Investing in Britain’s Future

John Bercow Excerpts

Thursday 27th June 2013 Commons Chamber

[The Chief Secretary to the Treasury (Danny Alexander)]

I am grateful to you, Mr Speaker, for allowing more time than is usual for a statement, given the range of announcements to be made today.

Yesterday, my right hon. Friend the Chancellor set out the difficult decisions that the Government have taken to continue the process of restoring our country’s finances. I pay tribute to his work to see the country through these most difficult of times.

Today, I will set out how the British economy can succeed in the global race by creating balanced growth and delivering lasting prosperity. Most past Governments of every colour have prioritised short-term convenience over the long-term national interest. Today, we change that. We are shifting the Government’s policy horizon to match the modern economy’s horizon, because the coalition Government want to make the right long-term choices for Britain.

I therefore announce the most comprehensive, ambitious and long-lasting capital investment plans this country has ever known. We are putting long-term priorities before short-term political pressures. I tell the House in all candour that these are not easy choices. There is no easy way to create jobs and prosperity. It is a difficult path, but the right one.

Today, it is clear that the British economy is moving from rescue to recovery. We inherited an economy in dire straits. Official statistics published this morning show that the recession in 2009 was even deeper than we first thought. We have made painful choices to get our economy back on the right track. We are making good progress—the deficit is down, jobs are up—but as we move from repair to renewal, we need to invest in the fabric of our nation. I can do that because we have chosen to find savings from day-to-day budgets, allowing us to recycle billions into long-term capital spending. That is not the easy choice, but the right one.

We can guarantee £300 billion of capital spending by the end of the decade. Today, I can set out our plans for more than £100 billion of that for the infrastructure of our country: the biggest public housing programme for more than 20 years, the largest programme of rail investment since Victorian times, the greatest investment in our roads since the 1970s, fast online access for the whole country and the unlocking of massive investments in cleaner energy to power our economy forwards, all at a price that we can afford to pay, without adding a single pound to our borrowing forecasts. Investing in stronger communities, in better infrastructure, in new sources of energy—that is how we will build a stronger economy in a fairer society, enabling everyone to get on in life.

At every stage of the process, we have sought to cut waste and inefficiency first, focusing on the back room, not the front line. We should not pretend that that is painless. Back-office efficiencies mean thousands of job losses. Contract renegotiation means rightly asking more for less from our suppliers. But that is the right way to make savings, while improving the quality of our public services.

Across government, we are using our capital budgets to help our public sector become smaller, more efficient and more effective. In 2015-16, we will invest £25 million in the best digital equipment for our police and £100 million in a new prison in north Wales—a scheme that will eventually save £20 million every year. More than £200 million is being invested over three years to increase the digitisation of Her Majesty’s Revenue and Customs’ customer services, a move that will save more than £50 million every year in administrative costs.

I pay tribute to the Minister for the Cabinet Office and Paymaster General and his team for their expertise and insight in unlocking these savings. I am the first Chief Secretary ever to have had this pool of commercial expertise at my disposal during a spending round. They tell me that we can do more to save money for the taxpayer. So, working closely with the Minister for the Cabinet Office, I will conduct a further rolling efficiency review of all Departments to unlock savings to support our economic priorities. I will strengthen the financial management capability in Government, too. We will take action to sell off £15 billion-worth of public assets by 2020. Some £10 billion of that money will come from corporate and financial assets, such as the student loan book, and the other £5 billion will come from land and property.

The Government are the custodians of taxpayers’ assets. When we no longer need them we should sell them back at a fair price and not act like a compulsive hoarder. Too often, local and national Government sit on an area of land that could be put to good use for the economy, housing or schools. Today, we say this to businesses and communities, “If there are any publicly owned sites out there that you can make economic use of, then tell us.” Unless Ministers can be convinced that the site is needed, we will sell that land at a fair price and we will use the proceeds to pay down our debt and invest in our economy.

Let us not forget that the plans we inherited from the previous Government included significant cuts to capital spending in this Parliament. We have added to those plans year-on-year with more money for investment in this Parliament. Some people say that we are not delivering, but since we came to office more than 30 transport schemes have been completed, 150 railway stations have been upgraded and we have built 84,000 affordable homes. However, we need to work more smartly to improve delivery. No single Government infrastructure project in recent memory has been quite as triumphant as the 2012 Olympic and Paralympic games, so we appointed Lord Deighton, the man who oversaw that success, to improve infrastructure delivery across government. He is working his way through Whitehall Department by Department, helping to develop clear delivery plans. Today, the Government are accepting his central recommendation that we take crucial infrastructure delivery out of the hands of civil servants and into the hands of commercial experts.

Our innovative UK guarantee scheme is enabling privately funded projects to go forward, too. It has already provided certainty to investors in the Drax power station and the Northern line extension. I can announce that UK guarantees will be available for two more years to December 2016. I can announce today that we will offer a guarantee of up to £500 million to support investment in the Mersey Gateway bridge and a multi-million pound guarantee to advance the new nuclear power station at Hinkley point, a guarantee that could provide growth in Liverpool and a guarantee that could provide power to 8% of the UK’s homes. These deals are not yet done, but they are a major step forward for our country’s future.

Let me turn to how we will invest in stronger communities. The Government have made a very strong commitment to education. We have protected the schools budget, including the pupil premium. We know what parents want: a good school nearby in a good state of repair, and this is how we will give it to them. First, some buildings simply are not good enough, so we are rebuilding 261 of the worst schools as part of the Priority School Building programme. With the moneys I have committed today, we will complete this by 2017—two years early. There are many other schools in need of repair and investment. The previous Government stopped even checking just how many schools were in need of repair. We have started again. We will put £10 billion behind this, which will be enough to clear the urgent backlog. We are investing, too, to create 1 million new places in a decade across the country, including in Lancashire, Leeds and London—better buildings and a place for every child are the best investment in our future generation.

We will continue to invest in the health of the nation, too. The health budget will rise in 2015, including on capital. That means we can begin redeveloping the Royal Liverpool hospital next year, and I can also announce a further £150 million for health research infrastructure, including facilities for our world-leading work on dementia.

Our new approach to housing is truly transformative. Our Help to Buy scheme is already getting people on to the ladder. But, put simply, this country does not have enough homes that people can afford. The previous Government allowed the number of affordable homes to fall by a shocking 420,000. A good home should not be a luxury for the few, but an achievable aspiration for the many. We are already ensuring that the affordable housing supply increases every year, not decreases, as it did in every year but one under the previous Government. But our housing associations have told me that they can do more. To do that, they need certainty on rents, alongside public investment. So today I can provide both those things: I can guarantee that social rents will be set at the consumer prices index plus 1% out to 2025—the longest period of certainty ever; and I can provide £3 billion more capital over three years from 2015 to deliver 165,000 new affordable homes. On average, that is more each year than in any of the past 20 years; it is more in three years than the previous Government managed in seven. And we can do all that because our approach gets twice as many houses as they did for every pound we put in, getting more for the taxpayer and more for this country. This spending round also funds over 2,500 more new homes specifically designed for older and disabled people, and £160 million for decent homes, mainly in London. I know that issue is important to many MPs, particularly my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes). This is the most ambitious and significant investment in affordable housing for a generation.

Too many Members of this House, on both sides, have in recent years seen the devastation that flooding can cause in their constituencies. We need to work with the private sector to protect families from the threat of flooding, so we will provide £370 million in 2015 and increase that in real terms every year to 2020. More than 400,000 households will be protected over this decade. Insurance also has a vital role to play in helping households deal with the consequences when flooding does occur. I am pleased to tell the House that we have now reached an initial agreement with the Association of British Insurers on the future of flood insurance. The industry wants to do the right thing and so do we. We have always said that we wanted to find a solution that works for households at risk of flooding, wider bill payers and the taxpayer. The industry’s proposed scheme, known as Flood Re, promises to do that by effectively limiting insurance prices for high-risk households. Up to 500,000 households would be helped, with support targeted towards those on lower incomes. Support would be funded by a levy on insurers, something the ABI has promised us will not increase customer bills in general. Importantly, there will be no cost to taxpayers.

There remain many details to work through, so we propose also to take powers to allow us to regulate for affordable flood insurance should that prove necessary. We are seeking these powers in the Water Bill, which we are today introducing to Parliament. The Secretary of State for Environment, Food and Rural Affairs is today launching a public consultation on our proposed approach, and we welcome views on it. He will introduce our final proposals to Parliament as a Government amendment in the autumn.

Local businesses, local communities and local authorities know best how to make the decisions to support growth in their area. For decades we have not given them enough chance to do so, but now we are. Yesterday, the Chancellor confirmed that we are establishing a single local growth fund to transfer funding streams to local enterprise partnerships, as recommended by Lord Heseltine, with £2 billion in 2015 and at least that in every year for the rest of the decade. In total, at least £20 billion will be under the control of LEPs to 2020. The details of how that will work are set out in the document published today.

We have also reached agreement with Greater Manchester on its innovative “earn back” scheme, which will allow it to invest in its priorities, such as the Trafford Metrolink and the A6 to Manchester airport relief road. I know that many hon. Members, including my hon. Friend the Member for Cheadle (Mark Hunter), have been campaigning on that for many years—as indeed has the Chancellor, for that matter.

The regional growth fund has also been a fantastic success, thanks to the drive of people up and down the country, led by my right hon. Friend the Deputy Prime Minister. The £2.4 billion in this Parliament is safeguarding half a million jobs, spread across every English region. Furthermore, we are today investing an extra £600 million so that we can do even more to strengthen our communities.

For our economy to grow, however, we need those communities to be better connected. In the last two decades, rail passenger numbers have doubled, and that figure is set to rise by nearly 15% over the next five years. More people are using our railways than at any time since 1927, so we have set out a clear, long-term plan to cope with that demand. Last year, we announced that Network Rail had been funded to deliver the largest programme of rail investment since the Victorian era, and today I reaffirm that commitment. This investment will bring new life to our rail networks, upgrading stations such as King’s Cross, Manchester Piccadilly and Birmingham New Street, improving links from Liverpool to Newcastle through the northern hub and opening up a new line from Bedford to Oxford. We are also electrifying 850 miles of railway. By comparison, the previous Government managed nine miles in 13 years.

My hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) will be pleased to hear that Network Rail is conducting a feasibility study into electrifying the Lakes line between Oxenholme and Windermere. We are going one better in London, and from 2015, we will fund Network Rail to begin work on electrifying the line connecting Gospel Oak and Barking. Nowhere is fast commuter transport more important for our economy than in London, and our investment in Crossrail will support more than 120,000 additional peak-time commuters every day. The Government are committing £2 million to support a funding and financing study into Crossrail 2. The challenge for the Mayor of London now is to determine how at least half of the cost of the scheme can be met through private sources, ensuring that it will be affordable to the UK taxpayer.

Keeping London connected is crucial, but it must not be done at the expense of our other great cities. It is not good enough that the UK has just 68 miles of high-speed rail, compared with 1,000 in Germany and more than 2,000 in France. We want a high-speed line that connects eight of the UK’s 10-biggest cities, making daily commuting between them possible for the first time. Today, therefore, we provide long-term financial certainty for High Speed 2, setting a funding envelope of £42.6 billion for construction costs and £7.5 billion for rolling stock, and we are setting a clear budget for the scheme of £16 billion for the next Parliament.

Yes, that is a higher overall budget than previously put forward. We are learning from our Olympic experience and setting a long-term, realistic financial plan with the right contingencies. This is the longest and largest transport budget the Treasury has ever set aside, and the people running the project will have to deliver within it.This project will change the economic geography of our country, and I urge hon. Members to support it. It is not being built at the expense of a single other rail project. Taken together, we are supporting more than £30 billion of investment in rail, making this coalition the most pro-rail Government in history.

We also need to think of the remote parts of the UK that HS2 will not reach. Air connections are crucial to those regional economies, so to help maintain those connections, I can announce today that we will provide £10 million a year for a new regional air connectivity fund. I look forward to Howard Davies’s report into that and other aviation issues.

Millions of people rely on our road network. We have worked hard over the past three years to protect road users, cancelling fuel duty increases and saving 13p on a litre of petrol, but our road system has been decaying for decades, and without further significant investment now, by 2040, nearly a quarter of motorists’ travel time could be spent stuck in traffic. I can therefore announce today the biggest programme of investment in our roads in 40 years. The Government will invest more than £28 billion over the six years from 2014 in the enhancement and maintenance of national and local schemes. First, we will take action to fix the backlog of maintenance that has left road surfaces crumbling in communities up and down the country. We are committing £10 billion of investment in road repairs between 2015-16 and 2020-21. More than £4 billion of that money will be spent on national road maintenance—enough to resurface more than 21,000 miles of road, which is the equivalent of London to Beijing and back—while the other £6 billion will be spent locally, allowing local authorities to fill the equivalent of 19 million potholes a year.

Secondly, we will deliver all the major projects in the Highways Agency’s pipeline. We will add two lanes to the busiest motorways, bringing another 221 lane miles to our road network, and we will tackle some of the most congested parts of our network, through projects such as the £1.5 billion A14 scheme between Huntingdon and Cambridge. This scheme is of strategic national importance and will unlock jobs, housing and growth in the region, as well as providing key relief for a major freight route. I am delighted to announce that we will be bringing forward the start of construction by almost two years, to 2016.

I can confirm today that there is more: the A19 between Newcastle and South Shields, the A63 in Hull, the M6 junctions between Birmingham and Manchester, the M5 junctions from Bromsgrove to Worcester, the A38 Derby junctions, the M1 junction near Long Eaton and south of Rugby, the A21 between Tonbridge and Pembury, junctions on the M4, the M23 Gatwick junctions and the A27 Chichester bypass.

This money will pay for us to identify and deliver solutions for the most notorious problem spots across the country. Any hon. Member from the Prime Minister down who lives in Cornwall or who has driven there for their holidays will want to see a better A303. Any hon. Member planning a trip to Scotland—Scotland as part of a strong United Kingdom—will want to see a better A1 north of Newcastle. We will also look at the A27 corridor, the trans-Pennine route and connectivity to Leeds airport.

We will ensure that these investments are delivered, because I can also announce that we are transforming the Highways Agency into a publicly owned corporation, an organisation that will have the long-term funding certainty and flexibility to deliver the best possible road network for the UK’s motorists. We are legislating to ensure that these reforms and this investment are guaranteed.

Where our predecessors left the road network on the hard shoulder, we are bringing it into the fast lane. We are not only building the roads of the future but developing the cars of the future. This Government remain committed—[Interruption.]

[Mr Speaker]

Order. There is a very disorderly atmosphere in the House. Mr Docherty, you are in a very jolly frame of mind, but it would be greatly to your benefit and that of the House if your jollification could be a tad more restrained.

[Danny Alexander]

Thank you, Mr Speaker.

This Government remain committed to ensuring that the UK remains at the forefront of decarbonising road transport and investing in electric vehicles. In the 21st century, good communications are not just about faster roads and high-speed railways, however; they are also about high-speed internet access. The Government have already committed £1.2 billion of public investment to fixed superfast broadband. I saw at first hand the impact that that investment is having on smaller communities when I visited Rothbury in Northumberland. It is crucial, if we want to rebalance our economy, that it is not just the biggest cities that have access to the fastest broadband.

The UK already has better broadband coverage, usage and choice than Germany, Italy, France and Spain, but we want to go further. I can announce today that we are providing a further £250 million to ensure that fixed superfast broadband reaches 95% of the population by 2017. We will work closely with industry to ensure that at least 99% of the UK population have access to superfast broadband—whether fixed, wireless or 4G— by 2018.

Let me now turn to how we support the private sector to deliver our energy needs. Some Members will know that I was privileged to spend my early years on the Hebridean island of Colonsay. Then, the island had no mains electricity. Unreliable diesel generators powered the island, and regularly broke down. Until mains electricity arrived, we never quite knew when the lights would go out. We do not want any community in our country to face that problem in the future. Our existing power stations are closing, as they are too old or too dirty to continue. They must be replaced and added to as our need for electricity grows. Thanks to the hard work of the Secretary of State for Energy and Climate Change—

[Danny Alexander]

He is the best ever.

Thanks to my right hon. Friend’s hard work, we are ready to unleash the energy revolution that our country needs. Today’s news from the British Geological Survey of 1,300 trillion cubic feet of shale gas—double the previous estimate—confirms its huge potential for the UK. That is almost as much hot air as the shadow Chancellor produces in a year—[Interruption.] And if they would stop fracking around on the Opposition Front Bench, they might learn something. The plans that we are setting out today provide the framework to kick-start this industry in a way that protects the environment and supports local communities.

As well as revolutionising the way in which we get our energy, we are transforming how we generate and supply it. As we face the challenge of climate change, we need to bring forward investment in low-carbon technologies. This country has massive potential in wind, wave and tidal. We need to harness it. We are putting in place a comprehensive energy policy through the Energy Bill that is in front of this House. This is an approach that we know will work for consumers and investors alike. Last year we made the unprecedented decision to set out funding plans for low-carbon generation all the way to 2020, providing up to £7.6 billion in real terms.

Now we can set out what this means for investors. We do this through setting strike prices. If future prices are below this level, we will guarantee a price to the generator, giving them the confidence to invest now. But if they rise above it, we will claw back money for consumers. We were planning to set strike prices next month, but we have been able to make faster progress so, today, I can announce that we are publishing the prices for renewable generation ahead of schedule. Prices have been set for key renewable technologies, including onshore and offshore wind, tidal, wave biomass and solar. The prices are broadly similar to those we would have to pay under the renewables obligation. We will set the price at the level we need to bring forward sufficient investment, but not a penny higher. As these technologies develop, costs will fall, so we will reduce the price too. For instance, next year we will guarantee generators £155 per megawatt hour of offshore wind. By 2018 this will fall to £135. We expect our reforms to bring forward 8GW to 16 GW of offshore wind capacity. Industry asked for certainty; we have given it. Now industry needs to get on with it.

Yes, this approach has costs now but, in the long term for consumers, they will be more stable than they would otherwise have been. In fact, when this investment goes alongside our plans for energy efficiency, overall our policies could save an average of £166 per household by 2020. We are taking the right decisions now for the good of our country.

In addition, we need to guarantee that capacity will be available at short notice to meet spikes in demand, for instance through gas-fired stations. Today we can provide details on a new regime that will achieve this. The first auction for this new capacity market will run next year to provide certainty for the winter of 2018. But there is financial risk for construction, too. That is why we have set up a Green Investment Bank to back green energy projects. It has committed over £600 million already; for instance, it has invested in the Walney wind farms off the north-west coast of England, which are expected to provide energy to the equivalent to 300,000 households. We have already pledged to provide £3 billion for the bank and, today, I can announce that we will provide an additional £800 million so that it can expand further. Crucially this will include, for the first time, the power to borrow half a billion pounds in 2015-16 from Government. This is a real milestone in green investment, delivering a key promise we made in our election manifesto, unlocking over £100 billion of private investment into our energy networks, and supporting jobs, growth and prosperity for years to come. Our energy policy is a win for consumers, a win for investment and jobs and a win for our climate; the greenest Government ever.

In the last three years we have re-secured for this country a very precious commodity: credibility. No one doubts that the coalition is serious about sorting out the economic mess that we have inherited. People have the right to know that we will continue to work hard to repair the economy, that interest rates will stay low and that we will get our country back on an even keel. But repair is not all we do, because people also have the right to expect that Britain stays one step ahead in the world, that we ease congestion on our roads and deliver faster broadband to make sure businesses in every corner of this country can serve their customers—[Interruption.]

[Mr Speaker]

Order. There is a lot of noise in the Chamber. I think that the Chief Secretary is nearing his end.

[Danny Alexander]

I am certainly nearing the end of this statement.

People expect us to ease congestion on our roads and deliver faster broadband to ensure that businesses in every corner of this country can serve their customers, and that we make sure all parts of Britain keep going. They expect that we will invest in a modern railway so that commuters get to work on time and home in the evening to see their kids. People have the right to expect that we keep spending serious money on the schools and hospitals on which all families rely, and that we make sure that the lights stay on in our homes, even when the demand on energy is surging.

The plans I have set out today deliver all that and more. This is an ambitious plan to build an infrastructure of which Britain can be proud and, in doing so, to help build a stronger economy in a fairer society where everyone can get on in life.

I commend this statement to the House.

--- Later in debate ---

[Mr Speaker]

The length of the Chief Secretary’s answer is improper, regardless of its content. The way in which a Minister replies to questioning is a matter for him, and he is at liberty to refer to material, but he must not dilate in his answer. If it were to become effectively a second statement, he might have some difficulty retaining the attention of the House.

[Danny Alexander]

Thank you for that advice, Mr. Speaker. I was merely attempting to respond to the inaccurate account of our investment given by the hon. Member for Nottingham East (Chris Leslie). In fact, investment as a share of GDP will be higher during the current decade than it was during the 13 years for which Labour was in office. We are spending more and underspending less than Labour did. Ours is a record of delivery and a record of action, and today I have given the House our promise of more.

The hon. Gentleman asked about the private sector. We have been listening to the private sector, which is why we are setting out the long-term plans that it wants. He asked about the planning system. We have reformed the planning system, and he voted against that reform. He also asked about flooding. As I said in my statement, my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will be announcing amendments to the Water Bill. The hon. Gentleman will know from the spending round document which was published yesterday that the forecast for local government self-financed expenditure is up, not down. I am sorry to hear that he opposes investment in shale gas. His Building Schools for the Future programme was expensive and inefficient, which is why we have introduced the Priority School Building programme.

I should very much have liked to hear from the hon. Gentleman that he supported our detailed and ambitious plans, and so would the country. I am sorry that we did not hear that from him, and I hope that he will reflect on it in the days to come.

--- Later in debate ---

[Danny Alexander]

I am sorry to hear such a curmudgeonly response to what I thought was a very positive announcement. [Interruption.] The point that I was making in my statement was that there are a number of long-standing issues on our highways network that have never been addressed. We have set aside the funding and will bring forward the plans to ensure that the improvements to that route take place between now and 2020.

[Mr Speaker]

My sense is that there is nothing unparliamentary about the use of the word “curmudgeon”. It is very much a matter of taste.

[Paul Burstow (Sutton and Cheam) (LD)]

I congratulate the Government on the announcements about social care spending and the health service. I draw my right hon. Friend’s attention to a capital project that will serve my constituency: the commitment to an investment of £219 million in St Helier hospital. However, that project has been stuck in the mud for the past three years because local NHS managers have been blocking its progress. Will he intervene with Ministers at the Department of Health to unblock that project and provide the much-needed investment?