Infrastructure (Financial Assistance) Bill

Chris Leslie Excerpts

Monday 17th September 2012 Commons Chamber

[Priti Patel]

Speaking for Essex, I do not recognise that. The county of Essex has had no infrastructure spending whatsoever. Despite Essex being the county of entrepreneurs, where thousands of new businesses are started each year, and despite it being a net contributor to the Treasury, Labour neglected it. Local and regional infrastructure in Essex failed to keep pace with national and local economic growth. That is no doubt one of the reasons why the electorate booted Labour MPs out of Essex, full stop, at the last general election. It is now a Labour-free zone.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Is not the Maltings academy in the hon. Lady’s constituency, which opened about a year ago, a significant piece of capital infrastructure? Surely she welcomes the investment in those new school buildings.

[Priti Patel]

I welcome that investment in infrastructure improvements, but it was something that I had to campaign and fight for as a prospective parliamentary candidate—not even a Member of Parliament. That says something about the priorities of the last Labour Government. My constituents look with confidence to this Government to take positive action to rebuild our roads and railways, to meet the ever-increasing demands of the growing population in the county of entrepreneurs.

I urge Ministers to consider some particular projects in Essex. The first area is rail, which was highlighted by my hon. Friend the Member for Suffolk Coastal (Dr Coffey). Commuters on the Greater Anglia franchise return £110 million a year to the Treasury on a profitable franchise, but face some of the longest delays and worst facilities in the country. For a modest fraction of the money that the Government receive from the franchise, the rail service could be upgraded from being one of the worst performing in the country to one of the best. We are lobbying the Government, in particular the Department for Transport and the Treasury, to hear our case on this. Local commuters, not only in Essex but along the route of the franchise, would welcome Government investment in the line.

--- Later in debate ---

[Neil Carmichael (Stroud) (Con)]

Thank you, Mr Deputy Speaker, for calling me to speak in this important debate. This is a necessary piece of legislation, not least because we need to stimulate growth by showing that we are interested in developing our infrastructure. Such infrastructure investment has taken place in the past, but we need more, and it is important to understand what kind of investment is needed and how the process needs to unfold. We do not always remember that organisations involved in civil engineering, for example, want to see a little more confidence in the world of infrastructure investment, so that they can start to prepare for projects that are in the pipeline or that are urgently needed. We must recognise that some of those projects will stimulate further economic activity. Transport and energy are classic examples of sectors in which more investment is needed, as a stimulant to create even more exponential economic activity.

Let us take transport as an example. By investing in more transport infrastructure and ensuring greater connectivity, we give businesses a better foundation from which to grow. I know that from experience in my own constituency, where the news of the investment in the redoubling of the railway line between Kemble and Swindon on the Stroud to Swindon line has had an enormous impact. There is a real feel-good factor for the medium term in relation to the connectivity of my constituency. We need to see much more of that kind of signalling, and I welcome the thrust of the measures that relate to transport.

Another critical area whose importance we do not always recognise when we talk about investment is the energy sector. Again, the word “connectivity” is important, but we must also understand the need to provide a framework for the right kind of investment, as well as ensuring, as the Bill does, that guarantees can be put in place for those investments. For example, in the renewable energy sector, we need to think about the infrastructure required to get the energy from where it is created to the place where it will be used.

We must also encourage new technologies by providing the right policy platform to enable them to be developed and promoted. A good example is energy storage. In some sectors, we have the kind of technology that could make energy storage a realistic prospect. I have told the House before about liquid air, but I will tell it again. Liquid air provides a significant way of storing energy, but we need the infrastructure to achieve that. The Bill could provide the necessary encouragement for that to happen, and for an interest in energy to be developed.

[Chris Leslie]

Is it hot air?

[Neil Carmichael]

It is certainly not hot air. It is very cold. The technology is well worth looking into; it is all about the transfer of pressure.

The hon. Member for York Central (Hugh Bayley) talked about the proximity of the Bill to private finance initiatives and public-private partnerships, and I agree that that proximity exists. We need to learn lessons, however, from our experience of the more complicated and convoluted PFI schemes. We need more flexibility, and we need to give the public and private sectors the confidence to think, “Let’s get this done”. We need to generate a can-do approach, and the Bill will go some way towards achieving that.

--- Later in debate ---

[Chris Leslie (Nottingham East) (Lab/Co-op)]

This has been a thorough debate on not just infrastructure, but the state of the economy in general. I am afraid to say that little light has been shed on the Bill’s details, although we have yet to hear from the Economic Secretary, whom I heartily welcome to his new post as a Treasury Minister. Perhaps he will illuminate matters for us. As things stands, it looks to be a curious little piece of legislation. My hon. Friend the Member for Coventry North West (Mr Robinson) said that the Government’s policies on infrastructure were embarrassingly thin. As most hon. Members have noted, there seems to be more spin than substance in this Bill. Perhaps that is why the Government ran out of people to speak in favour of it almost an hour ago.

It occurred to me that this legislation is perhaps a classic example from the book by the new Conservative party chairman, “How To Bounce Back From Recession”, which was written under the pseudonym Michael Green or Sebastian Fox—I cannot remember which. It is all about a presentational drive to be seen to be doing something. The Government cannot specify precisely what it is that they want to be seen to be doing, but it is definitely Shapptastic.

It is the lack of detail in the Bill that worries many people. My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) questioned who will be given financial assistance and what will be defined as nationally significant infrastructure. My hon. Friend the Member for York Central (Hugh Bayley) questioned the time scale of the £50 billion for underwriting and guarantees. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) noted that the Government are coming late to the benefits of infrastructure, and have reannounced over and again the concept of UK guarantees. They were mentioned first by the Prime Minister in May and were reannounced in June by other Ministers. Only now are we getting the Bill that is supposedly necessary to underpin them.

There are dangers of making policy on the hoof in this way. However, for the time being, we will give the Government the benefit of the doubt that they will specify in Committee which projects they envisage need this level of support. We will seek safeguards for taxpayers’ money against losses that are not spelled out in the Bill, supported, I hope, by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who mentioned this issue. We need to ensure, for example, that there is reasonable consideration of clawback provisions, which are normal contractual arrangements that might be needed to safeguard best value for the taxpayer.

It is unclear whether the Bill will aid social housing, particularly in parts of the country where the council housing stock has not been transferred to housing associations—those arm’s length management organisations —such as Leeds and Nottingham. I disagree with the hon. Member for Reigate (Mr Blunt) and think that housing should be considered to be part of our nation’s infrastructure. Opposition Members feel strongly about that.

There are other issues that the Minister needs to address. Will the Government run into state aid clearance issues if they are simply providing financial assistance to the private sector? Such contractual questions may come up. How will the Government overcome them?

My right hon. Friend the Member for Salford and Eccles (Hazel Blears) and my hon. Friend the Member for Walthamstow (Stella Creasy) pointed out that the Bill lacks any mention of social value. We need to leverage jobs and benefits for communities out of infrastructure schemes. The real and tangible economic consequences that should flow from infrastructure ought to be at the heart of this Bill.

One cannot look at this small set of clauses without wondering whether the Bill is sufficient for the task at hand. Guaranteeing private loans will not come close to addressing the scale of the infrastructure problems that we face because of this Government’s inactivity. It is not certain whether this technique will be successful. There are no details of which projects will be guaranteed or when they will be guaranteed. My hon. Friends the Members for Swansea West (Geraint Davies) and for Scunthorpe (Nic Dakin), among others, rightly emphasised that the country is crying out for infrastructure investment, especially to create confidence and to strengthen productivity and competitiveness in our economy.

The Government have a pretty woeful record on the delivery of infrastructure, but there has been a great deal of hot air. The hon. Member for Stroud (Neil Carmichael) spoke about the industries that he wanted to be supported in his constituency. Who can forget the Chancellor’s much-vaunted “The Plan for Growth”, which he said was

“an urgent call for action”?

He stated:

“If we do not act now, jobs will be lost, our country will become poorer and we will find it difficult to afford the public services we all want.”

Eighteen months later, that plan for growth is looking a little forlorn.

The Prime Minister himself said,

“this autumn the government is on an all-out mission to unblock the system and get projects under way”—

except, of course, he was talking about autumn 2011. My favourite was the rhetorical flourish from the Chancellor of the Exchequer, who, in his Budget speech 18 months ago, promised

“a Britain carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Since then, the economy has, of course, shrunk into a double-dip recession.

The Government’s policies have not been helping; in fact, they have been harming. They have been causing more delay to projects that ought to be under way. My right hon. Friend the Member for Wentworth and Dearne (John Healey) talked about the risks that can arise from sort of the public policy vacillations that we have seen from the Government. He mentioned, for example, the uncertainties in planning policy, where a national planning policy framework was announced a few months ago, only for the Government to change their minds. They say they are going to suspend section 106 agreements, but they have not yet done so. A number of developers are saying, “We’ll hang back for the time being. We’ll wait rather than get on with applying for planning permissions right now.” We want the Government to make their minds up about how to move forward, but we have our concerns about their strategy.

In transport, we are still awaiting the long-promised national policy statements on transport networks and aviation, as my hon. Friend the Member for Easington (Grahame M. Morris) mentioned. In waste management, the national waste management plan was supposed to be announced this spring, but it will now not be finalised until the end of 2013. In low-carbon investment, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been

“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy.”

The Government have undermined or pulled the rug from under many infrastructure schemes. The same can be said of their approach to the green investment bank and broadband targets, which they have deferred, notwithstanding the strong campaign by my right hon. Friend the Member for Salford and Eccles for superfast broadband at MediaCity in her constituency, which she mentioned in her speech.

We need a renewed focus on the plans that the Government themselves put forward in their national infrastructure plan in 2011. None of the road-building programmes in that plan has started construction. Only one in 10 of the projects mentioned in it have moved forward, while one in 10 has moved backwards. House building starts are down 24% from the same period last year, and, on Friday, infrastructure data from the Office for National Statistics showed that the volume of new work was also down 24% on the same period last year. The statistics get worse and worse, not to mention the woefully inadequate approach to the regional growth funds, which many of my hon. Friends mentioned.

Indeed, the pace of capital investment under this Administration has slowed, contrary to the claims of the Government. The Office for Budget Responsibility’s forecasts show that under Labour’s public service net investment plans, investment would have been £2.7 billion higher than under the Government’s plans in the key year of 2010-11, £2.6 billion higher in 2011-12 and £1.3 billion higher in 2012-12. That is a difference of £6.6 billion over that three-year period between Labour’s trajectory on capital investment and the cuts implemented by this Government. That is something that even the hon. Member for Northampton South (Mr Binley) mentioned in his contribution. Reductions in capital expenditure have been relatively extreme, and I agree with him that the Government should certainly be doing better.

There are ways in which underwriting and guarantee schemes should be investigated. We do not oppose the Bill before us today, but we are a little cynical and sceptical, given the number of schemes that the Government have promoted with great flourish but then failed to deliver. My hon. Friends will remember the claim that they were going to reach into the pension funds of large fund managers across the country and take £20 billion of investment to help to support public infrastructure schemes. However, a year later we have seen only £2 billion secured, and again, it will not be forthcoming until 2013-14. Indeed, the Government’s chief construction adviser, Paul Morrell, said,

“there won’t be a barrel-load of funding coming in from pension funds for greenfield infrastructure. It’s not their business and I don’t know anyone who thinks it is.”

The Government promised a whole set of new revenue sources for new investors in the national infrastructure plan, but they have not been forthcoming. The Government have also been indecisive over the use of tax increment financing.

The Government also promised a new Cabinet committee, chaired by none other than the Chief Secretary to the Treasury himself, which was set up last year to “show decisive leadership”. A year on, we are still waiting for the Chief Secretary’s decisive leadership. I am sure that the Cabinet Committee meetings are extremely interesting, and it would be helpful if he could share with us some of the decisions that have been taken.

Businesses and those in the wider country are increasingly frustrated by the progress that this Administration are making. We have already heard quotes from key business figures. John Longworth, the head of the British Chambers of Commerce, has described the national infrastructure plan as “hot air” and a “complete fiction”. John Cridland, the director general of the CBI, has warned that

“firms fear initiative overload and are becoming impatient with delivery”.

Richard Threlfall of KPMG has said:

“Business confidence in our infrastructure is ebbing away”.

And we have only to look at the opinions of businesses across the country, as expressed to The Financial Times, to get a flavour of what is happening. It states:

“British business is fast losing any remnant of confidence in the government’s infrastructure strategy even though investment in transport, telecoms and energy has been at the heart of its growth plans since it came to power two years ago. Two thirds of British companies fear UK infrastructure will deteriorate over the next five years, according to a survey by the CBI…and KPMG”.

The Bill lacks not only substance but evidence that the Government understand what is happening in the economy and more broadly. My hon. Friends the Members for Glasgow North East (Mr Bain) and for Walthamstow made that point in their speeches. It contains nothing to address the lack of demand in the economy, and it proposes no change of direction to prevent the Chancellor’s tax rises and precipitous cuts from exacerbating the contraction in the economy. My hon. Friend the Member for Derby North (Chris Williamson) rightly pointed out the economic strangulation that the Government’s policies were exerting on the confidence and demand that ought to exist in the economy and more broadly. My hon. Friend the Member for York Central highlighted the five quarters of negative growth that have occurred on this Chancellor’s watch.

There is no recognition from this Administration that the lack of growth is resulting in a rise in welfare spending; it is up by 7% in the financial year so far compared with the previous financial year. We have also seen borrowing rise in the first quarter of this year, compared with the previous financial year. These proposals lack substance. We need immediate action rather than warm words. We will table amendments to the Bill, to test the Government’s commitment to their infrastructure plans. Either this Administration are ignorant of the causes of recession or they are wilfully ignoring our decline, for politically obstinate reasons. They are flailing around for initiatives, and they are racked by dithering, hesitancy and coalition divisions. We need action now; we cannot wait until the Chancellor’s Christmas statement on 5 December. The Bill is a fig leaf for their indecision. It is not an adequate substitute for action. Notwithstanding my welcoming the Minister to his new post, I would like to see whether the Prime Minister’s reshuffle and his appointment of this particular Minister have changed a single thing.