Infrastructure (Financial Assistance) Bill

Debate between John Healey and Kelvin Hopkins

Monday 17th September 2012 Commons Chamber

[John Healey]

My hon. Friend is right, and I hope that he gets a chance to make a speech. I will move on in a moment to some of the changes in policy and cuts since the general election that have made infrastructure projects and that sort of investment harder, not easier.

There are big causes for concern behind the two big questions I mentioned. First, there are questions and concerns about speed and how serious the Government are about getting infrastructure work going. It is almost a year since the Prime Minister promised

“an all-out mission to unblock the system and get projects underway”.

It is almost two years since the Government published their first national infrastructure plan and almost two and a half years since they set up Infrastructure UK in June 2010 in the Treasury. Most seriously, since the Government’s second infrastructure plan in November 2011 the economy has shrunk by nearly 1% and Britain has become one of only two G20 countries in a double-dip recession.

On the point of concern about clarity and simplicity, the Infrastructure Investor journal recently conducted a survey of 200 industry investors. Lack of finance, poor regulation and procurement weakness are all problems they face, but some 60% said that confusion and lack of clarity from the Government are a far greater disincentive. What matters most is confidence in the pipeline of projects, often based on clear Government policy decisions and commitments. The Government are failing that test over big projects and policies such as High Speed 2, aviation capacity and power generation. Their record on other policy decisions that at first sight have nothing to do with infrastructure is also making it harder to put in place the funding required. The abrupt change and then change again in the solar feed-in tariffs, the benefits reforms and cuts, the tripling of student tuition fees, creating “core and margin” university course places, and the rebanding of renewables obligation certificates have all changed the risks and the costs of long-term capital—so much so that a senior figure in the industry recently said to me: “Investors are now asking for the first time how you can price in public policy risk.” The guarantee scheme needs to be flexible and straightforward. The devil is in the detail, and Government revel in the detail. Is every Department going to introduce and run its own scheme with its own rules? Who in Government will be accountable for the programmes and the problems on the guarantees?

On housing, let me take issue with the hon. Member for Reigate, because the Chief Secretary and the Government are right and he is wrong. I welcome its definition as infrastructure. It is basic to people’s lives and to a good society, and central to wider economic growth and to productivity. Above all, it is a long-term good. We are still getting rent from Bevan’s post-war council housing a long time after the cost of the capital to build them has been paid.

I am looking to the Government for reassurances on four questions, especially in relation to housing. First, the Chief Secretary said that he did not want to prescribe and would not circumscribe the stages of projects that credit guarantees can support. The Treasury has said that guarantees can cover key project risks including construction, performance and revenue risk. Will that apply equally to housing as to the other categories set out in clause 1(2)? Secondly, some housing associations already have a presence in the capital markets and can raise finance in their own names, so will such organisations with significant project proposals be able to push ahead without the creation of any intermediary or aggregator?

Thirdly, the best housing developments are mixed and help to support mixed communities. The Government have said that the guarantees will support private and social housing. Will those building new homes be able to source guarantees for both sectors from the same fund scheme? Fourthly, I expect that security requirements will be part of the arrangements for the borrowing guarantees. Will developers building homes be able to provide the security on completion of those homes rather than in advance? If the Government want these guarantees to work, and to work rapidly, to boost housing, jobs and the economy, they need to provide answers and reassurance on all four points.

The Chief Secretary mentioned the 1932 Baldwin agreement, which emphasises that where financial liabilities that last beyond the term of one Government or one financial year are introduced, they should be backed by specific legislation. I believe very strongly that improved long-term infrastructure should be a shared endeavour of all parties, because infrastructure projects do not fit neatly within the political cycles and are damaged by the chopping and changing of Government policy.

[Kelvin Hopkins]

On my right hon. Friend’s point about infrastructure investment covering more than one Government and different parties, there was a time, when I was young, when Conservative and Labour Governments used to compete on the number of council houses they could build during their term of office. We should get back to that kind of arrangement.

[John Healey]

I do not think I have ever heard my hon. Friend advocate competition in any circumstance on any policy before, but I am happy to say that he is right, and I support him. I hope that we may get back to those days. Just before the election, when I introduced the local authority new-build scheme, which boosted and supported local council housing for the first time, we had very strong bids and very strong support from 73 councils, including many Conservative councils that wanted to build council homes but were not, until then, getting support from Government to do so. They are certainly not getting that support now.

Since the election, this Government have done too little for too long on new infrastructure. This Bill could make an important difference. It deserves all-party support, and the Government will get it if they get this right.