Infrastructure (Financial Assistance) Bill

Roberta Blackman-Woods Excerpts

Monday 17th September 2012 Commons Chamber

[Danny Alexander]

The hon. Gentleman, with the greatest of respect, has misunderstood the Government’s message. Part of the guarantee programme will extend the benefit of Government guarantees to housing associations, to enable an additional 15,000 affordable properties to be built. That is why it has been welcomed by the National Housing Federation, which speaks for housing associations in this country. Housing associations recognise that they will benefit from the guarantee, because it will reduce the cost of finance and help them to build many more homes for the sadly limited amount of money that is available to this country at the moment.

The plans are also supported by the Home Builders Federation, which said:

“Government now clearly understands the constraints on delivery and has outlined action to address them.”

The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and geographical regions; to moving away from an economy focused exclusively on the south-east of England, which is reliant on financial services and unsustainable debt, towards an economy supported by a wide variety of industries across the United Kingdom; and to making the UK one of the best places in the world to do business, attracting foreign investment and promoting our exports. To achieve that vision, the Government are committed to delivering world-class infrastructure, thereby giving firms access to the communication and transport networks that they need, wherever in the UK they happen to be.

[Roberta Blackman-Woods (City of Durham) (Lab)]

Will the right hon. Gentleman give way?

[Danny Alexander]

I am going to make some progress, but I will come back to the hon. Lady.

We want to allow Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map for delivering on that vision. There is a pipeline of £200 billion of upcoming investments in major necessary projects, most of which will be delivered through the private sector. In addition, we want to see billions of pounds of investment in housing and infrastructure to support our public services.

Even in more favourable circumstances, raising the private finance that is necessary to deliver on those goals would be a challenge. Given the disruption caused by the instability of international markets and the eurozone, and its adverse effect on capital markets, it is clear that decisive action is necessary to enable these projects to be delivered. The Bill will allow us to take that action and to bring forward the investment that is required.

[Roberta Blackman-Woods]

Will the right hon. Gentleman explain why it has taken so long for the Government to recognise that additional investment in infrastructure is needed if the economy is to grow?

[Danny Alexander]

Again, I do not agree. By looking at the way we use capital moneys across Government, the decisions we took in the 2010 spending review have enabled us, for example, to devote more capital moneys to the Department for Transport for investment in our transport infrastructure over these four years than our predecessors were able to devote over the previous four years. The same could also be said of communications and broadband infrastructure. This Bill is a major development along that road. Labour could have put in place a guarantee scheme at any point in the previous 13 years, but it chose not to.

--- Later in debate ---

[Roberta Blackman-Woods (City of Durham) (Lab)]

It is always a pleasure to follow the hon. Member for Suffolk Coastal (Dr Coffey), but I am afraid that I do not share her lack of recognition of the value of investment made by the previous Labour Government or her optimism about this Government.

I am pleased to be able to participate in this debate, even though the Bill is overdue. The Government seem to have come very late to the idea that we need investment in infrastructure if the economy is to recover from a double-dip recession. I must remind Government Members that the double dip of the recession was caused by the failed economic policies of their parties and their Government. Having come late to the realisation that investment in infrastructure is necessary, will their Bill deliver what is needed?

We know that the Government are trying to rush the Bill through as fast-track legislation. Surely this is a panic measure. When the economic recovery is nowhere to be seen, the Government are trying to rush through the Bill to create the impression that they have a plan. That is further emphasised by the existence of the Bill itself; it is not entirely clear whether new primary legislation is really necessary to authorise such expenditure. It could be argued that the Bill is seeking to create an impression that the Government have a sense of direction, when in reality they do not.

The Bill as drafted raises a number of questions. It allows for financial assistance to be made available to a range of project types outlined in clause 1(2), but there is no guidance or indication whatsoever about how projects and areas of expenditure will be prioritised. The lack of guidance means that we have no idea, in a strategic sense, in which area the Government want to see investment. I am deeply concerned that the Bill and its consequences could fall into the same trap that has been set for the regional growth fund. There is no strategic direction to the investment in the RGF and, as we know, delivery has been incredibly slow—only about a third of round 1 projects in the north-east have actually received their money and we have no idea when some of the round 2 money will come through.

My right hon. Friend the Member for Salford and Eccles (Hazel Blears) highlighted in her excellent speech the problems with not addressing procurement issues. There are no such measures in the Bill and the absence of guidance means that we do not know whether any priority will be given to projects that demonstrate social value and that would enable jobs to be created in areas with high unemployment.

Clause 1(2)(c) notes that infrastructure includes health and educational facilities. Are we to understand from this that Building Schools for the Future projects, which are much needed in constituencies such as mine and which were pulled by this Government only two years ago, can now be resurrected? The same could surely apply to hospitals. If those projects are to be resurrected, how will local authorities go about doing so? There are a number of issues. Surely it is atrocious public policy to pull projects in 2010 and then seek to bring them back in 2012. It is also really bad economic policy.

Although the main thrust of the Bill is to underwrite loans to the private sector, clause 1(4) appears to sanction direct expenditure from the Treasury. Will the Minister clarify whether that is the case? What does he think the balance will be between guaranteeing loans and funding projects directly? We need that direct expenditure.

In my constituency, the number of claimants continues to rise month on month. The north-east is in particular need of investment, with a claimant rate in August 2012 of 7.9%, which is much higher that the UK average of 5.3%. We need good-quality infrastructure projects in the north-east because of its high levels of unemployment and because of the high level of job losses in the public sector.

The Prime Minister pledged that his Government would go on an “all-out mission” to get infrastructure projects under way, and the Chancellor promised to lay the foundations for future economic success, but unfortunately this Government have so far not delivered on their promises. The Chancellor said in his autumn statement that there would be £20 billion in new investment from the UK’s pension funds, but a year later there are no signs of the infrastructure we were promised or of the economic growth that we were told it would create. When challenged on their failure to carry through their promises, the Government admitted that only a small amount of investment would come from the UK’s pension funds and that the rest would be left to the private sector. Even that investment will not start until next year.

It is also not clear how much of the promised support will go into housing. The number of house building starts fell by 24% between the second quarter of 2011 and the second quarter of 2012. As well as having a negative economic impact, that will have worsened the housing shortage in many areas, including in my constituency.

The most recent construction market survey by the Royal Institution of Chartered Surveyors, which is for the second quarter of 2012, shows that infrastructure work loads in the north-east declined by 11%. That lack of investment can be seen across all sectors and across the UK. Similarly, public sector gross investment fell by 29% between 2009-10 and 2011-12. I am concerned about this matter because the north-east has seen the greatest drop in jobs in the construction sector, with a massive 30% loss. There have been job losses across the country, but the 4% loss of jobs in London contrasts very well—or very badly, depending on how one looks at it—with the loss of jobs in the north-east.

If the many stalled regeneration projects in my constituency are to start again, what we need from the Government is direct investment, and quickly. More than 2,000 young people in my constituency are out of work. That simply does not make economic sense. It is also a dreadful loss of talent. People who are leaving our universities with degrees in civil engineering are not able to apply their skills in infrastructure projects. It is time that the Government stopped using words and started taking action.