UK: Chief Secretary Signals Threshold Lowering In Infrastructure Bill Debate

Last Updated: 20 September 2012
Article by Angus Walker

Today's entry reports on the second reading of the Infrastructure (Financial Assistance) Bill.

The Infrastructure (Financial Assistance) Bill had its second reading (the debate on the main principles of the Bill) in the House of Commons on Monday.  The Bill is the one that is to be rushed through to allow up to £50bn of guarantees to be given to infrastructure projects that are poised to go ahead but can't quite get all the necessary financial backing.  First, a brief analysis of the bill and then what happened on Monday.

The Bill

The bill can be found here. It's a short bill - just four clauses, and the meat of it is just the first.  Clause 2 puts the limit of expenditure at £50bn, clause 3 requires a report to be made of what the government did with the money in each year up to 31 March, and clause 4 is the standard final clause about the name of the Act, its extent, etc. (more on that in a moment).  In case you were wondering why parts of the bill are in italics, that is to signal that the provision authorises the spending of money provided by Parliamentary expenditure.

Clause 1(2) gives a non-exhaustive definition of 'infrastructure' that is a different formulation from the Planning Act definition.  The bill covers more areas, but within each area the definition is sometimes narrower than the Planning Act. For example, the Planning Act covers seven types of energy project, whereas this bill just covers 'electricity, gas ... or other services', which isn't as wide - an oil pipeline would be in the former regime but not the latter, for example, as I would not have thought of it as a 'service'.  Waste is in the Planning Act but not in the bill at all.

On the other hand, the list in the bill covers telecommunications, trains (rather than just railways), health or educational facilities, court or prison facilities and housing. The list is not exhaustive, whereas the Planning Act categories of energy, transport, waste, water and waste water are.  This could act as a suggestion for the extension of the categories that the Planning Act might cover.

The Planning Act contains thresholds below which projects are outside it (see previous blog entry), e.g. electricity generation must be capable of exceeding 50MW.  The bill has no thresholds, so the government could give financial assistance for the provision of one house.  Criteria for which projects will be covered will be issued as guidelines rather than being written into the bill.

Clause 1(3) says what the money can go towards, and covers acquisition, design, construction, conversion, improvement, operation and repair, which is pretty wide. It does not cover authorisation because the projects will have to have been authorised already (see below).

Clause 1(4) says what the assistance could entail.  A non-exhaustive list of examples are all indirect, i.e. they do not cover simply giving money to the applicant, but then the catch-all includes 'any type of financial assistance (actual or contingent)', so presumably giving money is covered as 'actual financial assistance'.

Clause 4 says that the Act will extend to all parts of the UK, and yet the explanatory note says 'the Bill does not apply to any devolved matters'.  This is slightly confusing, especially when Treasury minister Sajid Javid said that the bill was intended to support infrastructure throughout the UK, including all the devolved regions.

The debate

The debate can be found here starting at column 676.  Although the bill is being 'fast tracked', there was a 4 1/2 hour debate on it, albeit with no vote at the end since all parties support it.

The most significant contribution by Chief Secretary to the Treasury Danny Alexander MP for infrastructure authorisation junkies was 'we have made significant changes to the planning system, including in the announcements last week, that relate directly to the threshold for infrastructure projects. Those will allow more projects of a slightly smaller scale to go through the national process, rather than getting tied upin local processes.'  Thus the review of Planning Act threshold will be looking in general to lower them ('slightly') rather than raise them.

If you are looking for examples of the projects that might be assisted, Danny Alexander was reluctant to give details: 'it would be wrong to set out in this House those projects that could potentially benefit from the Bill'.  However, guidelines would contain a definition of 'nationally significant' (which will have to be different from the one in the Planning Act given that a different set of projects is covered): 'We will issue guidelines and scrutinise proposals to ensure that any proposal that receives an infrastructure guarantee is nationally significant, financially credible, good value for the taxpayer, requires a guarantee to get under way and is ready to start within a year.'

Danny Alexander said that it would only apply to projects that had secured the relevant consents.  This is more restrictive than saying projects that are ready to start being built within a years, since the consents could have been achieved during that period.  In terms of Planning Act projects, then, it doesn't apply to any yet since no project to be funded privately has been fully consented.

He later hinted that appearing in the National Infrastructure Plan (or covered by one of the programmes in it, presumably) would be the main test, although the plan does not cover health, education, courts, prisons or housing.  The government will charge infrastructure companies for using the guarantee facility.

Danny Alexander's Labour counterpart Rachel Reeves described the bill as a peashooter when a bazooka was needed, and characterised it as legislation as PR, quoting the House of Commons Library as saying the commitments in the bill 'do not typically require legislation'.

Brian Binley gave a backbench speech in favour of 'vital' infrastructure, which is ironic considering that he is on the committee holding up the Rookery South energy from waste project.

So the bill sailed through its second reading and will start its committee stage on 10 October.  The proof of its effectiveness will become apparent on 31 March 2013, when we shall see if it has been invoked for any actual projects.

One speaker reminded me of the following surprisingly hard trivia question: what is the third most populous island in the British Isles after the British mainland and Ireland?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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