UK Infrastructure Bank Bill [HL] — House of Lords, 2022-06-14
Topic: Macroeconomics
Alan Smith (Bishops, Unknown): My Lords, I declare my interest as a vice-president of the Local Government Association and president of the Rural Coalition. I shall speak to Amendment 9, which stands in my name, but I also want to give my broad support to Amendments 6 and 7, which also deal with regional inequalities, and to echo the importance of getting biodiversity and nature into the Bill It is telling that London, as the most productive region of the UK, receives a larger per capita amount of public spending compared to other regions of the UK. Productivity relies as much on public investment as it does on private investment but, at the same time, it makes sense economically, from a private perspective, to invest in those areas that receive significant public backing, particularly in areas such as transport. The reality is that government transport spending by region remains heavily skewed towards London, at nearly double the UK average. Hence, it certainly holds that public expenditure is a significant contributory factor to productivity, even if other factors, such as economies of scale and private investment, also play their part Increasing the UK’s productivity and reducing the productivity gap is the first aim listed in the Government’s 12 missions to level up the UK, but this is not adequately reflected in the UK Infrastructure Bank’s objectives. The second objective, which a number of noble Lords have referred to, is supporting regional and local economic growth. That is an extraordinarily broad objective that allows incredible levels of discretion over where the bank will focus its investment. Supporting infrastructure improvements in some of the wealthiest parts of London to drive local economic growth would fall under the remit of the bank’s activities but that is surely not what the bank is meant to be doing. We need to concentrate investment in specific infrastructure initiatives to boost regional productivity and close the infrastructure gap I fear that the integrated rail plan is a good example. It has its priorities absolutely inverted. Better connecting London to Birmingham and Manchester is being given precedence over connecting some of the northern cities to one another. The scrapping of HS3 and the eastern leg of HS2 remains a mistake and, to quote the Mayor of Greater Manchester, is rightly seen as a betrayal of the north. People in deprived or less productive parts of the country are tired of their second-rate infrastructure and the lack of investment in it. The amendment places a clear responsibility on the bank to close the productivity gap between regions of the UK, better to align it with the Government’s levelling-up objectives The need to close regional infrastructure gaps does not pertain just to metropolitan areas. It is a crippling issue for rural communities. One thing I shall come back to when we get to the amendment—later today, I hope—is how we want to rural-proof what is going though in legislation. The rural economy is 18% less productive than the national average, and while economies of scale contribute to this, the gap is primarily driven by a failure to engage with rural economies on their own terms Poor rural transport infrastructure and digital connectivity are arguably the two biggest factors raised by those trying to sort out the huge gap between urban and rural in this country. The fear is that the UK Infrastructure Bank, as a private company wholly owned by the Treasury, will not be subject to the usual rural-proofing requirements to which all government departments are subject. Rural areas must be adequately considered as viable locations for investment by the UK Infrastructure Bank. By focusing on closing regional productivity gaps, this amendment would ensure that rural areas and underperforming urban areas would receive their fair share of the bank’s finances—money desperately needed to level up As this is simply a probing amendment, I am at this stage just listening to the other interesting amendments and I do not particularly want to push this later, but I would be grateful if the Minister could address these concerns. What mechanisms will be hard-coded into the bank’s commitments to prioritise investment in those areas that suffer from poor productivity and need improved infrastructure to meet that first mission statement of Her Majesty’s Government on levelling up?