With much of the world now dominated by talk of the need for economic growth the Welsh government today announced a series of measures designed to deliver such growth and secure existing and new jobs.
On the day the head of the International Monetary Fund, Christine Lagarde, came to London with a call for the UK government to increase spending on infrastrurue projects to boost growth, ministers at Cardiff Bay published their Plan for Infrastructure Investment (pdf).
In presenting the £15 billion package of measures for the next decade, finance minister Jane Hutt warned AMs:
“Further urgent action is required to stimulate and strengthen our economy.”
The package itself consists of a number key areas designed to:
• Improve the transport and telecommunications networks;
• Support the development of the energy industry in Wales;
• Secure greater investment in housing;
• Deliver more efficient and economical public services in the NHS;
• Improve the quality of the educational estate, particularly schools; and
• Develop Welsh Enterprise Zones.
• Preview 2012 – Wales 29 Dec 2011
Among the measures announced – agreed with the support of the Welsh Liberal Democrats – were several which will help to either create or protect more than 1,300 jobs in Wales.
• A commitment to the development of a Welsh mortgage guarantee scheme to support house builders and first time buyers;
• An additional £5m for home energy efficiency measures;
• £6m to expand the Welsh Housing Partnership, levering in an investment of £30m in total to deliver 280 family homes for intermediate rent; and
• £5m to double the size of the recyclable empty homes fund, contributing to our target of bringing 5,000 empty homes back into use during this Assembly term.
With other measures including:
• £2.7m for M4 junction improvements;
• An additional £4m to bring forward essential flood protection schemes;
• £6.8m to accelerate major hospital projects at Ysbyty Glan Clwyd and Llandough;
• £500,000 to deliver premises for domestic abuse ‘One Stop Shops’ in Pembrokeshire, Swansea and Gwynedd;
• An additional £5m to support schools projects in Lampeter, Denbighshire, Abercynon and Penarth and £3m for the new Cardiff City Centre post-16 campus;
• £3.5m to support essential infrastructure work for the Northern Gateway site in the Deeside Enterprise Zone; and
• £2.5m to boost the Welsh Economic Growth Fund to support Welsh SMEs.
Whilst pledging that financing the schemes would be primarily “through direct government capital expenditure”, the minister has, however, argued a “strong economic case” now exists for boosting the resources available above the level of government capital budgets where, she says, “the benefits of investment now outweigh additional costs”. This is in part is a result of the sizeable cuts to the Welsh government’s capital budget imposed by Whitehall.
Having outlined that in the longer term Cardiff Bay is “engaged constructively in ongoing talks with the UK government” to enable it to “borrow directly to finance infrastructure investment”, the minister went on to outline a number of new innovative financing approaches that have been adopted to boost the spending power of government.
These include the Local Government Borrowing Initiative – enabling investment of more than £170m to improve local highways across Wales – and the Ely Bridge development, working with the Principality Building Society to unlock capital funding and provide 700 housing units for rent, social rent and open market sales.
In expressing his government’s clear ambitions to kick start growth despite cuts from Westminster, first minister Carwyn Jones said of the plans:
“We are a government committed to the provision of infrastructure and the creation of jobs. We want to take every opportunity to increase capital investment, despite the severe cuts in our budget.
“We want to create a Wales with a strong economy that has 21st century transport, IT and energy networks We want a low-carbon Wales with sustainability at its core and a skilled and efficient Wales where businesses thrive and our expertise are globally renowned. Through the Plan we can make this happen.”
Meanwhile, the economist Gerald Holtham, who advised on the plan, responded:
“The Welsh government has already started using new ways of financing projects such as the Local Government Borrowing Initiative and support for a Welsh Housing Bond to increase the supply of affordable homes. We need to build on these developments to find funding to bring forward other investment with economic, social and environmental benefits.
“In spite of current turmoil in financial markets triggered by economic crises funds are available for sound projects with assured revenue streams and we must find innovative ways to tap those resources.”
The announcements come as EU leaders prepare tomorrow to gather for an informal summit in Brussels with even greater talk of plans to boost spending on infrastructure. The Financial Times this morning reported (£) that European Diplomats have signed off on a pilot programme to issue commonly backed bonds designed to fund pan-European infrastructure projects, the first element of a new “growth compact”.
Ahead of the gathering, Danish prime minister Helle Thorning-Schmidt said the establishment of an EU-wide growth treaty would be a welcome ending for her country’s six-month presidency of the European Union.
In expressing optimism at the potential for “discussions about creating growth and new jobs”, following a meeting with French President François Hollande, she explained:
“The election of Hollande means that there will be wind in the sails for many of the initiatives that the Danish presidency started. We are happy that discussions that previously focused exclusively on the topic of economic discipline have now moved toward talks about growth.”
“We are also discussing how to use our structural funds in more intelligent ways that foster growth and job creation.”
Meanwhile, on the eve of the informal summit, the OECD has also called on EU leaders to increase funding for the European Investment Bank to cover the costs of infrastructure spending, whilst China has announced plans to fast-track infrastructure investments.