Forum

Latest News
  • Will Croft elected Leader of the Conservative party
  • South Pacific nations agree new alliance to counter China
  • Budget 2016: Chancellor faces global slowdown
  • Ministers embarrassed by ‘Legion’ leak
{"effect":"fade","fontstyle":"normal","autoplay":"true","timer":4000}

MS-05 - Capital Spending  

  RSS

General Goose
(@general-goose)
Member
Joined: 7 months ago
Posts: 362
14/05/2019 10:11 pm  

Mr Speaker,

The newly enacted budget is to serve as a launching point for a bold new industrial strategy. It provided for £13.5 billion in additional capital spending, the starting point for an industrial strategy that recognises the importance of the foundational economy, adapts to deindustrialisation, addresses regional inequalities, promotes social mobility, prioritises green energy and green growth, and establishes Britain firmly at the forefront of the fourth industrial revolution. This ministerial statement will explore the first steps of this new industrial strategy and how that capital spending will be used.

The Industrial Strategy Challenge Fund, Mr Speaker, is a centrepiece of this strategy. A total of £1.2 billion will be provided in kickstarting this fund, providing prizes, grants, funding opportunities and the necessary infrastructure and business environment to support cutting-edge innovation in areas with rapidly growing or large global demand and where we already enjoy substantial research and innovation capacity. The purpose of this Fund will be to use innovation to both place the UK at the forefront of the fourth industrial revolution and to tackle serious social and economic challenges. £700 million of this initial starting fund will go towards environmental and ecological issues. A further £100 million will be ringfenced towards social care. Coupled with a considerable increase in science and research current spending, this will be a massive boost towards our efforts to promote scientific and research excellence.

A British Housing and Infrastructure Development Bank has been established by this budget, with seed capital of £5 billion provided by the government. For too long, the UK has lacked a dedicated funding vehicle for leveraging the resources and credibility of the state to make the long-term investments into housing and infrastructure that we need. We intend the British Housing and Infrastructure Development Bank to be a public corporation to become a long-term part of the infrastructure landscape in this nation, using public money to stimulate further private investment in the long-term infrastructure needs of this nation. In addition to other potential methods to raise money, the British Housing and Infrastructure Development Bank will be a home for annuity funds looking for a reliable and effective investment within the UK. Mr Speaker, the British Housing and Infrastructure Development Bank will be a major source of investment in new housing projects, maintaining and creating new infrastructure proposals, and creating a resilient and equitable 21st century economy.

A British Business Bank will be established, structured as a public limited company, to increase the supply of credit to small and medium enterprises and provide advisory and support services to businesses. This will provide a source of patient long-term capital, willing to help foster entrepreneurship and innovation, building new economic assets that will diversify and strengthen our economic landscape, and providing a source for countercyclical loans for businesses that have potential and long-term merit and social promise yet are facing hard economic contexts. £2 billion will be provided in seed capital. Its portfolio structure will be based on the best practices of venture capital firms and it will be given the remit to explore funding options such as retaining equity in the businesses that it helps succeed. The British Business Bank will have a variety of economic instruments at its disposal - long-term loans to boost lower risk incremental activities, equity investments for high-risk innovation that our society needs but most banks are reticent to loan to, products tailor-made designed for specific societal challenges such as the industrial strategy challenges that we have identified, and advisory services bolstered by in-house technical expertise and strong local knowledge.

For too long there has been no state investment bank to provide patient capital investments, engage in infrastructure investment, or engage in countercyclical lending. The BHIDB provides for infrastructure - the British Business Bank, for investments in our long-term economic health and capacity. We will be working diligently throughout the parliament to provide for strong governance frameworks for these new entities, ensuring safeguards are in place against weak performance, ensuring fair and honest relationships with the private sector, and establishing procedures to ensure the long-term viability of these entities to both enable democratic accountability and minimise the risk of undue political interference. Strong monitoring and assessment frameworks will be put in place, and these entities will work to ensure that they are encouraging investment that otherwise would not have happened - picking the willing, not picking winners.

Neither of these new banks will be headquartered in London. It is essential that we involve the entire nation in setting a new and inclusive infrastructure policy, to have funding opportunities and expertise development spread out throughout the nation. That is what we will do. The locations for the headquarters of these banks will be announced by January 2015.

The budget also provides for £3.2 billion in green stimulus. This includes £700 million for Industrial Strategy Challenge Fund research, innovation and infrastructure improvements related to environmental and ecological challenges, and an extra £1 billion in capital for the Green Investment Bank. We will give the GIB powers to borrow, lend and issue “green bonds”. We will use the GIB, as well as the other public entities established by this budget, to invest in causes such as offshore and onshore wind, onshore renewables, waste and bioenergy, energy efficiency, smart grid improvements, public transit needs, green social housing, flood protection, parks, waterways, woodlands, green agriculture, climate mitigation and adaptation, patient capital and gap funding for research and innovation.

In addition to this, to appropriate the remaining £1.3 billion in green stimulus funds, we will invest in various other schemes: helping local economies benefit from the change to a greener economy; a circular economy drive; a resource efficiency push; a scrappage scheme for highly polluting vehicles; and measures to promote electric vehicle technologies in the UK. This will all be supplemented by £400 million in energy efficiency and insulation spending provided for elsewhere in this package.

£250 million will be provided for a project to refurbish shipyards in the North of England and Scotland to promote their regeneration and equip them to become global centres for offshore wind and marine renewable energy technologies. A further £250 million will be provided to assist communities and economies currently dependent on fossil fuel industries to diversify their economies and prepare for transitioning to lower-carbon economies.

We will also make £200 million available for a circular economy drive. A circular economy aims to minimise resource input and the exhaustion and waste of resources and the emission of pollutants. It does this by promoting long-lasting design, promoting repair and reuse of existing products, recycling and refurbishing old products, and trying to make supply chains as circular as possible. This money will go towards investing in infrastructure, training, research, materials, and loan guarantees for businesses and industrial clusters that are interested in embarking upon creating a circular economy. We will be promoting circular economy techniques such as reuse; closed loop recycling; open loop recycling; biorefining; repair and remanufacturing; and servitisation. The intention is to develop a competitive advantage for circular economy using industries, reduce the costs of partaking in such technologies at the margins, and leverage the government’s purchasing power and coordination ability to really get this industry going.

We will make an additional £200 million available for resource efficiency efforts beyond the circular economy drive. Resource costs are a major drag on productivity and business viability, so we will establish a resource efficiency advisory service for manufacturers and other resource-intensive businesses, funded by a share of the savings that it enables, a loans programme to help businesses transition to more resource-efficient systems, and targeted innovation spending in resource and energy efficiency technologies and proliferating them.

£200 million will be invested in a bus, van and highly polluting car scrappage scheme, to take polluting vehicles off our streets and replace them with newer models that have lower emissions, better safety records, and more accessible facilities. £200 million will be invested in supporting the development of an electric vehicles sector throughout the UK. We will be investing in plug in car and van grants and building the necessary infrastructure for deploying EV charging points throughout the UK; supporting the use of electric vehicles in national and local government vehicle fleets and the vehicle fleets of contractors; experimenting with locally distributed energy systems and methods to use electric vehicle batteries to smooth energy consumption against supply; supporting the development of a sustainable market for spare vehicle parts for electric vehicles; and supporting the growth of a service-led manufacture model in electric vehicle production.

£3 billion will be provided for other capital spending needs, including at least £500 million specifically earmarked for rural areas, such as in expanding broadband and rural public services, and £100 million for new refuges and shelters, with a focus on supporting this government’s work to promote women’s shelters and shelters for LGBTQ+ individuals.

Of the £3 billion for miscellaneous capital spending needs, £1.5 billion will be ringfenced for creating a new Invest to Save programme funding pool - resources to revolutionise the way government works, investments to promote long-term sustainability of government services, investments that’ll improve our nation’s long-term fiscal health. This is a broad area and will entail significant experimentation. £400 million from this will - and this adds to the green stimulus budget from earlier - be made available for a massive effort to promote insulation, energy efficiency, and circular economy drives within both central and local governments. About half of these funds will be used to create a considerable programme for energy efficiency and microgeneration in schools, hospitals, and other government properties, ensuring the government leads by example, plays its part in transitioning to a low-carbon economy, and using the government’s purchasing power to generate further business opportunities for innovative green companies.

Mr Speaker, as the Secretary of State for Health and Social Care has already made clear, a total of 1 billion pounds will be invested in social care as a result of this capital spending package. £200 million will go to local authorities and local care trusts to promote immediate investment in front-line services and capacity building, an additional £200 million earmarked for training, facilities, integration and other such needs in rural areas. £100 million will be invested from the Industrial Strategy Challenge Fund to respond to the economic challenges posed by an aging population. And £500 million will be made available for projects - infrastructure, training, new sustainable local plans, public health and home care initiatives, measures to reduce the costs and improve the fairness and sustainability of social care in the long term - under the Invest to Save programme. Mr Speaker, we are aware that, to do good, a one-off cash injection must be followed with future funding commitments and a long-term plan. Mr Speaker, this government will deliver on that.

Mr Speaker, as a nation we have long struggled to provide suitable long-term investments in equitable growth. All governments of all parties must accept that many opportunities have been missed as a result of this and many challenges have been exacerbated in their scale and severity. Mr Speaker, this government is committed to reversing that error. Through these investments, we are promoting environmental sustainability. We are promoting effective public services. We are promoting equitable growth that boosts opportunities in all parts of this country. We are promoting a sustainable plan for long-term economic growth, with an inclusive industrial strategy and a plan for economic investments that puts us on a strong economic footing.

Graham Adiputera (Lib Dem - Sutton and Cheam)
Deputy Prime Minister
Liberal Democrat Leader
Foreign Secretary
Secretary of State for Business, Energy and Climate Change
Secretary of State for Culture, Media and Technology

Parliamentary - 36
Media - 53
Policy - 48


Quote
Emmanuel Runswick-Jones
(@ashcroft)
Member
Joined: 4 months ago
Posts: 6
16/05/2019 7:23 pm  

Mr Speaker,

I thank the Rt Hon. gentleman for his statement, we do certainly all love to see the Government purse strings opened up. I must insist, however, that this debate be considered in the context of the greater budgetary situation that this country faces – namely a Government that is intent upon borrowing against our future prosperity to finance short-term expediency. 

When can we expect the Government to take seriously the issue of the deficit and ensure that our children and young people are not saddled with a generation of indebtedness that strangles the Government's ability to make necessary investments in the future?

The Hon. Emmanuel Runswick-Jones
Member of Parliament for Camarthen West and South Pembrokeshire (2010-present)


ReplyQuote
General Goose
(@general-goose)
Member
Joined: 7 months ago
Posts: 362
16/05/2019 7:58 pm  

Mr Speaker,

There are two fundamental objections I have to the argument the gentleman is making. Firstly, the nature of the investments we're making. Mr Speaker, this country has long failed to provide adequate investment in the future. We have, compared to many of our peers, failed to provide sufficient sources of patient capital, of infrastructure investment, of countercyclical lending. That is a big part of why, for example, we are not meeting our full potential on housebuilding, on key areas of the fourth industrial revolution, on rural broadband access, on renewable energy, on so many other issues. We are taking bold action to rectify that. These investments will improve the sustainability of our economy, grow and expand our revenue base, and increase our ability to handle the challenges and seize the opportunities of the 21st century. 

Secondly, as has been said in this house time and time again, this government has committed to two fiscal rules: firstly, we will run a cyclically adjusted current budget from 2018-19; and secondly, from 2018-19, we will ensure debt falls as a share of our GDP year upon year. Both parties agree to do what is possible to meet these rules ahead of schedule. We have laid out our parameters by which we will meet these targets, and we, quite frankly, are on target to meet them. 

Graham Adiputera (Lib Dem - Sutton and Cheam)
Deputy Prime Minister
Liberal Democrat Leader
Foreign Secretary
Secretary of State for Business, Energy and Climate Change
Secretary of State for Culture, Media and Technology

Parliamentary - 36
Media - 53
Policy - 48


ReplyQuote
Steven Andrews
(@steven-andrews)
Member
Joined: 4 months ago
Posts: 120
19/05/2019 2:02 pm  

Mr. Speaker,
Where do we begin? Clearly there must be a hive of bees somewhere nearby, because the buzzing of buzzwords in the chamber is almost deafening.

Overall, what I see here is very often not capital spending. Capital expenditure, by its very nature, implies that funds are being put towards building some form of fixed asset. Instead, we see the first £1.2bn being primarily set out in the form of...prizes. Do not get me wrong, there have been competitions such as the X Prize that have achieved impressive results, but building a significant cornerstone of government policy around such approaches is dubious: Those competing for such prizes may run the risk of getting "scooped" by a surprise entrant, while there is always a risk...and not an unreasonable one...that the government manages to develop prize goals which are either unambitious and simply lead to 'easy money' for someone holding out for a patent or which are overly-ambitious and not only go unclaimed but indeed do little to encourage private-sector investment.

It would be one thing if the government were going to consider such efforts to be a reasonable use of the National Lottery's 'good causes' fund, but this has all the feeling of being a dubious boondoggle, particularly given its scale.

Next, Mr. Speaker, I think we can turn to the bank that the Business Secretary has suggested, since it is the single largest line-item in his so-called capital expenditure list. Rather than having the government 'pick winners' in this manner, it would behoove the government to use a structure of tax credits or other arrangements with already-existing banks. Getting this to work properly does not require the creation of a new government agency or some strange hybrid, it requires putting some good contract lawyers on the job.

The Green Stimulus runs into the same issue, Mr. Speaker: that of picking winners and assuming risk on the part of the government rather than properly letting the market assume it and simply helping to defray it. However, on top of that I must ask...if the government is dead set on handling these things themselves, why must they make a bank for everything? Are there perhaps some consultants in need of a cushy gig running around in somebody's back offices?

Finally, Mr. Speaker, we do come to some actual capital expenditure...I must admit that when reviewing the Secretary's remarks for a while I was wondering whether using that term was going to be wholly questionable...it is rather just questionable in part. I can understand, and indeed get behind, some of the miscellaneous items, but I wonder why more resources are not being put behind the electric car sector? Why is the government just tossing a small pot of money at 'supporting' electric vehicles when they're randomly throwing money out the windows into banks? Would it not make more sense to put most of this into a "big bang" that might actually make electric cars a workable, affordable option...with the choice of car to remain with the consumer, of course...rather than scattering their supposed capital expenditures into a bunch of new agencies?

While we're at this, Mr, Speaker, I must confess that the Secretary seems intent on confounding the House. We see a number for the "green stimulus", but then more is randomly lathered on top of that as if there were a few hundred million quid that he found in the office couch and needed to spend. Invest to Save gets £1.5bn...and then another £500m a paragraph later. Perhaps the next time he comes before the House, Secretary could make a flow chart first and *then* write his speech?

Frankly, when we get down to the last few paragraphs it very much feels like this is a situation where the spending package was randomly adapted to fit the available budget, and that is probably the most damning complaint I can make: The Business Secretary seems to have decided that, having been thrown too much money to achieve his objectives...well, I may have done it with a sweater or two over the years but the Business Secretary has decided to re-gift a few billion quid to other departments. Apparently the Chancellor threw so much money at him that he decided that he couldn't spend it all himself! There seems to be plenty of money going in circles between departments, to the point that I am not sure if we can properly say that the Budget this House passed is the Budget that the government is using.

Mr. Speaker, I cannot be sure whether the problems with this plan are down to the fact that the parties in government aren't on the same page or just aren't talking to one another. What we have here ultimately feels like two parties playing "Whose Manifesto is it Anyway?", which has to be the worst game idea I've heard of in a long time. Perhaps at this rate the next budget will be handled by Eight Out of Ten Cats? Labour has simply made up numbers to spend, and their Liberal Democrat partners don't know what to do with all that money and so everyone is making it up as they go along. The government needs to find themselves a good dictionary, look up what the term "capital expenditure" means, and try again.

Steven Andrews, MP for Croydon South

34 Policy/18 Media/23 Parliamentary


ReplyQuote
General Goose
(@general-goose)
Member
Joined: 7 months ago
Posts: 362
25/05/2019 5:48 am  

Mr Speaker,

There’s a few points that, I feel, need to be corected. Firstly, the gentleman refers to the Industrial Strategy Challenge Fund, rather glibly, as if it is ONLY the prize component of the programme. That is inaccurate.

Secondly, the gentleman asks why we are making a Housing and Infrastructure Development Bank, which is, we are proud to say, complementary to more direct investment channels and a component of this government’s continued commitment to better enabling private investment in these causes. As I said in my earlier remarks, it is about building up a longer-term investment capacity, a forward-thinking means to ensure there is always a source of funding for these investments, something which we have lacked in the past.

Thirdly, he speaks of picking winners. Mr Speaker, the government is, of course, aware that this is a risk with any investment programme by the state. That is why we are placing good governance and accountability so high on the list of priorities. What we are striving to do, Mr Speaker, is to pick the willing, not pick winners. We want to ensure that innovators and entrepreneurs have access to the necessary infrastructure and capital sources to flourish.

Fourthly, Mr Speaker, the rough breakdown of these funds have been known in advance for some time. I apologise if the gentleman opposite is confused, but the breakdown of these funds has long been public knowledge.

Fifthly, Mr Speaker, and this ties into my last point – these funds were going to be spent, broadly along these lines, from the outset. They were never ALL going to go to BECC. The gentleman should know this, both from how the funds were described as being used in the budget document and in the fact that these funds were not listed UNDER the BECC line item. I myself had the final say on how these funds were appropriated and divided.

The gentleman’s characterisation of how this occurred behind the scenes is…just not accurate. This is a policy that I was involved in from the very outset. He should do the appropriate research before trying to craft a pithy narrative.

Let me make it clear – this is a proposal that I have long championed, that I have long proudly and fervently argued for. This is a policy that the government – both parties, with discussions with the civil service and based on plans that were outlined in the manifesto and the coalition agreement – is incredibly proud of. We are creating jobs. We are preparing our economy for the challenges and opportunities of the twenty-first century. We are ensuring our economy has the resources necessary for long-term fiscal sustainability and the much-needed investment capacities needed for countercyclical lending, patient capital, and infrastructure and housing investment.

Mr Speaker, I am proud of this proposal. The party opposite may criticise it, but where is their forward-thinking proposal to invest? It is absent, Mr Speaker – but what can we expect from a party that didn’t bother to put forward a forward-thinking and comprehensive manifesto?

And Mr Speaker, let me summarise. We have an ambitious green stimulus proposal that will promote the sustainability, resource and energy efficiency, and fairness of our economy. We are setting up a British Business Bank, to support innovation and small and medium enterprises. We are giving local authorities more resources to attend to their local needs. We are tackling some of the great challenges facing our nation, in terms of the rapid technological changes and growing societal difficulties that we must face, by harnessing innovation and entrepreneurship. We are establishing a Housing and Infrastructure Development Bank, to make up for the scandalous long-term underinvestment in infrastructure and to provide necessary solutions to the housing crisis by providing direct investment.

Graham Adiputera (Lib Dem - Sutton and Cheam)
Deputy Prime Minister
Liberal Democrat Leader
Foreign Secretary
Secretary of State for Business, Energy and Climate Change
Secretary of State for Culture, Media and Technology

Parliamentary - 36
Media - 53
Policy - 48


ReplyQuote
Share: