Nick Clegg tells the North: We'll borrow to invest in transport infrastructure

Liberal Democrat leader backs One North plans for massive transport investment after deficit is taken care of

Deputy Prime Minister Nick Clegg during a question and answer session on day three of the Liberal Democrat autumn conference at the Clyde Auditorium in Glasgow, Scotland
Deputy Prime Minister Nick Clegg during a question and answer session on day three of the Liberal Democrat autumn conference at the Clyde Auditorium in Glasgow, Scotland

Britain should start borrowing money again - to invest in ambitious infrastructure schemes such as the £15 billion One North transport project backed by councils across the North, Nick Clegg has said.

Speaking to The Journal in Glasgow, the Liberal Democrat leader said the public finances could soon be in a state when borrowing became acceptable.

He said he expected Britain’s structural deficit - the deficit created by the gap between spending and Government income, rather than short term economic factors - to be dealt with by 2017-18, around ten years after the banking crisis began.

At this point it would become sensible to borrow money, he said, as long as the cash was invested in infrastructure such as the North East transport scheme.

Local authorities representing Newcastle, Manchester, Liverpool, Leeds and Sheffield published their plans in a paper called One North in August.

The measures are partly a response to the proposed new high speed rail line, known as HS2, and are designed to ensure every part of the North shares in the benefits.

They include improvements to rail links between Newcastle and York, as well as improvements to commuter train routes between Tees Valley, Wearside and Tyneside. The paper also urged the Government and opposition parties to consider extending HS2 north into Newcastle and on to Edinburgh.

Mr Clegg said he was not promising to enact every proposal in the paper but said he broadly accepted the findings.

He said: “We should deliver on the One North report. This is the report councils put together which has some really good ideas about a new high-speed trans-Pennine rail link, the electrification of some of the existing trans-Peninne connections, improving the motorway network and so on.

“I think we should get on and do much of that, and we can under our fiscal rules. Because we have said very clearly once the structural deficit is dealt with in 2017-18, and as debt continues to fall thereafter as a proportion of GDP, we should permit ourselves as a country the ability once again to borrow on a prudent and sensible basis for investments which improve the competitiveness long term economic performance of the United Kingdom.”

He contrasted this approach with the Conservative proposal set out by George Osborne, the Chancellor, to raise money by freezing working-age benefits for two years.

He said: “George Osbrne has made it very clear that even after the structural deficit is dealt with, the only way a Conservative government would fund those transport infrastructure investments in the North would be by hitting the working age poor across the North.

“And I don’t think many people in the North will appreciate at all that George Osborne is giving with one hand and taking massively away with the other.”

The Liberal Democrat leader also set out plans to introduce “devolution on demand” for English regions, by giving local authorities the legal right to demand more powers from central government,

He said: “One of the lessons I have learned in Government and of course it is an observation which has been given even greater force after the Scottish referendum is the desperate need to decentralise power from London to other parts of England. It really is the missing bit of the constitutional jigsaw.

“As more powers are devolved to Scotland in what is in effect home rule to Scotland, and I also hope we start delivering home rule in Wales and there is a debate about whether we devolve further tax powers to Northern Ireland.

“The missing bit of the jigsaw which is how power is still so firmly hoarded in London, and what I am working up at the moment is ideas on how we can enshrine in law a statutory right for local areas, whether it is the North-West, the North East, the South-West – wherever it is, to demand new powers from Whitehall.

“In other word to take down new powers from Whitehall and enshrine that right, that sort of devolution on demand, in law, which can only be refused if there are very very good reasons.”

Draft laws could be published as soon as January next year, he said.

“I very much hope, there is a lot of technical work still to be completed, but I very much hope we could publish some draft legislative articles on that on roughly the same timetable as we will be publishing the draft articles on devolution to Scotland at the beginning of the year.”

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