Lord Andrew Adonis speech at Second Reading of the Infrastructure (Financial Assistance) Bill 23 October 2012

I am delighted to be debating with Lord Newby, for whom I have the highest regard. I am also very glad that Paul Deighton is to become Minister for Infrastructure. It was specifically to shadow him, and his vitally important work, that I have returned to the front bench, and I much look forward to engaging with him. I understand that Paul Deighton will not be joining the Government until January, so this is an unusual, if not unprecedented, case of the shadow materialising three months before the substance. That sort of sums up the governments infrastructure problem: all shadow, no substance.

If I can continue the metaphor, this Bill is one of the most shadowy I have ever seen. Its four clauses simply give the government power to spend up to 50bn on infrastructure in very broad areas water, electricity, gas, telecom, sewage, railways, roads, health, education, courts, prisons and housing with little indication in the Bill or in the debates in the House of Commons beyond a single announcement about Crossrail trains of what real infrastructure projects it is intended to assist and when.

Our consideration of this Bill is a mere shadow since it is a Money Bill which we cant amend or even debate amendments to. However, before this phantom passes into law, I would like to set out some issues for debate and I would be grateful for the Ministers response at the end.

In 2009, expenditure on infrastructure was 11.6bn the highest real terms level for about two decades. Three years later, the Construction Products Association is warning that infrastructure is in free-fall. It is expected to decline by 13% this year compared to last. The CPA is projecting even bigger falls in key sectors. For example, a 40% drop in road construction this year, not least because

of the Coalitions wholesale cancellation of road schemes in 2010. Would the Minister confirm these figures, and tell us whether in retrospect it was wise to cancel essential schemes of national importance such as the dualling of the A14 east-west route, from Felixstowe port to the Midlands, and the dualling of the A21 a key route from London to the Kent and Sussex coast.

In the case of the A14, this project has resurfaced as a proposed toll road. My officials told me tolling of the A14 was unworkable when I was Secretary of State, but the Coalition appears to know better. So, could the Minister tell me, first, are the Government considering a state financial guarantee for the privately financed A14 project, as it will surely need one; secondly, could he tell me what tolling scheme is proposed, because I can find no reference anywhere to a scheme that appears even vaguely workable; and thirdly, can the minister say when the tolled and dualled A14 will be open? If the work had gone ahead as a conventional road scheme in 2010, the opening would be taking place in stages from now.

Equally concerning is the delay and prevarication over energy policy, which is holding up investment in new infrastructure, including the 210 million Siemens investment in a wind turbine factory in Hull and huge investment in new windfarms and renewable energy. There are big delays, too, in rolling out superfast broadband and G4. When I was on the Norfolk coast earlier this month, visiting StatOils new Sheringham Shoal offshore windfarm, a particular concern was the lack of fast broadband and the poor quality of mobile phone reception. Britains lack of 4G mobile phone provision is pushing us behind the United States, Germany, Sweden and parts of Asia. As for broadband, the Country Land and Business Association recently described the superfast broadband situation as lamentable saying It is becoming clear that the Governments strategy will not meet the target date of 2015.

The shadowy case for this Bill is that it will help unlock the capacity of the private sector to invest in infrastructure. But it is important to understand that a critical obstacle to infrastructure investment is the Governments own failure to lead and deliver.

I mentioned road schemes a moment ago.

It is the same story with airport capacity in the South East, where the Prime Minister has just appointed a review which is going to take three years. And it is now three and a half years since the last government announced its decision on airport capacity in the South East. In the Commons the Economic Secretary to the Treasury said any decision on airport capacity I repeat, any decision will be taken by the next government I repeat next government. In other words, this government has given up. If I may say so, thats one of the most brazen abdications of responsibility I have ever heard from a Government.

It is the same story on HS2, another project I know intimately, where dither and delay since 2010 has put back the project by at least two years and may, again, delay the key decisions until the next government.

It is a similar story too in London, where one of Mayor Johnsons first cuts in 2008 was to cancel the desperately needed Thames Gateway Bridge, providing another Thames crossing in East London, for which both planning and funding were already secured. Instead, all we have is a new cable car offering a tiny fraction of the capacity and you couldnt make this up the beginning of a planning process which might ultimately lead to a new bridge, not far from the one which was cancelled for short-term political reasons.

It is the same story now with the extension of the Northern Line to Battersea, a key development area. In June, a Treasury source told the Evening Standard The entire weight of the Government is being thrown behind the extension of the Northern Line. Now? Transport for London can only say, Subject to funding being in place and permission from the Secretary of State for Transport, the new stations could be open by 2019.

So much for transport, energy and broadband. Lets look at education.

One of the governments first acts in 2010 was to slash to ribbons the school building programme. If that hadnt happened, hundreds of schools would be being built or refurbished as we speak, pumping billions into the construction industry, and providing modern school premises which will now have to be built, at far greater expense, hereafter. It is the same story, too, with housing. The number of house building starts fell by almost a quarter between March last year and March this year, with starts by housing associations, in the quasi-public sector, down by a similar proportion.

My lords, I have always taken it as a golden rule that the state should not preach to the private sector until it has got its own act together. Well lets be clear: the position we are confronting is one where the state itself has slashed or delayed infrastructure spending across the board, and failed to agree planning decisions for key privately funded infrastructure projects, while deploring delays in the private sector. That isnt leadership, but complacency masquerading as concern.

Its not just on investment that the state is failing to lead. The Government talks constantly about reducing planning delays, something which is within the power of the state to determine. Yet, I note that last year only 60% of major planning applications were processed within the target date of 13 weeks, a big reduction on the 68% determined within 13 weeks in 2010.

Turning to the National Infrastructure Plan, I note that in the latest re-issue 63 projects have disappeared without explanation from the 2011 national infrastructure plan. Of the 357 projects in both the original national infrastructure plan and the updated April version, almost two-thirds were still in pre-procurement stages. Only 38 had proceeded to procurement or construction. So more than 300 projects are still mere shadows, and 63 have vanished into thin air.

Honing down to the most important projects, the British Chamber of Commerce identified 13 critical infrastructure projects before the last election. There has been little or no progress on 8 of them.

Now, will this Bill help with any of this? It entirely depends what the proposed assistance is going to be used for. The Bill simply says that the Government may provide any... kind of financial assistance up to the absolute limit of 50bn. The only further limitation suggested by ministers is that projects should be of national significance, a definition which looks to be in the eye of the beholder.

Could the Minister, give us just a few examples, beyond Crossrail trains, of projects which will now go ahead through the proposed guarantees to the private sector? As the CBI has said: we need urgent action from ministers to identify further projects. Could the Minister also give us an indication of when the first project financed under this guarantee scheme will actually go ahead? The Financial Times said, when the Crossrail trains announcement was made: the government appears to have relaxed one of its key criteria for guarantees in that neither the Crossrail trains nor the London super sewer, another possible project for this scheme, funding for which is apparently stuck in the Treasury, will be shovel ready within 12 months. Could the Minister also tell us about the relationship between this Bill and the Growth and Infrastructure Bill published last week? This Bill was supposedly going to unlock a string of major infrastructure projects. Now, before this Bill is

even enacted, another appears which, in the notes describing it, says its purpose is promoting growth and facilitating provision of infrastructure.

There are to be yet more changes to the planning system, intended and havent we heard this before to enable applicants to avoid delays in local decision-making while respecting localism. The next Bill also includes changes to the infrastructure financing regime, which overlap directly with this Bill, for example, removing so called unviable section 106 agreements for affordable housing.

The CLG blurb accompanying the Growth and Infrastructure Bill says these further changes could unlock investment decisions across a range of technologies, bringing thousands of new jobs and billions of pounds of investment. These are almost precisely the same words were used to justify the present Bill and a host of other initiatives over the last two years, each of which has been succeeded by another intended to achieve precisely the same objectives before it has even been enacted or implemented. They are also the justification for the Regional Growth Fund, only a tiny fraction of whose allocated funds have yet been released to businesses, as catalogued in the highly critical report by the Public Accounts Committee.

I have asked a lot of questions and entirely understand if the Minister writes to me about those he cant get answers to by the time he replies. I fully recognise it may take longer than 2 hours perhaps 2 years, or even 200 to come up with a viable scheme for tolling the existing A14! Let me end on a broader note. When this Bill was debated in the Commons, the Economic Secretary to the Treasury said it would facilitate headline schemes for infrastructure and housing investment, accelerate and bring forward investment in major UK infrastructure projects, and increase the number of homes being built and occupied. Those are fine words, my lords. What we need now is action. At the moment we are chasing shadows. ENDS