utilise a dedicated Cabinet Committee to ensure infrastructure delivery. The Opposition motion alludes to Sir John Armitt’s review into long-term infrastructure. Given the important and valuable role he played in the Olympics, I am sure it will be an interesting read and I will look at his recommendations. I am also sure that his advice will be considered, balanced and politically neutral. I would be very surprised if it were influenced by the shadow Chancellor in any way.
We have recently appointed our own Olympic expert to the role of Commercial Secretary. Lord Deighton is overseeing a review of Whitehall’s ability to deliver infrastructure, to increase commercial expertise across Government. We are enhancing the mandate of Infrastructure UK, increasing its capability to make sure that projects are delivered. Those steps show that this is a Government committed to investing in infrastructure projects and a Government committed to delivering infrastructure projects.
Let me turn briefly to two points raised by my hon. Friends the Members for Halesowen and Rowley Regis (James Morris) and for Rochester and Strood (Mark Reckless). They talked about the importance of rail investment and alluded to making greater investment in regional aviation. They made powerful cases and that is something the Government will look at. My hon. Friend the Member for Rochester and Strood asked whether I would be happy to meet him to discuss the matter further—I would be very pleased to do so.
In conclusion, I thank all hon. Members for their contributions this afternoon. I am sure we all want to see improved infrastructure in our constituencies and in the UK as a whole. While the Opposition have no answers for the challenges our country faces, this Government are getting on with the job. I therefore urge Members to reject the Opposition’s motion and to back the Government’s amendment.
Question put (Standing Order No. 31(2)), That the original words stand part of the Question.