The Chamberlain News

Ed Balls says ‘I won’t write blank cheque for HS2′ and slams ‘unfit and incoherent’ LEPs

A Labour government will not “write a blank cheque” for HS2 and must be convinced that the economic benefits of high speed rail actually stack up, Shadow Chancellor Ed Balls has insisted.

In a wide-ranging interview, Mr Balls told Chamberlain News that he was a supporter of HS2 and believed that a planned route from London to Birmingham, Leeds and Manchester could help to narrow the north-south economic divide.

However, he accused the Government of “sleeping on its watch”, not making the case for the £50 billion cost and benefits of HS2, and failing to respond adequately to mounting criticism of the project.

Mr Balls said: ““The Government has taken their eye off the ball.

“We have said consistently that we support new investment north south. But there has to be value for money, controlling costs and being clear about the benefits.

“I am for HS2 so long as we can see the value for money.”

Mr Balls said he feared the Government would attempt to steamroller through HS2 come what may and ignore demands for a closer look at the business case.

“George Osborne gives the impression that whatever the cost he is going to do it. That’s no way to run the Treasury. I am not going to sign a blank cheque. I want to know there is a solid case around journey times, capacity and improving the economy.

“There has been criticism and that criticism hasn’t been properly answered.”

Discussing a broad range of economic policy, Mr Balls set out his stall for government:

- A Labour government after 2015 will continue with public spending cuts because it is likely to inherit a deficit of more than £90 billion.

- The case for Birmingham Airport to act as Heathrow’s third runway has been made, but “a lot of people don’t think it stacks up”.

- Local Enterprise Partnerships are “incoherent and unfit for purpose” and must improve.

Mr Balls hinted that he expected LEPs to amalgamate in many instances. Although not referring specifically to the West Midlands, where the Greater Birmingham and Solihull LEP and the Black Country LEP split the metropolitan area, Mr Balls said the “free for all” in establishing LEPs did not make sense.

He regretted the abolition of regional development agencies: “Advantage West Midlands did a really good job leading a strategic debate about the future of the economy and challenging politicians and government. The fact that they were separate from councils and the Department for Trade and Industry and had power and money and could sort things out working closely with the public and private sector.

“Even business organisations have been having second thoughts since. LEPs at the moment are incoherent and unfit for purpose without the budgets and levers to make a difference. It needs to get better.

“RDAs could lever through investment around business and jobs. They could go to the universities or local authorities and say we will put some money in to catalyse private investment alongside it. LPs haven’t got the clout and the levers to challenge and it’s easy for other agencies to ignore it.”

There appears to be little or no chance of Labour reinventing the RDAs, however.

Mr Balls said he expected local councils to play a bigger role in LEPs, although he called for “evolution not revolution”. He warned that a Labour government would not “put in resources” or grant additional powers if LEPs were “not coherent”.

He added: “There’s a balance to be struck between devolving and being clear nationally about what we think our infrastructure needs are and the balance. I am all for devolution and decentralisation but I want to know there is going to be delivery and consistency across the country.”

On Birmingham Airport, Mr Balls stressed that he fought the last election on a manifesto of expanding Heathrow and his prime concern was to improve connectivity from airports in the north of England to London.

Labour has set up a commission under Sir John Armitt, former chairman of the Olympic Delivery Authority, to examine the future of aviation and the way in which large infrastructure projects are delivered in the UK.

Mr Balls said: “Sir John will assemble the evidence, work out the objectives and make clear recommendations. The Government can’t make a political decision until it has seen the evidence and what really works.”

He doubted whether the current government would take on board recommendations from the Davies Commission, which is looking at the future of Heathrow and other airports. There would always be a temptation to do nothing when controversial and expensive projects were being considered.

Mr Balls added: ““The Davies Commission will look at whether it is possible for Birmingham to play a role. I have heard the argument from Birmingham I have also heard from many people who say they don’t think it stacks up as an alternative.

“It’s hard in any democracy to make tough decisions that cost money. But if we as a country decide not to make any decisions we end up falling behind. You need to get some consensus on airports or you will never get anywhere. We have to make it harder for any government of the day to delay and kick things into the long grass.”

Labour’s Armitt Commission will look at the possibility of establishing an independent body enshrined in law with powers to make recommendations to the government of the day. Mr Balls explained: “Armitt will report on how we can make long term infrastructure decisions better than we have in the past 30 to 40 years.

“He is proposing to legislate for an Independent Infrastructure Commission with experts on it. It would draw up the most important infrastructure challenges for the country then report back to the Government.”

“May be this will stop the dither and delay. You would try to get consensus about national objectives.”

The Shadow Chancellor welcomed expansion plans by Jaguar Land Rover, but warned that a severe skills shortage in the West Midlands would have to be tackled to take advantage of jobs in the advanced manufacturing sector. He accepted that the last Labour government did not go far enough in devolving powers around skills policy to regional development agencies and the business sector.

Mr Balls said: “Manufacturing and advanced manufacturing can not only continue to flourish in the West Midlands, it can be a leader rather than a follower in a globally competitive sector.

“But even for a company like JLR there is a big challenge getting the skills they need so they are putting a lot of money into apprenticeships.

“We still have a skills deficit to make up. The answer is you need a diverse range of sectors. Not everyone is going to be able to work in manufacturing in the future, they haven’t in the past. There is no sector that doesn’t need really high quality skills.

“Once you get a big skills deficit it takes a long time to turn around.

“Employers say they need more young people doing sciences at the highest level but for many young people what they want is good maths and English.

“You need local authorities and businesses to shape with colleges skills policy more than we were able to do. We didn’t go far enough with trying to give an appropriate say through the RDAs around skills.”

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