Ben Harrison provides live commentary and analysis as Act Two of the 2013 Spending Review begins.
Good morning everyone. Welcome to day two of the 2013 Spending Review. Yesterday the Chancellor announced details of new departmental budget cuts and confirmed various elements of capital investment.
Today, the Chief Secretary to the Treasury will provide more detail on that capital investment, with news expected on the specific projects to receive funding over the coming period.
We’re also expecting more information on Lord Heseltine’s Single Local Growth Fund.
Centre for Cities Chief Executive Alexandra Jones gave her response to the Chancellor’s statement yesterday. Like many in the sector, she was disappointed at the scale of the proposed Single Local Growth Fund:
The announcement on Heseltine’s Single Local Growth Fund is the clearest demonstration of localism in name more than in practice. Heseltine argued for £49bn over four years; what was announced today was £2bn a year for five years. While I recognise that we are living in an era of austerity, it’s hardly a ringing endorsement for devolution to local areas.
Divided between 39 LEPs, it’s not a great deal of money (roughly the same as the 9 Regional Development Agencies had in the mid 2000s), and the worry is that Whitehall could require places to jump through a lot of hoops in order to access relatively small amounts; hardly a localised process.
While it was good to see a direction of travel announced over five years, I’m hoping that tomorrow’s announcement will give details of other sources of funding available to LEPs that could not be rolled up into the Single Pot – for example, Structural Funds. I’m also hoping that there are more announcements to come on greater powers and freedom for local areas, for example to influence spending of Skills Funding Agency monies and Highways Agency decisions.
You can read Alex’s thoughts in full here: https://www.centreforcities.org/blog/2013/06/26/spending-review-act-one/
Overnight there has been much debate on the extent to which the capital investment figures announced by the Chancellor represented net new money over and above what had previously been committed.
In his interview on the Today Programme this morning, Mr Osborne confirmed that the spending totals for future years had been previously announced.
In many respects, that makes today’s statement from Danny Alexander even more important – it might not be new money, but at least today we will get more information on which kinds of projects the investment will support.
It is noticeably more quiet in the House today, with the green benches far more sparsely populated on all sides. Still time for them to fill up though…
Here we go, Danny Alexander is on his feet…
On assets – Alexander currently making the case for better use of public assets for housing and development.
£15bn of public sector assets to be sold by 2020.
Infrastructure administration investment to be transferred from civil servants to sector specialists
On affordable housing: supply will increase year on year. Social rents will be set at CPI +1% up to 2025, and £3bn more capital over three years to deliver 165,000 new affordable homes.
This is significant in providing a longer period of policy certainty compared to previous affordable housing regimes.
SINGLE LOCAL GROWTH FUND: At least £20bn to be under control of LEPs up to 2020.
This doesn’t immediately tally with £2bn per year over 5 years, so it will be interesting to see how those numbers add up.
Various rail improvements being announced now, including feasibility study on Crossrail 2. Half of the total cost will need to be met from private sector funding.
Funding envelope for HS2 confirmed at £50bn, including rolling stock
Funding confirmed for electrification schemes of Oxenholme to Windermere and Gospel Oak to Barking routes
Various announcements on road improvements now, including maintenance works and a commitment to deliver all of the major projects in Highways Agency plans.
£28bn for local road maintenance schemes in 2014-20. Highways Agency to be transferred into a publicly owned corporation.
Further £250m to ensure fixed super-fast broadband reaches 95% of the country by 2017
A series of announcements on renewable energy now aimed at improving confidence for generators and investors. Measures will incur a short term cost, but should provide future savings for consumers.
Green Investment Bank receiving an additional £800m to expand and will include the power to borrow £0.5bn from Government.
And that’s it, the statement is commended to the House.
I must say Alexander rattled through his announcements, and so it will be necessary to inspect the supporting documents to get a clear picture of delivery timelines and precise levels of anticipated investment.
Chris Leslie now responding for Labour – challenging the Government on their delivery record to date.
A quick round-up then of key announcements from Alexander:
– On affordable housing: supply will increase year on year. Social rents will be set at CPI +1% up to 2025, and £3bn more capital over three years to deliver 165,000 new affordable homes.
This is significant in providing a longer period of policy certainty compared to previous affordable housing regimes.
– On Lord Heseltine’s Single Local Growth Fund: At least £20bn to be under control of LEPs up to 2020.
This doesn’t immediately tally with £2bn per year over 5 years, so it will be interesting to see how those numbers add up.
– £15bn of public sector assets to be sold by 2020
– The Green Investment Bank to receive an additional £800m to expand and will include the power to borrow £0.5bn from Government
It’s telling that so many of the announcements made on infrastructure investment stretch way beyond the 2015/16 focus of this Spending Review and beyond the next General Election.
Given the degree of uncertainty surrounding the outcome of that election, it is hard to know just how significant some of these announcements really are.
Right, I am off to review the supporting documents in more detail.
There will be more reaction and responses from the Centre for Cities team appearing throughout today and tomorrow, so please do check back regularly!
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