Regional Growth

Baroness Neville-Rolfe Excerpts

Thursday 5th June 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, the Statement given in the other place yesterday made many references to the benefits of growth, and the Chief Secretary to the Treasury could hardly contain his excitement when he said that increases in regional productivity could grow the economy significantly. We on this side of the House would of course welcome the prospect of economic growth. However, although the Statement mentioned “growth” nine times, there was little to no detail on how these proposals would in fact boost our economy.

One vital question is whether this level of investment—if it is in fact new money—will require an increase in taxation, given that national debt is already at around 100% of GDP. As we know from the country’s experiences with inheritance tax and the NICs hike, tax rises are bad for growth and bad for our economy. I hope that the Minister can provide the House with some clarity on this question. Can he confirm to the House what the net figure is for the projected cumulative impact of this policy on British economic growth by the end of the Parliament? Can he assure the House that this policy will not be met through any new or increased taxes?

This Statement also gives me a sense of déjà vu, because the measures announced are incredibly similar in scale and form to the funding announcements made by the previous Government under the City Region Sustainable Transport Settlements in 2023. In 2023, we promised £2.64 billion for the West Midlands, and the Government have announced £2.4 billion for the West Midlands. We promised £2.1 billion for West Yorkshire; now, the Government have announced £2.1 billion. We promised £2.5 billion for Greater Manchester; they have announced £2.5 billion. Indeed, much of this investment touted by the Government appears to have been recycled—money already announced in different forms under previous schemes and now repackaged. This needs careful examination. Perhaps the Minister could help us here with an honest assessment.

The Government quote the Green Book, which they are revising to give more opportunity for projects outside the south-east—so a change in the way value for money is approached. Given that this has already been briefed to the media, what are the key features here and have the projects announced yesterday been assessed on the old or the new basis? How will the rules be honed to avoid Whitehall-inspired or ministerially-inspired white elephants?

I had the honour of chairing the Built Environment Committee, with many from across the House, and leading its work in 2022 on Public Transport in Towns and Cities. We found that nearly two-thirds of journeys on public transport were by bus. What do the Government’s plans do for bus funding? I am less interested today in the rapid bus routes planned for Liverpool than in basic bus services that so many people take to work, especially when they live outside our cities and commute. The Government have increased the maximum £2 fare that we introduced and have not guaranteed its long-term future.

The committee also found that light rail schemes—basically, trams—are very expensive but that very light rail systems such as that in Coventry, and bus rapid transit schemes, had more potential and needed to be assessed and compared. What have the Government concluded about the balance here, and how is that reflected in yesterday’s package?

We support infrastructure investment when it is targeted, timely and impactful. But what we heard from the Chancellor and Chief Secretary yesterday was less of a plan and more of a press release. The funding, spread over nearly a decade, will not begin in earnest until 2027. That is two years from now before the money leaves the Treasury. For communities in the Midlands and the north, this will sound like delay dressed up as action.

Can the Minister confirm when we will see the effect of this policy reflected in regional and national growth and productivity rates? Can he assure the House that businesses in the areas identified will see a tangible improvement in their day-to-day operations as a result of these spending decisions? After all, it is business, not government, that is more productive and the main driver of growth.

The noble Lord and I agree on the importance of productivity growth. However, to achieve the £86 billion productivity improvement in cities cited in the Statement requires much more than this largely welcome transport investment. We need a revolution in skills, innovation, digitalisation and public sector efficiency, and to solve the problem of uncompetitive electricity prices crippling our industries, especially in the very regions we are talking about today.

Finally, I must raise a note of caution on the fiscal front. At a time of considerable pressure on the public finances, we must be clear-eyed about priorities. A commitment of this scale, without clear delivery mechanisms or clarity on the projected economic returns, risks becoming a drain rather than a driver. Transport investment must support productivity, growth, and value for money. It must not become an uncosted political gesture, reliant on anti-growth decisions such as tax hikes. It is incumbent on the Government to be responsible in the steps that they take, so I look forward to the noble Lord’s answers today and to next week’s spending review, when we will return to some of these issues.

[Baroness Pidgeon (LD)]

The Liberal Democrat Benches fully support measures to grow our economy across every nation and every region. We therefore welcome this Statement detailing planned investment in public transport and infrastructure. It is good to see not just plans but the money set aside for some city regions, giving long-term transport financial settlements. Frankly, that is the only sensible way to ensure investment in transport infrastructure, rather than the constant stop-start begging-bowl approach we saw with the previous Government, which benefits no one and delivers nothing. For too long, communities have heard promises only, to be left with phantom transport networks, so investment in transport infrastructure is vital if we are to grow our economy and create access to jobs across the country.

In particular, we are very pleased to see the Metrolink to Stockport in this announcement, which is testimony to the hard work of the local Liberal Democrats, who have been campaigning and working on this issue for many years—indeed, long before the mayor and the combined authority were created. However, we have a number of questions. It seems that areas without mayors are being left behind or ignored. Where is the plan and money for rural areas? There are parts of the south-west, for example, which would benefit hugely from transport infrastructure investment, yet this area has been ignored in this Statement. It feels as though Bristol is as far west as the Government can see.

Whether it is Cumbria, Shropshire, Norfolk, Devon or Cornwall, there is nothing in this Statement for them, so what plans do the Government have for a rural growth strategy? What funding is planned for our railways as they come under public ownership? There is a desperate need for major investment across the network to enable more frequent trains to serve our communities. Will there be a railway investment plan? Will the Mayor of London and Transport for London be allocated further funding to maintain and grow the capital’s transport system, creating jobs across the country?

The cost of fares is a real barrier to many people. What plans are there to reduce fares—in particular, to reinstate the £2 bus fare cap—and to reform rail fares to make them affordable for passengers? Alongside the investment in infrastructure, there is the challenge of the skills and workforce issues. What plans do the Government have to ensure that we have the skilled and trained workforce to build this transport infrastructure, including fixing the apprenticeship levy? This is a welcome first step, but key questions need to be answered to ensure that every area can grow and prosper.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am very grateful to both noble Baronesses, Lady Neville-Rolfe and Lady Pidgeon, for their questions, and I welcome the noble Baroness, Lady Pidgeon, to her place and look forward to speaking with her in many more of these debates.

The noble Baroness, Lady Neville-Rolfe, asked a number of questions. She started by asking about growth. I noticed that she did not mention that, in this quarter, the UK is the fastest-growing economy in the G7. I noticed that she did not mention that our growth forecasts have just been upgraded by the IMF. I noticed that she did not mention that, in many business surveys, business confidence is now at its highest level for many years. I hope that, when she talks about growth, she will always give a rounded picture of where we are on growth.

She asked whether these measures will contribute to regional growth, and yes, of course they will: that is the whole point of them. For too long, we have relied on just one part of the country to generate economic growth. We need to make sure that more parts of our country are contributing to growth and more people throughout our country are feeling the benefits of that growth. That is absolutely why we are doing what we are. It is why we started with connectivity: because we know that connecting city regions is incredibly important, enabling more people to travel to work, connecting labour markets and connecting businesses to more places so that they can sell more goods to more people. That is absolutely central to what we set out yesterday. The answer to the question, “Will this contribute to growth?” is: yes it absolutely will. We saw in the Spring Statement the OBR, for example, scoring for the first time some of our growth measures, and of course we hope that it will continue to score our growth measures going forward.

She asked: is this new money? Absolutely, yes—yesterday, we announced £15 billion of new money. It is the biggest ever investment by any British Government in our regional transport network. As a result of the fiscal rules and the difficult decisions that we have taken, we are in the spending review increasing the overall amount of spending by £300 billion: £190 billion on day-to-day spending and an increase of £113 billion on capital spending. I noticed that the noble Baroness, Lady Neville-Rolfe, welcomed—slightly half-heartedly—what we announced yesterday. It is notable that she welcomed the additional spending, but she has at no point welcomed any of the difficult measures we have taken to raise that money so that we can spend it on the things that she is now welcoming. I think that her shadow Chancellor is today making a speech where he is seeking to distance himself from the Liz Truss approach from the previous Parliament. Yet it seems to me that the party opposite is repeating exactly the same mistakes of the Liz Truss mini-Budget of spending money that it does not have. I think that is a huge risk going forward. As I say, she has welcomed this spending, but she has opposed every single measure we have taken to raise the money to fund it. She asks: will this policy require any additional taxes? No, because we have already raised the taxes in the last Budget—£40 billion—to enable us to spend this money for the rest of this Parliament. So yes, these measures will be met within the envelope that was set at the last Budget.

The noble Baroness said that these are the same measures as the previous Government announced. She kept using the phrase, “We promised”. I think that is a really important phrase because, yes, the previous Government did promise many things, but they did not put a single penny of funding behind any of the promises made. The big difference between what we are doing now, what the Chancellor announced yesterday, and what the previous Government announced, was that they made lots and lots of promises that they never funded—not with a single penny of funding. She will have heard me refer to the £22 billion black hole in the public finances. That is exactly why that black hole occurred. What we announced yesterday was real funding for real measures going forward. That is the big, fundamental difference. She asked for an honest assessment, and I think I would call for some honesty from her too that the previous Government did not fund any of those promises.

She asked about the Green Book. We have set out that the Green Book was used by previous Governments against regional authorities and local mayors as a reason not to invest outside London and the south-east. We have changed that methodology. We will set out in the spending review next week the full details of that review, and I look forward to discussing the full details of that with her.

She said that funding would not be seen for two years from now. Of course, there was no funding seen under the last Government at all, so of course we have to start somewhere and we have to get the money out of the door—she is absolutely right. But spades will be in the ground in this Parliament, and we absolutely confirm that.

She asked: will we see improvements for business? Yes, it is absolutely the purpose of this announcement to connect businesses to more areas. It is why local transport networks are so vital and why we have started where we are. She talked about the fiscal front, and I completely agree with her. Of course there are increasing pressures, but that is why I say to her that we must not make promises that we cannot afford. The previous Government did exactly that; we will not make that mistake.

I am very grateful to the noble Baroness, Lady Pidgeon, for her welcome for the long-term nature of these announcements, and it is obviously great that national government is working with local government and local government leaders to deliver on these promises. She called it a welcome first step, and I would agree exactly with that sentiment. We were very clear about what we were and were not announcing yesterday. Yesterday, we were announcing the connectivity of city regions, so of course this focused on certain city regions. Next week, we will set out in the spending review the entire regional plan for growth: for the rest of England, Scotland, Wales and Northern Ireland. That is what we will do, but yesterday we were talking purely about the connectivity of city regions, and we were putting the transport connectivity first, because we know that that is the essential underpinning for so much else in our growth strategy.

She touched on a number of other things that are important to growth. She talked about skills, for example. I completely agree with her when it comes to skills. We will be setting out in the spending review, and then in the industrial strategy in the weeks following the spending review, the measures that we are taking. She talked about having the workforce to build this transport infrastructure. Absolutely: I completely agree with her on that point. She asked about funding for railways, the rest of the country and regional plans, and about the Mayor of London, et cetera. All those questions will be addressed in the spending review next week, and I look forward to discussing that with her and other noble Lords next week.

[Baroness Neville-Rolfe (Con)]

Will that include buses?

[Lord Livermore (Lab)]

It will include buses too, of course.