Infrastructure (Financial Assistance) Bill

Debate between Sajid Javid and Stephen Phillips

Monday 15th October 2012 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Is not the real point that the Government are taking action? Does my hon. Friend agree that it is that action that is important? We do not necessarily need to consider what the measures of success might be in the future, as the real point is that the Government are actually doing something, unlike the previous Government.

[Sajid Javid]

As always, my hon. and learned Friend makes a fantastic point and I agree wholeheartedly.

The Government have agreed in principle, and subject to strict approvals criteria, to make financial support available to infrastructure projects, using the strength and credibility of our balance sheet to support the investment we need. The Treasury and the Secretary of State already have common law power to issue guarantees, make loans, and give other financial assistance. In addition, in some cases, Secretaries of State have express statutory powers to support infrastructure. However, the Treasury does not have authority to incur expenditure in relation to guarantees on the scale that I have outlined. Moreover, Members will know that there is a long-standing convention dating back to 1932 that Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. So, to achieve the crucial level of financial support required for key infrastructure projects, we need new primary legislation.

The legislation authorises the Treasury and, where appropriate, the Secretary of State, to incur expenditure for providing financial assistance. The Bill will allow the Government to support crucial investment in key areas of economic and public service infrastructure. That will include utilities, such as energy and telecommunications; transport, such as railways and roads; infrastructure to provide public services, such as hospitals and schools; and housing development to deliver much-needed homes. We estimate that up to £40 billion of investment in infrastructure and an additional £10 billion in housing investment could be accelerated under the UK guarantee scheme using the powers in the Bill. Importantly, we will put in place strict guidelines and eligibility criteria for the schemes to protect the taxpayer and ensure the Exchequer does not take on unacceptable fiscal risks.

In Committee, I was asked about application time frames. Let me clarify that the time frames are detailed in the scheme rules, not in the Bill. Any proposal that receives an infrastructure guarantee will, as a minimum, have satisfied the requirements to be nationally or economically significant; financially credible; good value for money for the taxpayer; not solely dependent on a guarantee to proceed; and ready to start construction within 12 months.

The projects we expect to back will be structured to minimise potential losses to the Exchequer, so there will be a minimal impact on public sector net borrowing as a result. The exception is under the extreme circumstances that a guarantee is called upon or other forms of financial assistance are provided. Furthermore, we will levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive and taxpayers receive a fair price for any risk being taken.

We have designed the UK guarantee scheme to ensure that critical infrastructure projects receive the investment they urgently require.