Prime Ministers Questions today was more of an even match between Cameron and the younger Miliband after last week’s surprise victory for Ed. David had more of the measure and shot back the jibe about “asking the questions” to the Leader of the Opposition.
But PMQs this week was just the warming-up spar for the real attraction for a more than usually packed Wednesday lunchtime House of Commons Chamber – where even Secretaries of State crouched to the side of the Commons Clerks or had standing places only on the overflowing Coalition side of the House. Big beast Ken Clarke was squeezed uncomfortably between colleagues on the end of the front bench.
As ever the devil was in the detail and not in the hour long speech delivered by Osborne, which presented all the upside in detail and only alluded to the downside in passing.
So there was £30 billion for building infrastructure for improving roads and motorways and rail stations. After mentioning widening the M25 for ten consecutive northern and eastern junctions and re-building Birmingham New Street station, the effect was damaged when the sense of re-packaging of goods crept in. The Chancellor mentioned almost under his breath that this good news included “completing the A3 improvement at Hindhead.” This is of course a rather old infrastructure project from the previous government, which a Minister will be opening next year – money largely spent already. I suspect the art of double and triple counting and re-re-announcement did not die with New Labour. So don’t rush out expecting £30 billion of fresh development and construction projects to be coming forward and be careful chasing any of the other money or projects.
Crossrail will be retained, however, the wording is critical here – the scheme will go ahead “while continuing to seek efficiency savings to maximise value for money from the scheme.” That sounds like time honoured Treasury speak for slimming down station construction projects and cutting out escalators – cuts which come back to haunt commuters in overcrowded facilities decades later.
The Chancellor was pleased to announce plans for 150,000 affordable homes, without specifying how or where, or exactly when. Equally, this isn’t exactly a massive step towards actual need or anything like previous ambitions (as distinct from actual progress). It seems that this is anticipated to come through greater flexibility on rents for social landlords which will then be reinvested in bringing forward new housing stock and, ultimately, will make the market more attractive for institutional investors. The difficulty comes in where social rents are increased to 80% of market rents but housing benefit doesn’t rise to match this.
After that we had to switch to the written documents to get the detail of the department cuts. Defra took one of the biggest hits, with a 34% cut to capital projects and 29% for departmental spending as a whole. Communities and Local Government wasn’t far behind with a 27% cut for the Local Government funding side. Local authority budgets are being squeezed and the pips are going to squeak. Whilst financial responsibility is being devolved, it means little when there is still no money in the system to spend. Even the New Homes Bonus is likely to rob one local authority to reward another. In the end the Treasury always wins. How could anyone think otherwise…
The Government is continuing to look at localising taxation powers, removing ringfencing and giving freedoms back to local authorities, however, this works well in a rising market and less so in straightened times. The brave new world of Tax Increment Funding for local government will be officially introduced in a White Paper – this will be one of many White Papers due out shortly which will add flesh to the bones of everything we have read today.
Along with the New Homes Bonus came a statement that the regulatory burden on house builders would be “reduced”. However, there is no detail on this as of yet – it would be nice to see exactly how this regulatory burden is going to be reduced and what this will imply. Moreover, how it will fit in with the Localism agenda which seems to place a huge regulatory burden on the house building industry – as the Chancellor explained “putting local people in charge.” Similarly, we are still waiting for the outcome of LEPs, detail on how the newly extended Regional Growth Fund will be distributed and also the general detail of the 4-year Reform plans.
Funding from Defra will be stopped for seven waste PFI projects across the country in a signal that will send major bidders running for cover after years of government cajoling for action. The Treasury has pulled the rug with the wonderful reassuring Sir Humphrey statement that these are just “projects which, on reasonable assumptions, will no longer be needed to meet landfill diversion targets set by the European Union.” Just what sort of reasonable assumptions would these be – lack of cash assumptions perhaps?
Furthermore, it seems that the pilot Carbon Capture and Storage schemes will be reduced from four down to one with £1bn of funding. Although green issues seemed to be prioritised, the funding allocated was relatively low – the Green Infrastructure Bank receives just £1bn for all grants combined.
The new Shadow Chancellor, Alan Johnson, although pleasant and jovial, seemed to be out of place in his response. Budget Day sees the Leader of the Opposition respond and perhaps this convention would have served Labour better on this occasion. Johnson will need to find more fire in the belly to be credible in his new front line role.
Written by Nick Sutcliffe