Infrastructure

Sheila Gilmore Excerpts

Tuesday 12th February 2013 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the right hon. Gentleman concede that during much of the Labour Government’s period in office a good deal of debt was repaid? That was one of the things that was done, and in my constituency people can point to new schools and new buildings, so there is something to be seen. Is that not the case in his constituency?

[Greg Clark]

The hon. Lady seems to be unaware of the fact that under the last Labour Government the national debt almost trebled. That is the legacy that they left and with which this Government are dealing. Over 13 years, they borrowed so much they left us with a deficit that was as big as that of Greece, and bigger than that of Spain, Portugal or Italy.

We would think that there would be something to show for all that money spent. We would think our roads, railways and power stations would be at least as good as those of Spain, Portugal and Italy. That, at least, would be a consolation prize: modern, up-to-date national infrastructure available to support British business and help us to generate the billions of pounds we need to pay off the deficit and reduce our debts.

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[Greg Clark]

There is a Government of the Welsh Assembly led by the hon. Gentleman’s party. I commend the example that we have put forward in this country. Our close working with each of the leaders of the eight cities has achieved very encouraging results to date. I dare say the hon. Gentleman can go back to Wales and commend that to his colleagues.

The way that investments can be financed has also been transformed for the better. Labour saddled future generations with PFI debts of £279 billion, of which less than £40 billion has been paid off, and which cost at least five times and often more than the original project cost of the underlying investment.

[Sheila Gilmore]

Will the Minister give way?

[Greg Clark]

I have given way to the hon. Lady.

Our programme of infrastructure guarantees has made available £40 billion to underpin important projects, of which £10 billion of investments have already been pre-qualified only months after the initiative was begun. This will unlock vital investment, such as the £1 billion extension to the Northern line in Battersea. On energy policy, our reforms are driving investment in new capacity, not only in generation, but in energy efficiency and extraction. Our energy industry is now alive again—a new start after years of neglect under Labour.

All Governments are stewards of the country that elects them. The test of their stewardship is whether they leave their country better equipped and better prepared to prosper in the future through having taken the long-term decisions on which major infrastructure investment depends. In two short years, Britain’s reputation for infrastructure has been transformed. Having plummeted down the international league table of countries rated by their infrastructure, we are now climbing it again. The rest of the world has seen this country shaking off the torpor of the past. After more than a decade of inaction, we are once more laying the foundations of the future.

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[Sheila Gilmore (Edinburgh East) (Lab)]

It is very important to realise that investment in infrastructure works in boosting the economy. I want to give an example from Scotland that is about investment in housing, and I will start, but not necessarily finish, by praising something that the current Scottish Government did. At the beginning of the UK Government’s term of office, they took a decision to bring forward capital spending in order to boost the economy. They put some of that spending into housing, particularly affordable housing. As a result, for a brief period, they were able to increase the proportion of spending on affordable housing.

[John Healey (Wentworth and Dearne) (Lab)]

In the spirit of generosity to other parties, will my hon. Friend also commend the coalition Government for introducing the borrowing guarantees and earmarking £10 billion for housing, classifying it categorically as infrastructure for the first time? To make her point, I should say that every £1 million of public money that goes into house building generates 11 jobs.

[Sheila Gilmore]

My right hon. Friend makes an important point. The spending in Scotland enabled the Scottish Government to announce that unemployment was not rising as fast as in the rest of the UK, and they took great pleasure in that. Sadly, the situation has not been maintained, and we are hearing less of how wonderful the Scottish Government are at dealing with unemployment; at present, the opposite is happening. I would argue that one of the reasons is that the investment in infrastructure, particularly in housing, has not been sustained. The figures are stark. In Scotland, there were 7,915 new affordable housing starts in 2009-10; in 2010-11, the figure fell slightly to 6,460; and in 2011-12, it fell to 3,405—a halving in less than two years.

There is a consequence for the construction industry, its employees and unemployment in Scotland. The Scottish Government showed that such investment worked, but they have not been able to sustain it. They would probably argue that that is solely because of what has been happening at the UK level—investment in housing and in capital has been falling. They would be right to some extent, although I would add that they are not particularly interested in showing that the situation can be overcome. I suggest two ways in which they could overcome it.

First, the Scottish Government could use the tax-raising powers given in 1999 as part of devolution. They have not chosen to use those, although I think people in Scotland would be prepared for them to be used if they thought that the money could be invested as it was previously. They have also put a stranglehold on local government by having a five-year council tax freeze, which has meant that local government cannot make the choice to say to its local population, “We desperately need more housing. We will put up council tax so that we can borrow”—that is perfectly possible—“and build that much-needed housing.”

So there are ways in which the Scottish Government could continue with policies that for a brief period showed that investment in infrastructure boosts the economy and employment. I urge them to go back to doing that, rather than allowing things to deteriorate so that they can always blame London; that, I am afraid, is what they tend to do.

Some of the discussion is fascinating. If someone had fallen asleep in 1997 and woken up watching this debate, they would have wondered which party was talking. Government Members want to argue, “The last Government didn’t do anything on infrastructure and when they did, it was all this horrible PFI.” I seem to recall that PFI was not a Labour Government invention, but was enthusiastically put forward by the preceding Conservative Government. I am interested to know when that conversion happened. We can get that sort of investment better, but my city is a lot better for some of the public-private partnerships that we put in place—the schools that were built and the investment that was taking place.

A lot of things seem to happen in Scotland first these days, which are then followed, not always for the better, here. In 2007 a Scottish Government of a nationalist persuasion took over, and in my city a Lib Dem-Scottish National party council took over. They both decided that they did not like public-private partnerships and so would instead come up with some magic way of creating these investments. As a result, not one new school was started in the five years of that Lib Dem-SNP administration—not one. Several were finished, and councillors were very pleased to go and open them and have their name put on the opening plaque, but those schools had been planned and funded through PPPs. We seem to have undergone a miraculous conversion at some point—I am not quite sure when—but we have not come up with anything that really works in its place.

I call in support of this argument none other than the Mayor of London, who is quoted in tonight’s edition of The Evening Standard as calling for a £1.3 billion investment in housing in London. Perhaps the Government would like to listen to a mayor of their own political persuasion.

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

I am grateful for the opportunity to conclude this debate.

I have listened with great interest to the 11 Back-Bench contributions in the Chamber this afternoon. This is clearly an issue about which many Members feel strongly. It is also an issue that Members on both sides of the House seem to agree on in many ways. Both sides want to see a UK with world-class infrastructure and both sides recognise the importance of improved infrastructure for the nation’s economic future.

However, only one party ruined the UK economy after 13 years in government, hugely damaging the UK’s ability to invest in the very infrastructure that we all care about. It was the party that tabled the motion. That same party left the UK with the largest budget deficit in the G20. [Interruption.] Labour Members say that we should look forward. It is no surprise that they want the country to look forward, because they do not want us to remember their legacy, but the country must remember. They left a budget deficit higher than 11% of GDP. They borrowed £159 billion in their last year in government—£5,000 in each and every second of that final year.

Had the previous Government not messed up the regulation of the financial sector, they would not have had to carry out the biggest banking bail-out the world has ever seen, with £65 billion being put into RBS and Lloyds alone. Imagine how much new infrastructure that money could have been invested in. As if that was not bad enough, let us not forget the decision to sell off the nation’s gold reserves at record low prices. Had they not done that, the country would have been £10 billion richer. One thing that we did not hear from a single Labour Member this afternoon was an apology for the damage that they did to this country.

Despite that toxic legacy, this Government have restored economic confidence. We have slashed the record budget deficit by a quarter. We have restored economic credibility and opened Britain up for business again. That credibility has led to record low interest rates, with the Government’s 10-year funding costs having halved since 2010. Each of those steps has been crucial to creating an economic environment in which the Government can invest in infrastructure, and one in which investors feel their funds are secure.

[Sheila Gilmore]

Will the Minister explain to the House and the country why the OBR predictions at the time of the so-called emergency Budget and the comprehensive spending review have not happened, why growth has not happened, and why the deficit has not been reduced at the rate the Government originally promised?