UK Infrastructure: 10-year Strategy

Lord Livermore Excerpts

Tuesday 24th June 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, like my colleagues in the other place I welcome this strategy, which if well managed can significantly improve the UK’s potential for growth. My colleague, the MP Sarah Olney, who responded to this Statement in the other place, focused very much on the absence of a serious discussion of skills in the paper. She did not get a very satisfactory answer. I hope that we will hear something more from the Minister today, because that is the Achilles heel of a great deal of this Statement. However, I am going to focus not on the specific projects or on the issues that were covered in the other place but on some critical aspects of the financing.

As the noble Baroness, Lady Neville-Rolfe, indicated, the strategy proposes an updated version of public/private partnerships. I was recently privileged to chair a round table. Under Chatham House rules, I cannot tell you who was there by name, but there were leading developers, contractors and, basically, the money. To my amazement, and completely in contrast to most public statements, everyone started out by arguing against such a flawed model. Through an hour’s discussion, we identified some conditions under which a PPP could work. I will happily share that report, when it is prepared, with the Minister. The most significant condition was that the public sector has to field an educated buyer team with world-class negotiating skills, with world-class engineering, legal and financial knowledge in support. According to the people we talked to, such teams have not been in evidence.

The second most significant condition was that the projects must be specified in very fine detail, far more so than for a conventional financing and, especially if outcomes-based, allowing only for minimal variances. This condition, which many people will agree is essential for successful PPPs, seriously limits the eligible projects. I would like to hear from the Minister how much of a gap this might mean if these issues are pursued, as I hope they will be.

My second finance issue is specific to London, which will not receive government funding for much new infrastructure, even though it drives the national economy. If that is to be the case, London needs to be able to go directly to the financial markets at scale, to raise money against future value added, to build projects—and without the constraints associated with the current tax increment financing schemes, which are heavily laden with Treasury control. Once refined, this could extend to other parts of the country. I stress the urgency of dealing with this issue. London is the UK’s golden goose.

My last issue is to warn the Government again against abusing the regulated asset base as a mechanism to finance small modular nuclear reactors. In the Conservative era, the estimate that we were given on the Economic Affairs Committee for the then Government’s plans was an £80 increase to annual energy bills for ordinary people—£10 for each of eight SMRs. It was clearly an underestimate then and would be even more so now.

Does the Minister agree that the ordinary bill payer must not be treated as the stuffee—believe it or not, that is the common-parlance term—who must carry the risks and costs while others take both the immediate and future profits?

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their comments and questions, and for their broad support and welcome for this strategy.

The noble Baroness, Lady Neville-Rolfe, began in her non-partisan mode, which I will try to replicate if I can. She talked first about the low rate of investment, and she is absolutely right. When we came into power, we saw the lowest rate of private sector investment as a share of GDP in the G7; we clearly have to turn that around. We saw public sector investment repeatedly cut, which is one of the reasons why we changed the fiscal rules in the way that we did, to incentivise capital investment and try to protect it from being cut to subsidise day-to-day spending. I am very grateful to the noble Baroness for her support for that investment and for the plan that is in front of us.

I am grateful to her for welcoming the maintenance fund. As we speak, there is a £46 billion backlog in the public sector maintenance of our schools, hospitals, prisons and courts. As part of this plan, we are putting £5 billion into the maintenance backlog for the NHS, £3 billion into our schools by 2030, and £600 million into courts and prisons. That is really important, so I am pleased that there is cross-party support for it.

The noble Baroness, Lady Neville-Rolfe, talked about governance and delivery capacity. I completely agree with her on the point about delivering value for money. Obviously, the strategy is not just about giving long-term certainty of investment, in terms of the numbers—she is quite right to say that—but what sits beneath them. The strategy is about trying to do things differently and to make sure that we get the strategic planning behind the investment that we are making.

That is the insight that sits behind the creation of NISTA, the National Infrastructure and Service Transformation Authority. It brings together under one roof infrastructure expertise combined with the policy and strategy insight of the National Infrastructure Commission and the delivery specialism of the Infrastructure and Projects Authority. Every two years, it will do a report into the delivery of this strategy. It will give Ministers real-time advice and expertise on specific projects. I hope that that goes a long way to solving some of the issues that the noble Baroness talked about.

The noble Baroness also talked about where the money is coming from. The announcements, as part of the spending review envelope, were fully funded and fully costed as part of that process and are within the current fiscal envelope. Beyond that, we have said that we will guarantee that investment spending will grow by at least inflation for the period beyond the spending view for a total of 10 years, which gives people certainty about the level of infrastructure investment that we are making.

The noble Baroness, Lady Neville-Rolfe, talked about PPPs, and the noble Baroness, Lady Kramer, also talked extensively about this. I agree with a lot of what she said and respect her great expertise on this matter. She talked about the criteria for success, and lessons clearly need to be learned from our previous experience of PFIs and PPPs. The Government are absolutely committed to that. There are several reports now available to us; the NAO’s lessons learned report, for example, provides vital information on what we can do differently and can do better.

The noble Baroness, Lady Kramer, said that, once you apply those criteria, it severely limits the number of projects for which you can use PPPs. To answer the question from the noble Baroness, Lady Neville-Rolfe, I do not think that this is about huge, widespread use. We clearly want a widespread degree of private sector capital coming in and financing infrastructure, and we want to continue to invest alongside the private sector and the private sector to step up and fund things.

We see a role for PPPs but in a very limited way and where their role will clearly be appropriate. We have said specifically that we will explore the feasibility of using new PPPs—learning lessons and applying the right criteria—for taxpayer-funded projects in very limited circumstances where they could represent value for money. We have given two specific examples where we think they could do that. One good example is Euston—the HS2 station—where we will investigate the use of PPP models for user-funded infrastructure. The other is the Lower Thames Crossing, where, again, we think there is the potential for the criteria that the noble Baroness mentioned to apply. There are a limited number of examples but those are two where there is a clear case to be made.

On housing, I completely agree that 1.5 million new homes is a stretching target. It absolutely remains our commitment and we think we are on course towards achieving it. We put a record amount of funding—the greatest for several generations—into social housing. The noble Baroness is clearly right that the potential occupiers want that housing now, which is why that funding has gone in. She wanted reassurance, and I can say that we firmly believe that we are on course towards that housing target.

Both noble Baronesses talked about skills, and I completely agree. It is good that we are in the spirit of consensus and cross-party thinking here. Obviously, with these commitments, it is absolutely right that we need people to build the things that we want built. Clearly, we can always do more, but we have made a strong start. We have made a record commitment to invest in skills—£1.2 billion of additional investment per year by 2028-29 to support current and future workforce needs.

I know that we are in a cross-party mood, but I have to reflect the fact that the degree of underfunding that we inherited was substantial. We had to put in significant amounts of money—billions of pounds—just to stand still and just to plug the gap that existed between needed provision and the funding that was there. Having to plug that gap limits the extent to which we can move forward.

However, we have provided funding to support over 1.3 million 16 to 19 year-olds to access high-quality training—some 65,000 additional learners per year by 2029. The spending review has delivered £625 million to train up to 60,000 construction workers. In the industrial strategy yesterday, we announced that we will introduce new short courses for priority skills as part of the growth and skills levy, continue to roll out foundation apprenticeships and deliver a targeted package for engineering skills. We have specific packages for engineering and construction, both of which are priority occupations in the infrastructure strategy and the industrial strategy.

How do we choose the investment? We always talk about growth, and I think noble Lords can see that much of this investment is targeted towards the sectors that will, I hope, really drive our growth agenda—transport, energy and housing just to name three.

On the questions about London from the noble Baroness, Lady Kramer, I cannot give any commitments today on the future financing model, but I completely share her support for London and her reflection of it as the golden goose. Future investment in London will be central to driving the economy.

[Lord Wigley (PC)]

My Lords, I join the cross-party consensus on the issue of skills. The Minister referred to the 16 to 19 year-old skills requirement age group. Does he also accept that, if we are going to successfully get investment into sectors such as the energy sector, which is a key part of the development the Government have in mind, the university sector must also get the resources that are needed? In view of the cutbacks that have taken place in the university sector over recent years, can the Government, in co-ordination with the devolved Governments in Cardiff and Edinburgh, look particularly at this sector in order to get the resources in? We need action now. It will take three to five years before those people come out the other end, and we need them desperately to drive the scheme forward.

[Lord Livermore (Lab)]

I completely agree with what the noble Lord said about the importance of that sector. He mentioned the example of the energy sector and, as I said, we have, in the industrial strategy, made an investment into engineering skills, which are particularly important in that sector. I hear what he is saying and we will keep driving towards what he wants us to achieve.

[Lord Birt (CB)]

My Lords, the Minister may recall that I spent six years at No. 10 as Tony Blair’s strategy adviser. I spent a year of my time there, with the team of officials, looking at national transport infrastructure—road and rail. We quickly identified that we have by far the worst road and rail infrastructure of any major country; it was very easy to demonstrate. We went further and looked back—I cannot recall the precise term; I think it was 70 years, although it might have been slightly less—at national investment in infrastructure of all kinds over that period. It was the same story: we spent a smaller proportion of our GDP than any major country. Under both main parties, again and again, on every occasion when the economy went into slight reverse, national investment in infrastructure was cut back. Will it be different this time? Does the Minister know what proportion of GDP over this 10-year period is implied by this plan? If he does not, perhaps he will write to us.

[Lord Livermore (Lab)]

I can definitely say yes to one of the noble Lord’s questions, which I am pleased to be able to do. He talked about making sure that this investment is not cut back according to the economic weather, as it were. I completely agree with what he said about how previous Governments did that. That is why the fiscal rules are as they are. That creates the space to ensure that capital investment can continue and is not used to patch up day-to-day spending. That is important for us to appreciate.

The noble Lord is absolutely right that there has been too little investment in transport infrastructure in the past. We have talked before in debates such as this about the importance of connectivity to economic growth and the agglomeration effects that you get from joining up cities with each other, and joining up towns to cities. This ensures that people can live close to where they want to work and can travel to work and, on the skills conversation we have just been having, gets skills into the right place. There are huge growth benefits from transport spending. Some of the money that we are putting in—£15.6 billion into the city regions, £2.3 billion for the local transport grant and £2.2 billion of funding for Transport for London—is vital to what we were just saying. On the percentage of GDP, I do not have that number to hand, but I will write to the noble Lord.

[Viscount Stansgate (Lab)]

My Lords, the Government’s 10-year infrastructure strategy, and the industrial strategy published yesterday, are essential for future growth. If I had to single out one item in the 10-year strategy, it would be to develop our sovereign compute capacity for the future. I am a member of the Science and Technology Committee of your Lordships’ House, which is looking right now at the problems of scaling up science and technology companies. Can my noble friend the Minister assure the House that the National Wealth Fund will be able to provide vital early-stage development support for companies, because we want them to scale up in Britain for the benefit of Britain?

[Lord Livermore (Lab)]

I am grateful for what my noble friend said. I share his enthusiasm for what we are doing in the innovation landscape, such as putting a record high of £22.6 billion into R&D as part of the spending review. It is exciting that yesterday the industrial strategy talked about allocating £2 billion for AI and £2.8 billion for advanced manufacturing. This is all incredibly important.

What my noble friend said is absolutely part of what the National Wealth Fund is for. My noble friend talked about start-ups and scale-ups. The British Business Bank now has a total financial capacity of £25.6 billion, which will result in a two-thirds increase in support for innovative UK businesses compared with 2025-26, crowding in tens of billions of pounds more in private capital The National Wealth Fund will play that role, but so too will the British Business Bank. That was one of the key announcements in yesterday’s industrial strategy.

[Lord Harrington of Watford (Non-Afl)]

My Lords, I shall do my best to comply with the spirit of cross-party consensus day. I should first declare from the register that I am chairman of Make UK, which has more than 20,000 member companies in manufacturing and infrastructure. I commend the Government on this 10-year infrastructure plan and yesterday’s industrial strategy because I did a review for the previous Government on foreign direct investment. Lack of consistency of policy was the number one item, and the others were connection to the grid, planning and other delays.

I want to ask the Minister about monitoring implementation. For the main industrial strategy, the Government have quite correctly set up an industrial strategy council where each sector—life sciences, advanced manufacturing, et cetera—has groups to monitor the implementation of the industrial strategy. The infrastructure plan is very complex; it includes skills, access to finance and, of course, energy and very large things. What mechanism will be used to independently monitor its implementation?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for the positive things that he said. I pay tribute to him and to Make UK for the work that they do. Clearly, the skills conversation that we just had is vital in that sector. Make UK always makes the point to me about the vital importance of engineering skills, so I hope that that is welcome.

The noble Lord did indeed do his review into foreign direct investment. I hope he does not think that it was just for the previous Government; we still talk about it now in this Government. A lot of the recommendations that he made in that review are things that we have been trying to take forward in this Government. That is a good example of the cross-party working that we have been discussing today.

The noble Lord is right that the industrial strategy will be taken forward by the industrial strategy council; that will be put on a permanent footing, which I think is important. His question is about the equivalent for this strategy. That is the National Infrastructure and Service Transformation Authority—NISTA—which I was talking about. It will monitor the strategy and help the Government to implement it. It will do two-year refreshes of this strategy to make sure that it is up to date and doing what it needs to do. Crucially, it will provide real-terms advice to Ministers when it comes to individual projects to make sure that we have the expertise that we need at our fingertips to be able to implement them.

[Earl Russell (LD)]

My Lords, we on these Benches very much welcome this report. Of course, after decades of underinvestment, it is essential to ensure that our country can operate appropriately.

I will ask the Minister about infrastructure and adaption and resilience to climate change. Our climate is changing before our very eyes. In a number of places in this report there are vague promises to do things, not firm commitments. To pick up one example, although we welcome the £7.9 billion of capital for a new 10-year flood investment programme, the report says that the Government will merely “explore” setting a long-term, multiyear target for flood risk management in line with prior recommendations made by the NAO and the NIC. Will the Government go further on these things, recognise the speed at which climate change is happening, and put more effort into ensuring that we have the best policies in place?

[Lord Livermore (Lab)]

I agree with the noble Earl on the importance of investment in net zero and measures to tackle climate change. From a growth perspective, it is not one or the other for those investments; they go hand in hand.

I do not quite agree with the noble Earl’s view on the vagueness of these commitments. We are putting real money behind real projects: £14.2 billion into nuclear; £9.4 billion into carbon capture and storage; £80 million of investment in ports to support floating offshore wind; and £13.2 billion for the warm homes plan. This is a huge amount of investment into real concrete action to move us forward. We were talking before about getting people on to public transport—for example, in relation to take-up of EVs. Action is going on across the board on the measures that he talked about. I am grateful to him for his support on that.

[Lord Dodds of Duncairn (DUP)]

I very much welcome the strategy that the Minister relayed to your Lordships’ House. However, I refer him to the decision yesterday in the Northern Ireland High Court, which struck down the Northern Ireland Executive’s major flagship project from the Department for Infrastructure—a £1.7 billion upgrade to the A5 to save lives and improve economic connections throughout Northern Ireland and with the Irish Republic. It was struck down because it was contrary to another part of the Northern Ireland Executive’s overall strategy programme for government. Is this something on which the new NISTA, which sits within the Treasury, could assist the Northern Ireland Executive? They certainly need help from somewhere if they are going to be able to deliver major infrastructure projects in the light of this very serious judgment.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for the question and for bringing that to my attention—I did not know about that decision. I will very happily go away and look at that. We have tried to engage extensively with the devolved Governments to ensure that there is strong alignment between the strategy and what they are doing. We will continue to do that as we move into implementation, for example through the Council of the Nations and Regions. I am happy to go and talk to my colleague the Chief Secretary about how NISTA can play a role to secure that. We have put substantial amounts of capital investment into Northern Ireland as a result of the spending review. Clearly, we want to make sure that that is spent in the right way and achieves the right objectives, so I will very happily take that back for him.

[Baroness Young of Old Scone (Lab)]

My Lords, I welcome the Statement from the Minister about a much more joined-up and rational approach to infrastructure. It has been long called for and is very much welcomed. I also welcome NISTA’s commitment to ensuring that infrastructure developers are going to take account of biodiversity protection and delivery. I was delighted when NISTA’s predecessor discovered climate change, and the fact that it has now discovered biodiversity is even more welcome.

I also am very pleased to see that the Government are committed to the land use framework approach to spatial issues. But a fair number of existing infrastructure schemes are already in progress and decisions are being made on a day-by-day basis, and government departments across the piece are now preparing spatial strategies of all sorts. We have housing spatial strategies, transport spatial strategies, energy spatial strategies—everybody has a spatial strategy, but we have not yet got the land use framework in place that gives them join-up and integration. So when do the Government intend to make their hand clear on the land use framework approach? I am concerned, as I said, that by the time it arrives and is then implemented at national, regional and local level, it will be too late for many of the decisions on infrastructure that are currently being made.

Secondly—and more of this anon, tomorrow—in my view, the Planning and Infrastructure Bill does not take a sufficiently clear approach to a land use framework approach. In fact, any concept of land use framework is singularly absent in the Planning and Infrastructure Bill, which seems not to be as joined up as this admirable strategy is. Perhaps the Minister would care to respond on that.

[Lord Livermore (Lab)]

I am grateful to my noble friend for her support for NISTA and the spatial planning elements of that. I do think that the spatial side of that is really important, as she says, to make sure that infrastructure is not just built in isolation but focuses on building communities and looks across the piece and integrates national, regional and sector-level planning. I do not have any news for her today on the land use framework, and I certainly hear what she says about the Planning Bill. I do not have anything to add today to what is already known, but I will make sure that, when we do, she is one of the first people to know.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the Government on bringing forward the 10-year strategy. It has managed to put a smile on the Minister’s face, which is very welcome indeed. In the interests of transparency and clarity, can I ask him what the route for the trans-Pennine route upgrade will be and what consultation there will be? There seemed to be some confusion in an interview last week from the Minister responsible as to what the route would be. It would be very helpful to know. It will be a very welcome upgrade. I regret that it has not taken precedence over HS2 or HS3, but we are where we are. Also, can he comment on the implications of clean energy? To be fully understood, it is going to take 10% of farmland and 10% of fisheries out of production. Have the Government considered what the impact on farming and fisheries is going to be?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for the smile; it is always most welcome. On the route of the trans-Pennine route upgrade, she spoke about the importance of transparency. I think the best thing will be to write to her and set it out in full, so that there is no misunderstanding.

In terms of farming, I hope she welcomes the £2.7 billion per year in sustainable farming and nature recovery. I think that is a very substantial investment in the things she spoke about.

[Baroness Bennett of Manor Castle (GP)]

My Lords, there have been a number of references to NISTA, the National Infrastructure and Service Transformation Authority. The Statement says:

“Based in the Treasury, NISTA brings oversight of infrastructure strategy and delivery together, and integrates assurance, design and delivery assessments”.


The Treasury is not the expert in transport, energy or social housing infrastructure. Many Members of your Lordships’ House often lament the dictatorship of the Treasury over other government decisions. Is this not a further concentration of power within one department in government, when actually we need the people with the expertise and knowledge to have the oversight, not this concentration in the Treasury?

[Lord Livermore (Lab)]

Well, the noble Baroness might not expect me to agree with her on that; I think the more Treasury, the better, from my point of view. So, no, I disagree with her, but of course NISTA is there to work for the whole Government and not just the Treasury. It has to be based somewhere and it makes sense for it to be based in the Treasury, given the Treasury’s responsibility for the 10-year infrastructure strategy, which it will be overseeing. Of course, NISTA’s expertise will be available to Ministers right across government.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, I congratulate the Treasury on this plan, which is well thought through. If the economy is going to grow, we have to ensure that public investment grows faster than public consumption. That is reflected in the Government’s plans. But, like my noble friend Lord Birt, I worked for Governments of both main parties who announced investment plans with great fanfares and good intentions, only to jettison them the first time they got into difficulty. That happened in 1976, 1992, 2008 and 2016. The Minister mentioned that fiscal rules this time will see us right but, as he knows, fiscal rules come and go. Can he assure the House, especially the sceptics among us, that, should the Government get into financial difficulties, they will protect investment, even if that means bearing down on public consumption?

[Lord Livermore (Lab)]

I am grateful to the noble Lord—I was going to say “my noble friend”—for his question. The fiscal rules are non-negotiable, as he will know. We have put them in place for exactly the reasons he described. Too often in the past, public investment has been cut to patch up holes in day-to-day spending. The reason we are setting out this 10-year plan now is to give certainty and stability to the investment horizon, and we will protect that investment going forward.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I will briefly go back to a subject I have raised several times with the Minister before—PPPs. I welcome pages 44 and 45 in the report, and I also share the interesting views expressed by the noble Baroness, Lady Kramer and look forward to the report that is coming. I am content to leave the issues with the Treasury. Perhaps the Treasury might expand its vision a little bit wider and, when we come to review the future PPPs, we might think about involving the public in them and not limiting private investment simply to big capital. There is money around among the public. People are prepared to invest. We ought to be more open-minded about it and perhaps look at some of the experiences of the past. There will be money there for us and it will be committed.

--- Later in debate ---

[Lord Livermore (Lab)]

I am grateful to my noble friend for his support for this. I am pleased to give him some good news as part of this, because I know he has spoken extensively about the use of PPPs and is a strong advocate for that. As I said, the Government will explore the feasibility of using new PPP models for taxpayer-funded projects in the limited circumstances I talked about. As NISTA’s work goes forward and develops these new PPPs, it will be through engagement with departments and industry. I hope some of that engagement will include the groups my noble friend referred to.