Speech by Chief Secretary to the Treasury, Danny Alexander, 'Investing in Britain's future'
Chief Secretary to the Treasury, Danny Alexander delivered his 'Investing in Britain's future' speech on the government's infrastructure plan on 27 June 2013.
Mr Speaker,
Yesterday my RHF the Chancellor set out the difficult decisions this government has taken to continue the process of restoring our country’s finances.
I pay tribute to his work to see this country through these 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 this coalition government wants to make the right long-term choices for Britain.
So today I 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.
Let me tell the House – in all candour – these are not easy choices.
There is no easy way to create jobs and prosperity.
It is a difficult path, but the right one.
And today it is clear that the British economy is moving from rescue to recovery.
Official statistics published this morning show that the recession in 2009 was even deeper than we first thought.
We have made some painful choices to get our country back on the right path.
We are making good progress. The deficit is down. Jobs are up.
But as we move from repair to renewal we also need to invest in the fabric of our nation.
And I can do that because we have chosen to find savings from day-to-day budgets…
… which allow us to recycle billions back into long-term capital spending.
Not the easy choice, but the right one.
So we can guarantee £300 billion of capital spending by the end of the decade.
Today I can set out our plans for over £100 billion of this for the infrastructure of our country.
The biggest public housing programme for over twenty 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.
Unlocking massive investment in cleaner energy, to power our economy forwards.
All at a price we can afford to pay without adding a single pound to our borrowing forecast.
Investing in stronger communities.
Investing in better infrastructure.
Investing 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.
Mr Speaker, at every stage of this process we have sought to cut waste and inefficiency first – focusing on the backroom not the frontline.
We should not pretend this is painless.
Back office efficiencies mean thousands of job losses.
Contract renegotiation means rightly asking more for less from our suppliers.
But this 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 future.
So I can say that in 2015-16:
- £25m will be invested in the best digital equipment for our police.
- £100m will be invested in a new prison in North Wales – a scheme which will eventually save £20m every year.
- And more than £200m is being invested over three years to increase the digitisation of HMRC’s customer services – a move that will save over £50m every year in administrative costs.
I’d like to pay tribute to the Minister for the Cabinet Office 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 in this Spending Round.
And 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, unlocking savings to support our economic priorities.
- And I will strengthen the financial management capability in government.
And we will take action to sell off £15 billion worth of public assets by 2020.
£10billion of that money will come from corporate and financial assets like the student loan book.
And the other £5 billion will come from land and property.
Mr Speaker, government is the custodian of the taxpayers’ assets.
When we no longer need them, we should sell them back at a fair price – not act like a compulsive hoarder.
But too often, local and national government sits on an area of land which could be put to good use for the economy, housing or schools.
So 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 the site is needed.
Then we will sell that land, at a fair price.
And we will use those proceeds to pay down our debt, and to invest in our economy.
We have added to those plans year on year with more money for investment in this Parliament.
Some people are saying we’re not delivering. But since we’ve come into office:
- Over 30 transport schemes have been completed.
- 150 railway stations have been upgraded.
- And we’ve built 84 000 affordable homes.
But 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.
And today, this government is 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.
And I can announce today that we will offer a guarantee up to £500 million to support investment in the Mersey Gateway Bridge, and a multi billion 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 for 8% of the UK’s homes.
These deals aren’t yet done, but they are major steps forward for our country’s future.
Mr Speaker, let me turn to how we will invest in stronger communities.
This government has made a very strong commitment to education.
We’re protecting the schools budget including the pupil premium.
We know what parents want.
A good school, nearby, and in good state of repair.
This is how we’ll give it to them.
First, some buildings simply aren’t good enough.
So we are re-building 261 of the worst schools as part of the Priority School Building Programme – with the money I’ve committed today we’ll complete this by 2017 – two years early.
But there are many other schools in need of repair and investment.
We’ll put £10 billion behind this, enough to clear the urgent backlog.
Second, we’re investing to create a million new school places in a decade.
Across the country, including Lancashire, Leeds and London.
Better buildings. A place for every child. The best investment in our future generation.
And we will continue to invest in the health of the nation too.
The health budget will rise in 2015, including on capital.
This means we can begin redeveloping the Royal Liverpool Hospital next year.
I can also announce a further £150 million for health research infrastructure, including facilities for our world-leading work on dementia.
Mr Speaker, our new approach to housing is truly transformative.
Our Help to Buy scheme is already getting people onto the ladder.
But put simply, this country does not have enough homes that people can afford.
A good home should not be a luxury for the few, but an achievable aspiration for the many.
But our housing associations have told me they can do more.
To do this, they need certainty on rents alongside public investment.
Today I can do both of these things.
I can guarantee social rents will be set at CPI+1% out to 2025.
That’s the longest period ever.
And I can provide £3 billion more capital over three years from 2015…
… to deliver 165,000 new affordable homes.
On average, that’s more each year than in any of the last 20 years.
Getting more for tax-payers, and more for this country.
This Spending Round also funds over 2,500 more new homes specifically designed for older and disabled people, £160 million for Decent Homes, mainly in London.
An issue I know is important to many MPs, in particular the RHM for Bermondsey and Old Southwark.
The most ambitious and significant investment in affordable housing for a generation.
Too many members 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’ll provide £370 million in 2015 and increase that in real terms every year to 2020.
Over 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. As do we.
We’ve always said we want to find a solution which works for households at risk of flooding, wider billpayers, and the taxpayer.
The industry’s proposed scheme, known as Flood Re, promises to do this 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. We therefore propose to also 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.
My RHF the Environment Secretary is today launching a public consultation on our proposed approach and we welcome views on this.
He will introduce our final proposals to Parliament as a government amendment in the autumn.
Mr Speaker, local businesses, local communities and local authorities know best how to make the decisions to support growth in their area.
For decades, we’ve not given them enough of a chance to do so. Now we are.
Yesterday, the Chancellor confirmed we’re establishing a Single Local Growth Fund to transfer funding streams to Local Enterprise Partnerships – 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 this will work are set out in the document.
We have also reached agreement with Greater Manchester on their innovative ‘Earn Back’ Scheme.
This will allow them to invest in their priorities such as the Trafford Metrolink and the A6 to Manchester Airport Relief Road.
The Regional Growth Fund has also been a fantastic success, thanks to the drive of people up and down the country, led by my RHF the Deputy Prime Minister.
The £2.4 billion in this Parliament is safeguarding half a million jobs, spread across every English region.
And today we’re putting in an extra £600 million so we can do even more.
That, Mr Speaker, is how we are strengthening our communities.
But for our economy to grow, 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 per cent 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 is being funded to deliver the largest programme of rail investment since the Victorian era.
Today I reaffirm that commitment.
This is investment that will bring new life to our rail networks.
Upgrading iconic stations like Kings Cross, Manchester Piccadilly and Birmingham New Street.
Improving links from Liverpool to Newcastle through the Northern Hub.
Opening a new line from Bedford to Oxford.
We are electrifying 850 miles of railway.
And the Honorable Member for Westmorland and Lonsdale will be pleased to hear that network rail are conducting a feasibility study into electrifying the Lakes line between Oxenholme and Windermere.
They are going one better in London, and from 2015, we will fund Network Rail to begin work on electrifying the line that connects Gospel Oak and Barking.
Nowhere is fast commuter transport more important for our economy than London, and our investment in Crossrail will support over 120 000 additional peak time commuters every day.
The government is 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 mustn’t be done at the expense of our other great cities.
It isn’t good enough that the UK has just 68 miles of high speed railway, compared with over 1, 000 in Germany, and over 2, 000 in France.
We want a High Speed Line that connects 8 of the UK’s 10 biggest cities, making daily commuting between them possible for the first time.
And so today we provide the 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 [in 2011 prices].
And we are setting a clear budget for the scheme of £16 billion for the next Parliament.
Yes this is a higher overall budget than previously put forward.
We are learning from our Olympic experience – 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 Mr Speaker, is a project that will change the economic geography of our country, and I urge Honourable Members to support it.
It is not being built at the expense of a single other rail project.
Taken together we are supporting over £30 billion of investment in rail, making this Coalition the most pro-rail government in modern history.
But we also need to think of the remote parts of the UK that HS2 won’t reach.
Air connections are crucial to those regional economies.
To help maintain those connections, I can announce today we will be providing £10 million a year for a new Regional Air Connectivity Fund.
And I will look forward to Howard Davies’ report into this, and other aviation issues.
Millions of people rely on our road network.
We’ve worked hard over the last three years to protect those road users.
Cancelling fuel duty increases, and saving 13p on a litre of fuel.
But our road system has been decaying for decades, and without further significant investment now, by 2040 nearly a quarter of all those motorists’ travel time could be spent stuck in traffic.
So today, I can announce the biggest programme of investment in our roads in 40 years.
This government will invest over £28 billion over the 6 years from 2014 in enhancements and maintenance of national and local roads.
Firstly, we will take action to fix the backlog of maintenance, which has left road surfaces in communities up and down the country crumbling.
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 over 21,000 miles of road; the equivalent of London to Beijing and back.
The other £6 billion of that money will be spent at a local level – allowing Local Authorities to fill the equivalent of 19 million pot holes a year.
Secondly, we will deliver all of the major projects in the Highways Agency Pipeline.
We will add two lanes to the busiest motorways – bringing another 221 lane miles to our road network.
It will see us tackle some of the most congested parts of our network.
Like the £1.5 billion A14 scheme between Huntingdon and Cambridge.
This is a scheme of strategic national importance, which will unlock jobs, housing and growth in the region, as well as providing key relief for a major freight route.
And I am delighted to announce that we will be bringing forward the start of construction by almost 2 years, to 2016.
But 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 Bromsgrove to Worcester; *The A38 Derby Junctions *The M1 junction near Long Eaton and south of Rugby; *The A21 Tonbridge to Pembury *Junctions on the M4 *The M23 Gatwick junctions; and *The A27 Chichester bypass.
Thirdly, this money will pay for us to identify and deliver solutions for the most notorious problem spots across the country.
Any Honourable Member – from the Prime Minister down – who lives in Cornwall, or has driven there for their holidays will want to see a better A303.
Any Honourable Member planning a future trip to Scotland – a Scotland as part of a strong United Kingdom – will want to see a better A1 north of Newcastle.
And we will also look at the A27 corridor, the trans-Pennine route, and connectivity to Leeds Airport.
These are investments that we will make sure are delivered.
Because today Mr Speaker, I can 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.
And we are legislating to ensure these reforms and this investment is guaranteed.
Mr Speaker, where our predecessors left our road network on the hard shoulder;
We are bringing it into the fast lane.
Not only are we building the roads of the future, we are also developing the cars of the future.
This government remains committed to ensuring that the UK is at the forefront of de-carbonising road transport, investing in electric vehicles.
In the twenty-first century good communications are not just about faster roads and high speed railways.
They are about high speed internet access too.
This government has already committed to a £1.2 billion programme of public investment in fixed superfast broadband.
I’ve seen first-hand the impact that our investment is making in smaller, rural communities, such as when I visited Rothbury in Northumberland.
It’s absolutely crucial, if we want to rebalance our economy that it’s not just the biggest cities that have access to the fastest broadband.
Now the UK already has better broadband coverage, usage, and choice than Germany, Italy, France and Spain.
But we want to go further.
So I can announce today that we are providing a further £250 million to ensure fixed superfast broadband reaches 95% of the population by 2017;
And we will work closely with the industry to ensure that at least 99% of the UK have access to superfast broadband –whether that’s fixed, wireless or 4G – by 2018.
Mr Speaker, let me now turn to how we support the private sector to deliver our energy needs.
Some in the House 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 the mains electricity came, you never quite knew when the lights might go out.
We do not want any community in our country to face that problem in the future.
Our existing power stations are closing, 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 my colleague the Secretary of State for Climate Change, we are ready to unleash the energy revolution our country needs.
Today’s news from the British Geological Survey confirms the huge potential that shale gas has for the UK – 13 hundred trillion cubic feet, double previous estimates.
And the plans we set 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 we get our energy, we are transforming how we generate and supply it too.
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 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 out 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’ll guarantee a price to the generator, giving them the confidence to invest now. But if they rise above this, we’ll 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: on-shore and off-shore wind; tidal; wave; bio-mass; and solar.
The prices are broadly similar to those we would have to pay under the Renewables Obligation.
We 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’ll reduce the price too.
For instance, next year we’ll guarantee generators £155 per megawatt hour of off-shore wind. By 2018 this will fall to £135.
We expect our reforms to bring forward 8 to 16 giga-watts of offshore wind capacity.
Industry asked for certainty. We’ve given it. So now they need to get on with it.
And yes, this approach has costs now.
But long term prices for consumers 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.
Taking the right decision 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 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.
There’s financial risk for construction too.
That’s why we set up a Green Investment Bank to back green energy projects.
It’s committed over £600 million already.
For instance, it’s invested in the Walney Wind Farms off the north west coast of England, expected to provide energy equivalent to 300,000 households.
We’ve already pledged to provide £3 billion to the bank.
And today I can announce we’ll provide an additional £800m so 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.
A real milestone for green investment.
Delivering a key promise we made in our election manifesto.
Unlocking over £100 billion of private investment into our energy network.
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.
Mr Speaker. In the last three years we have re-secured for this country a very precious commodity: credibility.
No one doubts that this coalition government is serious about sorting out the economic mess we have inherited.
People have the right to know that we continue to work hard to repair the economy, that interest rates will stay low and that we will get this 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 the congestion on our roads and deliver faster broadband to make sure businesses in every corner of this country can serve their customers and make sure all parts of Britain keep growing.
That we invest in a modern railway so that commuters get to work on time and home in the evening in time to see their kids.
People have the right to expect that we keep spending serious money on the schools and hospitals all families rely on.
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 will deliver all of that and more.
This is an ambitious long-term plan to build an infrastructure of which Britain can be proud, and in doing so help to build a stronger economy in a fairer society, where everyone can get on in life. And I commend this statement to the House.