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Mr Barry Sheerman (Huddersfield) (Lab/Co-op): May I push the Secretary of State a little on the level and depth of the consultation he is suggesting? He will know that many people of good will on both sides of the House, and outside it in the education world, want reform and change, but they are willing to work with him to get change fit for the 21st century. Many competitor nations are moving to a system that looks at 14 to 19 in a very different way, and the crucial turning point in education for many of those economies is 14, not 16; 16 is becoming rather redundant. If the Secretary of State is genuine about consultation, many of us on the Opposition Benches will work with him, but not if he is too fixed and too belligerent about today’s announcement.
Michael Gove: Again, I am grateful to the hon. Gentleman for arguing that we should take a less belligerent tone, but I could not help feeling that those remarks would have been better addressed to his Front Benchers rather than ours. It is in that spirit that we will work with others to identify best practice internationally. [Interruption.] I think we have had another outbreak of belligerence from some of the more rumbustious elements on the Opposition Front Bench. Of course we are happy to work with the profession, hence the period of consultation on which we are now embarking, but we want to make sure that it is informed by evidence, and the evidence is that the highest-performing jurisdictions ensure that there is an academic core that students follow to the age of 16. There is growing concern in other countries that premature specialisation at the age of 14 actually condemns some students to a lower place in a two-tier system that perpetuates the social division that I know the hon. Gentleman and I want to end.
Andrew Percy (Brigg and Goole) (Con): I know from my time in the classroom that there is no doubt that the exam system has been undermined, with young people forced on to courses for the benefit of the school. However, I say to my right hon. Friend that there is a place for coursework in examinations, particularly in history and geography, the subjects I used to teach. In addition, some pupils simply do not test well because they are not supported at home in the same way that more privileged children may be. What will my right hon. Friend do to support those young people, generally from poorer backgrounds, who struggle with exams?
Michael Gove: I was talking this morning to the head teacher of Burlington Danes academy, Sally Coates—[Interruption.] She is embracing these reforms, as most enlightened head teachers are, and I suggest that the hon. Member for Liverpool, West Derby (Stephen Twigg) have a word with her before it is too late and his position leaves him even more exposed in the educational world. The point she made to me is that, contrary to my hon. Friend’s suggestion, coursework and controlled assessment often work to the benefit of middle-class students, whose parents can better support them, and actually the form of examinations we are putting forward is better designed to support students from poorer backgrounds to show what they can do, rather than simply to show what their parents have achieved.
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are helped so that they enter a single exam and that he will not tolerate a second-tier exam for those weaker students? Although parents will be relieved that students are not asked any more to complete coursework, does he not accept that some coursework does enable students to manage their time better and to improve their skills? Should that not be reflected in his new system?
Michael Gove: The right hon. Gentleman makes two very important points. On the first, we are perfectly clear that we are moving towards a single-tier system and away from a split, two-tier system. One of the points that the Opposition Front-Bench team have refused to engage with or acknowledge is that we have a two-tier system now, with foundation and higher-tier examinations at GCSE which force students who enter the foundation tier to accept a cap on aspiration. It is a disgraceful situation, which was never addressed when they were in office.
On the second point, which the right hon. Gentleman rightly makes, about the importance of coursework and controlled assessment, I would say, as I said in response to the hon. Member for North Cornwall (Dan Rogerson), that there are specific subjects outside the existing English baccalaureate, such as art and design or design and technology, in which students can demonstrate practical skills effectively through work that is not examined during a time-limited examination period. However, there are real problems with coursework and controlled assessment in core academic subjects.
Karen Lumley (Redditch) (Con): I welcome my right hon. Friend’s announcement today, but will he look at strengthening vocational qualifications, as they are so important to young people in my constituency?
Michael Gove: My hon. Friend makes a good point. One of the things that I am delighted by is that, under the leadership shown by the Secretary of State for Business, Innovation and Skills, the number of apprenticeships has increased. In addition, thanks to the work put in place by the former skills Minister, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), we have seen a growth in the number of university technical colleges and studio schools. The Wolf report, which has also been referred to, has set us on a path where we can ensure that high-quality vocational qualifications are offered to all students who believe that that is the right course for them.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op): Under the Secretary of State’s proposals, it seems that the experimental generation who will have gained qualifications in 2016 will have either two different qualifications or none. I am not clear—perhaps the Secretary of State could provide an answer—as to whether there will be an age cap on achieving the English baccalaureate. What happens to those who do not get that grade?
I see no age cap, and I stress that one of the things that has been very encouraging during the course of today is that a number of schools have suggested that they would like to pilot this qualification even earlier than the planned start date. I hope that we
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can build up a degree of consensus behind exactly what it is that we propose to introduce and that the schools that are enthusiastic about it are able to make sure that students who do not get a good pass at 16 have the chance to do so at 17 or 18.
Mr Rob Wilson (Reading East) (Con): May I welcome the Secretary of State’s statement and congratulate him on being a real education reformer? He will know that introducing an exam with higher standards that rejects grade inflation will mean more schools failing to meet the minimum standards. Does he agree that it is better to know the failures in our schools and put them right? Does he agree that it is better to know the details?
Michael Gove: I do not believe that there is a necessary link between making sure that exams are more rigorous and more schools failing. My experience of all highly successful schools is that they use outside encouragement to do even better, and higher standards set from the centre as an opportunity to raise their performance, but I agree that greater clarity and honesty about how students and schools are performing is an absolute precondition for improving outcomes for everyone.
Geraint Davies (Swansea West) (Lab/Co-op): Does the Secretary of State understand that increasingly educated parents and investment in schools are the driving forces for increasing results at GCSE, and does he not realise that abolishing GCSEs will discredit the qualifications of everyone under the age of 50, and the likely qualifications of those taking GCSEs over the next five years, thus devaluing the currency of education in Britain and shooting a hole in the economy?
Michael Gove: The currency was devalued by decisions taken by the Government the hon. Gentleman supported from the Back Benches. The currency was devalued by the introduction of modules and by the extension of controlled assessment. It is not just me taking that view; it is the view taken by business organisations and school teachers themselves. The things that contribute to improvement are Governments committed to raising the bar, head teachers liberated to do a superb job and two parties coming together to make sure that we modernise our examination system in a genuinely internationalist way. If the hon. Gentleman wants to be part of that process, we will welcome him; if he wants to carp from the sidelines, sadly, history will leave him behind.
Andrea Leadsom (South Northamptonshire) (Con): Does my right hon. Friend agree that it is not just good for children but essential for our country that our exam results are internationally competitive? An example where we have badly fallen behind is in the EU: although we are 12% of the population of the EU, and back in the ’70s we represented 12% of the EU Commission, now we have fallen to around 4%. One of the key reasons is that we are not good enough at speaking bilingually to compete in that essential area.
My hon. Friend makes a good point about the importance of language learning. Under the previous Government, the proportion of students who were studying modern languages at GCSE fell, but under this Government, it is at last beginning to rise. On
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Friday, I had the opportunity to congratulate the Lycée Charles de Gaulle on its bilingual extension, and 60 years of successful Anglo-French teaching. Later this year, I shall visit the first new bilingual primary free school, which is in Hove. The growth of language teaching as an integral part of an all-round academic education is central to what the coalition Government wish to achieve; it is an area where we diverge from the previous Government. Vive la différence.
Nia Griffith (Llanelli) (Lab): The GCSE fiasco this summer showed the danger of rushing in change, so will the Secretary of State not only hold serious consultation with business but serious piloting of the type of question that can be tackled by the least able and also stretch the most able? That is a real challenge.
Michael Gove: I agree that it is important that we have the sort of questions in examinations that can simultaneously test the most able and ensure that all students feel that their hard work is recognised, but when the hon. Lady talks about examinations being introduced without sufficient consultation or thought, and refers to this year’s GCSE problems, I am afraid that was an examination designed by the Labour party, introduced by the Labour party and there are people—[Interruption.]
Mr Speaker: Order. The hon. Member for Cardiff West (Kevin Brennan) makes more noise chuntering from a sedentary position than he does strumming on his guitar, and I am bound to say that the noise is not as melodious.
Dr Julian Lewis (New Forest East) (Con): Does my right hon. Friend accept that the publication of grades rather than of actual examination marks makes examination results easier to massage and manipulate? Will he therefore consider the publication of actual marks in any future new examination results?
Michael Gove: My hon. Friend makes a very good point. One of the things we want to encourage in the consultation is thoughtful reflection on how we can properly record the level of achievement that each student has secured. His point is a very valuable contribution to the debate.
Siobhain McDonagh (Mitcham and Morden) (Lab): As a new member of the Education Committee, I am particularly disturbed by some of the language the Secretary of State uses. Certainly in my constituency, the real-life chances of kids, particularly those previously in the bottom schools, were transformed with the introduction of city academies by Lord Adonis and the former Prime Minister, Tony Blair. I should like to hear the Secretary of State say good things about great sponsors such as the Harris Federation and the Church of England, because they seem to be missing from this picture.
I am a huge fan of the hon. Lady, one of the last surviving Blairites in the Labour party. I am tempted to say, looking at the hon. Member for Stoke-on-Trent Central (Tristram Hunt), that together they
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are perhaps the last breeding pair of Blairites on the Labour Back Benches. All I will say is that I never lose an opportunity to celebrate the work of the Church of England and Lord Harris, whose 70th birthday party I was delighted to attend on Saturday in order to raise a glass to everything he has achieved for young people in the hon. Lady’s constituency and elsewhere.
Jane Ellison (Battersea) (Con): I very much welcome my right hon. Friend’s statement, and his words about academic rigour will be welcomed by many schools in my constituency, not least Bolingbroke academy, which opened today. Will he be looking to learn from exam systems from other parts of the world that are generally acknowledged to be very rigorous?
Michael Gove: My hon. Friend makes a very good point. One of the problems with the debate in this country, as the Deputy Prime Minister points out in an excellent article in today’s Evening Standard, is that it has tended to be introspective and backward-looking. My hon. Friend is right that we need to look outward and forward to those countries that have the best-performing education systems.
Mr Ronnie Campbell (Blyth Valley) (Lab): May I press the Secretary of State further on the kids who leave school with nothing, the kids who are on the street corners, on methadone courses, drinking cans of beer, or going down the road of crime. We all have them in our constituencies; we have all seen them. What about those kids? Why are they being left on the shelf?
Michael Gove: The hon. Gentleman’s passion does him credit, but it is thanks to some of the changes introduced by people such as Lord Adonis and carried on under this Government that we are addressing problems in constituencies such as his. It is as a result of the new academy that has opened in Blyth that children are at last enjoying a more rigorous education of the kind they deserve. It is a relentless focus, through academies, free schools and improved examinations, on improving education for the very poorest children that marks out this coalition Government, and the additional money that the pupil premium provides will ensure that those children who are poorest, and about whom the hon. Gentleman cares most, benefit the most.
Fiona Bruce (Congleton) (Con): I welcome the Secretary of State’s statement, and it will also be welcomed by Eaton Bank academy, which I had the privilege of opening on Friday. With reference to the teaching of languages, may I ask that the assessment of verbal skills during the examination process includes a genuinely spontaneous conversation with an independent external assessor so that those skills can be realistically assessed on the part of students?
My hon. Friend makes an excellent point. One of the problems we have had with languages is not just the decline in the number of pupils taking them—the result of changes made by the previous
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Government—but insufficient rigour in the way speaking and translation have been assessed. We aim directly to address that.
Julie Hilling (Bolton West) (Lab): One head teacher in my constituency contacted me to say that he went to bed in 2012 but woke up in 1956, and I know that manufacturing employers in my constituency are equally outraged by the Secretary of State’s proposals. Why did he not consult broadly with educationists and employers before coming forward with these proposals, and how will he ensure that young people end up with a qualification that is fit for the skills needs of the future?
Michael Gove: I am grateful to the hon. Lady for her point, but she invites us to consult. As I have pointed out, we are launching a consultation today, but we cannot launch a consultation on any proposals. Perhaps she is inviting us to launch a consultation on whether we should have a consultation on some ideas that someone else might think of before we can actually come forward with our own. It seems to me that she wants to have her consultation and eat it at the same time.
Sir Tony Baldry (Banbury) (Con): Is that not the point my right hon. Friend is making? First, this is a genuine consultation, which will take some time, and head teachers and others should submit their views in it. Secondly, this is not being rushed—the first of the exams under any new system will not be taken until 2017—so a little less synthetic anger and a little more constructive comment would probably do us all well.
Michael Gove: As is so often the case, my hon. Friend hits several nails squarely on the head in quick succession. It is our intention to ensure that the consultation is long enough to take into account the views of head teachers, academics and others, and head teachers have already welcomed many of the steps we are taking and want to engage positively with the Government. I hope that the Opposition do likewise.
Nic Dakin (Scunthorpe) (Lab): The noble Baroness Thatcher, the former Prime Minister, said when she scrapped O-levels that she was doing so because they represented a cap on social mobility. Is today’s announcement a return to terminal norm-referenced exams and that cap on social mobility?
Mr John Leech (Manchester, Withington) (LD): I welcome any changes to qualifications that will better prepare young people for the transition to A-levels, because the gulf between GCSEs and O-levels is too great. However, may I caution the Secretary of State to bear in mind that there is also a huge gulf between O-levels and A-levels, so any changes must take us forward and better prepare us for transition rather than just be a return to the past?
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it is poor preparation for A-levels. In some cases, GCSE English and maths is poor preparation for the workplace as well. I entirely agree with him, and I hope that over the course of the next few months we can work to ensure that that chasm is closed.
Tristram Hunt (Stoke-on-Trent Central) (Lab): I welcome the reform plans as regards an end to endless resits and competition between examination boards, but I am not convinced of the year zero approach to coursework, nor that this might not lead to a two-tier system. May I gently say to the Secretary of State that this is not the way to develop public policy in this area? In Hong Kong, this kind of major reform took 10 years of open public debate. I fully understand that he wants to butter up the Rothermeres, but the examination system deserves better than a series of squalid leaks to The Mail on Sunday.
Michael Gove: I am grateful to the hon. Gentleman, particularly for the fact that in 30 seconds he said considerably more that was sensible and coherent than his Front Benchers managed in their allotted five minutes. I am also grateful to him for showing a degree of leadership in welcoming many of the changes that we have made. I take his point about coursework and controlled assessment. I said earlier that in some subjects outside the academic core, such as art and design and design and technology, we can see the need to assess practical endeavour. However, I remain to be convinced, given the terrible problems that we have seen with coursework and, this year, with controlled assessment, that it is right for academic subjects.
Craig Whittaker (Calder Valley) (Con): Employers in Calder Valley often complain to me that young people leaving school and being presented to them for jobs cannot read or write properly and have poor social skills. Can my right hon. Friend tell employers out there in the UK how the new reforms will change that and enable young people to be more job-ready?
Michael Gove: My hon. Friend makes a very good point. There is a consensus among business organisations, from the Federation of Small Businesses to the CBI to the Institute of Directors, that the current GCSE offer is inadequate and that we need reform. Particularly on literacy and numeracy, in our consultation paper issued today we make it clear that we would like GCSE English and mathematics to include sufficient rigour so that employers can be guaranteed that students are properly literate, properly numerate, and ready for the workplace.
Paul Blomfield (Sheffield Central) (Lab): Does the Secretary of State accept that a one-size-fits-all final exam is not the best way of assessing talent across the whole ability range in core subjects, and that it is no preparation for a world of work in which no employer would dream of appointing or evaluating staff on the basis of a single closed paper?
I am grateful for the hon. Gentleman’s question, but he seems to be inviting me to move towards a two-tier system because he believes that one size would not fit all. I reject the view implicit in his argument that the overwhelming majority of our students are not capable of doing what they do in other jurisdictions
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in showing at the age of 16 that they have mastered the core academic subjects and are ready for further study and the world of work.
Miss Anne McIntosh (Thirsk and Malton) (Con): May I press the Secretary of State on how the enhanced provision for the least academically gifted will be delivered in rural areas? He is aware that North Yorkshire is one of the most underfunded of local education authorities. What particular provision will be made to the schools in question?
Michael Gove: I am aware that North Yorkshire has particular challenges, not only as a result of funding but because of the dispersed nature of the population. I hope that North Yorkshire, like other areas of the country, has benefited from the additional funding for the poorest students through the pupil premium. Although there is not an absolute correlation between poverty and low achievement, it has certainly been an entrenched feature of our system in the past. I hope that the additional resources and the other changes that may well be brought in will ensure that those students continue to do better under this coalition Government.
Angela Smith (Penistone and Stocksbridge) (Lab): One of the most important aspects of my work as a teacher of GCSE English was the formal assessment of the speaking and listening skills exhibited by students—skills that are vital for young people as they go into the workplace. Will the Secretary of State clarify whether the assessment of speaking and listening skills will be excluded from the English examination system post-2017?
Michael Gove: I read with interest the work that was done looking at some of the weaknesses in the current English GCSE, and the controlled assessment of speaking and listening was one of the areas in which there were the greatest problems in ensuring effective marking by teachers assessing their own students. I agree that effective speaking and listening is essential to a broad curriculum, but when it comes to ensuring that speaking, listening and every other skill is assessed properly, we need to move away from the model of the past.
Sir Peter Bottomley (Worthing West) (Con): My right hon. Friend can expect some representations on the expression “baccalaureate”, which originally came from an English degree at age 21 and a university course, is now a European system for 18 or 19-year-olds and will in future be provided to 16-year-olds who qualify in the core subjects.
As well as the public examination and certification system, we ought to encourage people to pass standards and get grades in their academic and other school subjects in the same way as they can in music and sport, to allow those who are achieving things to have that recognised. They can then get add-on tuition and develop.
As a last point, may I say that my right hon. Friend ought to look at the sub-editors of his article in the Evening Standard? The first four times he used the word “both”—meaning the coalition, presumably—were unnecessary, and the fifth time, the word “We” would have substituted for the first four words of the sentence.
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Michael Gove: My hon. Friend has just completed an eloquent application for the post of chief examiner at whichever exam board is successful in securing the franchise. I will ensure in future that any article that is penned by both the Deputy Prime Minister and I—or should that be me?—passes through my hon. Friend’s blue pencil before it appears in the Evening Standard. I take his point about sport and music, which both need to be better recognised in modern schools.
Bill Esterson (Sefton Central) (Lab): I do not think any hon. Member is arguing against the need for improvements in the GCSE system. However, it must be a mistake to move back to rote learning at the expense of problem-solving and the encouragement of the applied skills that are needed in the workplace and generally in life, which benefit both children and the economy in a competitive world. From what the Secretary of State has said, it seems that we face a system that will be to the benefit of the few who are good at exams but at the expense of the many who excel in other ways.
Michael Gove: I am grateful to the hon. Gentleman for his points. He says that no one in the House will oppose improvement to GCSEs, but I am afraid the Opposition Front-Bench team have done precisely that. They have made no constructive proposals of their own; they have merely defended a discredited status quo and sought to create partisan dividing lines.
On the hon. Gentleman’s point about rote learning, I would say that it is encouraged in the current system by the modular approach and the way in which examinations are currently designed—[Interruption.]
Well designed examinations ensure that people have not just the knowledge but the skill and deep understanding to show that they have been well taught. The best head teachers have argued for that view, and I am happy to embrace it.
Alun Cairns (Vale of Glamorgan) (Con): The statement by the Secretary of State is excellent news for pupils in England. The way in which GCSEs have been discredited over the past decade or more has been completely unacceptable. Pupils in my constituency and across Wales, however, will still be subject to the same failed model of GCSEs. Will he do everything possible to encourage his counterpart in Wales to engage in the process and bring about either the same model as in England or one as close to it as possible, and to stop scoring party political points?
Michael Gove: I am grateful to my hon. Friend for making his point. As someone married to a Welsh girl, it grieves me that the Welsh education system went backwards under Labour, and it grieves me even more that every objective assessment of what has happened under Labour in Wales shows that education has improved more quickly and effectively in England than in Wales. I hope that the Education and Skills Minister in Wales will embrace the progressive reforms that the coalition Government have put forward. He now has an opportunity to show that he is ready to operate in a constructive fashion.
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Michael Gove: I looked at everything that had been written by the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses, and in so doing, I could see the widespread view among business that we needed to reform GCSEs. I look forward to hearing from individual businesses about their views of specific aspects of the reform. However, among businesses, there was a universal view that examinations had been discredited and dumbed down under the previous Government and that, at last, the nettle was being grasped.
Nigel Mills (Amber Valley) (Con): I welcome the statement. What can my right hon. Friend do to ensure that students in the next five years also obtain qualifications that are well regarded by prospective employers?
Michael Gove: One thing that the coalition Government have done is allow schools that are concerned about the quality of GCSEs, particularly the modular nature of some GCSEs, to teach the IGCSE. I visited a state school in Hertfordshire on Friday, where a mathematics teacher told me that she hoped that we would adopt a system that was more similar to the IGCSE, because that would help inject greater rigour into the process. I was able to reassure her that we were learning from best international practice and that I would encourage all schools to consider how the IGCSE might be an appropriate preparation for the changes that we hope to introduce.
Diana Johnson (Kingston upon Hull North) (Lab): I would like rigorously to test the Secretary of State’s statement. To assist me, will he provide the evidence base for the policy that he has announced to assure me that it will benefit young people and this country’s economy?
Michael Gove: Yes, I would be happy to share with the hon. Lady the work that has been done by the university of Durham, the Royal Society of Chemistry, Ofqual, Ofsted and King’s College London, all of which have pointed out the way in which the current model of GCSE examination needs to change. I would also be happy to share with her best practice in every successful education jurisdiction, which stresses a broad curriculum of the kind that the English baccalaureate aspires to provide.
Mr David Nuttall (Bury North) (Con): I thank the Secretary of State for his statement. Does my right hon. Friend agree that, to reassure everyone of the rigour of the new exam, no pupil should be regarded as having passed it unless they achieve a mark of at least 50%?
I take my hon. Friend’s point. When I was re-reading Mike Tomlinson’s report into what went wrong with A-levels under the last Labour Government, I noted that he made the point that it is very difficult for the public to understand how exam boards convert raw marks into particular scores and then particular grades. It is an opaque process that impedes understanding. I think that my hon. Friend the Member for New Forest East (Dr Lewis) made the
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point that greater granular detail about attainment can help us all understand how marks are awarded. The simplicity that my hon. Friend the Member for Bury North (Mr Nuttall) wants is not always available to us, but we should aspire to it.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Employers in places such as Birmingham tell me that new industries, particularly social media and the computer programming and gaming industry, often look for aptitude in such skills as programming and coding. They say that none of the current examination systems reflects that sort of aptitude. Will the Secretary of State’s reforms to the examination system take those areas into account, accommodate new skills and provide a test for them?
Michael Gove: The hon. Lady is right. In January, in response to the Livingstone-Hope review, I announced that we would disapply the current ICT curriculum, which did not provide the sorts of skills that the hon. Lady mentions, and that we would develop new computer science specifications. That announcement was widely welcomed, and I have been working since then with Ian Livingstone, Microsoft and others to ensure that we can provide people with the coding skills with which they were not provided in the curriculum that we inherited.
Henry Smith (Crawley) (Con): I seek reassurances from my right hon. Friend that students who have been diagnosed with dyslexia will be afforded the additional time and appropriate assistance needed during a more rigorous exam process.
Michael Gove: My hon. Friend makes a characteristically acute point on behalf of those students who labour under the disadvantage that comes from having special educational needs. We want to ensure that all students are capable of sitting the examination and that, if they have a particular disability, or live with a condition such as dyslexia, appropriate support is provided.
Andrew Miller (Ellesmere Port and Neston) (Lab): During the consultation, will the Secretary of State listen carefully, particularly to the engineering industry, which is concerned about the artificial divides that have crept in between vocational and academic qualifications? We all need to develop some practical skills—even the Secretary of State needs to learn how to use a left-handed screwdriver. In doing that work, will he also listen to those who are worried about the lack of continuous professional development in the teaching profession because of the pressures in the curriculum?
Michael Gove: I am painfully aware, as are the British School of Motoring and the Department for Transport, of the need continually to improve practical skills, and as a result of my failure in that area I have had recourse to expert engineers on more occasions than I care to remember. The hon. Gentleman makes an important point and we must ensure that the academic qualifications in maths and the sciences for which students study to age 16 are preparation for the vocational courses that follow, including in engineering. The point about continuous professional development was well made, and we will ensure that that is a priority of the new chief executive of the Teaching Agency.
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Lorely Burt (Solihull) (LD): Under the existing GCSE system, too many of the most vulnerable children leave school with nothing. What arrangements will be made for children with special educational needs?
Michael Gove: The hon. Lady makes a good point. In every nation, a small percentage of students—perhaps 5% or 6%—live with such severe special educational needs that it is difficult for them to secure access to an academic curriculum by the age of 16. We must ensure that those young people have a full and rounded statement of what they have achieved at age 16, so that they, their parents, and potential employers know that they have talent and real ability. Although that talent may not be recognised through an academic curriculum, it can be recognised in the world of work and deserves to be applauded. We want to work with specialists in the field of special educational needs to ensure that that achievement is recognised and, where appropriate, for those students to secure EBacc certificates in English and mathematics at a later stage.
Alison Seabeck (Plymouth, Moor View) (Lab): Children in homes that are not connected to the internet—largely those in disadvantaged areas—are likely to fall one grade behind other children, so tackling rather than increasing poverty must be a priority. Does the Secretary of State agree that working with families in those children’s early years is more important than waiting until they fail at 16 and hoping to sort things out in the two years that follow?
Michael Gove: I absolutely agree and would say two things. First, the efforts being made to improve access to broadband across the country will help to ensure better internet access for every family. Secondly, improving education in a child’s early years is critical. That is why we are extending the number of hours of pre-school learning available for disadvantaged two-year-olds, and why we are ensuring that the early years foundation stage is more rigorous.
Andrew Bridgen (North West Leicestershire) (Con): My right hon. Friend the Secretary of State will be aware of the investigation by The Daily Telegraph into the conduct of exam boards last year. One examiner was recorded as saying that the exam in question had so little content he was surprised it got through, and other examiners were caught telling teachers which questions to expect in that year’s exams. Will the Secretary of State assure the House that the reforms will end the ludicrous situation in which exam boards compete with each other in a race to the bottom to offer the easiest exams to schools?
Michael Gove: My hon. Friend is to be congratulated on the clarity of his question and the cogency of his argument, as is The Daily Telegraph on the public benefit that accrued from its investigation.
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May I congratulate the Secretary of State on learning his Welsh lesson, even if he has proved himself a rather slow learner? My constituents can enjoy the benefits of the Welsh baccalaureate now, rather than wait until 2017. Will the Secretary of State learn another lesson from Wales by studying what happened with Leighton Andrews’s decision to award fair results to those who were cheated by the mismarking in the English exams?
Michael Gove: There is a lot to admire in Wales, including the hon. Gentleman. I do not, however, admire the way that the regulator and the Education and Skills Minister are one and the same, and we must separate decisions taken by politicians from those taken by regulators. That is the approach taken in England, and I think it is better.
David Rutley (Macclesfield) (Con): I welcome the commitment of my right hon. Friend the Secretary of State to ensuring an absolute focus on genuine educational attainment, rather than grade inflation. Will he reassure the House by confirming that the planned consultation exercise will focus not only on course content but on how the new exams will be implemented to ensure maximum possible success?
Michael Gove: Yes. My hon. Friend makes an important point and we will do everything we can to ensure that the consultation includes not only content but method of assessment and support for teachers.
Neil Carmichael (Stroud) (Con): I welcome the statement, chiefly because it builds on the English baccalaureate, and also because it reflects the important conclusions of Professor Alison Wolf’s report. However, may I stress the importance of ensuring that further education colleges, universities, sector councils and representatives of business communities are consulted, because their views are pivotal? My right hon. Friend will find that they are also supportive.
Michael Gove: I am grateful to my hon. Friend, whose commitment to the FE sector is well known. He is absolutely right: no reform of examinations at 16 can succeed unless we listen to the best voices in further education.
Businesses in my constituency tell me time and again of their concerns about standards and their confidence in them. Members may find it hard to believe, but I was not the most academic pupil. I am therefore particularly interested in how best we can help such students. Guiseley school in my constituency has done excellent work on encouraging pupils into engineering and on working with local businesses to determine their needs. Will my right hon. Friend assure me that while he is introducing the changes he will put equal emphasis on creating opportunities for those less academic pupils and on encouraging partnerships such as the one that Guiseley school has established with local businesses?
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ability, can progress at the age 16 either to the world of work if it suits them, or to further and higher education. We need to work with business to ensure that that can happen.
May I express my sympathy for him in finding himself the final person to be called? As it says in the King James Bible, which, of course, has been distributed free to every school under this Government, the first shall be last and the last shall be first.
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Points of Order
Mrs Madeleine Moon (Bridgend) (Lab): On a point of order, Mr Speaker. Prior to the House going into recess in July, I pressed the Leader of the House on keeping local Members informed of the sale of their Remploy factories into the third sector. I was promised that that would be done. I have since written to the Department for Work and Pensions on 6, 7 and 13 September asking for information relating to the sale of my Bridgend Remploy factory. I have received no reply to any of those letters.
My understanding is that a final decision on the sale will take place either today or tomorrow. As a matter of courtesy, should not the Department for Work and Pensions respond to local Members’ letters and keep them informed of job losses—for me, it potentially means the loss of the jobs of 45 disabled people—so that we can work closely with bidders to ensure that our factories are kept open and that workers have the opportunity to continue the work they so enjoy?
Mr Speaker: I am grateful to the hon. Lady for her point of order, to which I make two points in response. First, Ministers should always reply in a timely fashion to letters from hon. and right hon. Members, as they should to questions from them. Secondly, I would say to the hon. Lady that if she has been assured that she will be kept informed in advance of announced decisions, that commitment should obviously be upheld, whether it was made on the Floor of the House or elsewhere. The Leader of the House is not present, but I would imagine that he is within the precincts of the Palace, and would very much hope—[Hon. Members: “The Deputy Leader of the House is present.”] The Deputy Leader of the House is here and we are extremely grateful to him. He has heard the message and will have digested it already by now, I feel sure.
Henry Smith (Crawley) (Con): On a point of order, Mr Speaker. I hesitate to raise this matter as a point of order, but I would appreciate your advice. I have been extremely concerned about the near-monopoly situation whereby prepaid envelopes are supplied to Members of Parliament without any competition. I have been in dispute—or my office has been in dispute—with Banner, suppliers of prepaid envelopes, for an extremely long period, with no resolution. It has got in the way of helping to deal with constituency correspondence, and I would appreciate your advice.
Mr Speaker: The hon. Gentleman has raised an important point, but it is not one immediately for the Chair. I advise him to contact either the Administration Committee or the Finance and Services Committee, and if he is unsure and genuinely hesitating about which of the two should be his preference, he could always be bold and write to both.
Paul Flynn (Newport West) (Lab):
On a point of order, Mr Speaker. In the exchanges earlier about Afghanistan, reference was made to the three soldiers who have died since last Thursday. I believe it appropriate that the House also remembers the others who have died in the past few years. They are: Guardsman Jamie Shadrake,
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1st Battalion Grenadier Guards, aged 20, from Wrexham; Lance Corporal Matthew David Smith, Corps of Royal Engineers, aged 26, from Aldershot; Lieutenant Andrew Robert Chesterman, 3rd Battalion the Rifles, aged 26, from Guildford; Warrant Officer Class 2 Leonard Perran Thomas, Royal Corps of Signals, from Cardiff; Craig Andrew Roderick, 1st Battalion the Welsh Guards, aged 22; Guardsman Apete Saunikalou Ratumaiyale Tuisovurua—
Mr Speaker: Order. It is with some reluctance that I interrupt the hon. Gentleman, but he will understand that I cannot know how long is the list that he plans to read out. I want to say politely to him—because he deserves this response—that I have not forgotten the exchange that he and I had on, I think, the first or second day back in September, when he raised with me his view that there should be a formal oral recording, periodically, of lives lost, and asked me to look into the matter. I said that I would, and I am doing so, and I think it wise to proceed on the basis of consultation. I intend to speak very soon to the Leader of the House, the shadow Leader of the House and various others about the matter, and then to revert to the hon. Gentleman. I intend him absolutely no discourtesy, and naturally I intend no discourtesy to the deceased whose names he was planning to read out, and I hope that in return he will do me the courtesy of allowing me briefly but properly to reflect on how to take this matter forward. If he would be good enough to leave it there for the day, his generosity of spirit would once again have got the better of him.
Paul Flynn: You will recall, Mr Speaker, that I have in the past read out the names of the 179 men and women who died in the Iraq war and the names of more than 200 of those who have died in the Afghan war. By a deliberate decision, this is now banned in the House, and the only protest that I can make against that attempt to disregard and show a lack of respect for the fallen is to continue reading out this list, until we reach an obvious conclusion—
Mr Speaker: Order. Would the hon. Gentleman be good enough to take his seat? I note what he has said, but I say to him and the House that I intend no discourtesy to anybody. In all fairness, we cannot make policy on the hoof. I understand his impatience for what he regards as a satisfactory resolution of this matter, and I hope that such a resolution, in whatever form, can be achieved. Meanwhile, however, we have to operate in accordance with some norms and practices, one of which is acceptance of the decisions of the Chair. I was happy to let him proceed for a short period and to read out some names, and he has done that, but it would not be right today to have a long list read out, without regard to what decision the House might reach. I shall reflect and consult on the matter, and I undertake to him, in full view of the House, to return to him and the House very soon. I hope that that is fair for today.
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Infrastructure (Financial Assistance) Bill
We are introducing the Bill because a number of key infrastructure projects in this country that are close to starting construction are being held back as a result of the difficulties they face in accessing finance. These difficulties are not because of poor commercial or economic viability of projects, but because of temporary capacity constraints in debt markets and significantly longer lead times to secure lending commitments. Accordingly, we are expediting this Bill so that we can provide the necessary financial assistance as quickly as possible and provide confidence to the markets that the Government will be in a position to do so. Once Parliament approves the Bill we will be able to complete formal negotiations with project providers over financial assistance, which we would like to do as quickly as possible to prevent costly and unnecessary delay. I therefore thank Opposition Members and the Opposition’s Front-Bench representatives for agreeing to expedite the Bill.
The measures that the Bill will make possible—financial assistance to infrastructure and housing projects worth tens of billions of pounds—have received widespread support, particularly from the business community. They are supported, for example, by the Confederation of British Industry, which says that our approach
“marks a big step towards unlocking the…investment needed to renew our national infrastructure,”
“will provide a much-needed tonic for the construction sector, getting diggers on site and people into work. It will make a difference to households across the country.”
Mr Denis MacShane (Rotherham) (Lab): I support the main thrust of the Bill, but on Sunday last week I drove my son to start his studies at Edinburgh university and the A1 between Newcastle and Edinburgh, which is a single-carriageway road, was clogged up with tractors and hay balers. It is extraordinary that, in contemporary Britain, the access road to one of our main capital cities belongs to the back of beyond in Bangladesh. Can we do anything to dual-carriageway that road? It is close to the Chief Secretary’s constituency as well as mine.
Danny Alexander: I think that my constituents in the highlands would say that describing it as close to my constituency might be a misuse of the word “close”, but none the less I recognise the right hon. Gentleman’s point. I gently observe that his party had 13 years in office to deal with that project, although I mean no disrespect to him in saying so.
Danny Alexander: Let me answer the intervention made by the right hon. Member for Rotherham (Mr MacShane) and then I will gladly take a further intervention. I will deal with them one at a time, if I may.
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I certainly will pass on the right hon. Gentleman’s concerns to the Department for Transport, which is aware of the matter. I have received representations from Members of all parties in the north-east of England about that particular project.
Mr Robinson: On road projects that would be advantageous, such as the one mentioned by my right hon. Friend the Member for Rotherham (Mr MacShane), is the Chief Secretary aware that not a single one of those announced in the autumn statement has yet got under way?
Danny Alexander: I would point out to the hon. Gentleman that one of the announcements in the autumn statement was about local authority major projects. He will know, for example, that the Kingskerswell bypass is under constructions, that the A164 Humber bridge to Beverley improvements are under construction, and that the east of Exeter scheme improvements to the M5 junction 29 are under construction. I could carry on, but I will save the rest of the list for further interventions.
Kelvin Hopkins: The fact is that public sector investment fell by 29% between the last year of the Labour Government and this year, and that it is forecast to fall further to 32%. Given that borrowing money is as cheap as it has ever been, surely the decision is just a matter of reversing what the Government have been doing.
Danny Alexander: The hon. Gentleman will know that the headline plan set out by the previous Chancellor and Government included cuts to capital spending that were substantially greater than those being implemented by this Government.
Danny Alexander: I will gladly take another intervention after responding to the hon. Member for Luton North (Kelvin Hopkins). He will know that the low interest rates to which he has referred are in part a consequence of the fiscal credibility that this Government have established. It is precisely because we wish to use the strength of this country’s balance sheet which comes from that credibility that we are able to announce this guarantee scheme, which I will go on to describe in a moment. However, I shall take an intervention from the shadow Chief Secretary first.
Rachel Reeves: The right hon. Gentleman will be aware that the Office for Budget Responsibility has forecast that the previous Labour Government’s plans would have led to £6.6 billion more investment in infrastructure than that planned by this Government over the next three years. Will he confirm those numbers?
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Danny Alexander: That is not my understanding of the position. In 2010, we added a little more than £2 billion in every year of the spending review to the capital headline figures set out by the previous Government. We added to that further in last year’s autumn statement by switching some money from current spending to capital spending, precisely because of the value that we ascribe to infrastructure projects.
“Business will appreciate the pace with which the government is moving to put its new housing and infrastructure guarantees in place”.
“This can play an important role in helping reduce development risk, boost returns and attract investors once the development is complete.”
John Howell (Henley) (Con): I wonder whether my right hon. Friend has seen the survey that was published today by the CBI and KPMG, which shows that 97% of business leaders see the planning system as a big turn-off to allowing infrastructure to go forward.
Danny Alexander: I did see that survey. I note that it was conducted before the Government announced the guarantees plan. However, a subsequent snap-shot poll showed a widespread welcome from the business community for the Bill. My hon. Friend will know that we have made significant changes to the planning system, including in the announcements last week, that relate directly to the threshold for infrastructure projects. Those will allow more projects of a slightly smaller scale to go through the national process, rather than getting tied up in local processes.
Geraint Davies: The right hon. Gentleman will know that there are schemes in America where, with the support of pension funds, the private sector builds houses on land provided by the public sector. That provides a mixed asset with social and private housing, and a revenue stream for the public sector at no cost to it. When such schemes are available, why are the Government instead saying to the private sector, “Forget about social housing for a while. Just build private sector housing”? That will have a long-term impact on the demography of an area.
Danny Alexander: The hon. Gentleman, with the greatest of respect, has misunderstood the Government’s message. Part of the guarantee programme will extend the benefit of Government guarantees to housing associations, to enable an additional 15,000 affordable properties to be built. That is why it has been welcomed by the National Housing Federation, which speaks for housing associations in this country. Housing associations recognise that they will benefit from the guarantee, because it will reduce the cost of finance and help them to build many more homes for the sadly limited amount of money that is available to this country at the moment.
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“Government now clearly understands the constraints on delivery and has outlined action to address them.”
The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and geographical regions; to moving away from an economy focused exclusively on the south-east of England, which is reliant on financial services and unsustainable debt, towards an economy supported by a wide variety of industries across the United Kingdom; and to making the UK one of the best places in the world to do business, attracting foreign investment and promoting our exports. To achieve that vision, the Government are committed to delivering world-class infrastructure, thereby giving firms access to the communication and transport networks that they need, wherever in the UK they happen to be.
We want to allow Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map for delivering on that vision. There is a pipeline of £200 billion of upcoming investments in major necessary projects, most of which will be delivered through the private sector. In addition, we want to see billions of pounds of investment in housing and infrastructure to support our public services.
Even in more favourable circumstances, raising the private finance that is necessary to deliver on those goals would be a challenge. Given the disruption caused by the instability of international markets and the eurozone, and its adverse effect on capital markets, it is clear that decisive action is necessary to enable these projects to be delivered. The Bill will allow us to take that action and to bring forward the investment that is required.
Roberta Blackman-Woods: Will the right hon. Gentleman explain why it has taken so long for the Government to recognise that additional investment in infrastructure is needed if the economy is to grow?
Danny Alexander: Again, I do not agree. By looking at the way we use capital moneys across Government, the decisions we took in the 2010 spending review have enabled us, for example, to devote more capital moneys to the Department for Transport for investment in our transport infrastructure over these four years than our predecessors were able to devote over the previous four years. The same could also be said of communications and broadband infrastructure. This Bill is a major development along that road. Labour could have put in place a guarantee scheme at any point in the previous 13 years, but it chose not to.
Andrea Leadsom (South Northamptonshire) (Con):
I have a business breakfast club in my constituency. A group of business people told me recently that the big challenge for them is not being able to move into decent premises so that they can expand and the inflexibility of the system. Can my right hon. Friend tell me whether
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there is anything in the Bill for those businesses? Surely they are the real engines of growth, operating at the sharp end of our economy.
Danny Alexander: By offering guarantees to a wide range of infrastructure projects that might otherwise be delayed because of lack of access to finance—thereby bringing those projects forward, or in some circumstances accelerating them—the Bill will, I hope, help to ensure that the businesses my hon. Friend is describing can access the quality of infrastructure they need to deliver their growth plans. In that sense, I think the Bill will make a big difference.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab): I have been listening carefully to what the Chief Secretary has been saying. I understand the argument in principle, but he has been short on specific illustrations. He will know that the national infrastructure plan identifies a significant number of schemes. Can he now tell us which schemes that are currently stalled and not proceeding he would anticipate getting the go-ahead as a result of the Bill being passed?
Danny Alexander: I have a good deal more detail to get to in my speech, and I shall do so as soon as I have got through the various interventions that have been made. However, I shall not list individual projects before we have agreed guarantees for them, for the very good reason that it would be wrong to set out in this House those projects that could potentially benefit from the Bill, as doing so could either disturb the commercial position of some of the finance that has already been secured or undermine the discussions that we are engaged in to put in place such guarantees.
Joan Walley (Stoke-on-Trent North) (Lab): When the Minister gives the details of where the investment will be going, will he tell the House what regard will be given in the decision-making process to the Climate Change Act 2008 and the work of the Committee on Climate Change? It would be short-termism and completely the wrong way to go about the policy if, for example, his infrastructure investment locked us into greater use of carbon rather than reduced use.
Danny Alexander: The hon. Lady makes an important point. Of course, the Bill will not discriminate between projects on policy grounds. We have set out some criteria, which I shall come to, but there are many energy projects—particularly in the renewables field—that are being brought forward in this country as a result of that framework and the policies that have followed from it. Some of those projects may well fall into the category that needs the support from the guarantees that the Bill will provide. In that sense, the Bill should give us an extra tool to ensure that the renewables investment that we need can go forward in a timely fashion, which I hope she would welcome.
The House will know that the Treasury already has wide powers under common law, not limited by statute, to issue guarantees, make loans and give other financial assistance in support of infrastructure. In some cases, Secretaries of State have statutory powers to support infrastructure; in others, they would need to rely on common law powers. However, many Members will
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also know that there is a long-standing convention, dating back to 1932, that the Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. Accordingly, in order to offer the support that we want to see, the Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities, should they be called on to do so. Today we seek authority for the Treasury, or the Secretary of State where appropriate, to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK.
Hazel Blears (Salford and Eccles) (Lab): In drawing up the agreements for such significant expenditure, what account will the Chief Secretary take of the Public Services (Social Value) Act 2012, so that we can secure a social, environmental and economic impact from such contracts—in particular, through employment and training opportunities for young people—and ensure that the money makes a difference on the ground in our communities?
Danny Alexander: The right hon. Lady is referring to an important piece of legislation, which, generally speaking, will have been taken into account in the process of giving consent to a project. The guarantees will be offered to projects that meet a number of criteria, one of which is that they already have the necessary consents in place to get going within 12 months. The objective is to bring forward and accelerate the development of infrastructure, and it would be inappropriate to impose additional obligations on people delivering projects. This is about enabling projects that are already slated to happen to get going quickly.
Mr Robinson: This is a huge sum of money that the Treasury is undertaking to guarantee. I cannot imagine what some officials must think about it, but I know that there will be a strong case for ensuring that all guarantees are immediately and unconditionally added to the public sector borrowing requirement. Is it the case that any guarantee will be counted as public expenditure and be part of the PSBR?
Danny Alexander: It is good to hear from someone on the Labour Benches who thinks that £50 billion is a lot of money, given the freedom with which the Labour Government borrowed such sums during their time in office. The hon. Gentleman will know that these guarantees will not score to the PSBR, except to the extent that one makes an assumption about them being called, which causes a bit of immediate public expenditure. It is only at the point at which a contingent liability is called on that it scores as public spending. He will also know, because I suspect that he was involved in these matters when he was a Minister at the Treasury—
If the hon. Gentleman will let me finish my answer, I will give way to him again. He will also know that we recently obtained the agreement of Members on both sides of the House to introduce a new process known as the whole of Government accounts.
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That process, in addition to covering the national accounts that relate to immediate expenditure, also reports on off-balance-sheet expenditure of all sorts. Contingent liabilities of the kind that might be entered into under the Bill will be reported in the normal way.
The hon. Gentleman will also observe that the Bill includes significant reporting requirements. These will require the Treasury—or the Secretary of State, where appropriate—to report to the House in circumstances in which guarantees are issued under the terms of the Bill. I hope that that satisfies him—but perhaps it does not.
Mr Robinson: There was a long-standing Treasury tradition—I do not know when it was last breached, or whether it has been discarded—that a guarantee was counted as expenditure when it was given, not when it was called. The Bill seems to provide yet another easy way for the Government to find some off-balance-sheet expenditure in a way that they swore not to do.
Dan Rogerson (North Cornwall) (LD): I am pleased that the Government are doing more to build on the work that they have done to invest in infrastructure and to encourage investment for other projects. I hope that many hon. Members visited Cornwall over the summer. If so, they might well be familiar with the Temple to Higher Carblake stretch of the A30 on Bodmin moor, which is not dualled. The road on both sides of that stretch is dualled. Local proposals have been made to come up with funding that can be put with Government funding to take the dualling scheme forward. I hope the Chief Secretary will ensure that this legislation will help to unlock local sources of funding to take such projects forward.
Danny Alexander: I had the pleasure of spending some time in Cornwall earlier this year, and of driving down that stretch of road. I understand the case that my hon. Friend makes. It has been made to me by Cornish colleagues from both coalition parties, and we will of course look sympathetically at any requests that might be made. It is always welcome to see local funding coming forward, and to see a local area taking responsibility for what it wants to do.
Charlie Elphicke (Dover) (Con): The way in which the guarantees will be structured will be incredibly important for the planning by the financiers who wish to unlock these important projects. Will this involve credit support for the land or undeveloped infrastructure, credit support for the development finance piece, or credit support for the off-take or use of the infrastructure at the end of the day?
As I shall explain, we are not seeking to circumscribe unnecessarily the nature or structure of the guarantees, either through the Bill or through the announcements that the Government have made. We are willing to have discussions with those involved in projects that meet the criteria that have been set out, and it might well be that different structures of
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guarantee will be appropriate for different projects. I do not wish artificially to circumscribe the flexibility of the scheme in advance of the discussions with the individual projects. I am sure that those involved in the projects will be well able to have discussions with Infrastructure UK about the nature of the guarantee that would suit them best.
I was explaining the convention that the Government should not rest significant expenditure under common law powers on the sole authority of general supply legislation. Accordingly, to offer the support we want to see, Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities should they be called upon.
Today we seek authority for the Treasury to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK. That financial assistance might take the form of guarantees, loans, indemnities or other support backed by public funds. It could be used—
The Bill does not affect any existing authority to incur expenditure that might already have been conferred on a Secretary of State; nor will it cover expenditure by a Secretary of State that can properly rest on the authority of annual supply legislation, without requiring specific statutory authority.
Where costs connected to the guarantee are incurred by the Exchequer that cannot reasonably be absorbed by the funds already provided by Parliament and where it is not possible to seek authorisation of Parliament for the additional expenditure—for example, because the House is not sitting—the Bill allows provision to be made from the Consolidated Fund. This is to cover the commercial reality of situations in which payments need to be made very quickly following an unforeseen obligation. Without this provision, any guarantee could lack commercial viability.
The Government intend to offer assistance in the form of guarantees, although the Bill makes provision for other forms of assistance that we intend to use only where unforeseen urgent provisions are required. We believe that up to £40 billion of investment in infrastructure could be brought forward or accelerated under the UK guarantee scheme, using the powers in the Bill. That will help to deliver core infrastructure that supports growth, to improve the UK’s energy, transport, water,
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waste and telecommunications, and it includes about £6 billion-worth of public-private partnership projects delivering essential public service infrastructure. We will issue guidelines and scrutinise proposals to ensure that any proposal that receives an infrastructure guarantee is nationally significant, financially credible, good value for the taxpayer, requires a guarantee to get under way and is ready to start within a year.
Since the projects we expect to back will be structured to minimise the potential of losses to the Exchequer, there will be minimal impact on public sector net borrowing as a result, except in the extreme circumstance that a guarantee is called upon or other forms of financial assistance are provided. We intend to levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive, and that the taxpayer receives a fair price for any risk being taken. We also plan to use these powers to support up to £10 billion-worth of investment in housing.
Mr Raynsford: I am grateful to the Chief Secretary for giving way, although this intervention is not on a housing matter, but relates to his earlier comment about “schemes of national significance”. As he will know, this was part of the original blueprint, yet I searched in vain through the fine print for any definition of “national significance”. Is the absence in the Bill of any such reference to nationally significant schemes a significant omission, or not? If not, how are the Government going to ensure that their objective of supporting schemes of national significance is met?
Danny Alexander: It is not an omission from the Bill, which puts in place broad and permanent powers to issue guarantees for infrastructure projects. The Government expect that under the UK guarantee scheme, which will be the first manifestation and use of the Bill’s powers, nationally significant projects will be the sorts of projects able to apply. That means projects listed in the national infrastructure plan or other such projects as may come forward, but the Bill gives a broader authority to the Treasury to issue guarantees in other circumstances. What I am describing is how the Government intend to use the powers in the Bill.
John McDonnell: On that specific point, I hope that the right hon. Gentleman is going to deal with clause 1(2)(b), which is one of the provisions defining the range of facilities that will be funded in this way. It refers to
“railway facilities (including rolling stock), roads or other transport facilities”.
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Will he clarify whether those “other transport facilities” include airport expansion and runways? Although the third runway at Heathrow, or perhaps elsewhere, is not listed in the national programme and will not be brought forward in the next 12 months, there are no sunset clauses, so this Bill could be used to that effect.
Danny Alexander: The hon. Gentleman is right: there is no sunset clause. That is because we think that it is important to introduce these powers, not just for now but for the future. By circumscribing the financial limit of the extent of the powers and also by establishing strong requirements for reports to be made to Parliament, we can ensure that Members continue to be informed on how they are used. As the hon. Gentleman says, no such proposals are on the table at present, but in principle, should a major infrastructure scheme arise in the transport sector but be unable to attract the necessary finance because of conditions in the funding markets, it could be eligible in the future. However, that would be a decision for the Government of the day.
Henry Smith (Crawley) (Con): Will my right hon. Friend join me in congratulating London Gatwick Airport Ltd on the £2 billion that it is investing in the upgrading of the facility, including the rail infrastructure?
Danny Alexander: The hon. Gentleman has cited the airport that I use most, apart from Inverness airport, because it services Inverness. I probably use it a couple of times a week. I have observed the investment programme, and it is certainly improving the facility. We hope that that improvement will continue.
Joan Walley: I am grateful to the Minister for giving way a second time. Does he agree that it is important for the Bill to provide for proper environmental impact assessments? Given that consultation is taking place in the House now that the Government have got rid of the regional spatial strategies, there is a requirement for us to ensure that environmental impact assessments take place. Will the Minister explain how that is linked with the requirement in clause 3?
Danny Alexander: I think it important for legislation to contain provision for appropriate environmental impact assessments, but this Bill is not the proper place for such a provision. Such assessments will have already taken place as part of the consenting process. As I have said, the Government will offer guarantees only to projects that can get under way in less than 12 months and have secured the relevant consents.
Kelvin Hopkins: Private companies in Britain are sitting on a cash surplus of £700 billion, but they are, in effect, on investment strike. They will not invest because the economy is depressed and they see no possibility of a profitable return. Is it not the case that only the Government can drive us into growth again, and that the Government must take the lead to unlock that money for the private sector?
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important infrastructure, which has suffered from under-investment for so many years. Perhaps that is the answer that he was seeking.
The Government will use their hard-earned fiscal credibility to pass on lower costs of borrowing to support the long-term delivery of new affordable and private rental homes. We plan to issue debt guarantees for a private rental housing scheme and the affordable housing scheme to give institutional investors the assurance that they need to invest in housing. Under those schemes, the Government would enable providers who commit themselves to investing in additional new-build rented homes to raise debt with a Government guarantee. Housing proposals will be scrutinised and approved on the basis of presenting low-risk, high value-for-money investments.
As with UK guarantees, there will be a minimal impact on public sector net borrowing, as the developments we expect to back will be structured to minimise the potential losses to the Exchequer. For the private rented sector guarantee, we intend to levy a commercial charge to reflect the benefits that companies receive and to cover the risk taken by the taxpayer.
The actions made possible by the Bill would provide enormous benefits across the UK. We expect the boost to housing construction, combined with our recently announced planning reforms, to generate about 140,000 jobs in the construction sector, and the infrastructure unlocked through UK guarantees could provide hundreds of thousands more. However, this is not just about a near-term boost. The projects that go ahead as a result of the action that we are taking will provide major long-term benefits for individuals, firms, households, and the whole UK economy. They could help businesses to take better advantage of 21st-century technology by improving broadband and mobile speed and connectivity. They could help businesses to connect with consumers, employees and each other, and allow workers to gain access to new job markets by improving our major ports, airports and corporate centres, and the transport links between them.
The planning system has an important part to play. Two years ago, the local authority gave Lydd airport, which is in my constituency, permission to expand. A private investor is willing to pour in millions of pounds so that the work can start immediately, but the decision is still locked up in the planning system awaiting the Secretary of State’s approval. Is there any advice that my right hon. Friend can give his colleagues in the Government that might make it easier for people to invest in the kind of infrastructure that he is describing?
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Housing guarantees, alongside a wider package of housing and planning reforms, will contribute to the construction of up to 70,000 homes, including affordable housing, and opportunities for first-time buyers to get on to the housing ladder. That will ease conditions in overcrowded and overpriced residential areas, and will enable people to locate near to jobs.
The steps that we plan to take, and which the Bill enables us to take, will help more companies in a wide range of sectors to grow and flourish, not just in the south-east of England but throughout the UK, and will give more people access to a wider range of opportunities. The benefits will also be felt in Scotland, Wales and Northern Ireland. The UK’s hard-won fiscal credibility should benefit the whole of the UK.
The Bill will enable major infrastructure projects to secure finance regardless of where they are based. We will work closely with the Northern Ireland Assembly, the Welsh Assembly Government and the Scottish Government to ensure that the authority conferred on the Treasury or the Secretary of State by the Bill can be used effectively to help to deliver for people in Scotland, Wales and Northern Ireland.
Geraint Davies: In certain areas of Wales—such as Swansea, part of which I represent—the cost-benefit ratio is not always as strong as it might be. Will the Minister support, for instance, super-connectivity for Swansea, given that it has been granted to Cardiff, and better links to Cardiff airport? Passenger numbers are not great at present, but that is simply because the infrastructure has not been there in the past.
Danny Alexander: I hear the case that the hon. Gentleman is making. We have made important announcements recently, particularly in relation to rail links in and to Wales, which I hope he welcomes. I will not support specific projects that may be in gestation, but we will work with the Welsh Assembly Government, who are principally responsible for such proposals. If there are projects for which a guarantee is appropriate, we will consider that very positively in the light of the representations made to us.
As the hon. Gentleman will know, great interest has already been expressed by investors and those involved in projects since the UK guarantees idea was launched six weeks ago. Since then, about 40 companies and project sponsors have come forward, responsible for projects worth well over £5 billion and covering high-priority investment in areas such as energy, transport, water, waste and telecommunications. Detailed discussions are already taking place with, for example, those involved in the Mersey Bridge Gateway project, which is considered to be one of the world’s top 100 infrastructure projects. We have also indicated that we would be willing to consider a guarantee relating to the green deal.
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There should be no doubt that the Government are in a position to deliver this policy, and the investment it will unlock, only because of the decisive action that we have taken to reduce the deficit, and the credibility that that has secured for this country. When we came to office, the UK taxpayer was paying interest rates comparable to those of Spain and Italy. Were that still the case, the course of action that we are taking now would be impossible. Because we made tough decisions to regain control of our public finances, we now enjoy interest rates of only about 2%. That is the result of a responsible approach to spending and a credible long-term commitment to regaining control of the public finances.
Despite those tough decisions, we are already spending more on critical transport and communications infrastructure directly as a Government than was spent at the height of the spending boom. We are providing £18 billion-worth of rail investment, supported by the spending review, and a further £9.4 billion of infrastructure enhancements for the rail network was announced in the summer. Ten super-connected cities—the hon. Member for Swansea referred to super-connectivity—will enjoy ultrafast broadband and high-speed wireless connectivity as a result of Government investment, with funding set aside for a further 10. We are also focusing on how we can reduce burdens and keep costs low so that investment, whether public or private, goes as far as possible.
Last week we announced a package of measures to reduce burdens on business still further, including the reform or removal of more than 3,000 regulations to reduce their impact. That constitutes the most ambitious action ever proposed by a modern British Government to set business free. Our spending plans have prioritised capital spending that supports balanced sustainable growth across the country, and our efforts to reduce burdens on businesses mean that investment has gone even further. That approach is producing results despite difficult conditions. More than 1 million private sector jobs have been created under this Government, and this year we rose from 10th to eighth in the World Economic Forum rankings of international competitiveness. The Bill could allow us to unlock even more investment without placing material additional burdens on the public finances, enabling the Treasury to support infrastructure delivery so that we can make better use of private sector finance, skills and incentives, while also managing exposure to the taxpayer.
Under the previous Government, the UK fell in the infrastructure world rankings from seventh in 1998 to 33rd in 2009—behind Namibia, Slovenia and Cyprus. We are now up to 24th and taking the necessary steps to make the further improvement this country needs. There can be no argument with the view that we are delivering far more than under the plans we inherited from our predecessors.
The Bill contains appropriate safeguards and checks to ensure transparency and accountability to Parliament for actions taken under it. It imposes an upper limit on the amount of expenditure that the Treasury and Secretary of State may incur, which can be increased through affirmative resolution. It also requires the Treasury to update the House regularly. In answer to a point that was made earlier, where expenditure is charged on the Consolidated Fund, the Bill requires the Treasury as soon as practicable to lay a report before Parliament
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specifying the amount paid. Any expenditure or contingent liabilities will be reported in the whole of Government accounts.
Charlie Elphicke: One of the key sensitivities is that one does not want a guarantee to end up like quantitative easing, whereby guarantees are issued and nothing actually comes out the other end. To what extent and how will the Treasury monitor the situation, to ensure that this is a results-based guarantee that brings forward such projects and really makes them happen?
Danny Alexander: I am not sure I accept my hon. Friend’s characterisation of quantitative easing. One of the strengths of the tight fiscal policy that this Government have run and will continue to run is precisely that it allows the monetary activism that we have seen in this country and, indeed, in other parts of the world. However, he is right that the purpose of the Bill is to enable infrastructure projects to come forward quickly. That is why one of the key criteria by which we will decide whether to issue a guarantee to a particular project is that it can get under way within 12 months of the guarantee being issued, and that it has the necessary consents in place. This is about bringing forward projects now; it is not about offering guarantees now for projects where nothing will happen for many years to come.
Stella Creasy (Walthamstow) (Lab/Co-op): Many Members will want to follow where the public money is spent, and we should consider the role of the Public Accounts Committee in understanding these measures. Will the Minister say a little more about when a liability will go on to the balance books, and the impact of the value for money assessment of the Public Accounts Committee of any of these projects? What will be the impact on those decisions and on any future liability that might be incurred?
Danny Alexander: Of course, the Public Accounts Committee will be able to undertake scrutiny in the normal way. Clause 3 sets out detailed reporting requirements to Parliament for the guarantees, and the PAC will want to scrutinise such matters. As I was explaining earlier, these contingent liabilities will be reported through the whole of Government accounts process, which is the appropriate way to report such things. They will manifest themselves as public spending only as and when the liabilities are called, or where an assumption has to be made about the likelihood of a guarantee being called; otherwise, they are contingent liabilities, as the hon. Lady will well understand.
The Bill contains measures that will support growth, jobs and families, all at minimal expected cost to the taxpayer. It will support the UK’s construction sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business, and to support sustainable growth balanced across sectors and regions.
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we now face: the longest double-dip recession since the war, record levels of youth and long-term unemployment, dangerously low levels of business investment, and as a result, deficit reduction way off track, with borrowing up by a quarter this year. The longer this situation continues, the higher the price for businesses, taxpayers and working families in the future: permanent damage to our long-term productivity and competitiveness, and billions of pounds in additional unplanned Government borrowing.
The Opposition have been urging the Government to act and we have repeatedly identified infrastructure investment as an urgent priority. However, this is not the plan it purports to be. The Prime Minister said that he would “cut through the dither”, but he has simply created another distraction—a fig leaf for their own inaction; a peashooter where we needed a big bazooka. At a time when we need to be bold if we are to boost business confidence, to come out with something half-hearted and hesitant risks making things worse.
Let us remind ourselves of the background to the Bill. Over the summer, we learned that the UK economy had entered its third quarter of negative growth—the longest double-dip recession in British post-war history. Unemployment remains unacceptably high; youth and long-term unemployment is a national disgrace; and headline employment figures conceal endemic under-employment. Record numbers are working fewer hours than they want to, and record numbers are trapped in temporary work. The Chancellor’s promise of expansionary fiscal contraction has come to nothing.
A Government who proudly proclaimed on page 1, paragraph 1 of their coalition agreement that eradicating the deficit and securing the recovery were their No. 1 priority are now midway through their term of office. What do they have to show for themselves? They have an economy that is smaller than when the Government’s measures began to take effect and, at the last count, £150 billion in additional debt—a figure that is likely to rise further, with borrowing up by a quarter this year. As the former US Treasury Secretary writes in this morning’s Financial Times,
“the reality is that the primary determinant of fiscal health in both the US and UK over the medium term will be the rate of growth. An extra percentage point of growth maintained for five years would reduce Britain’s debt-to-GDP ratio by close to 10 percentage points whereas austerity policies that slowed growth could even backfire in the narrow sense of raising debt-to-GDP ratios and turning debt unsustainability into a self-fulfilling prophecy.”
Rachel Reeves: From a sedentary position, my hon. Friend the Member for Nottingham East (Chris Leslie) suggests “plan F for fail”, and I could not agree more. I wish this was a plan B, but I do not think it is. It is more words, when what we require is action. Yet the Government do not listen to the evidence—they just plough on with a plan that everybody else knows has failed.
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Charlie Elphicke: Can the hon. Lady clear up a bit of confusion? Today, she wrote in The Guardian that the Labour party would fix all this with a bankers bonus tax to build new affordable homes. However, it seems that this tax has been spent a number of times. Back in March, the Leader of the Opposition said it was going to be used to fund the young unemployed. Which is it?
Rachel Reeves: The bank bonus tax is being used to do two things: first, to create 100,000 jobs for young people; and secondly, for the construction of 25,000 new affordable homes. The Opposition believe that the priority right now is construction and getting young people back to work. The Government believe that the priority is a tax cut for the bonuses. That just shows how out of touch this coalition Government are.
Nothing better illustrates the long-term costs of this Government’s short-sighted complacency than the shocking shortfall in infrastructure investment. If we want to build a productive, competitive economy for the future, we need to invest in the road and rail systems that keep this country moving; in the energy supplies that power our industries; in the information and communication networks that turn ideas into real innovations. With study after study confirming Keynes’s original insight—that construction projects can maximise the multiplier effects of new investment, creating skilled jobs in the construction sector as well as in engineering and design—there is no better time than now.
Instead, we have had from this Government countless speeches, statements and strategy documents. People are asking, “Where is the delivery?” As the CBI is asking, where are the diggers on the ground? When are we going to start turning blueprints into bricks and mortar? It was the Prime Minister who said,
“This autumn, the government is on an all-out mission to unblock the system and get projects underway”.
That sounds promising—until we realise that he said this a year ago. Since then, what have we seen? None of the road building projects in the autumn statement package have begun construction. The number of housing starts is down on 2011. Planning applications are taking longer to approve. I agreed with the Prime Minister when he said:
“In terms of job creation today, getting construction projects off the ground is critical.”
But in the year since he told us that barely one in 10 of the projects listed in the Government’s construction pipeline have moved forward to procurement or construction, and almost as many of them have moved backwards. Total UK construction output is down by more than 10% and last week’s jobs figures showed that the number of jobs in the construction sector has fallen by 89,000, bringing the total number of construction jobs lost since this Government came to power to 120,000.
“boost to business, which will jump start growth and create jobs that last in the places that really need it.”
That sounds like just what we need, but that was said a year ago. We know that since then just £60 million of the promised £1.4 billion has been released to businesses, creating barely 5% of the 37,000 jobs promised.
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The Chancellor of the Exchequer announced £20 billion in new infrastructure investment to be funded by the pension funds—that was a year ago. We now know that this scheme will be launched next year, with funds amounting to only a tenth of what was promised back then. As the failure of this Government’s promises increases, their rhetorical displays have become ever more strident. Two weeks ago, in response to questions from my right hon. Friend the Leader of the Opposition, the Prime Minister said:
“If we look at what is planned by this Government, we see that between 2010 and 2015 we will be investing £250 billion in infrastructure.”—[Official Report, 5 September 2012; Vol. 549, c. 230.]
It is true that the national infrastructure plan sets out £250 billion-worth of projects— would government not be easy if you were judged only on what you had planned? If we look instead at what has been delivered, we see that the picture is rather different. The Office for National Statistics shows that new infrastructure orders since the second quarter of 2010 average less than £2 billion a quarter. At this rate, it will take not five years but more than 30 years for the Government’s grand plan to be delivered. The latest construction output figures released last week show that progress is slowing, not accelerating. It is no wonder that the director general of the British Chambers of Commerce has described the national infrastructure plan as
“hot air, a complete fiction”.
Geraint Davies: My hon. Friend will know that the Prime Minister boasts of an extra 1 million jobs in the private sector. Does she agree that many of those jobs are where people are moving into part-time work having lost full-time work? It is wrong that the Government penalise people who are now working less than 24 hours but used to do more, by cutting their working tax credits by £3,750. The Government are saying, “Get some more work” but these people have just come down from full-time employment.
Rachel Reeves: I thank my hon. Friend for that intervention. He will know that there are 1.42 million people working part time who wish that they were working full time. As of April, about 200,000 families lost support through working tax credits because they could not find the additional hours that they need to still be eligible for that extra support to help them when they are in work; that support helps them to avoid poverty.
It is no wonder that people are asking whether they can have faith in anything the Government are saying, given that in every area we see dither and delay. In communications, the Government have put back the 2012 broadband target to 2015 and may not meet that new deadline. In house building, recent statistics show that new housing starts are down by 24% on a year ago. In waste management, the plan promised for spring this year will now not be delivered until the end of 2013. In energy, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy”.
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kicked into the long grass. Instead of the drive, decisiveness and clarity of vision that businesses are crying out for, what do we get in sector after sector? We get dither and delay; we get initiatives and announcements driven by the desire to hit headlines rather than to deliver results.
The Bill—the Government’s latest scheme—is a strange piece of legislation. It is being fast-tracked through Parliament, with the justification that the situation is immediate and urgent. However, given this need for speed, we are bound to ask whether legislation is necessary, particularly given that, as the House of Commons Library note explains, such commitments
“do not typically require…legislation”.
The UK guarantee scheme at the centre of the Bill was first announced by the Prime Minister in a speech in May. It was re-announced by the Chancellor in a speech in June. The press release came from the Treasury in July. It is therefore hard to resist the conclusion that the Bill is designed more to create the impression of activity and delivery than to get real results in the quickest way possible.
However, the Opposition’s biggest concern with the Bill is that it is simply inadequate to meet the challenge we face. Many in industry are sceptical that it will make any difference. Even where it is taken up, the tight criteria of economic and commercial viability may mean that it amounts to only a deadweight subsidy, aiding projects that would have gone ahead in any case. The best anyone has been able to say for it is that it might help some schemes at the margin, but that is hardly commensurate with the challenge we face.
The schemes that have been most frequently mentioned as strong candidates for assistance are those the Government have announced are going ahead several times already. Let me cite one example, which the Chief Secretary mentioned in his speech. Earlier this month, he said:
“Detailed discussions are already taking place with the Mersey Bridge Gateway project”.
We certainly welcome progress, but many may experience a strange sense of déjà vu, given that a year ago the same project was announced by the then Transport Secretary, who noted that although some transport plans are long term, this one could be
“implemented more quickly…creating jobs when they are needed most.”
“firms fear initiative overload and are becoming impatient with delivery, leaving many companies still sceptical about the overall impact on investment.”
Mr William Cash (Stone) (Con): Does the hon. Lady accept that this Bill is, in effect, pure Keynesianism? If she had the opportunity to read Nicholas Wapshott’s recently published and excellent book on the arguments between Keynes and Hayek, she might conclude that elements in this hoped-for infrastructure programme carry with them the germs of really serious difficulties if we pursue a policy of pure Keynesianism and do not take into account the arguments of Friedrich Hayek.
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Rachel Reeves: I look forward to reading the book that the hon. Gentleman mentions, but I do not think that the Bill is pure Keynesianism—that would be doing things that Labour Front Benchers are recommending, such as introducing a temporary reduction in VAT, a tax on bank bonuses, genuinely bringing forward infrastructure investment and a national insurance holiday for small businesses. Those are the things that would kick-start the economy, get people back to work and get the deficit down in a sustainable way, because there would be more people in work and more businesses succeeding, unlike what we have from this Government, which is £150 billion of additional borrowing because more people are on welfare and fewer businesses are succeeding.
Kelvin Hopkins: I compliment my hon. Friend on her excellent speech and may I say that Friedrich von Hayek has caused more damage in this century and the last than any other economist in the history of the world? Nevertheless, she is absolutely right; this is about a supply-side measure which is not Keynesianism. Assisting and providing a little bit of investment with a little bit of Government subsidy is not Keynesianism. Keynesianism is direct spending to create demand in the economy. The private sector will not create demand. Only government can restore the demand where there is the vacuum at the moment.
Rachel Reeves: I thank my hon. Friend for that intervention. Of course he is agreeing with something that the Business Secretary said, which is that the real problem in the economy is a lack of demand. Supply-side measures will not do very much to help with that. When the Chief Secretary was asked in intervention what projects would be supported by this Bill he could name not one. That is the problem; this is a guarantee scheme, but we do not know what it guarantees. This is a project to help infrastructure investment, but we hear no announcement about which infrastructure investments will go ahead that would not have done previously. No wonder businesses and Members are sceptical and no wonder we are still in recession, if this is as good as the Government can get.
We will not oppose the Bill, but nor will we allow the Government to use the scheme as a substitute for the real plan that the economy and businesses so desperately need. Instead of devoting themselves to the task of getting our economy moving again, the Government have put before us an infrastructure investment guarantee that guarantees no infrastructure investment—fast-track legislation that has had the effect of getting the scheme stuck in the slow lane. The Government are preoccupied with distracting us from their fundamental failure and inaction, but people’s patience is wearing thin. We have had enough of initiatives and announcements: no more excuses, no more evasions—the Government need to get serious.
Two years ago, we warned that the Government’s economic plan would choke off recovery, shatter business confidence and add to borrowing, and that it would make it harder, not easier, to balance our books and pay our way in the world. A year ago, we called on the Government to bring forward infrastructure investment; we called for a bank bonus tax to fund the construction of 25,000 new affordable homes and to deliver a programme
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of youth jobs. If the Government had taken our advice then, just think how much progress we could have made by now.
Jane Ellison (Battersea) (Con): Before the hon. Lady reaches the end of her speech, perhaps she will comment on this point. If all the things that have not been done are so bad, why did Madame Christine Lagarde say that she shivered to think what would have happened had the Government not taken the action they did?
Rachel Reeves: Olivier Blanchard and the International Monetary Fund have been saying for a year that if growth does not materialise the Government should think again. How much longer do we need to be in recession? How much longer must we have rising youth unemployment and rising long-term unemployment before the Government act? The IMF now forecasts that the economy will shrink this year and will barely grow at all next year. That is evidence that the Government need to rethink their strategy, and it is a shame that they have not heeded the advice of the IMF.
Geraint Davies: Does my hon. Friend agree that the reason consumer demand is so awful is that the Chancellor announced that 700,000 people in the public sector would lose their jobs? People in the public sector do not know whether it will be them or their neighbour, or whether it will be this year or next year, so they are saving not spending. That is why there is no growth.
Rachel Reeves: I thank my hon. Friend for that intervention. It is not just people in the public sector; people in the private sector, particularly in construction, which has shed 120,000 jobs since the Government came to power, are also worried about their jobs and futures and about how they will get the money to feed and house their families. There is real concern and a real lack of confidence among households and businesses.
This summer showed that things could be done differently. The Olympics showed what can be achieved with an inspiring vision—the right combination of public, private and social enterprise, with the nation united behind it. We delivered on time and on budget, and it was a perfect platform for Britain at its best. Let us hope that the Olympics provided a much-needed boost for our economy, but the lesson to learn is not that we can now rest; if we really want to seize the economic opportunities before us and build a better future, we need to repeat that effort on a much bigger scale, with a nationwide plan for jobs and growth. Let that be the lesson for today and let us get to work on laying the foundations of the economy we need to build for the next generation. Let us have a Government who follow up their rhetoric with real action.
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15 years to arrive on the Government Back Benches and this is my first speech as a Back Bencher for more than eight years. I enjoyed the fact that the first constituent to seek my help after I was relieved of my responsibilities as one of Her Majesty’s Ministers was a gentleman who needed assistance at an employment tribunal in a case of unfair dismissal. I was able to look him squarely in the eye and tell him that he had to take whatever he got from the employment tribunal, and once that was done, he must put matters behind him and get on with the rest of his career and his life. I have every intention of doing that, and enjoying the freedoms of the Back Benches.
It was interesting to follow the Gatling gun-like delivery of the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), who rattled through her speech. When I sat on the Opposition Benches, I heard similar speeches from colleagues about Government announcements that were made but not immediately delivered. When they relate to infrastructure, things take a tiresome amount of time.
I wondered about the economic analysis that underlay the hon. Lady’s critique. What kind of economic la-la land are the Opposition living in that they think the financial markets would have confidence in underwriting the Government’s debt if it continued to be managed by Labour? They had got us into the most appalling trouble by May 2010. It took the formation of the coalition and the urgent need for all Ministers to attend to their departmental expenditure to drive down debt so that the Chief Secretary could deliver credibility to the financial markets and our nation could continue to enjoy borrowing rates that are at an historic low. The difference between us is that if Labour had been in charge, we should probably have been enjoying borrowing rates something like those of Spain, which would be costing us £40 billion a year in the extra interest charges we would have to pay on the monumental national debt that was built up under the previous Government.
Having achieved a level of market confidence, it is absolutely proper that we now look to capital expenditure. That is why in principle I welcome the Bill and the fact that under the so-called Baldwin convention the Government are seeking specific authority for capital expenditure of this type. However, better explanations are required of the detail.
Hugh Bayley (York Central) (Lab): If business confidence in the previous Labour Government was as bad as the hon. Gentleman suggests, it would have been reflected in interest rates, yet in fact when his party came to power we had interest rates at a record low. I acknowledge that they have continued at that level, but it was a record low that his party and the coalition Government inherited from Labour.
Mr Blunt: That would be fine if the markets had not entirely discounted the prospect of the hon. Gentleman’s party being retained in office in 2010. It was perfectly clear that Labour was being sent firmly through the exit door. I assure the hon. Gentleman that if the markets felt there was any chance of the former Prime Minister and his henchmen remaining in office, we should have faced a quite different picture.
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There is a case for measures that enable capital expenditure on prisons. There is a very strong case, which I shall continue to press from the Back Benches, for building new prisons, not to increase the number of prison places but to modernise the prison estate and make it fit to deliver rehabilitation, work and security at a sensible, affordable price in a prison infrastructure for the 21st century.
Oakwood prison offers an example. It was built with running costs of more than £10,000 a prison place less than other category C training prisons of its type. With capital expenditure at about £100,000 per prison place, one can easily see the rough order of magnitude in a 10% return on that scale of investment. If we then take into account the fact that we could sell off the old prison sites, that we will not have to deal with the accumulated maintenance deficit in the older parts of the prison estate and that we will get much better implementation of policy in prisons that are built with work, security and rehabilitation in mind, we can see that the case for including prisons in the Bill is extremely strong.
I am, and will remain, an advocate of wholesale reinvestment in our prison estate. It means new prisons that will be more efficient and older ones closing so that we end up with the estate we should have for the 21st century. There is currently a competition process for nine prisons, the second such round of competitions—eight are currently in the public sector and one is in the private sector. All the bids I have seen, from both the public and private sectors, show the enormous benefit of competition in coming forward with better ideas on how to run our prisons.
At this point it would be appropriate to pay tribute to the officials in the Ministry of Justice and to Michael Spurr and all the people at the National Offender Management Service with whom I have had the privilege of working over the past two and a half years. I put on record my gratitude to them and, as prisons are in the Bill, to Peter McParlin, chairman of the Prison Officers Association, the biggest trade union representative in the Prison Service. In an era of considerable change in the service, I commend the constructive relationship and dialogue I had with him and with other union officials and staff, including those from the National Association of Probation Officers.
I turn from my former responsibilities to the application of the Bill to my constituents. Reigate plays host to some serious national infrastructure. We have two prisons, but we are adjacent to Gatwick airport, the M25 runs through the middle of the constituency, and the London to Brighton main line is another key piece of infrastructure. The constituency has been under constant developmental pressure throughout my time as Member of Parliament. The borough of Reigate and Banstead has more than met the housing targets imposed by the previous Administration. It is not housing we are short of; it is infrastructure. For example, we are woefully short of primary school places, the M23 has yet to be finished and brought to an end at the Hooley interchange, and there needs to be a reorientation of the railway line that cuts across the London to Brighton main line and runs between Guildford and Tonbridge.
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obvious: we need an airport in an estuary that can operate 24 hours a day and that has the capacity to deal with the primary needs of the United Kingdom, which is to have a proper hub airport. That has been fairly obvious since people were looking at Maplin Sands about 50 years ago. Frankly, it is about time we got on and made the decision. I seriously regret its being put off for another three years.
I will conclude by expressing my concern about housing appearing as infrastructure in the Bill. I do not think that housing is infrastructure. The financing of housing should come from other mechanisms. I hope that my right hon. and hon. Friends will understand my concern about housing appearing in the Bill in conjunction with the Chancellor’s remarks about the green belt and the potential threat to it. I will be examining the Bill very carefully.
John Healey (Wentworth and Dearne) (Lab): I am glad that I was in my place to hear the hon. Member for Reigate (Mr Blunt) make his first speech from the Government Back Benches. He was a very serious Minister and brought a very serious mind to his brief, as he has done in this afternoon’s debate.
I see borrowing guarantees to help fund investment in Britain’s infrastructure as a good, if overdue, use of the power of government. It is creative, innovative and active government, if it works. Using the strength of the public balance sheet to underwrite private investment makes sense, especially at a time when public funding is limited and private bank lending is constrained. It should improve the credit rating of, and attract investors to, infrastructure projects, and I see those as two key tests for the policy and the legislation before us.
I welcome the Bill and want it to work. The country needs it to work. However, I say to the Minister and to the Chief Secretary, who is no longer in his place, that there are two big questions behind the Bill that, even after his long speech this afternoon, remain unanswered. They are about urgency and clarity. The value of the legislation and the Government’s borrowing and funding commitment will be felt when the first project is chosen, the guarantees are in place and the work begins. When will that be? As always with a new policy, the devil is in the detail. We have no detail and we have no idea how the arrangements allowed for in the Bill will work. The Government have already asked for expressions of interest for funding and borrowing guarantees but have published no guidance. When will that be done?
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. May I make a quick point? The hon. Gentleman is making a lot of interventions and obviously wants to speak later in the debate. If he moves down the list of speakers, I presume he will understand why.
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Does my right hon. Friend agree that, given that the Building Schools for the Future programme was in place and ready to go before the Government cancelled it, it would be a good idea to reinstate it and get productivity through our children as well as through the construction industry?
John Healey: My hon. Friend is right, and I hope that he gets a chance to make a speech. I will move on in a moment to some of the changes in policy and cuts since the general election that have made infrastructure projects and that sort of investment harder, not easier.
There are big causes for concern behind the two big questions I mentioned. First, there are questions and concerns about speed and how serious the Government are about getting infrastructure work going. It is almost a year since the Prime Minister promised
“an all-out mission to unblock the system and get projects underway”.
It is almost two years since the Government published their first national infrastructure plan and almost two and a half years since they set up Infrastructure UK in June 2010 in the Treasury. Most seriously, since the Government’s second infrastructure plan in November 2011 the economy has shrunk by nearly 1% and Britain has become one of only two G20 countries in a double-dip recession.
On the point of concern about clarity and simplicity, the Infrastructure Investor journal recently conducted a survey of 200 industry investors. Lack of finance, poor regulation and procurement weakness are all problems they face, but some 60% said that confusion and lack of clarity from the Government are a far greater disincentive. What matters most is confidence in the pipeline of projects, often based on clear Government policy decisions and commitments. The Government are failing that test over big projects and policies such as High Speed 2, aviation capacity and power generation. Their record on other policy decisions that at first sight have nothing to do with infrastructure is also making it harder to put in place the funding required. The abrupt change and then change again in the solar feed-in tariffs, the benefits reforms and cuts, the tripling of student tuition fees, creating “core and margin” university course places, and the rebanding of renewables obligation certificates have all changed the risks and the costs of long-term capital—so much so that a senior figure in the industry recently said to me: “Investors are now asking for the first time how you can price in public policy risk.” The guarantee scheme needs to be flexible and straightforward. The devil is in the detail, and Government revel in the detail. Is every Department going to introduce and run its own scheme with its own rules? Who in Government will be accountable for the programmes and the problems on the guarantees?
On housing, let me take issue with the hon. Member for Reigate, because the Chief Secretary and the Government are right and he is wrong. I welcome its definition as infrastructure. It is basic to people’s lives and to a good society, and central to wider economic growth and to productivity. Above all, it is a long-term good. We are still getting rent from Bevan’s post-war council housing a long time after the cost of the capital to build them has been paid.
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I am looking to the Government for reassurances on four questions, especially in relation to housing. First, the Chief Secretary said that he did not want to prescribe and would not circumscribe the stages of projects that credit guarantees can support. The Treasury has said that guarantees can cover key project risks including construction, performance and revenue risk. Will that apply equally to housing as to the other categories set out in clause 1(2)? Secondly, some housing associations already have a presence in the capital markets and can raise finance in their own names, so will such organisations with significant project proposals be able to push ahead without the creation of any intermediary or aggregator?
Thirdly, the best housing developments are mixed and help to support mixed communities. The Government have said that the guarantees will support private and social housing. Will those building new homes be able to source guarantees for both sectors from the same fund scheme? Fourthly, I expect that security requirements will be part of the arrangements for the borrowing guarantees. Will developers building homes be able to provide the security on completion of those homes rather than in advance? If the Government want these guarantees to work, and to work rapidly, to boost housing, jobs and the economy, they need to provide answers and reassurance on all four points.
The Chief Secretary mentioned the 1932 Baldwin agreement, which emphasises that where financial liabilities that last beyond the term of one Government or one financial year are introduced, they should be backed by specific legislation. I believe very strongly that improved long-term infrastructure should be a shared endeavour of all parties, because infrastructure projects do not fit neatly within the political cycles and are damaged by the chopping and changing of Government policy.
Kelvin Hopkins: On my right hon. Friend’s point about infrastructure investment covering more than one Government and different parties, there was a time, when I was young, when Conservative and Labour Governments used to compete on the number of council houses they could build during their term of office. We should get back to that kind of arrangement.
John Healey: I do not think I have ever heard my hon. Friend advocate competition in any circumstance on any policy before, but I am happy to say that he is right, and I support him. I hope that we may get back to those days. Just before the election, when I introduced the local authority new-build scheme, which boosted and supported local council housing for the first time, we had very strong bids and very strong support from 73 councils, including many Conservative councils that wanted to build council homes but were not, until then, getting support from Government to do so. They are certainly not getting that support now.
Since the election, this Government have done too little for too long on new infrastructure. This Bill could make an important difference. It deserves all-party support, and the Government will get it if they get this right.