On Monday the Commons approved the government’s legislation to support its infrastructure programme. The Opposition did not oppose the £50 billion authorised spend, nor the broad thrust of the programme. They did not examine most of the operational detail of the proposals. Time was very limitied to do so. The Bill passed without a vote at third reading.
The legislation was needed to allow the Treasury to put in place its “UK guarantees programme”. When this was announced on 18 July 2012 we were told that up to £40 billion would be available as guarantees for private sector schemes in “transport,energy, communications and environmental sectors set out in the National Infrastructure Plan” and £10 billion for housing. The idea was to allow the government to issue a guarantee or indemnity so the private sector could raise the necessary money from banks and markets to build the schemes. The government would charge a fee and aim to end up with no bill for the projects.
However, when I read the draft legislation I discovered that this had changed between July and September. The bill widened both the scope of the projects that can be included, and greatly widened the types of financial intervention in projects which the government can make. They added health, education, courts and prisons to the areas which can be financed in this way. They added to gurantees and indemnities, loans, and “any other kind of financial assistance (actual or contigent).” This includes subsidy, grant, purchase of equity or simply paying the bills. They dropped the planned divsion of the £50 bn between housing and the rest.
The nature of the spending no longer has to be just capital works. It can include “acquisition, design, construction, conversion, improvement, operation and repair” – in other words just about any kind of revenue as well as capital spending.
I asked why the Bill had to go so much wider than the original guarantees scheme. I asked if we could have some indication of how much might be spent under each heading. I asked if the Minister agreed that spending money on coruts, prisons and public sector health and education were different in kind from offering a guraantee on private finance for a new power station or broadband link? After all, these latter can be rewarding private sector projects, where end users pay for the service. The whole point of the NHS and state schools is they are free to users, so the provider cannot earn a return from customer revenues.
I look forward to finding out what the government does intend. It was not clear on Monday.