Funding for Major Infrastructure Projects
(1 year, 6 months ago)
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Wera Hobhouse (Bath) (LD)
I beg to move,
That this House has considered funding for major infrastructure projects.
It is a pleasure to serve with you in the Chair, Mr Sharma. Any Government should have a long-term strategic vision for the country beyond short-term election cycles. Infrastructure planning must be at the heart of any serious Government. However, such a long-term coherent infrastructure strategy is lacking and the Government are failing to capitalise on the long-term benefits of upgrading our infrastructure. We need an infrastructure strategy now to face the challenges of the future.
Wera Hobhouse
Thank you, Mr Sharma—again, it is a pleasure to see you in the Chair. I think I had just got beyond my first sentence, so I will repeat what I finished with. Currently, a long-term, coherent infrastructure strategy is lacking, and the Government are failing to capitalise on the long-term benefits of upgrading our infrastructure. We need an infrastructure strategy now to face the challenges of the future, get to net zero, transform our energy and transport systems and solve our housing crisis. We need vision, not permanent crisis management.
Public investment levels in the UK are too low and too volatile. We have averaged 2.5% of GDP per year this century—well below the 3.7% average for industrialised countries. The UK’s frequent large changes in investment spending plans mean that it has the most volatile annual growth rate among all OECD advanced economies bar one, which makes it harder to deliver investments. The Government are failing to spend around £1 in every £6 they want to spend. The Chancellor of the Exchequer has said that infrastructure investment is one of the Government’s main growth priorities, but the National Infrastructure Commission has argued that they are not delivering fast enough.
Infrastructure enables trade, powers businesses and connects us all. It creates opportunities for struggling communities and protects us from an increasingly unpredictable natural environment. Weak investment in infrastructure makes all this harder. We need strong infrastructure commitments and the certainty that projects will go ahead on time and continue to be funded appropriately.
Government dither and delay over infrastructure investment is making us all poorer. Take transport: the Government have said that their decision to delay building the Birmingham to Crewe leg of High Speed 2 and the planned link into central London was made to balance the books.
Sarah Green (Chesham and Amersham) (LD)
I share my hon. Friend’s concerns that even the Government’s attempts to keep construction of HS2 in budget will, in practice, only add to the already spiralling costs. Surely this shows that spending on HS2 is completely out of control. Whatever our views on this particular project— I personally think it is no longer value for money and should be scrapped—does she agree that it demonstrates a clear need for the Government to more closely monitor the progress of such projects, particularly where the taxpayer is pouring in billions of pounds?
Wera Hobhouse
My hon. Friend’s intervention goes straight to the issue. What were the initial contracts the Government signed with contractors? We have to scrutinise the plans for delivery to make them viable for taxpayers. To pick up my hon. Friend’s point, the National Audit Office has said that the decision to delay will lead to additional costs and potentially a more expensive project overall. The Transport Secretary himself even admitted that the delay would not save money—I would be interested to hear how much it will cost the taxpayer. I agree with my hon. Friend that, whatever our views are on HS2, it is important to know what the overall delay will cost the taxpayer.
The Institution of Civil Engineers says that delaying HS2 could make the building process
“more difficult as construction firms shift their focus to other countries.”
Whether or not we agree with HS2, this incessant delay and further uncertainty benefits no one.
Another example of this Government’s short-sightedness is the M4 to Dorset coast strategic road network, which is due to undergo major upgrades. This is a matter of great importance to my Bath constituents. The present strategic route is a mixture of the A36 and A46 and goes right through the centre of Bath—a world heritage site. My local Liberal Democrat council has rightly argued that the route should not go through Bath. I recently met with the Under-Secretary of State for Transport, the hon. Member for North West Durham (Mr Holden), and National Highways to hear more about how the M4 to Dorset coast study is progressing.
National Highways said that the route through Bath has high accident rates, is heavily congested and has more cars passing through than it was designed for; it also said that the A350 route via Chippenham delivers greater benefits and has fewer challenges. However, it is still considering using the Bath route. I understand that money does not grow on trees, but why are the Government not giving enough attention to the long-term benefits to people, which include health? The A36-A46 route through Bath is not fit for purpose. The Government know this, but they are paralysed when it comes to promoting and delivering alternative routes.
The Government also fail to deliver for rail electrification. We need to electrify our railway to get to net zero. The Railway Industry Association notes that an electric railway is the cheapest to operate, saving £2 million to £3 million per vehicle. Electric trains are also up to 300% more reliable than diesel trains, and are three times more efficient than diesel or hydrogen trains. Electrifying our railway is a no-brainer. However, the Government cannot see past the short-term cost. Network Rail has said that 278 miles of track must be electrified every year to reach net zero. Last year, the Government added only 1.4 miles of newly electrified track.
Stephen Hammond (Wimbledon) (Con)
The hon. Member is making an interesting speech, and I agree with some of what she has said, but let us be clear: the reason so little track was built was because Network Rail failed to deliver it. That is not the Government’s fault; that is an implementation fault. Network Rail has actually underspent its investment budget in the last two control periods. It is not a question of money not arriving or the Government not doing their job; Network Rail is supposed to deliver the project but has failed to do so.
Wera Hobhouse
I thank the hon. Member for his intervention; I have already answered half the points he raises. The problem is that the Government need a scrutiny process to ensure that those contracts are delivered on time and on budget. There seems to be something wrong with the Government’s system to keep track of them, because in the end, big infrastructure projects are national projects, and the Government should have some interest in how they are delivered.
Bath has a big air pollution problem. The council has tried to address the issue by introducing a clean air zone, amid considerable opposition, but the electrification of the line through Bath has been on hold for years, and dirty diesel trains are still going through the city. How can I persuade my constituents that it is reasonable to stop them from driving their diesel cars through Bath when the public transport alternative is still operating on polluting diesel fuel? Air pollution kills. Not getting on with electrification is a complete dereliction of duty, not just to our net zero plans but to public health—and that costs a lot of money if we get it wrong.
Just over a year ago, the Treasury blocked a £30 billion plan to electrify Britain’s railways over the next 30 years. The Government said that Great British Railways would produce a 30-year plan to electrify the railways. However, that organisation is not expected to be fully up and running until 2024 at the earliest—more dither and delay. We have not even seen the Government’s plans for a transport Bill. I am interested to hear from the Minister whether the Treasury is kicking electrification into the long grass.
Sustainability should be woven into all aspects of transport infrastructure policy, not just for climate but for health reasons, as I have mentioned. The Government recently announced that overall funding for active travel in the current parliamentary term is being reduced by £800 million. That includes a cut of dedicated capital funding by two thirds over the next two years. It is a backwards move and will counteract the tremendous progress we have seen in recent years.
I am a keen cyclist, and I try to do most of my journeys within Bath on my bike. I am fully aware of the benefits of supporting active travel, which far outweigh the costs. People walking, wheeling and cycling in 2021 saved 2.5 million tonnes of greenhouse gas, prevented 138,000 serious long-term health conditions and avoided more than 29,000 early deaths. Active travel contributed £36.5 billion to the economy in 2021, and with continued investment, that would only increase. I urge the Government to reverse the cut to active travel infrastructure, and help more people to actively walk, wheel or cycle to the places they need to go to. Will the Government support the Liberal Democrat’s plan for a £20 billion community clean air fund that will create new walking and cycle routes, as well as expanding bus routes and creating new council-led clear air zones for congested towns and cities?
The Government might claim that all those decisions were made to protect the public finances, but that is ironic, given their record of wasting money. Network Rail has spent more than £25 million on the new station at Reading Green Park. Its response to my written question had me wondering whether the decimal point was in the wrong place. The National Infrastructure Commission and the Climate Change Committee wrote a joint letter to the Government last year urging them to produce better plans to improve the resilience of infrastructure to climate change. Record temperatures last summer forced the cancellation of hundreds of train services, and flights were stopped at London Luton airport after heat melted the runway.
The Secretary of State for Energy Security and Net Zero, in his former role as Transport Secretary, warned that it will take decades to make the UK transport system resilient to extreme heat, but we do not have decades to wait. If we do not prioritise climate adaptation now, we will pay for it later. A full national-scale economic review of resilience and adaptation, led by the Treasury, is needed to quantify the value of climate adaptation, and therefore to incentivise investment in resilience. Investment in renewables is vital to combat climate change and preserve our energy security. If the Government had supported renewables harder, faster and earlier, my constituents would not be paying the price for Putin’s war now.
China is currently the biggest investor in renewable energy. It accounts for just under half of global energy transition investment. Cumulative growth in Chinese wind power between 2021 and 2022 was more than three times greater than in the US and more than seven times greater than in Europe. If we fail to prioritise renewable investment now, we risk moving our energy dependence from one autocratic power to another. If we want to be a global competitor, we must get our act together now.
The US Inflation Reduction Act and the EU’s Net Zero Industry Act will be transformative and will incentivise huge investment in new renewable technologies and crucial net zero infrastructure, but our Government are not following them. There was no new funding on Energy Security Day, and the Chancellor has refused to go toe to toe with the Inflation Reduction Act. The UK’s investment in the energy transition fell by 10% from 2021 to 2022. In contrast, similar investment rose by nearly a quarter in the US and by 17% in countries such as Germany. When will we see a real response from the Government? Global competition over talent and resources is fierce, but the Government seem content to be left behind.
The UK has huge competitive advantages in renewables such as tidal, yet the Government have failed to give the industry the funding it needs to prosper. We still do not have enough detail about how net zero investment is being defined. I hope the Minister will provide some clarification today. If other countries provide greater certainty for green investment, we will see investors and engineers leave.
When he was Chancellor, the Prime Minister used Britishvolt as a success story. He said that the factory would produce enough batteries for more than 300,000 electric vehicles a year. The former Prime Minister, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), told the House that support for Britishvolt would be delivered, and that the Government remained 100% behind the project, yet within a month it had collapsed. It is clear that mistakes were made at the company, but is there really nothing that the Government could have done to prevent the loss of a strategic battery producer? It is emblematic of an erratic Government without a plan—a Government who change their mind with the wind. Why on earth would people invest in the UK when they cannot have any confidence in what the Government will do from one month to the next?
The Treasury should consider giving a statutory underpinning to the publication of a national infrastructure strategy every five years, as opposed to once every Parliament. That would provide greater long-term clarity to investors, supply chains and other stakeholders about the Government’s plans. It would provide developers with a clear, long-term timeframe to plan ahead with confidence when delivering projects. The Institution for Civil Engineers argues that that means that projects can be delivered quicker and at a lower cost. Will the Minister meet it to discuss the detail of how that change would work in practice?
After the 2019 election, the Government set out their intention to raise public investment to a level not sustained since the 1970s, but now that pledge is in tatters. The Resolution Foundation has said that an increase in public investment set at around 3% of GDP would not only improve our infrastructure but would boost economic growth by about 0.8% over five years. Its research found that that boost would still allow us to keep our debt-to-GDP ratio on a downward path. According to the same research, the UK’s public investment levels could have been a transformational £500 billion higher if they had kept up with the OECD average over the past two decades. I am interested to hear whether the Government think that we should be working to close the gap with OECD counterparts.
The quality of our national infrastructure will determine the quality of our lives. It impacts how we communicate, travel and power our homes. Infrastructure in the UK is now not fit for purpose. This Government have become so focused on the here and now that they are unable to consider the future. They are so used to short-term firefighting that they are unable to take the long-term decisions that would stop fires happening in the first place. They have failed to safeguard our public finances to ensure that we can afford the vital investments that our communities are crying out for.
We need an urgent overhaul of our infrastructure strategy and more focus on the long term. Only then can we fix our crumbling and outdated infrastructure and build a vibrant, sustainable country that is fit for the 21st century.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
It is a pleasure to serve with you in the Chair, Mr Sharma. I congratulate my hon. Friend the Member for Bath (Wera Hobhouse) on securing today’s very timely debate. It strikes at many of the issues that we face in politics at the moment—issues that must be dealt with over something longer than the current electoral cycle. One of the failings of politics and the frustrations with Government that we have all experienced over the years is that we are all focused on the next four or five-yearly electoral event. For some infrastructure projects—we have touched on HS2, and I will speak about some that are closer to home for me than that will ever be—we need a more strategic approach.
When it is at its best, the Treasury is very good at doing the strategic, but often it becomes a bit hidebound by its own rules, and it lacks a little of the creativity that we require. For those of us in the northern isles, the most important infrastructure that we have is our transport infrastructure, in particular our ferries. We have the ferries that go between Orkney and Shetland and Scotland—or mainland Scotland, as some people like to call it—and the ferries that go between the different isles that make up Orkney and Shetland. What brings me to the Chamber today is the community discussion of those internal ferry services in recent years.
Earlier in the sitting, I was pleased to welcome the announcement of funding of £26 million for a replacement Fair Isle ferry—a significant amount of money, but that money is critical to preserving one of the smallest and most economically fragile communities to be found anywhere in these islands. The geography of Shetland is such that, apart from Fair Isle, Foula and others, the islands are pretty close together on a map. To our mind, it makes perfect sense for those islands to be joined not by ferry services, which are subject to weather delays, breakdowns and all the rest of it, but by a series of short tunnels—fixed links. In recent years, the debate on the islands has very much headed in that direction. We look with some envy at what our Nordic cousins in the Faroe Islands have done by linking their islands together and at the west of Norway, where parts of the mainland are linked by tunnel, as indeed are some of the smaller islands.
As a consequence of those discussions, which have been happening in the community for some time, my colleague Beatrice Wishart MSP and I set up a series of town hall meetings in the summer of last year. Obviously there are no towns, so they were not in town halls; they were in community halls and church halls in Fetlar, Unst, Yell, Whalsay, Out Skerries and Bressay. In an age in which we are always told that people are uninterested in politics and will not turn out for a public meeting, about 250 people from these small communities came out over the course of a week to offer their views on what fixed links could do for their communities.
A tiny number of people demurred, but the overwhelming consensus was that in our communities the construction of fixed links could be absolutely transformative for the design and delivery of public services. Keeping GPs based in an island community of a few hundred people is a big ask, for example. Then there is the creation and ongoing maintenance of schools in those communities, which are constantly shifting.
I was born and brought up in Islay; I grew up there in the ’60s, ’70s and early ’80s. In those days, one GP served our end of the island. If he went fishing for the day and someone had an accident, they had to wait until he came back from his fishing trip. In the 21st century, thankfully, that is not how the NHS works. We need a wider range of clinical practitioners, and people expect different standards from those practitioners. Maintaining public services of that sort in such communities becomes ever more difficult and challenging for us.
At every meeting we heard the same story. Overwhelmingly, the view was that young people wanted to stay in the outer isles in Shetland, but were forced to leave by the nature of the opportunities for employment, health and education for their family and were desperate to return. If these people stayed in our island communities, they would contribute to their economic growth. They would be able to found, run and grow businesses or maintain businesses that had been run by their family for generations, keeping children in the schools and keeping money going through local contractors into post offices, shops and all the rest of it.
For the bigger economic development projects, getting products from the outer isles to the market will always require at least one ferry service, but there is no reason it should need two. I think of businesses such as Cooke Aquaculture, which has a processing station in Mid Yell: it has to construct an entire staff rota on the availability of ferry services to get its product from Mid Yell down to Lerwick before it catches the ongoing ferry. That is how the infrastructure provided has a very direct impact on one of the most important food-producing businesses in my constituency.
Wera Hobhouse
I do not know too much about ferry services, but I think the point that my right hon. Friend is making is that we cannot just look at one product in isolation. The cost benefits are wider, in the round.
Mr Carmichael
Absolutely. I am horrified that, having been a colleague of mine, my hon. Friend says she does not know much about ferry services—she has clearly not been listening! However, the point she makes is a good one.
This is where Treasury rules and funding come into play. If we are looking at ferries, for example, we look for a pay-down over a 20-year or possibly 30-year period. A tunnel will be several times that, but Treasury rules constantly push people towards a like-for-like replacement. They seem to lack the flexibility and creativity necessary to provide the services that will maintain the economic and social viability of such communities in the longer term.
There is also a continuing role for EU—sorry, for Treasury—funding.
Mr Carmichael
Yes, I am always right the first time.
There is a continuing role for the Treasury in relation to funding, because a significant proportion of the ferries that we are now looking to replace were purchased and commissioned in the first place with a proportion of EU funding. That funding now sits with the Treasury, so although transport as a whole is devolved, there is still an obvious and strong role for the Treasury.
Following on from the Tunnel Vision roadshows that we ran in the summer of last year, as we suggested, communities set up tunnel action groups to decide how they could make the case. The case for a big infrastructure project like that, for a small community, is always that it should basically be designed by the community itself. I am happy to tell the House that the Unst and Yell tunnel action groups, working together, have already obtained pledges in the region of £100,000 towards the £200,000 that they think might be necessary to get the first stage of a feasibility study.
The project will have not just local strategic importance, but national significance. Unst will probably be the earliest and most effective—possibly the only—spaceport in the United Kingdom that is capable of doing vertical as opposed to horizontal launches. The people behind the SaxaVord spaceport in Unst tell me every week that that will be critical to their ability to exploit to the maximum the potential of the project in which they are investing.
There is also the question of the carbon cost. In the medium to long term, tunnels will always be much more carbon-efficient than ferries, with respect both to running costs and to ongoing replacements.
The Treasury has a pot of money that is currently set aside as a consequence of the wish of the last Prime Minister but one, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), to build a bridge from south-west Scotland to Northern Ireland. I can promise the Minister that there are none of the problems with unexploded ordnance that befell that particular project. The money still sits there in a ringfenced pot, so if the Minister wants to stand up and give me a commitment to fund tunnels for Shetland, I will be delighted to take it.
What we are looking for at the moment is a bit of willingness from the Treasury to engage with our community and allow us the opportunity to make the contribution to the rest of the United Kingdom that we have always made and that we know we can continue to make. Might the Minister agree to meet me and a delegation from the Shetland communities and the Shetland Islands Council to hear their intentions and hear what they want to do to make this happen? A small amount of Treasury money at this stage, to establish the case with scientific and technical rigour in a way that as a community we may be unable to do for ourselves, could be transformative in future.
Several hon. Members rose—
Mr Virendra Sharma (in the Chair)
Order. Before I call Stephen Hammond, I remind hon. Members who want to be called that they need to bob.
Stephen Hammond (Wimbledon) (Con)
It is a pleasure to see you in the Chair, Mr Sharma. I had not intended to make a speech this afternoon; I came to hear the hon. Member for Bath (Wera Hobhouse) and to intervene on her. Given the vast number of people here, however, I thought I might make a small contribution.
It is a pleasure to follow the hon. Lady. I agree with some of her speech; her closing point that quality of infrastructure determines quality of life is key and has been a fundamental tenet of what Governments of both colours have believed for a long time. I think her analysis of some of the problems was also pretty accurate, although she will not be surprised to hear that I do not agree with all of her solutions.
On the financing of infrastructure, the hon. Lady is right that the accountability bodies have not been as good at holding the institutions that are supposed to deliver the infrastructure to account. She is also right that for a long period the United Kingdom did not have a strategic vision. That is why seven or eight years ago the two bodies—the National Infrastructure Commission and the Infrastructure and Projects Authority—were set up. I think it is difficult to argue that the Government do not have a vision or that the National Infrastructure Commission has not provided the Government with one. The hon. Lady and I met Sir John Armitt at an afternoon meeting only recently; I think she was there when he talked about the launch of his new national infrastructure green solutions project.
There are two issues. First, the Infrastructure and Projects Authority was supposed to bring into Government the expertise that would allow the Government to be given scrutiny over projects. A major infrastructure project has at least four phases before it even starts implementation. A key part of that is the initial working with designers—the ability to design a project and to understand whether that project will fulfil the requirements that one might want.
Secondly, there is the whole issue of contracting and procuring the project, ensuring its longevity and providing certainty that it will deliver on the price. This must be a source of frustration for Transport Ministers, if not for Treasury Ministers. In setting the control period for the railways—I have to confess that in my short period as a Transport Minister this applied to the highways as well—the attempt was to provide some certainty about investment and therefore give certainty to the pipeline. If there is a pipeline of projects that developers and suppliers such as the Railway Industry Association see, the contract price will almost inevitably decline because there will be a certainty of project work.
One thing that this debate should therefore focus on is that if we want to get financing right—[Interruption.] You are probably waiting to hear how we are to get financing right, Mr Sharma, but that may have to wait until after the Division.
Stephen Hammond
I think I was just about to set out the key to getting the financing right. First, we must understand the long-term nature of the projects—a point to which the right hon. Member for Orkney and Shetland (Mr Carmichael) rightly referred. Secondly, if infrastructure is designed, contracted and procured in a way that is accountable but also looks at supply issues, a better contract is likely to be achieved. It seems clear to me that developing a long-term approach to infrastructure is the only way, at local, regional and national levels, because that will inevitably ensure good quality of life, and quality of economic performance.
In this country, major financing problems are often not about the money committed to a project at the beginning, but project creep. That results from an inability to go through those first three phases. I think in particular of the Great Western electrification upgrade, which the former Chancellor, George Osborne, signed off at £888 million. A huge number of unrealistic expectations were built into that quote. For instance, the infrastructure provider, Network Rail, suggested that it would be able to pile between 17 and 30 piles an hour. In fact, in the end, it was only achieving three, and unsurprisingly the whole cost of the project went up.
Equally, there were other institutional problems. An analysis of why there has been cost creep on several routes in this country is under way. One element is about understanding over-specification, as well as the right specification. There is a contractual professional liability issue, which, if solved, would help do away with some of the problems of cost creep. I could go into the technicalities of why we do not need to take out the complete specification for the possible movement of half an inch of earth over a 20-year period, which is costing a certain bridge project £20 million. That is really happening, because the contractor does not want to take out the liability. If the Government were to underwrite that liability, it would force that financing down. If we got technical matters right in the design, build and financing phases, it would affect a number of the issues that the hon. Member for Bath mentioned to do with the cost of projects increasing and pressure on the overall budget.
On the need for long-term certainty, I mentioned in my short intervention on the hon. Member for Bath that one reason that Network Rail gives for not being able to spend its budget is that it is not certain what projects it should be delivering. That is nonsense. Network Rail is the infrastructure deliverer for rail; it should be very clear about the projects, and it has timelines for them. We are talking about the financing of projects. The Minister would be well advised to talk to his colleagues in the Department for Transport about what we can do to make the successor body to Network Rail more responsive and more accountable for some of its cost.
The hon. Member for Bath quite rightly talked about decarbonisation and electrification. Rail accounts for about 10% of transport air pollution in this country. It seems to me, therefore, that getting the financing in place for the investment in decarbonisation projects and long-term electrification is key. She is right about the amount of electrification the country needs. A number of projects have been looked at, but that is simply not deliverable on a 10-year timescale. It may be deliverable on a 25-year timescale, so we need to plan for that.
We need to ensure that transport infrastructure makes interim investment in hybrids. There are plenty of dual-fuel opportunities for rail. There are battery alternatives for rail, which would reduce emissions immediately. If we focused on that, it would help drive down costs, because we would then consider not only interim rolling stock, but new electrified rolling stock.
My final point is this. We talk about financing infrastructure as if the only source of financing were the Government. There are plenty of ways of involving the private sector, and having it work alongside Government. I do not think anyone in this room would disagree that using private finance to help deliver the public good is sensible.
Wera Hobhouse
I completely agree, but there is also the issue of the long term. I go to meetings and listen. Private investors in green infrastructure or insulation projects, for example, ask time and again for longer-term planning, because that is the only way they can deliver. Does the hon. Gentleman not agree?
Stephen Hammond
Private investors ask for two things: certainty that the project they are involved in will be delivered; and the certainty of an operating licence for a period, so that they can get back their investment. Therein lies the second accountability problem. In the operational phase, one should ensure the operator’s accountability. Design, build and finance operational models are well known throughout the world, and have delivered major infrastructure projects across the world—and, at times, in this country.
We must not close our eyes to the fact that the UK is still an attractive place to invest for many people. It has legal and regulatory certainty, which other countries do not have. It has certainty of Government. The Government should look again at the opportunities for an electrification infrastructure bond. What are the opportunities for working with major institutions, such as Siemens, that produce the battery infrastructure that could be accelerated into the rail industry? There are many opportunities for the Government and the country to look beyond the Government’s providing all the finance.
The key issues coming out of this debate are these. There is not a lack of vision, but a lack of implementation. We need to ensure that the bodies are put in place, be it Highways England, Network Rail, Great British Railways or BT Openreach. We have talked today only about transport and hard, physical infrastructure, but the investment in digital infrastructure and human infrastructure is almost as important for quality of life, which is a debate in itself. Getting the design and implementation phases right will undoubtedly make the financing of major infrastructure projects easier.
Peter Grant (Glenrothes) (SNP)
I am pleased to begin summing up the debate, and it is good to see you in the Chair, Mr Sharma. I commend the hon. Member for Bath (Wera Hobhouse) on her very well informed introduction to the debate. I heard her say that she did not win the ballot for this debate, but was asked to hold it later. That may be a lesson for us all: losing one vote does not prevent you from having another go later.
The hon. Member for Wimbledon (Stephen Hammond) gave a very interesting examination of the technical and organisational factors needed to get a project right, and to make sure that future projects go well. One thing that has struck me in this place is that when a big project goes wrong, nothing gets learned. If the Department of Health and Social Care has a project, the Department for Transport does not learn anything from the mistakes, so it makes exactly the same mistakes. We could fill a library with the things that we could learn from problems with Ministry of Defence contracting, for example. There does not seem to be any process for making sure that lessons learned are remembered and transferred across the whole organisation.
The right hon. Member for Orkney and Shetland (Mr Carmichael) gave a very interesting speech. I know a bit about Orkney and Shetland. I have not been to Shetland yet, but I have been to Orkney and hope to go back. He reminded us that we often think that a lot of the public are not interested in politics, but when they understand the impact that an issue will have on their life, they are interested. If the public are not interested, it is maybe more of a comment on politicians, who manage to turn the public off. It is certainly not the public’s problem if the way we do politics causes people to turn off.
I like the right hon. Member’s comments about the GP service on Islay, because several years ago two of my best friends spent two summers on the neighbouring island of Jura, providing cover for the only GP on the island; he was not allowed off the island unless he got cover. The right hon. Member reminded us that for a number of very remote communities in these islands, and sometimes for communities that are not all that remote, the realities of life can be very different from how they appear in this place, and possibly from the way they appear to Ministers or civil servants ensconced in their fancy buildings in Whitehall and around Westminster.
The right hon. Member mentioned the inflexibility of Treasury rules. I do not understand how we can possibly run a 25 to 30-year contract on an annual and cash-limited budget; it just cannot be done. It produces incentives to do stupid things. We have seen that with HS2. He also mentioned the very strong part that the EU played in the previous round of procuring ferries for the islands in his constituency. Yes, the Scottish Government have attracted, and probably deserve, criticism for their record on some of the ferry procurement that we have done in the past. Nobody gets it right all the time. Interestingly, the right hon. Member’s comment seems to show that the people who we were told were remote, unelected bureaucrats in Brussels could sometimes get closer to delivering what people in our communities wanted than the decision makers down here. Perhaps that is because the EU knew that it was sometimes remote, so it did not think that it knew what was best. Most of the funding programmes that it ran had to be managed by the Scottish Government, mostly in partnership with local authorities or other local organisations. Although not everybody agreed with every project that was approved, people could at least point to strong evidence that the project was born in the community and funded from elsewhere, rather than having been invented to fit a set of criteria that were often not relevant to the community in which the project was delivered.
Mr Carmichael
I bridle slightly at the hon. Gentleman’s use of “remote”. I am always being told that I live in a remote community, which means that I have to define the place I call home in relation to somewhere else. Surely the point is not about the distance between Brussels and the place where the projects were delivered; it is about understanding that the European Union enabled communities to do something for themselves. That is a very different model from the one in Edinburgh and London these days. Viewed from Shetland, both those places are pretty remote.
Peter Grant
I take the right hon. Member’s point. Let me clarify that I do not measure remoteness by how far people are from this place or anywhere else. It is arguable that parts of the right hon. Member’s constituency are more remote from each other than they need to be, because the infrastructure is not there, so a journey of a few miles can be a lot more difficult than it needs to be. The important point is that far too much infrastructure spending in Scotland is not done according to the priorities of the Scottish Government, local authorities, or the Scottish people. The fairy-tale vision of the former Prime Minister, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), of a bridge to Ireland is a good example of that. I have not heard anybody in my constituency or elsewhere in Scotland say that that was a priority.
Too many funded schemes in Scotland are the priority of somebody in London who holds no mandate whatsoever in my constituency or anywhere else in Scotland. The criteria are set by somebody in London, sometimes having invited comments from the devolved nations or local authorities; most of the time, they ignore any comments that come in. The allocation of money does not have any rational basis, or follow any measure of need or priority. For example, the UK Government promised that the shared prosperity fund would fully replace the EU structural funding that Scotland lost after we were dragged out of the European Union against our will. Over three years, we expected to get about £549 million in structural funding; through the shared prosperity fund, we are getting £212 million. We are losing £337 million, more than half of what we would have had.
Other Government investment schemes, such as levelling up, were supposed to be based on a prioritisation of need, but somehow that prioritisation of need meant that the Prime Minister’s constituency got more than the whole of Glasgow. Of course, Glasgow got nothing. The Prime Minister’s constituency got exactly the same as mine, which is one of the most seriously deprived areas in the United Kingdom. The towns fund was the same. On the face of it, that fund was based on some kind of objective assessment of need, but everybody knows that it was more about who the sitting MP was, or which party hoped they might win the seat at the next election. The way that the criteria are set is not in the interests of the communities that the fund is supposed to serve. The funding allocation is not about need or what is right; it is about what suits the party of Government.
Almost 20 years ago, my very good friend and then fellow member of the council, Michael Woods, discovered that the then Labour administration in Fife Council had a secret plot to close the award-winning sports centre, the Fife sports institute in Glenrothes, and Kirkcaldy swimming pool. Thanks to Michael’s determination, that plan was abandoned. In 2007, Michael and I were both re-elected to the council, formed a joint administration with the Liberal Democrats, and immediately put in place plans to not demolish those two institutions, but replace them, and make them brand new. Six years after we were elected, we delivered a new sports centre in Glenrothes. Sadly, Michael did not live to see it happen, but the Michael Woods sports and leisure centre remembers that it would not be there had it not been for Michael. That is what can happen if we have the political leadership that knows what needs to be done, understands what communities need, and is prepared to deliver it. We had to devise a new delivery model to make the sports centre happen. I note the comment from the hon. Member for Wimbledon. If that delivery model had not worked, it would not have been the fault of the delivery model; it would have been our fault. It was our responsibility to set out a delivery mechanism that would work.
If we want to look at something on a bigger scale, in 2007, when the SNP was elected to the Scottish Government for the first time, it inherited a Forth Road bridge that was in danger of becoming unsafe and being closed. Some 10 years after, the SNP having inherited no plans whatsoever, the new Queensferry crossing was opened to the public. It was a £1.3 billion investment, let it be noted. The SNP did that without putting the albatross around their neck of a private finance initiative, and the crossing is toll-free, as are all the bridges, motorways and roads in Scotland.
Compare that with HS2. In 2009, the Government set their delivery company a budget of between £31 billion and £36 billion. By 2013, almost exactly 10 years ago, the National Audit Office was already warning about problems. We are now looking at a cost of somewhere between £72 billion and £98 billion. The cost of a single railway station at Euston has increased by £2.2 billion, and construction on that station has stopped for two years. How can one Government—or one series of Governments—get one project so catastrophically wrong so often, with no one being held to account?
Lack of accountability is a significant problem. We could ask what has happened to the 40 new hospitals; maybe some of them will happen, but there certainly will not be 40 of them. We seem to be living in a time when “a long-term investment strategy” means “to get us through the next election”. We are clearly living in a time when “priority areas of need” are marginal seats, and 40 new hospitals means, if we are lucky, half of that number—most of them will never be built. Partly due to covid and partly due to the self-inflicted damage of Brexit, construction project costs are rising, often faster than the official rate of inflation. Contractors and subcontractors are finding it harder and harder to recruit the skilled workers they need, because in that industry a lot of the skills are international. The market is global, and Britain is making itself a less attractive place for overseas workers to come to and work. That is not just because of Brexit, but because of how it has been seen to be implemented by the Government.
We need a complete change in the way that the Government allocate and manage the funding for their major infrastructure projects. The hon. Member for Bath was a fellow member of the Public Accounts Committee for a while; I have not seen any evidence, in the reports that come to the Committee, that lessons have been learned. I would love to be able to say that during my time on the Committee—or even in Parliament—I have seen evidence that this Government are becoming better at managing large-scale projects. I cannot say that; if anything, I would say that they are becoming worse.
We have a Government and a governing party that are becoming more inward looking, more concentrated on looking after their own interests, less willing to face up to the decisions that need to be taken, and, frankly, less caring about the impact on communities all over these islands of their failure to deliver the kind of infrastructure that a modern western democracy should be allowed to take for granted.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this important debate. Some Members may be surprised to see me; I am covering for a colleague in the shadow Treasury team, but I always welcome the opportunity to hold the Government to account on their record on public and private funding for major infrastructure projects. There are three main areas that I will focus on: the Government’s underinvestment in energy, the Government’s record on transport and the dysfunctional planning system that means that infrastructure, especially housing, simply does not get built.
First, on energy, the UK is losing the global competition for green jobs. We are now investing five times less in green industries than Germany, and roughly half of what France and the USA invest. The Institute of Directors has warned that:
“the UK will find itself left behind in the accelerating race to lead the green economy.”
Only now, eight months after the passage of the Inflation Reduction Act, has the Chancellor finally confirmed that the UK will have to wait more than a year to respond. The Opposition think that is simply not good enough.
Ordinary families have paid the price for the Government’s dithering and delay. In 2015, the Government slashed solar subsidies, causing a huge crash in the market. That missing capacity has left household energy bills another £2.5 billion higher this winter in the midst of the worst cost of living crisis on record. We must remember that in 2013, the coalition cut energy efficiency programmes, which saw home insulation rates crash by 92%. If we had insulated 2 million homes every year since then, people’s bills would today be £1,000 a year lower.
On the offshore wind markets, as Scottish Power CEO Keith Anderson has said:
“The wind farms that are coming online today were approved when Gordon Brown was in power.”
Unfortunately, yards across the UK are closing and we are delivering three times fewer offshore wind jobs than Denmark, despite our being over 10 times their size. The Government said in December 2022 that they would introduce planning reform for onshore wind by April of this year. That deadline has been missed and no action has been taken. I hoe that the Minister will confirm whether the Government will end the ban on onshore wind, and, if so, when that will happen.
Let me turn to transport. A recent survey of global investors has seen the UK slip down the rail infrastructure rankings; we now sit between India and Kazakhstan at 30th in the global league table. That is a national scandal—how on earth did we get here? We know that transport projects need certainty, but time and again Ministers have mismanaged key projects. On the key trans-Pennine route, for example, we wasted hundreds of millions of pounds of taxpayers’ money before cancelling the project and starting again. That has meant that on one of the major rail routes in the country, which transports millions of passengers a year, upgrades are almost a decade late. That has hurt the taxpayer and has profound consequences for the UK, costing the northern economy £16 billion.
Finally, I come to our planning system. Planning applications for homes fell to a record low last year, while the number of local housing plans submitted in the last few years have plummeted. What are the Government doing about that? Planning changes snuck out by the Government three days before Christmas have already resulted in 55 local authorities withdrawing housebuilding plans. Experts are now saying that housebuilding is set to fall to the lowest level since the second world war.
Wherever we look, it is the same story—housebuilding is at a record low, inward investment in transport is in decline, and Britain is falling behind on green energy. But we do not need to continue down this path of managed decline, because Labour has a plan to get the economy growing and to drive the investment and infrastructure that we so desperately need. The Labour party is committed to overturning the senseless ban on onshore wind and to the radical reform of planning rules, to drive growth and build affordable homes.
Fixing our transport system is a prerequisite for growth in this country, and that is why we are working hand in hand with business leaders and pledging that a future Labour Government will deliver Northern Powerhouse Rail, including that vital new train line through Bradford. Meanwhile, our green prosperity plan will grow the UK economy by investing in the green industries that can power our economic future, cut the cost of living for British families, and make Britain a clean energy superpower.
The Minister has listened carefully to all the concerns voiced in the debate. I hope that he responds to them, including those that I have just outlined.
The Exchequer Secretary to the Treasury (Gareth Davies)
It is a great pleasure to see you in the Chair, Mr Sharma, particularly as this is my first outing as a Minister in Westminster Hall. What a great start!
There has been a really informed, detailed and, if I may say so, courteous display of speeches. The central core of every one of them was a deep care for our national infrastructure and a recognition of how important it is to all our constituencies. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing the debate—at the last minute, I hear, although you would not know it—and thank hon. Members for all the other contributions. I will try to cover off some of the points raised in the time available.
Good infrastructure acts as a knot that ties our communities and our Union together. It is a vital part of how we protect our environment and helps us to unlock economic potential. The Government, right up to the Prime Minister and Chancellor, are absolutely committed to delivering the long-term economic benefits derived from capital investment and infrastructure schemes. We want to build infrastructure that is modern, efficient and accessible to everybody across our four nations.
During this Parliament there has been a step change in how we fund national infrastructure, underpinned by our national infrastructure strategy, which was referenced by my hon. Friend the Member for Wimbledon (Stephen Hammond). To achieve the aims of the strategy we are increasing funding; we have a strategy and we are matching it with funding. That was announced in the spending review of 2021. A multi-year settlement provided £100 billion of investment in economic infrastructure for this spending review period. That includes over £35 billion for rail investment—including, yes, HS2, which I will come to in a moment—and other rail enhancements to boost connectivity across our country. In the longer term, our integrated rail plan, published in November ’21, committed £96 billion for rail construction and upgrades, representing the biggest ever single investment into our rail network. It will deliver a modern network that will benefit small towns and big cities, boost productivity and bring our communities closer together.
The hon. Member for Bath referred to HS2, so let me address that head on. It is a key part of our rail strategy—a long-term investment that will improve connectivity across the country and provide a low-carbon alternative to cars and planes for many decades to come. It is already supporting tens of thousands of jobs. The Government remain absolutely committed to delivering HS2 from Euston to Manchester, and continue to push on with the sections in peak construction so that the first high-speed services—running from Old Oak Common in west London to Birmingham Curzon Street—can be delivered between 2029 and 2033.
Wera Hobhouse
I share the Minister’s wish for HS2, but it is just that because there are so many delays, we are losing the public. Is it not important that the Government really come clean and say, “We will deliver this, and it will be great for this, that and the other reason,” rather than putting doubt into people’s minds that it might not be delivered, might be only half-delivered, or whatever it is? Let us go out there and really sell this as a great improvement to our rail infrastructure. Does the Minister not agree?
Gareth Davies
I thank the hon. Lady, although I think we are selling it. She is absolutely right: it will boost productivity. It is creating jobs, as I have said, and it will boost connectivity. It is important that we all do go out and sell that. However, we have to be real: we have to balance the need for high-speed rail with sustainable public finances and respond to events as they happen around the globe. That is the reality of what we are doing with the recently announced rephasing. This is true for construction projects all over the country and, if I may say, in many parts of the world; we face significant inflation as a result of Putin’s war in Ukraine and supply shortages coming out of covid. We are reacting to that as hon. Members would expect any reasonable and responsible Government to do.
The hon. Member for Bath referenced the National Audit Office report—I can tell her that we are looking at that report very carefully and will respond in due course. However, the point I am trying to make is that on HS2 is that it is vital and we are committed to it, but we have had to make difficult decisions and choices in order to balance the need for both robust transport infrastructure and robust public finances, which we will always do for the British people.
More broadly, as has been mentioned by many speakers, we are improving rail connectivity and restoring our transport services across the country, but in particular to reverse the 1960 Beeching cuts. It is important that we expand the rail network as well as improving the existing rails.
In the interest of time, I will pick up some of the direct points raised by hon. Members. The hon. Member for Bath should be aware that I am briefed on the M4, which she mentioned—even though I am only a week in, I know about the M4 connection to Dorset. The hon. Lady will know that the DFT commissioned a study by National Highways on that route, and its outcomes are being carefully considered by the Government and wider stakeholders. It is a live discussion and we look to come back on that very soon.
The hon. Member for Bath and my hon. Friend the Member for Wimbledon also made some excellent points on rail electrification. The hon. Lady should be aware of the transport decarbonisation plan, which will deliver a net zero railway by 2050. She referenced some specific statistics, and I will respond with a couple of my own: since 2010, we have electrified 1,224 miles of track, of which 1,000 miles have been installed in the past five years alone—compared, by the way, with just 70 miles electrified in England and Wales between 1997 and 2010. I think we are doing a pretty good job, although there is more to do. I do not think anybody would deny that.
The right hon. Member for Orkney and Shetland (Mr Carmichael) made a very insightful and interesting speech about the challenges his constituents face. I will look into the issue he raised about Treasury responsibility for the pot and come back to him.
My hon. Friend the Member for Wimbledon said eloquently that these things do not all rest on Government finances; the Government cannot pick up the tab for all our infrastructure projects. The benefits of our national infrastructure strategy will be secured through Government and private funding, so we will win the prize by mobilising private capital investment. Almost half of the UK’s future infrastructure pipeline is forecast to be privately financed, and the Infrastructure and Projects Authority recently estimated that the total infrastructure investment for the next decade across the public and private sectors will be nearly £650 billion.
As my hon. Friend mentioned, we are building on a strong base. The UK is a great centre for private investment. We have a strong system of regulation, a strong legal framework that is replicated all around the world, and a leading financial and services sector that helps to mobilise private capital. He talked about the bond market, and as he knows we are one of the leading issuers of green gilts. We are doing a lot to help mobilise private capital, but critical to our financing will be the mechanisms and institutions that we have available to mobilise private capital. That is why, when I was a Back-Bench MP, I was delighted to join him in the debate on the UK Infrastructure Bank, which will play a massive role in funding the projects that people around the country rely on. It has been set one mission: to partner with the private sector and local government authorities to increase infrastructure investment in pursuit of two objectives. The first is to tackle climate change, and the second is to support regional and local economic growth through connectedness, opportunities for jobs and higher levels of productivity. As it stands, £22 billion of financial capability has been provided to the bank, and we expect it to crowd in private capital investment and support more than £40 billion of infrastructure investment. To date, it has already announced 15 deals worth more than £1.4 billion, covering clean energy, digital infrastructure and green transport. That will be transformational.
A lot of Members mentioned net zero, which is absolutely critical. What every party has in common is our commitment to the health of the planet. We are world leaders in fighting climate change and galvanising action on the global stage, as we saw at COP26, and we are right to do that at home with our net zero pledge. The UK already has a world-leading track record of delivering decarbonisation. We have reduced emissions faster than any G7 country since 1990. By the way, we have grown our economy by 75% over the same period.
The Government are committed to a total of £30 billion of domestic infrastructure for the green industrial strategy. Since March 2021, an additional £6 billion for energy efficiency was committed at the autumn statement, and £20 billion for carbon capture, utilisation and storage was announced at the spring Budget. We have in place a clear strategy to deliver on our net zero obligations, deliver energy security and drive economic growth.
To Members who question our ambition and ask whether it is achievable, I say look at what we have already done. Some 71% of all UK households have access to gigabit-capable broadband—an uplift of 8% since November 2021—and we are on track to reach a target of 85% coverage by 2025 and at least 99% by 2030. Some 92% of the UK has access to 4G mobile coverage, and we are on track to meet the Shared Rural Network target of 95%, which has a big impact on Scotland. We also had the opening of the Elizabeth line between Paddington and Abbey Wood. Those are all high-quality infrastructure priorities and projects, and other crucial projects will be announced for economic growth, boosting productivity and competitiveness.
We will go on. We will continue with our strategy, our funding and our prioritisation of national infrastructure. We will transform our railways, including HS2 to Manchester, East West Rail and the Northern Powerhouse Rail core network. We will secure the UK’s energy security through delivering new nuclear power, including Sizewell C, and the roll-out of cheap, clean renewables, including wind and solar.
Infrastructure offers us one of the most exciting and efficient direct ways of improving living standards, boosting our economy and supporting our communities, and I appreciate the opportunity to outline that today.
Wera Hobhouse
The debate has been interesting and I thank all colleagues for being here and sharing their considered thoughts. I think we all agree that long-term infrastructure projects are vital for our four nations. They are complex to deliver and see through; they require a well-resourced Treasury and a vision that survives from one Government to the next; and last but not least—we have not really talked about this—they require an engaged public who share that vision and are prepared to see it through with the Government of the day. If that is true of anything, it is true of getting to net zero. We agree on a lot of things, but I think we disagree about the pace of change, which for me is not fast enough. The Government will of course say, “Yes, we are getting there,” but that is the nature of these debates, and I am glad that we had such a considered debate today.
Question put and agreed to.
Resolved,
That this House has considered funding for major infrastructure projects.