Osborne vows infrastructure boost

2 September 2012 Last updated at 12:40 ET

George Osborne said the government would seek cross-party agreement on airport expansion plans

The government is to underwrite up to ?50bn of private sector building projects which need finance, in an effort to boost growth.

It will also legislate to speed up planning decisions and encourage development of Green Belt land, if certain conditions are met.

Chancellor George Osborne also said a third runway at Heathrow was an option.

Labour said Mr Osborne had "no new ideas" and called for a cut in VAT and tax breaks for business.

The Treasury said the The Infrastructure (Financial Assistance) Bill, which builds on a scheme launched in July, will give the green light to ?40bn of construction projects by using the government's low interest rates to underwrite them.

To qualify, the projects must be "nationally significant", ready to start construction within 12 months, financially credible and "good value" for taxpayers.

'Do more'

As MPs return this week from their summer recess, ministers are also expected to set out plans to underwrite construction of up to ?10bn worth of new homes, including guaranteeing the debt of housing associations and private sector developers.

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Analysis

The chancellor's regular mantra is that 110% of his attention is devoted to doing everything he can to get the economy moving again.

The Infrastructure Bill that will be introduced in parliament in the next few weeks, George Osborne says, should be law by the end of October.

An Economy Bill is also imminent, which will liberalise the planning system.

And yet, at the heart of Mr Osborne's mantra, is what appears to be a striking contradiction.

Arguably the biggest, most controversial planning decision of them all, and one many businesses have been lobbying for for some time, is a third runway at Heathrow.

But there is a catch. The Conservative election manifesto, the Liberal Democrat election manifesto and the Coalition Agreement ruled a third runway out.

Ruled it out, in other words, until 2015.

It's highly unlikely the current government will perform an about turn.

But there is a growing sense at Westminster that a third runway might be a medium term option.

It was an option George Osborne didn't rule out.

An economy bill will follow, focusing on making it easier to secure planning permission quickly by reducing the time allowed for appeals and judicial review.

Mr Osborne said ministers would also be encouraging local authorities to use existing powers enabling them to build on Green Belt land if an equivalent area of land elsewhere is brought into the Green Belt.

He warned that the country could not afford to wait years for new development at a time when the economy was struggling.

"We have to do more and we have to do it faster," he told BBC One's Andrew Marr show.

"They are difficult times for the British economy, difficult times for the world but our economy is healing, jobs are being created, it is taking time, but there is no easy route to a magical recovery."

But shadow business secretary Chuka Umunna, for Labour, said that investment in new infrastructure was being held back.

"One of the problems that we have is that at the moment is that major infrastructure investment projects are falling backwards," he told BBC One's Andrew Marr Show.

"There has been delay and indecision all along the way."

He said the government's decision to re-write planning rules just six months after it introduced a new framework, would create uncertainty and deter investment.

Labour said the chancellor had no new ideas and it would kickstart growth by giving firms a National Insurance break to take on extra workers and reverse the government's VAT increase to get money back into the economy.

Runway capacity

In his Marr interview, Mr Osborne appeared to contradict Downing Street and senior cabinet colleagues who have repeatedly insisted the coalition will stick to its pledge not to build a third runway at Heathrow.

Chuka Umunna MP: "Major infrastructure investment projects are falling behind"

He said extra runway capacity was needed in the South East of England and "then it is a question of where it should go - Heathrow, a new estuary airport, Stansted, Gatwick - people have lots of different options.

"What I would say is - let's examine all the options, let's do it now, let's make sure we can create a political consensus."

He added: "I understand all about the local pressures but you have got, as a nation, to be able to overcome those and make a sensible decision about where that extra runway capacity in the south-east should be."

A consultation on future air capacity in the South East of England has twice been delayed amid reported divisions within the coalition and Conservative ranks.

On Sunday, Scottish Conservative leader Ruth Davidson added her voice to those backing a third runway at Heathrow, arguing the move is in Scotland's economic interests.

But the Lib Dems have rejected any expansion of the airport - which was explicitly ruled out in the manifestos of both coalition partners.

Source: http://www.bbc.co.uk/news/uk-politics-19455195#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

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