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Government Capital Expenditure

There is no freeze to the capital programme for further education expenditure, and there is no question but that the £110 million that was brought forward in the pre-Budget report this year will be spent. There are signs that the ability of some colleges to raise their own funds for proposed projects is being affected by the downturn, and it is right that the Learning and Skills Council should take a look at the proposals for capital schemes in the pipeline to assess the likely impact on funding support for individual projects. I understand the concerns that have been raised, but hon. Members who are anxious about projects in their constituency should recognise and accept that the 253 projects to which my right hon. Friend the Financial referred have been given the go-ahead, and that more than 150 of them are due to be completed this year, so there is a substantial programme of capital works in the pipeline—£2.3 billion over the next three years. I point out that the figure was zero in 1997. We know that we can sensibly combine our commitment to investment in our infrastructure and our public services with a real boost to the economy to help us through this very difficult global downturn. That is why we are bringing forward capital expenditure—not only because it is the right thing to do if we are to support jobs and stimulate economic activity, but because it will modernise Britain's infrastructure and ensure that we are in the best possible position to take advantage of the upturn when it comes. That is why we are using the fiscal stimulus to invest in our competitiveness for generations to come. I agree with the hon. Member for Brent, East (Sarah Teather) that it is far more costly to do nothing than to invest in increased public expenditure as part of a co-ordinated fiscal stimulus to deal with the unprecedented global situation in which we find ourselves. That is why the pre-Budget report in November set out a fiscal stimulus, including £3 billion of capital expenditure on schools, transport and homes, which is to be brought forward from 2010-11 to the next financial year. That is real help now, and it is in contrast to the attitude of the do nothing Tories. This Government have taken concrete action to give a timely boost to prevent job losses and stimulate economic activity, and we are on track to deliver that spending. There are reports that the difficult economic climate will adversely affect the private finance initiatives that are a common feature of the Government's public investment programmes. Some of those worries have been expressed this evening. There is no doubt that the market is challenging. The credit crunch has reduced liquidity in the financial markets, and that has affected all debt-raising. Understandably, there is a concern that that could result in new PFI deals struggling to find finance, or increase costs for those that do obtain finance. Obviously, we are watching the situation extremely closely. Projects continue to reach financial closure. As my right hon. Friend the Financial Secretary said, in January, two projects—the M80 highway project and the Forest Gate housing project—closed successfully. That involved £370 million of public investment, which had been committed and which is now being put to effect. We are working to push forward all the projects currently in the pipeline. In recognition of the potential difficulties facing such initiatives, Treasury officials are working with other Departments and Partnerships UK to help ensure that projects are able to obtain finance in a timely fashion. In addition, the measures to unfreeze credit announced last month by my right hon. Friend the Chancellor are intended to help remove barriers to lending. My right hon. Friend the Member for Makerfield (Mr. McCartney) made an impassioned speech, as usual, about the importance of protecting communities during such downturns. I agree with him about the policy of the Conservative party, which is to cut public expenditure now, right in the middle of a recession. That is the opposite of a fiscal stimulus. The Conservatives would not do nothing—they would take action that would make matters worse. By cutting public expenditure, the Conservatives are once more falling into the trap of laying waste to entire communities and huge areas of the country. This Government will not fall into that trap. We are committed to ensuring that public expenditure remains higher, even after the fiscal consolidation that we have planned. Public capital expenditure will be 1.8 per cent. of gross domestic product in 2013-14, which is three times more than the paltry 0.6 per cent. that we inherited from the Opposition. The Government have addressed the huge backlog—