Infrastructure and growth in Wales
David Jones MP gives keynote address to the Policy Forum for Wales to launch Wales Office Infrastructure Working Group report.
Check against delivery
It is generally recognised that there nothing more important for our nation’s long-term economic prosperity than investment in infrastructure.
It is what gets people to work, facilitates communication and helps British businesses to compete in what is an increasingly globalised economy.
I am pleased, therefore, to be here today to speak to you about what we in government are doing to ensure that Britain gets the infrastructure it needs to compete effectively in the global race.
Our inheritance
It is now just over 4 years since the coalition government came to power.
Our inheritance here in Wales was an infrastructure that had been severely neglected, was in dire need of upgrade, and was inadequate to cope with modern demands.
There was little plan for investment, not even on the main road route into South Wales - the M4 - despite general recognition that its improvement was desperately needed.
Energy infrastructure was coming to the end of its operating life without any commitment on the investment required to replace it.
Indeed, it is fair to say that for almost a decade under the last administration, Britain was without any coherent energy policy.
Wales’s railway infrastructure was neglected, too.
At the end of 13 years of the last government, Wales remained the only part of Europe, other than Albania, without a single centimetre of electrified railway track.
And Wales also lagged well behind the rest of the UK in broadband provision. It was notorious for “not spots”.
Mobile telephone coverage in large parts of Wales was, frankly, appalling.
Not only did the last government fail to “fix the roof while the sun was shining”, it failed to fix the infrastructure, too.
Wales was being expected to compete in a 21st century global economy when it was struggling with an obsolete, 20th century infrastructure network - it was an impossible ask. Wales - and Welsh businesses - deserve better.
Long-term economic plan
We know that investment in infrastructure is one of the driving factors of economic growth.
And when we came to power we didn’t just inherit an infrastructure that was unfit for purpose; we inherited an economy that had suffered the worst economic downturn since the 1930s and a deficit that was the largest in peacetime history.
We had to get the deficit down and to do so required difficult, and sometimes unpopular, decisions.
But because of the difficult spending decisions we have taken, we have been able to prioritise public investment where it is needed most and to create the right conditions for private investment in infrastructure.
Ensuring the United Kingdom has first class infrastructure is a crucial part of our long-term economic plan: supporting businesses, helping them create jobs, and offering the prospect of a brighter future for the British people.
And - whisper it - our plan is working!
Britain is now the fastest growing major economy in the West. There are more people going out to work than ever before, and confidence is returning.
But, as any business man or woman here will recognise, getting banks to lend has sometimes proved problematic.
So we have also used the strength of the national balance sheet to provide £40 billion of UK Guarantees to get infrastructure projects going, which otherwise would have stalled because of financial difficulties.
So in this year alone, new projects worth an estimated £36 billion are due to start across the United Kingdom, helping creating thousands of jobs, securing future growth and delivering the world class infrastructure that the country - Wales included - deserves.
Private sector
Key to infrastructure investment is a confident private sector. And the private sector is indeed investing.
Some 200 projects across the UK are due to be completed this year – including the Gwynt y Môr offshore wind farm, which is currently the largest in construction anywhere in Europe.
But this has only been possible because we took the difficult decisions required.
We know that the old model of the public sector funding our entire infrastructure network is not sustainable, nor is it desirable.
We understand that unlocking and stimulating private sector investment is crucial.
Because it is the private sector that will provide the majority of UK infrastructure investment between now and the end of the decade.
Broadband
But the government does have a significant enabling role.
We have, for example, invested significantly in better broadband.
We know that this investment will pay dividends; it is estimated that every £1 government invests delivers benefits of around £20 to the economy.
In Wales, we have increased our support for broadband to almost £70 million to allow the Superfast Cymru programme to go even further.
This is direct United Kingdom government funding for a programme managed by the Welsh Government under the guidance of Broadband Delivery UK – an excellent example of Wales’s two governments working positively together.
But there is still more we need to do.
Even with significant investment in the pipeline, there will still be parts of Wales in 2016 that will not be benefiting from high speed broadband.
That is why earlier this year we announced that we are providing an additional £10 million for those areas which are the most “hard to reach.”
This funding will allow market testing of solutions proffered by suppliers for the areas not covered by the superfast broadband rollout.
Businesses in our super-connected cities of Cardiff and Newport can also now apply for vouchers to improve their broadband connectivity, which is vital for a modern business to compete and grow.
And it’s not just in fixed broadband connection that we have plans to improve Wales’s digital connectivity.
Our £150 million mobile infrastructure project will see masts going up across the country, significantly extending coverage across Wales.
Transport
And let us consider the issue of transport.
Just as Wales needs to be better connected through our digital infrastructure, we need a transport network fit for a modern economy to prosper.
As I mentioned earlier, the congestion along the M4 at Newport is one of the most pressing road transport issues for the whole of the UK, let alone Wales.
And in the 15 years that have passed since devolution, nothing has been done to ease that congestion.
But upgrading that important stretch of highway is crucially important.
Indeed, the director of CBI Wales said recently that if the Welsh Government does not build a Newport relief road Wales could “miss out on millions of future investments and hundreds of new jobs.”
The Prime Minister put it even more starkly: he called the M4 at Newport “a foot on the windpipe” of the South Wales economy.
So in November of last year, we gave the Welsh Government the borrowing powers it needs to raise the necessary finance for this project.
We now expect to see firm progress.
And through the Wales Bill - currently passing through Parliament - we are providing the Welsh Government with the opportunity to acquire extended borrowing powers to enable it to upgrade Wales’s road infrastructure yet further.
We want them to take those powers, and trigger the referendum need to do so as quickly as possible.
And let us consider Wales’s railways. As a government, we are serious about giving Wales a railway that is fit for the 21st century.
Our plans for rail are the most ambitious since Brunel was transforming Victorian Britain.
We are investing £9 billion over the next five years to upgrade railway networks across England and Wales.
As part of our investment, we are committed to electrifying key rail routes including the Great Western main line.
But let me say this quite clearly.
It is a matter of great concern to me that, while we remain absolutely committed to perform our part of the bargain we struck with the Welsh Government in 2012 to electrify the main line through to Swansea, the Welsh Government remain reluctant to fulfil their side of the deal, and fund the electrification of the Valley lines.
I am seriously concerned that their stance is putting this transformational project at risk.
We stand ready to discharge our part of the bargain.
We want to help them to get this scheme underway and will continue to work with them to try to make this happen.
HS2
And let us consider HS2.
As we improve our rail services within Wales, we must not close our eyes to projects across the border in England – indeed, we must seek and exploit every opportunity to connect Wales better.
The economy of Wales is inextricably linked to that of England and our transport systems need to reflect this.
Sir David Higgins highlighted in his report the need to be alert to opportunities to connect services into HS2.
With the planned HS2 hub station at Crewe only 20 miles from Wales, we must be looking at how investment in Wales can link into the new network.
The development of HS2 is a huge opportunity for Wales and I believe that we must welcome it enthusiastically.
Energy
Nowhere is the close integration of networks more evident than in the case of energy infrastructure.
Wales has always been central to the UK’s energy security, and Wales’s potential in the sector is enormous.
We have the natural resources, the skills, the expertise and the enthusiasm to generate a significant proportion of the electricity Britain needs.
The UK National Infrastructure Plan lists more than 15 Welsh energy projects already in the pipeline, from large scale offshore wind farms to micro generation; and there is the potential for more.
We need to show Wales is open to diversity and innovation when it comes to growing the energy supply. Hitachi’s decision to build a new nuclear power station at Wylfa Newydd highlights the attractiveness of Wales as a place in which to invest.
Their investment will create thousands of jobs and provide massive supply chain opportunities for British companies.
And last autumn, we announced that we are working with Hitachi to support this development with a sovereign backed guarantee through the UK Guarantees Scheme.
Holistic approach
While broadband, transport and energy are, in their own right, key areas of infrastructure, we need to be holistic in our approach to infrastructure planning.
Let me illustrate this by a real life example.
Following the announcement that Hitachi would be investing £20 billion into nuclear energy projects in the UK, I met members of their executive team on Anglesey to discuss their proposals for Wylfa.
Bear in mind that this is the largest investment in Wales for generations.
This project will rightly showcase Wales as a leading place for investment.
During the meeting one of the executives, needed to make an urgent call but was unable to do so because there wasn’t a mobile signal!
Remember that we were discussing £20 billion of investment - it was embarrassing, to put it at its mildest, that he was unable to complete such a basic function.
So the moral is that infrastructure improvements don’t happen in silos.
Providers and investors need to work closely together to deliver infrastructure collaboratively.
We cannot have one sector investing in world leading technology if the supporting infrastructure is not up to scratch.
Planning
As we call on investors to be more collaborative in providing the infrastructure Wales needs, it is also essential that they should be able to invest quickly and with confidence.
There is absolutely nothing more crucial to efficient infrastructure development - or, for that matter, to economic growth - than a benign, flexible and practically-focused planning regime.
Because developers need be assured that Wales is a welcoming place in which they can invest with confidence.
In England, planning reforms are underpinning our long-term economic plan by unblocking the system; and we are determined to do all we can to make sure that it improves continuously.
We have, for example, radically simplified planning guidance.
What used to consist of thousands of pages of often impenetrable jargon and otiose waffle has now been cut to around 50 pages of clearly written, plain English.
Guidance that, remarkably, actually guides, rather than impedes.
Our reformed system means we can deliver the infrastructure that people want and need, by working with, not against, investors.
The hard fact is that, as a consequence of Eric Pickles’s reforms, the planning system across the border in England is now substantially more streamlined and accessible than that in Wales.
That is not good for Wales, and will only work to its disadvantage.
So, I urge the Welsh Government to look at what is happening in England and take action in their forthcoming Planning Bill, to implement similar, effective reforms to the planning system to enable the infrastructure Wales needs, to get going.
Infrastructure report
A year ago at this very conference I told you about a new Infrastructure Working Group I had set up.
Its task was to identify Wales’s future infrastructure priorities and the challenges they face.
I am delighted that today we are publishing our report, which sets out the infrastructure we need for a modern economy to build a more prosperous Wales.
This report highlights the key themes I have outlined today.
We need to remove the barriers to infrastructure investment in Wales, especially around planning.
Investors need to unlock all existing sources of finance, including UK Guarantees.
Infrastructure providers need to be holistic in infrastructure.
Planning and Wales’s two governments need to work together in planning and delivering Wales’s infrastructure needs.
Concluding remarks
My message to you today is: after years of neglect and inaction by previous administrations on infrastructure – we have a plan.
Our long-term economic plan is bringing stability and competition back to our economy and ensuring a brighter future for our nation.
We are investing in infrastructure across the country, to create a more balanced, resilient economy.
If we are to be ambitious for the economy in Wales, it is essential we are bold and clear in our infrastructure plans.
I can not reiterate this strongly enough - infrastructure is an absolutely vital part of our long-term economic plan and will continue to play a central role in improving our long term economic security.
Building a more prosperous Wales, fit to compete in the global race, demands world class infrastructure.
We are determined to do all we can to deliver that for the people and businesses of Wales.