Infrastructure (Financial Assistance) Bill

Hugh Bayley Excerpts

Monday 15th October 2012 Commons Chamber

[Chris Leslie]

It is very difficult to find an explanation for this Keystone Cops approach to infrastructure schemes, other than that the Government are incapable of getting to grips with the detail. I welcome the Minister to his position—he may be a new broom who will sweep everything clean, deal with the issues firmly and move many of these infrastructure projects forward—but I want to hear about his strategy for improving infrastructure on these shores, in the United Kingdom.

[Hugh Bayley (York Central) (Lab)]

May I intervene on my hon. Friend before he leaves the subject of the regional spread of investment? He will recall that on Second Reading I informed the House of changes in the level of infrastructure investment region by region. Some regions experienced an increase in investment between 2009 and 2011—most notably London, whose 18% increase was probably fuelled by the Olympics—but all the rest of the country, apart from three regions, experienced a reduction. Investment fell by 31% in Yorkshire and the Humber and the north-west, and by 32% in Wales. Does my hon. Friend think that the Bill, and the fund that it will establish, will provide an opportunity for some of those regional imbalances to be redressed?

[Chris Leslie]

I would like to hope so, but I do not advise my hon. Friend to hold his breath. We are not even talking about a fund; we are talking about promises to under-run funds in order to guarantee other schemes as they come forward. Where is the confidence? Where is the demand in the economy? Where are the private sector schemes whose organisers want to come forward? Far greater efforts must be made, and the Government must take the economic climate more seriously. We should be bringing forward schemes, prioritising UK infrastructure, and kick-starting construction here at home. We have suggested that revenue from the 4G spectrum auction should be used to fund the building of 100,000 new homes, and we are more than happy for the Chancellor to steal our thunder in the autumn—or should I say Christmas—statement on 5 December. Our amendment would ensure that the Bill focused on the British economy, and that should surely be the starting point.

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[Mr Redwood]

That is a helpful contribution, but it shows the dangers of this clause, because it demonstrates that if these projects are not properly evaluated they could be more expensive overall. My hon. Friend has recent experience as Minister with responsibility for prisons and he is saying that in the short term they will definitely be dearer, because the state will have a big cash outflow in order to buy the new prison. It will take time to close down the old one and find some alternative use for it, and that process might not produce anything like the amount of money that the new prison costs. He is arguing, with his former brief in mind, that this may still represent a good bargain for the taxpayer, but when we come to account for it, we will have to account for the fact that a lot more has been spent in the first couple of years; there may be benefits for Governments to come if, as he hopes, the thing is cheaper and better in the longer term.

In debating this clause, we need to unpack the three types of project we are talking about. The first is a genuine private sector project, where we hope that there will be no ultimate call on the taxpayer and it may just involve a facilitation guarantee that will be properly rewarded. The second is a mixed project, where a lot of accounting has to be done—as the Department for Transport is discovering, such projects are difficult to evaluate. The third is the pure public sector project, where we need to go into the departmental budget. So I hope that the Minister will give me some reassurances about this.

[Hugh Bayley]

I follow the argument that the right hon. Gentleman is making, although I do not necessarily share his conclusion. Health facilities are defined as one of the fields of infrastructure that this fund could be used to support. The recent health Bill showed that the Government favour more NHS services being provided by private contractors and private hospitals. Is he telling the Committee that he would be happy for this fund to be used to finance a private clinic or a private hospital, but not happy for it to be used to fund an NHS hospital trust?

[Mr Redwood]

I am not trying to say anything that contentious. I am trying to unpack what is going on in this clause, because we are in Committee. I was not going to presume to give my views on total public spending, because that is a matter for another day and another debate. I am trying to get the Committee to understand that we are dealing with three different types of project, and the health one is closer to the pure public sector project. Even if it is carried out in a private sector facility with some so-called “private sector risk”, all the patients will be paid for by the NHS if it is for the NHS and so it is a flow of public revenue. We have to account for it in the proper way and be realistic about that.

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[Mr Raynsford]

I said that I did not intend to engage in a debate on that subject. I believe that we need a great deal more housing in this country, but I will not engage with the hon. Gentleman in a debate about his constituency, which he knows much better than I do, and I certainly would not advocate extensive building on the green belt, which would be entirely inappropriate. I was simply drawing attention to the fact that the Secretary of State’s recent decision on planning, which came a mere three or four months after the national planning policy framework was put in place, withdrew many of the original localist hopes about allowing decisions to rest with the local authority and made it clear that he would refer items over the local authority’s head to the Planning Inspectorate. To me, that is not localism, but let us leave it there.

I tabled the amendments simply to try to get clarity and focus on the uses and application of the Bill. As drafted, it is incredibly broad. I do not object to the definition set out in clause 1(2), but the definition in clause 1(3) states:

‘“Provision” includes acquisition, design, construction, conversion, improvement, operation and repair.’

As the right hon. Member for Wokingham (Mr Redwood) pointed out, subsection (4) defines financial assistance as covering a whole range of activities, including

“loans, guarantees or indemnities, or any other kind of financial assistance”.

In theory at least, that definition would allow the Government to offer a guarantee literally on the repair of a door in a school or prison. Although that work might be entirely necessary and desirable, it is clearly nonsense for the provisions in this Bill, which are designed to allow major infrastructure schemes that are stalled for financial reasons to proceed. That is the purpose of the Bill.

[Hugh Bayley]

I am following my right hon. Friend’s argument. I am slightly concerned about how he would define “national significance”. I can think of a number of important infrastructure projects in my region that could be described as being of national or regional significance. For instance, would dualling the A-road that goes around York be seen as nationally significant? Flood defences, a matter that I hope to raise later if I catch the Chairman’s eye, need to be designed on a region-wide basis. Would my right hon. Friend regard flood defences as being of national significance—if they affected the Thames, perhaps?

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[Ian Swales (Redcar) (LD)]

I shall speak briefly against amendment 1, which would have the effect of limiting the definition of infrastructure to the items listed. That could mean that key elements of economic infrastructure would be omitted. We have already heard reference to broadband and flood defences, but I am thinking in particular of the installation of carbon capture and storage networks, such as the one proposed for Teesside, which already has strong private sector support.

Those networks will be vital for future economic growth and that type of investment must be included in the scope of the Bill. I would welcome clarity on that from the Minister and I ask him to consider adding such schemes to the list. Having said that, I accept the excellent inputs from my right hon. Friend the Member for Wokingham (Mr Redwood) and my hon. Friend the Member for Reigate (Mr Blunt) on the need to limit how the Bill is implemented.

As a member of the Public Accounts Committee, I certainly do not want any suspension of proper process, judgment or value-for-money assessment of any project that comes through under the Bill.

[Hugh Bayley]

When we discussed the Bill on Second Reading on 17 September, I had no idea that just one week later the River Ouse was going to rise 5 metres higher than its normal summer level and put York once again in the national and international news as a flood-prone city. I am glad to say that the emergency was well managed by the local authority, the Environment Agency, Yorkshire Water and the police, who led the silver and gold command, of course.

The consequence was far less dramatic than 12 years ago, when the Ouse rose just 10 cm higher—about 4 inches, for those who are metrically challenged. On that occasion, some 230 homes were inundated. Some homes were affected this time, but the damage was much lower, in part as a consequence of investment in flood defences and other flood alleviation schemes.

Hard flood defences have been built in the city of York to provide better protection for houses flooded during the previous high flood 12 years ago. Other alleviation measures have also been taken upstream. There has been funding to encourage farmers to build ponds—in one case, a major dam that stores millions of gallons of water during a high-flood event—and to plant more trees to slow the run-off so that the peak height is a few inches lower than it would otherwise be. I have asked the Environment Agency to calculate whether those measures made the 4 inches of difference between this occasion and 12 years ago, so preventing hundreds of thousands of pounds’ worth of damage to hundreds of houses and commercial businesses, as happened then.

I should stress that throughout the flood, 99.9% of York was open for business. It gets a bad press whenever there is a flood because journalists are lazy and know that a pub called the King’s Arms in York floods four or five times a year, and it is as easy as pie to get a picture of somebody in waders pulling pints behind a bar. When people see such photos, they need to realise that York is up and running and not closed for business.

On Second Reading, I posed the question of whether the list of types of infrastructure in the Bill would include funding, or support through loan guarantees, for flood defence schemes. The Economic Secretary took advice between hearing my remarks and replying to the debate. He said:

“I am advised that there is no reason for them”—

that is, flood defences—

“to be excluded, and we envisage their being part of the infrastructure that is being considered.”—[Official Report, 17 September 2012; Vol. 550, c. 747.]

Since the Economic Secretary has had an opportunity to consider the matter a little further in the weeks since Second Reading and was notified by an amendment that I tabled, which has not been selected, that I would raise this issue, will he go slightly further and reassure me and other hon. Members representing constituencies with considerable flood risk that it is not that there is no reason for such schemes to be excluded, but that they will be open for consideration if it is deemed appropriate?

I say to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), whose knowledge about these matters is enormous and whose judgment I respect—I normally consult him about matters of housing, planning or infrastructure—that I would be concerned if we limited the schemes to those of national significance. Some of the infrastructure that badly needs investment is important and will help to generate economic growth. Flood alleviation schemes, for instance, can support economic output by keeping businesses open and avoiding diverting expenditure to repairs when the funding could instead go to a future profitable investment that would generate a return.

I caution against limiting investment to matters of national significance. My right hon. Friend makes a telling point about the school door, but many schemes of local or regional, rather than national, significance ought to be candidates for consideration for the funds provided in the Bill. When the Minister responds, I hope that he will say something further about flooding and give an assurance that although we ought to be supporting schemes of national significance with this fund, we should not limit it to supporting such schemes and it should be open for the support of other schemes of local or regional importance.

[The Economic Secretary to the Treasury (Sajid Javid)]

We have heard excellent contributions from Members on both sides of the House. The shadow Minister rightly noted that the time for the debate has been restricted. That is not unusual when we first come back after a recess, but he made a fair point. However, I was taken aback when he then went on about many different issues that did not much focus on the nature of his amendments, as he could have saved some time for hon. Members to continue with a proper debate.

On the Opposition amendments, amendment 11 is designed to limit the Bill’s geographical ambit. My response is that it is clear that the scheme relies on the spending cover provided by the Bill and is designed to facilitate and accelerate infrastructure investment throughout the United Kingdom economy. The eligibility criteria have been published. For example, the guarantee scheme contains provisions requiring the infrastructure to be of national significance to the UK. Such conditions will be sufficient to achieve protection against the UK supporting other economies. If I understood the hon. Gentleman correctly, he was concerned about the potential effect on economies outside the UK.

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[Simon Hughes]

I shall make one short point and then give way.

The other really important thing—this is the purpose of new clause 3—is that we should require due diligence to be carried out in the same way as we require it for money-laundering prevention. The trouble is that it is not done properly and is not effective.

[Hugh Bayley]

On a point of order, Mr Gale. I apologise for interrupting the hon. Gentleman. Surely, the point of a Committee stage is to allow a Bill to be considered at greater length and in greater detail than is possible on Second Reading. Owing to reasons beyond your control, Mr Gale, we have less than half the time for debate in Committee that we had on Second Reading. We have not yet finished clause 1. All the other clauses will go unconsidered in Committee. Would it be in order, Mr Gale, for you to make a report to the Chairman of Ways and Means about how this Committee stage went, so that he and the Panel of Chairs can consider whether it is appropriate for us to have such short Committee stages on the Floor of the whole House?

[Temporary Chair (Sir Roger Gale)]

The Chairman of Ways and Means will undoubtedly read what the hon. Gentleman has said, but the proceedings are in order according to the programme motion agreed by the House.