Danny Alexander – 2014 Speech on Scottish Independence

Below is the text of the speech made by Danny Alexander, the Chief Secretary to the Treasury, on Scottish Independence and EU membership. The speech was made in Glasgow on 17th January 2014.




Thank you William [Hague].

What you’ve said is a real reminder of just how influential the UK is internationally.

How we project our collective power and our ideas for good…

And particularly for the benefit of the poorest and most disadvantaged people in the world.

Read ‘Scotland analysis: EU and international issues’.

Being on track to meet the target of 0.7% of GNI on international aid, even in these most challenging times, is one of our proudest achievements

It was also a reminder of how being in the United Kingdom family…

And the influential membership that gives us of…

The EU. The UN.

The G7. The G8. The G20.

The IMF. The World Bank.

Really gives us – as Scots – an ability to punch above our weight internationally.

To fight for Scottish interests across the world.

To promote Scottish values across the world.

And to export Scottish products across the world.

It’s one of the most powerful reasons why we’re better as part of the United Kingdom.

The research before us today gives us Scots – I think – two powerful messages.

The first is that – as William majored on – we have more influence in the world as part of the UK.

And the second is that our membership of these international organisations – those I just mentioned – comes a lot cheaper as part of the UK.

And my message is that – by leaving the UK – we would pay more…

But that we’d influence less, and we’d achieve less.

I’ll explain shortly how – on our EU membership alone – Scotland will be between £1.9 billion and £3.8 billion better off as part of the UK in the next 7 years.

But before I get into the details, I want to talk about the principles.

The question that will be put in September is of monumental importance.

The UK is a family of nations that has grown together through good times and bad times.

Our ancestors have literally fought and died to protect it from harm.

And I ask everyone in Scotland to reflect on our history.

We are woven together in so many ways…

And I have a strong sense that as the debate intensifies – as the referendum gets closer – that the rest of the UK doesn’t want to see our family of nations torn apart.

Our nation is valued and appreciated.

The UK is successful.

And let’s remember that a ‘Yes to Independence’ vote is a one way ticket.

There will be no going back.


So William has already explained why we Scots would lose influence and clout by leaving the UK…

But why – you might ask – does it also save Scotland money?

Surely greater influence comes at a greater cost?

But the truth is, that as a United Kingdom we simply have more financial clout.

You may have seen that earlier this week I made clear that the UK Government would – of course – honour our debts should independence occur.

And that an independent Scotland would pay its fair and proportionate share of the debt to the continuing UK Government.

We took that action to ensure that those who lend to us continue to do so at low interest rates – which is crucial for every business and mortgage-holder across the whole UK, including in Scotland.

The markets were showing the first signs of unease and nervousness at a situation in which they might have ended up being owed money by a newly Independent Scotland with no credit history of its own.

Because all the experts agree that a new country with no track record in financial markets – like an independent Scotland – would not retain the same credibility in financial markets as the UK.

The National Institute of Economic and Social Research has estimated that an independent Scotland could expect to pay a premium above UK borrowing costs of up to 1.7 percentage points.

With UK gilt yields currently around 3 per cent, that would mean an independent Scotland paying more than one and a half times the interest rate we get as part of the UK right now.

The referendum will decide whether that is a price we want to pay in future…

But I was not going to allow taxpayers in all parts of the UK to pay more for that risk in advance of the referendum.

EU Budget – paying more to get less

Our Union – our history – is crucial here.

In debt management, we achieve better deals for everyone in Scotland because of our collective strength.

And that is true elsewhere.

Let’s look at the EU…

Before we get into the detail of the analysis, I won’t surprise anyone if I say that I’m a strong supporter of the European Union…

Or that I believe our membership is vital for our economy, that our coalition believes it is vital for investment and trade, but above all for jobs.

I don’t think the EU is perfect. I think it’s far from it…

But I think we’re at our best when we’re at its centre.

Reducing bureaucracy…

Leading trade deals…

Something – again – we have far more clout in as part of the UK.

But our membership of the EU doesn’t come for free.

The UK contributes to the EU budget, like each member state.

And those combined contributions are then distributed throughout the Union, based on seven-year budget agreements.

Now, explaining, and quantifying the benefits of our EU budget position isn’t ever the most straightforward task!

But I’ll try to do it as clearly as possible today.

The bottom line is this.

Scotland outside of the UK would have to negotiate its own way back into the EU…

And – as such – its terms of membership would be entirely different to those it currently enjoys.

At present, Scotland gets the benefits of EU Membership at a discount of between £1.9bn and £3.8bn over the next 7 years…

And that’s because we are part of the UK.

Outside of the UK we’d pay more and get less.

CAP and Structural

In terms of paying in, every nation contributes according to their National Income…

And in terms of receiving money back, there are two main programmes:

– Structural and Cohesion Funds

– Common Agricultural Policy – or CAP

And it’s easy to see the impact both those funds have here in Scotland.

In Glasgow the Structural Funds have helped turn old buildings like the town hall into new cultural and digital projects.

And Structural Funds in my own part of Scotland, in the Highlands, have had an even bigger impact.

CAP payments too, play a crucial role in supporting farmers across the country.


On top of those funds, the UK also receives a unique, permanent rebate on our contributions.

This rebate is – essentially – the refund we get on what we pay in to the EU budget.

We get some back, because we don’t take as much out as other Member States.

And the UK’s rebate is currently worth around £3 billion pounds every year.

It was hard fought for…

It took 12 years after entry to achieve…

And it is strongly objected to by every other member, every time the budget is negotiated.

Now, the research before you models the impact that Scotland’s independence would have on each of those three areas.

On Structural Funds, Scotland would lose out on around £200 million over this seven year spending round…

And that’s because the UK Government has recognised Scotland’s specific needs, and acted to ensure that Scotland received – compared to England – a higher percentage of the UK allocation.

On CAP payments, the picture is more complex.

There are question marks over transition periods, and negotiated splits, and whether Scotland’s CAP payments would need to be phased in over a 10 year spell…

As has happened to every other country that has joined the EU in the last three accessions.

But in the best case scenario – incidentally the only scenario put forward by the Scottish Government.

In the best case scenario CAP payments would increase by £850 million over the seven years…

And in the worst case scenario – CAP payments – would in fact decrease by over £1bn.

But the most important figure here is what would happen with the rebate.

The Scottish Government’s position is that the UK’s rebate can simply be shared in the event of independence.

But that’s not how a rebate works.

It’s not an annual lump sum that can be divided.

It’s based on a formula, reflecting the UK’s respective shares in the EU’s economy and receipts…

So the new amount would relate to the continuing UK, excluding Scotland.

There would be no ‘Scottish share’ left.

For Scotland to secure a rebate, or a correction upon accession…

There would have to be a change to the rulebook approved by every other single EU member state.

Quite simply, it would be unprecedented.

No other country has ever secured any budgetary correction on joining the EU…

So it is inconceivable that an independent Scotland would secure a rebate as the UK has…

In the unlikely event that any correction could be secured at all.

We also have to remember that all new member states contribute to the UK’s rebate…

Which means that an independent Scotland – like any other EU member state – would have to make a contribution to the rest of the UK…

We calculate nearly £600m over the seven year period.

The numbers

So – adding those factors together – how much might it cost for an independent Scotland to be a member of the EU?

The best case scenario for an independent Scotland, based on the Treasury’s analysis, is that for 2014 through to 2020…

With structural funds going down, a loss from the UK rebate, a contribution to the UK rebate…

And an increase in CAP receipts.

Scotland would be £1.9 billion worse for the period.

And in the worst case scenario…

Where CAP receipts went down rather than up…

Scotland’s net position would be £3.8bn worse.

What this means for Scottish families is that over the next seven years…

Continuing as part of the United Kingdom will save them at least £750 per household.

Possibly climbing to £1 470 per household.

So, as part of the UK…

We Scots pay less, and we get more out of our EU membership.


Of course, the EU is just one example.

What about – say? – the UN?

As part of the UK, Scottish views – Scottish values – are represented by one of the founder members, with a permanent seat on the Security Council.

And while an independent Scotland could join the family of the United Nations…

It wouldn’t have that permanent Security Council seat, and the influence it brings…

And it would also pay for its membership at a rate equivalent to similar countries.

So – with regards to the UN’s regular budget – our analysis shows that an independent Scotland might be expected to contribute between $12.9m and $18m a year…

And to the peacekeeping budget, between $50m, and $64m.

That’s before we take into account the UN’s specialised agencies, like UNESCO or the World Health Organisation.

White paper

This is a huge decision for Scotland.

And – as such – we can’t afford to base it on anything but the very best information.

But what struck many people about the Scottish Government’s White Paper at the end of last year…

Was that when it came to money – time after time – their figures made clear they were based on a very partial account of the “best case scenario only.”

But I think the Scottish people deserve to see the best and the worst case scenarios.

And it’s fair to say that some of the Scottish Government’s best case scenarios are optimistic.

That Scotland would keep the pound they claim – despite the fact that such an arrangement would be highly unlikely to work, and highly unlikely to be agreed.

That Scotland would be in a stronger fiscal position than the rest of the UK – a claim based on wildly optimistic oil and gas forecasts, which conveniently ignores unfunded commitments on tax and childcare.

Or that Scotland would join the EU under article 48 – despite the fact that many key figures have said this couldn’t happen.


But when it comes to the EU – what the facts show – is that Scotland and the rest of the UK are better together, and stronger together.

And everything we’ve covered today only serves to highlight that.

As a United Kingdom we get a seat on all the most important international tables…

And put Scottish values and British at the centre of all global decisions.

As a United Kingdom we have a historic and successful network of embassies and trade bodies across the world.

Which opens up the whole globe for Scots to travel and do business in.

And as a United Kingdom we secure good deals on debt and on the cost of these memberships…

Which puts more money back in Scottish pockets.

But by leaving the United Kingdom.

We would see our international influence decrease.

And we would see the costs to our country increase.

We would be getting less, and paying more.

So let’s keep a situation where we pay less, and we get achieve more in the world together.

We are better together.

Thank you for listening.

Danny Alexander – 2013 Speech on the National Infrastructure Plan

Below is the text of the speech made by Danny Alexander, the Chief Secretary to the Treasury, on 4th December 2013 at The Institution of Civil Engineers.





I hope that Paul’s [Deighton, Commercial Secretary to the Treasury] comments…

And those completed projects he ran us through…

Show that our infrastructure plan is making a difference in every corner of Britain…

Underground, overground…

On shore, off shore…

Wired, wireless…

Tarmac, train track…

You name it. We’re building it. Right now.

And the renewal of our infrastructure is renewing the very foundations of our economy.

I’m enormously grateful to Paul, for the excellent job he’s done – during his first year in office – in taking that work forward.

His influence has been felt not just down the corridor at the Treasury…

But across the rest of Whitehall and beyond.

But while we celebrate delivering today…

We should also remember that these – the National Infrastructure Plan and the Investment Pipeline – are live documents.

And for me – they serve three main purposes.

First – as we’ve heard – they act as a benchmark against which we can measure our progress.

Second – their existence helps to embed the idea of infrastructure as a vital part of our national life.

And third. They give long term clarity and certainty to investors and the public.

In developing the National Infrastructure Plan – as Paul said – we’ve worked in close collaboration with industry and finance…

To make sure we meet your needs, and remove any obstacles to delivering the programme.

You told us you wanted a clearer picture of future work.

So we created the pipeline.

You asked us to have a greater sense of priority…

So we designated the top 40 projects.

And you asked us to make it easier to get those priority projects through the system.

So we’ve listened, and we’ve delivered all the reforms to planning and judicial review that Paul has just set out.

The pipeline is the most comprehensive overview of planned and potential infrastructure investment ever produced.

It also acts as a prospectus for investors, identifying key UK private and public sector infrastructure requirements for decades to come.

Add the certainty that provides, to the economic stability the government is overseeing…

And you can see why Britain is now ranked number one in the Nabarro Infrastructure Index for attracting investment…

Which takes into account factors like credit and taxation and innovation.

I’m delighted that investors are realising this, and taking advantage of the opportunities it offers.

Today, a group of insurers…

Aviva, Friends Life, Legal & General, Prudential, Scottish Widows and Standard Life….

Have made a commitment to work with government and regulators…

And invest £25 billion in UK infrastructure over the next five years.

This was made possible because the government negotiated a successful outcome on Solvency II…

Which has put insurers in a strong position…

To make longer term investments.

I’m delighted that those companies have made that commitment…

It is a fantastic contribution to Britain’s economic future by some of Britain’s most impressive companies.

It represents a massive vote of confidence in the UK economy…

And it will play a key role in financing key projects.

It also serves as real evidence that if the government demonstrates a long term vision…

It will help us to secure long term funding…

Which will lead – in turn – to sustainable, strong, long term growth for our economy.

Today’s plan also sets out our intention to increase publically owned corporate asset sales from £10 billion to £20 billion by 2020…

Including exploring the sale of Eurostar.

While no final decision has been made, government shouldn’t own assets it doesn’t need…

And we should look at where these proceeds can be reinvested, including in Britain’s infrastructure.

So this document before you, builds on the long term commitment of taxpayers’ money that I set out in the Commons this June.

And it contains a series of new measures that will create opportunities for new jobs and for new growth across the UK.


Most of the value of the pipeline lies in our energy and transport sectors.

Transport is an area where a little investment from government…

Can go a long way towards bringing investment from elsewhere.

Take Kings Cross which Paul mentioned earlier.

We committed £500 million of public investment into its redevelopment…

Which attracted – in turn – over £2 billion from the private sector, and led to the complete regeneration of that part of London.

Between April and September this year we invested £15 million every day towards improving our rail network…

And we hope our investment will unlock private investment at some of those stations…

Like Manchester, Birmingham and Reading…

That are seeing the benefits of that money.

But we also have to keep looking at other stations where further investment could unleash growth.

Howard Davies – whose interim report is due to be published later this month…

Recently wrote to Government pointing out the importance of improving surface access to airports.

And we agree.

The current station at Gatwick hardly provides the best first impression of Britain.

And it sits on a key transport route, linking London to some of our great coastal towns.

So we’ve decided – subject to contributions from the airport itself – to provide £50 million to the cost of building a new rail station at Gatwick…

And to commission studies exploring rail and road improvements at both Heathrow and Stansted…

As well as the Brighton line.

This is good for those airports…

And the communities that surround them.

On our roads too – as we’ve seen – rapid progress is being made.

But across the country, there are still too many pinch points where it isn’t just traffic that’s being slowed down.

It’s growth too.

87 schemes have already been funded through our local pinch point fund…

But more work – and on a bigger scale – needs to be done.

At the A50 for example, where residents and businesses in the area face delays and congestion every day.

So today I’m adding it to our priority roads programme…

So we can work with Staffordshire Council, the LEP, and the Highways Agency to find a solution.

We’re also making progress on the other routes where we identified blockages in June.

We’ve started feasibility projects into a number of areas, including:

– the A1 from Newcastle to Scotland

– the A303

– the A27

– and the Trans-Pennines routes

And we’ll be publishing our plans for all those routes by this time next year.

As we develop those plans, we’ll do our best to keep the public as involved as possible…

Just as we did with our proposals for the A14, where we set out a consultation exploring the idea of a tolled section of road.

The A14 is a crucial link to the Haven ports – which are predicting a three-fold increase in throughput by 2030…

And improving the road could also support 10 000 new homes…

And a 22% increase in local jobs…

So we’ve listened to the consultation responses, and we’ve come to the decision that…

When this road goes ahead in three years time…

There will be no toll.

This will not lead to any delay in delivery…

And the cost will be covered by government.

But, as well as the economic benefits that our transport network brings…

We should remember that infrastructure can also add to the cultural life of our country, and our civic pride.

That’s why the government will be providing £30 million to help make the dream of a Garden Bridge over the Thames a reality.

Providing this investment will – I’m certain – help the Bridge’s Trust to secure private donations for the scheme…

And move us closer to the target of a 2017 opening.

And as well as building the bridges and the railways and the roads for the future…

I want us to build the cars of the future too.

This summer government committed £500 million of funds to support ULEVS.

Details of which will be set out soon…

And today’s National Infrastructure Plan puts £5 million towards promoting the use of ULEVs for all Government car fleets.

But there are other opportunities for Great Britain too.

At present, the main advances in driverless car technology are happening in California.

Apparently they’re making progress, but they’ve found that the cars only really work in sunny weather.

So the UK has something to offer here!

And the National Infrastructure Plan contains plans to put our country at the forefront of driverless car technology.


If we want to be world leaders in new technology though…

We’ll need to have the right digital networks in place to support those industries of the future.

Paul laid out our progress on making 95% of households superfast.

But we believe that everyone should have access to the opportunities the internet offers.

Especially with more and more of our lives and our jobs – perhaps even our democracy? – moving online

That’s why we’ve decided to open – as part of this update – a new £10 million competitive fund…

Which will market-test the kind of bold and inventive solutions that could deliver broadband to the most difficult to reach parts of the UK.

No area – no matter how remote – should be left behind.

Energy, the need for certainty, strike prices…..

Finally, the need for investment in our energy sector is enormous.

The energy measures we announced at the weekend will ease the burden of gas and electricity bills on hard pressed families over the next couple of years…

Without in any way undermining the support for investment in electricity generation.

But those lower bills will only be sustainable if we deliver that investment in newer and cleaner sources of electricity…

And this document updates you on our progress.

Back in June, I announced the draft prices the government will guarantee for those investing in renewable energy.

And this Plan updates and confirms the final prices we’ll pay.

It shows that the price we’re willing to pay for onshore wind and large scale solar farms has come down.

So we can drive every penny of efficiency…

And get consumers the best possible deal.

It shows that we’ve maintained the amount we’ll pay for converting coal stations to biomass.

And it also shows that we’ll increase what we pay for offshore wind in 2018-19.

We believe that this plan will mean delivering 10GW of offshore wind by 2020 is achievable – perhaps more if the prices come down.

This protects our commitment to green energy….

While ensuring we get the best value for money for consumers, and ensure the huge potential of offshore wind is fulfilled.

But it’s not just wind, wave and tidal power that are seeing the benefits of our policies.

Just twenty minutes ago…

In this very building…

I signed an agreement with Hitachi and Horizon…

Which commits us in principle…

To offering a guarantee for their Nuclear Power Station at Anglesey.

There is work to be done…

And putting the financing plan together will be a commitment from both sides.

But the agreement today shows that…

Just as we did with Hinkley…

This Government is prepared to give certainty to investors…

To help them make the financial decisions that are critical for our nation’s infrastructure.

The power station this agreement will support is set to create around 1,000 permanent jobs once complete…

With a peak workforce of over 5 000 during construction.

And – along with the other Guarantees agreed in principle…

It shows that the government is doing all it can:

– to secure a stable, certain environment for energy investment…

– to create jobs…

– and to ensure the UK plays its full part in tackling climate change.


As I see it, this plan is a blueprint for Britain…

From which we will literally build the foundations of our future prosperity.

I want to see everybody…

Be they politicians or investors…

Project managers or engineers…

Getting behind it.

And helping to deliver it.

It’s a plan that demonstrates a long term vision, for our energy and our transport and our digital networks…

It’s a plan that is helping to secure long term investment – as we’ve seen from the insurance sector…

And ultimately, it’s a plan that will lead to sustainable, strong long term growth.

And help us to build a stronger economy in a fairer society, where everyone can get on in life.

Thanks for listening.

Danny Alexander – 2013 Speech on Scottish Independence

Below is the text of the speech made by Danny Alexander, the Chief Secretary to the Treasury, to the Institute of Chartered Accountants in Scotland on 5th November 2013.




I’m very glad to be here with you this evening.

I must also say, I’m glad to have an excuse not to be in the Houses of Parliament on bonfire night.

It’s been 408 years, but you can’t take any chances!

Perhaps there aren’t yet fireworks in the UK economy, but we’re on the way back.

Not fully recovered, but we are seeing signs of recovery.

It has been a long, hard road.

And there’s a long way to go.

But – thanks to the hard work of businesses, the length and breadth of the UK – we are starting to see signs of a recovery.

Scotland is playing a key role in helping the UK economy to turn the corner.

Scottish business proving – once again – that Scotland is highly successful within the UK.

In 2012 Scotland had a higher economic output per head than Denmark, Finland and Portugal…

A higher employment rate than Finland, Ireland and Luxembourg…

And Edinburgh is one of the cities really leading the way…

With output per head at 165% the UK average.

Those successful cities and companies…

Really benefit from being part of a strongly integrated UK.

Where nearly two thirds of Scottish exports go to the rest of the UK.

And in capital…

With 84% of mortgages…

91% of pensions…

And 89% of ISAs…

Provided by Scottish firms to non-Scottish customers.

And – in return – 70% of Scottish pension holders…

And over half our mortgage owners…

Having bought products outside Scotland.

Those cities and those companies and those industries performing well…

Have been able to help our economy because of decisions taken by the UK government…

Our efforts to build a more competitive and fair tax system.

To tackle regulation.

To reform the planning system.

Obviously not in Scotland – that’s a matter for the Scottish Government.

To invest in our skills and infrastructure…

And – of course – every accountant will know the importance of balancing the books…

And the very tough decisions we’ve had to take to reduce Government spending…

And to deal with the deficit…

Have maintained the international credibility of the UK…

And shown that as a country we can pay our way in the world.

We’ve all worked so hard to create this recovery…

We must now work equally hard, to avoid putting it at risk.

And an obvious – and increasingly imminent – threat to our collective prosperity is the referendum on Scottish independence.

Those who propose independence would have us – Scotland – separate from the UK.

So after we’ve demonstrated the importance of strong UK-wide support to our financial sector…

…after we’ve seen the benefits and resilience of the strength of our currency, the UK pound…

…and just as we’re starting to witness a recovery that the government wants to see shared through the whole UK…

…we would walk away.

We have to make sure that the people of Scotland have access to all the information they need…

To make the right decision next September.

I want to pay tribute to ICAS, for their influential role in this debate…

And I’d like to thank you for engaging in the discussion…

Especially with your pensions paper…

Which provided a very important angle on a very important issue…

And really changed the terms of the debate.

As I’m sure many of you in this room will know…

The UK government have been publishing papers to inform the debate – like yours – throughout the year…

And our papers too, have highlighted some of the challenges and risks that independence would present, on issues like…


And defence…

And the success of the financial sector north of the border.

We’ve got further papers coming up.

But the issue I’d like to return to briefly this evening…

Is our study of the currency options in an independent Scotland.

Just to warn you the last time I spoke in public about this paper was a 40 minute lecture at the University of Stirling!

But I’ll try to be slightly more succinct here!

It’s not clear to me that a currency union would be in the interest of Scotland or the UK.

I look at this issue from 2 perspectives.

The first is as a passionate Scot who wants the best for the people of Scotland.

But I also look at this in a hard headed way as a Cabinet Minister in the UK’s economic and finance Ministry.

The lessons learned from the Eurozone have been clear.

That while such arrangements can appear successful in a period of stability and growth…

They can lead to brutal readjustments in times of economic stress and uncertainty.

No one should think that because we see the signs of recovery…

That we’ll forget the lessons of the crisis.

No one should assume that a strengthening UK economy increases the likelihood of a currency union between an independent Scotland and the continuing UK.

It doesn’t because the fundamental problems remain.

An independent Scotland would be very different to Scotland as it is today – fully integrated into the UK economy.

Just consider the disproportionate impact that a collapse in oil prices would have.

If markets sensed that monetary policy – set by the Bank of England – no longer suited Scotland’s circumstances…

They might start to doubt Scotland’s commitment to any such currency union.

Financial market speculation could lead to capital flight and higher interest rates…

And ultimately, if those markets weren’t calmed…

We could exit the currency union, adopt our own currency in a time of crisis.

Don’t think that wouldn’t or couldn’t happen to us…

It was only twenty years ago that we fell out of the ERM.

The euro area is moving towards greater political and fiscal integration in response to the crisis…

But – in the event of independence…

Rather than seeing greater integration…

Scotland and the continuing UK would be moving in the opposite direction…

Would this be a credible basis for a currency union?

So-called “sterlingisation” is what Montenegro does with the Euro.

Literally importing the currency of a foreign country – in this case the UK pound.

There are a very few examples where countries have made such an arrangement work…

The most famous is probably Panama, where they use the US dollar.

But any historians in the room will know what happened in the 1690s…

The last time Scotland looked towards Panama for its economic future.

More fundamentally, adopting another currency like this would be a mortal threat to Scotland’s financial services sector.

This isn’t a situation where we can be wise after the event.

Where people can realise the impact of their decision, and rescind their vote.

The referendum won’t be like a general election, where if you don’t like the government that’s been elected you’ll get another go in five years.

If Scotland leaves the UK there will be no going back.

It is absolutely clear to me that the only way for Scotland to keep the pound as it is now…

…is for Scotland to stay in the UK.

Anything else is wishful thinking at best.

As one of the Scottish members of the UK government…

Let me say this clearly.

It would be very foolish for anyone to vote for an independent Scotland, on the basis that they will get to keep the pound.

The truth is that a currency union may not be in the interests of either the continuing UK or of Scotland…

It is highly unlikely in practise that a currency union could be made to work…

And it is therefore highly unlikely that a currency union would be agreed.

Now, I plan on unashamedly using every opportunity I have over the next year…

Be they meetings or speeches or TV appearances…

Weddings, christenings, plane journeys – where you have a captive audience!

To talk about the issue of independence.

Because this is – quite simply – the biggest choice our country will ever take…

And as such we all have a responsibility to make sure that the Scottish people have as much access…

To the information…

And the arguments…

As possible.

So I thank you – again – for your influential involvement in the debate so far…

I hope that you will all remain involved in the debate…

As we move towards this huge decision.

And I’ll look forward to hearing all of your questions

And – no doubt – seeing you politely decline the seat next to me on flights!

Thank you.

Danny Alexander – 2013 Speech at the Housing Market Intelligence Conference

Below is the text of the speech made by the Chief Secretary to the Treasury, Danny Alexander, to the Housing Market Intelligence Conference on 9th October 2013.




Thank you Mike [Quinton].

I’m very pleased to be here this morning.

I’m told by my office that I accepted the invitation to speak at this event exactly five months ago…

So it’s rather serendipitous that five months later, I’m here the day after the official launch of phase 2 of our Help to Buy scheme.

As such, I’m sure it won’t surprise you that I plan on spending a little of my time with you this morning discussing the details of, and the rationale for the scheme itself.

But I also want to talk about why that particular policy and why our actions on home building aren’t just about helping the public to buy homes.

They’re also about helping sectors like yours to build more homes.

Help to Buy

A functioning housing market is vitally important to growth and competitiveness in this country.

People need homes that are affordable, and within travelling distance of jobs and amenities.

And the economy needs a housing market that is stable and secure…

One that supports labour market flexibility and doesn’t undermine financial stability.

But home ownership – as you will well know – is a deeply personal issue for millions of people, as well as a macroeconomic one.

People who want a space to bring up their children…

Or relax at the end of a hard days’ work…

Or simply a place they can call home.

And week-in-week-out I have people coming into my constituency surgery…

And I know my colleagues up and down the country have people coming into their constituency surgeries…

Who want to follow that dream, and get onto the housing ladder.

But the thing those constituents keep telling me and other colleagues, is that it’s increasingly hard to get your foot up on the ladder…

Unless you get a helping hand from your parents.

And the facts support their suggestions.

Following the financial crisis, the number of first time buyers fell to its lowest level in 25 years – from an average close to half a million a year in the early 2000s to around 190,000 a year in 2008.

And since then, that number has risen only slightly – to 220,000 last year.

One of the reasons for this drop in first time buyers, has been the big drop in high loan to value lending.

At the beginning of 2008, there were 754 mortgage products available at 95% Loan to Value.

But by August this year there were just 43 such products.

And this has meant – in practise – that unless people have managed to secure a big deposit…

Be that from family, or be that from years of saving…

It has becoming increasingly difficult for them to buy their first home.

That is something it is right for us to change.

It doesn’t seem fair for a couple who earn more than enough to pay off their mortgage debts, to be stuck in rented accommodation while they scrape together enough for a deposit.

Especially if the amount required for a deposit is sneaking higher and higher every year.

Of course, there have been some vocal critics of the scheme, who have been suggesting that there is a housing bubble in our country.

But – I agree with what Stewart said – the facts suggest otherwise.

Nominal house prices remain below their peak in all regions other than London and the South East.

And according to Halifax, UK house prices are, on average, around 15% down on their 2007 level.

Yes, annual house price inflation is 3.3%, but if we take London and the South East out of the equation that figure falls to 0.8%.

I think commentators and journalists – and even perhaps my fellow MPs – can sometimes forget that there is life beyond Central London.

The Financial Policy Committee of the Bank of England noted last month that – and I quote – “activity in the housing market and loan-to-value ratios on new mortgage lending remained below their historic averages.”

In fact, relative to earnings, average house prices across the UK are now around the same level as they were ten years ago.

So – at this moment – I don’t see any evidence of a housing bubble across the country.

But if the Financial Policy Committee disagree – and if they think that there is danger of overheating the market – then they will alert us.

And we will listen to their advice.

Because this policy isn’t about creating a new volatility.

It is about creating a new opportunity, for tens of thousands of potential home owners.

One of the reasons I believe our action to support home buyers is sustainable, is because of the practical steps we’ve been taking to increase housing supply.

Help to Build

The Affordable Homes Programme – funded by £4.5 billion of public investment over the current Spending Review period – is on track to deliver 170,000 homes by March 2015…

Over half of those have been completed already.

And as part of our recent Spending Round, I announced that a further £3.3 billion will be invested in the programme in the next spending period…

Which will deliver 165,000 further homes by March 2018 – an average of 55,000 affordable homes a year.

More than in any year under our predecessors…

And the most for twenty years.

I was grateful for Stewart’s comments on Help to Buy, and glad reservations are above the levels expected.

I’m also grateful for the industry’s help in our work.

Where you – as an industry – have alerted us to problems…

To the things that have been preventing you from building…

Or causing delays to your projects…

We’ve done our best, and we will continue to do our best – to fix them.

You told us that it was hard to access funding, or debt at reasonable prices.

So we’re using our financial muscle to lever in private investment through our Housing Guarantee scheme.

Those guarantees – that have a value up to £10 billion – have already seen a strong level of interest from housing associations across the UK, so I’d urge you to get in quick if you want to apply.

And our £1 billion Build to Rent fund will provide further support for new high-quality rented homes that meet peoples’ needs.

We also announced the new Affordable Rent to Buy scheme.

This is a £400 million programme that will provide funding for new build homes to be let to tenants at affordable rents for a fixed period…

And at the end of this period the sitting tenant will get first option to buy the home and achieve their aspiration of home ownership.

We are going to set out more details on this in December, when we publish the framework for our next Affordable Homes Programme, so I’d urge too, you all to keep an eye out for that.

You told us that a web of red tape and planning constraints was holding you back, so we:

Introduced a new planning framework, with a clear presumption in favour of sustainable development.

And condensed over a thousand pages of planning guidance into a clear 50 page guide.

As Stewart said, our changes are making a real difference – planning approvals rose to 89% in the year to June 2013.

That’s the highest level for 13 years.

Where you’ve told us that progress has stalled, we’ve stepped in to provide support.

So our Large Sites programme has unlocked 11 major housing schemes which will deliver up to 69,000 new homes.

And our £570 million Get Britain Building programme has already helped to get over 11,000 starts on site in the short term.

And you told us that lack of access to mortgages was preventing you from having the confidence to build.

So we’ve taken steps through Help To Buy to remedy that.

I think it’s also important to note that by committing to invest heavily, over a long period of time, in our transport infrastructure – especially our major road and rail projects – we will open up new development opportunities for you.

Next to our newly electrified rail lines…

Or near the stations served by HS2 and Crossrail…

Or close to our newly widened motorways.

But our work won’t stop.

We know that we have to keep finding new and innovative ways to unlock investment, and to keep new houses being built.

And I’ll welcome any challenges from this organisation, and everyone here.

Right to Contest

You’ve told us that another factor holding back new house building has been land supply.

And – again – this is something the government is acting on.

Back in 2011, we set ourselves the ambitious goal of releasing land capacity for 100 000 homes by 2015, and we’ve made good progress.

We’ve already released land with capacity for 58,000 homes…

But we recognise that we need to do more, to ensure that land is used properly.

Too often we see that land that could be used for housing or for business – even for recreation – that is instead left for the grass to grow, and indeed sometimes for wildlife to move in.

And far too often for my liking, that neglected, or underused land is government owned – be that at a local or a national level.

In fact, independent estimates suggest that the public sector holds around 40% of developable sites and around 27% of brownfield land suitable for housing.

And I believe that we should make that land available.

After all, we need to remember that we – as government – are the custodian of the taxpayers’ assets.

And so when we no longer need those assets – or when we’re not putting them to good public use – we should be prepared to sell them back at a fair price.

We certainly shouldn’t act as some kind of compulsive hoarder of land.

It is for that reason, that I can tell you today, that next month will see launch our new Right to Contest scheme.

Under current law, members of the public have the right to challenge Local Authorities and government departments to release land that is vacant or underused.

But Right to Contest will expand this even further, so that if there is any land owned by central government departments that members of the public – or your organisations – think you can make better use of, then you can challenge us to release it, even if it is currently in use.

If ministers are convinced that the site can be used in a more economically valuable way – for business, for homebuilding – then we will sell that land on the open market…

And we will use the proceeds from the sale to pay down our debt, and to invest in our economy.

We’re also undertaking a new strategic land review, which will build on this right and invite input from industry and Local Authorities to help identify where further land can be made surplus or redundant and sold to support construction and local growth.


So we will continue to listen, and continue to take action – where we can – to support house building.

First, by ensuring that more people can afford to buy a home, and the Help to Buy scheme makes that a much greater possibility for tens of thousands of individuals.

And second, by building more homes, and – again – the Help to Buy scheme, alongside many other policies, will help support the construction sector to deliver more affordable housing.

And I hope that – through all of this – together we will build the new homes that our country needs…

Because that is essential to achieving our objective of a stronger economy in a fairer society, where everyone has the chance to get on in life.

Danny Alexander – 2013 Speech at the Scottish Productive Ageing summit

Below is the text of the speech made by the Chief Secretary to the Treasury, Danny Alexander, to the Scottish Productive Ageing Summit held on 3rd October 2013.




Thanks Richard.

I was especially keen to come and speak at your conference today…

Because the subject you’re discussing – productive ageing – is a huge issue for this government.

And I also think – unless we take the right decisions in this area now – it will become one of the biggest challenges facing our country in the future.

Why important?

So why do I place such emphasis on this?

Since I joined the Treasury one of our biggest goals has been to secure our country’s long term economic future.

That’s why we’re reducing the deficit, to make sure that our grandchildren won’t have to pay off this generation’s debts.

And that’s why we’re investing in our infrastructure, so that the next generation have the best possible transport and digital networks to support future economic growth.

But if we really want to secure the long term economic stability of the UK, one of our key challenges will be to keep control of the dependency ratio.

Which in plain English – as most of you will know – is the number of dependent people not of working age, relative to the number of working-age.

To do that, we have to ensure that our older people can be as productive as possible.

Because – over the longer term – any significant increase in that dependency ratio would place a greater tax burden on everyone of working age…

And result in a smaller working population, paying for an expanding support system.

Just to illustrate the scale of the challenge facing here…

The OBR’s projections suggest that public expenditure on older people is set to rise by nearly 4 ½ per cent of GDP between 2016 and 2060.

That’s an increase of £66bn in today’s terms.

And the figures here in Scotland are even more profound.


The Scottish government’s own research shows that this nation could see a 50% increase in number of people over the age of sixty through the next twenty years.

But despite that research, that same Scottish government concocted a statistical mirage recently to suggest that – somehow – the pension costs of an independent Scotland would be lower than the rest of the UK.

They did this by fiddling the figures and pretending that teenagers are now pensioners.

According to independent forecasts, by the year 2060, each pensioner in Scotland will be supported by just 1.9 people of working age, compared to 2.2 in the rest of the UK.

This is the key dependency ratio when it comes to assessing the cost of pensions.

But in their paper, the Scottish government used a dependency ratio that included those under 16, as well as pensioners.

So – because the rest of the UK has a higher number of children – they decreed that Scotland would have a lower cost of pensions.

And based on those rather suspect figures, they released a paper that suggested they may not increase the state pension age if the ‘yes’ campaign won the referendum.

Not only is that maths highly questionable.

But a two year delay in increasing the state pension age could cost an independent Scotland £1.4bn.

And by 2030, it could mean 30 000 fewer people in employment…

And a reduction in GDP of over £1bn a year.

It also strikes me that the implication that when people hit 65 they want to put their feet up is misleading.

That isn’t what I see either here in Scotland, nor south of the border.


That’s why this conference, and the work that so many people here are doing, is so important.

We need to turn that argument – and that perception – around.

And – at the risk of going a bit JFK – we need to look not at what our older generations take from society…

But what they contribute to society.

There is – as you will well know – a whole host of evidence out there about the advantages older 65s offer in the workplace:

McDonalds report a 20% higher performance in their outlets where workers over 60 are employed…

B&Q report that absenteeism is 39 per cent lower among their older workers…

and Hertfordshire County Council found that 65 year olds were their most engaged workforce group.

So this age group can offer a huge amount for individual businesses.

In fact, if we look at things on a larger scale.

Studies show that if everyone worked just one year longer, we could see real GDP increase by around 1 per cent.

That’s the equivalent of £14bn for the UK economy every year.

And that’s something it would be foolish for any Treasury Minister to overlook.

Of course, it’s worth saying at this juncture that this isn’t about trying to force retirees back to work.

Where people have worked hard, and saved wisely, and want to relax into retirement they should have every right to do so.

And the changes that my colleague Steve Webb – the Minister for Pensions – has overseen on auto enrolment will make it much easier for people to start saving for and planning for their retirement.

But where our older generations want to remain in the workplace…

And want to continue to support their families, and contribute to our economy…

Then we need to make that not only possible, but also much easier.

The government has taken a number of steps towards doing just that.

What is the government doing?

First, we’re bringing forward the increase in the state pension age.

Back in 1981, a man retiring at 65 typically had about 14 years of retirement; today it is around 21 years.

A woman retiring at 60 in 1981 would have had about 22 years of retirement – today it is around 29 years.

Now I for one am, and I’m sure everyone in this room is, delighted that people are living longer!

But we have to take account of that increased life expectancy in the State Pension Age…

Which will now rise to 66 by the year 2020 – six years earlier than previously planned.

And – should the current legislation go through – it will rise again, to 67 by the year 2028.

I hope everyone here will agree that this is a sensible step in recognising an ageing population, and encouraging people to remain in the workplace.

The second strand is our work – led by the Department for Work and Pensions – to increase the participation of our older generations in the labour market.

As part of this, DWP have launched an Age Positive Initiative to give guidance and case studies to employers and businesses…

They’ve launched a sector initiative to drive forward changes in the employment and retention of older workers…

And they’re also working with expert organisations through the Age Action Alliance Healthy Workplaces Group, to help employers more effectively manage the health of an ageing workforce.

The third – and I think the most important – change that the government is making…

Is removing some of the ageist provisions that already existed in UK law.

This Tuesday marked the two year anniversary of our phasing out of the default retirement age.

Meaning that most people can now work for as long as they want to, and that they can’t be discriminated against for taking that decision.

In that same year – 2011 – we also removed the effective requirement to annuitise by 75.

Which has ensured that individuals now have increased flexibility over their retirement age, and increased choice over purchasing a retirement income product.

Those actions…

– on increasing the state pension age…

– on helping employers to recruit and retain older workers…

– and on removing ageism from the system…

Add up – I hope – to a sensible set of policies that not only recognise the need to reduce our dependency ratio, but also recognise the economic contribution that our older citizens can make.

Civic Society

So far I have focused entirely on the economic contribution.

But I think it’s also vital that we also recognise the massive – and often unsung – contribution that our older generations offer in civic society.

Here in Scotland for example, 31% of adults volunteer , many of whom are older citizens.

Very often this is on a local scale…

I know that most of the charity shops in Inverness couldn’t run without a core team of retired workers.

But older people also play a key role – often an unpaid role – on charity boards, or as school governors, or in local politics.

And it’s important that we acknowledge what a huge asset these people are to our country, and the skills and enthusiasm and knowledge they bring to these roles.

Changing Perceptions

But as I said earlier, I think if there’s one big battle we’ve got to fight here, it’s a battle of perceptions.

It’s true that – very often – society places an awful lot of emphasis on the young.

And sometimes this is a good thing…

We need to keep producing the business leaders and the civic leaders of the future.

But we should also shine more of a light on the crucial role our older generations can play.

We’re in a country which is ruled by an 87 year old.

There’s a member of staff in my office still mourning the fact that a 71 year old is no longer in charge of Man United!

There are two goals that have driven everything the government has done.

And they are…

Building a stronger economy; and

Building a fairer society.

I firmly believe, that if we can make the best possible use of our ageing population…

If we can ensure that they remain in the work place, rather than being ousted by nervous employers and outdated legislation…

If we can celebrate what they contribute, rather than what they consume…

And if we can base our decisions on the pension age around long term economic stability, rather than short term politics…

Then those older generations can play a key role in building that stronger economy…

And in making our society fairer too.

Thank you for listening.

Danny Alexander – 2013 Speech to Liberal Democrat Conference

Below is the text of the speech made by the the Chief Secretary to the Treasury, Danny Alexander, to the Liberal Democrat Conference in Glasgow on 17th September 2013.


Conference, it’s great to have you here in Scotland. In Glasgow or, as we like to call it in Inverness, ‘the deep south.’

This great city has many claims to fame: its industrial heritage, culture, football, it’s even the home of the new Doctor Who. So, let take me you back in time. It’s spring 2010. We’re in the depths of the economic storm. Greeks rioting on our TV screens.

Labour had dug a gigantic hole of debt – the bankers had pushed us in. We were forecast to have the largest deficit in the EU. The polls had closed; we were in the uncharted waters of a hung Parliament. Action was needed. And as a Party, we stepped up.

Colleagues, just think if we’d acted differently. A minority government. Weak. Unstable. Unable to take decisions. And at the mercy of factions and extremists.

We would likely have seen another General Election within months.

A toxic mix of political and economic uncertainty. The hardships inflicted on other economies could so easily have happened here.

Yes, it has been tough, but those nightmare scenarios did not happen. They did not happen for one reason only.

Because of us. The Liberal Democrats. Because of our decision to ensure we had a stable government with a strong Liberal voice,

Able to act decisively. We didn’t duck the challenge.

We rose to it. There were plenty of people who didn’t think we were up to it. When I first became the Chief Secretary, there were even some people who questioned my, how should I put this, my employment record.

Clearly they hadn’t looked closely enough at my CV. You see, as a teenager I worked in the Tomdoun hotel in Glengarry. I washed plates in the kitchen, I polished pint glasses in the bar, I even cleaned the toilets. I basically spent most of my teenage years cleaning up other peoples’ mess. Perfect work experience for an aspiring Chief Secretary.

But with every step towards economic recovery we take, the party that caused the mess, the Labour Party, become even less credible.

Ed Balls bet the house on a failing economy. He banked on a double dip that never happened. He predicted a triple dip that never came.

And now even his closest colleagues admit he is a busted flush.

The Labour Party has opposed every single decision we’ve made.

That was until Ed Balls declared that the Labour party would adopt a new found “iron discipline” in public spending.

In fact, so strong is that commitment that the two Eds have managed to limit themselves to a meagre £45bn of extra spending commitments. To be fair, once you’ve left the next generation with a debt of £828bn to pay off. Rising at the rate of £3 billion a week,

Without any plan to deal with it, what’s another £45bn between friends? They derailed the economy. And if they had the chance, they’d do it all over again. The last thing Britain needs is a Labour majority. Conference, I was going to read you a list of barmy right wing Tory ideas that we’ve stopped in government.

But it’s so long I don’t have time, and after Nick’s appearance yesterday, I’m worried about Justine McGuiness cutting me off.

But I can’t resist just two. Two Tory ideas that put jobs at risk.

First, some Tories believe that the best way to help businesses hire someone is to make it easier to fire someone.

They believe that people that work hard, do their job day in day out,

Let’s call them ‘strivers’. Should be allowed to be fired at the will of the employer. Well conference, let me tell you this – it will never happen. Not while there are Liberal Democrats around the Cabinet table.

And then there’s Europe. For many Conservatives, the EU is the bogeyman responsible for every wrong. But for 3.5m people in Britain, it’s the reason they have a job. That’s 3.5m jobs that some Tories want to put at risk by leaving the European Union.

They should know, you can’t win the global race, unless you’re part of a strong team.

The last thing Britain needs is a Conservative majority. But the Conservatives aren’t the only ones wanting to break up a union, whatever the costs.

As a Scot, I believe that being part of the United Kingdom offers Scotland huge advantages in the 21st century. I believe the best choice is for us to stick with a family of nations in which we have thrived and prospered. To grow together, not break apart.

In the end, nationalism is all about building barriers between peoples, whatever the cost. Liberalism is about knocking those barriers down.

Today’s National Institute report shows that with Scotland as part of the UK, interest rates are lower and taxes are lower. That’s the value of the United Kingdom.

Another credible, independent, factual analysis that backs the case for our United Kingdom. So our job, from now until the day of the referendum, is to prove that “Better Together” isn’t just a slogan. It’s the truth. Tens of thousands of jobs in Scotland depend on us winning that fight. For the sake of our country, our children, and our grandchildren, we cannot, must not and will not lose.

We’ve seen the economy through its darkest hour, by ensuring that the Coalition’s economic plan is pragmatic. When the eurozone crisis was raging. When our growth forecasts were going backwards

Siren voices on the right called for us to respond by cutting further and faster. It was the Liberal Democrats who ensured the coalition remained anchored in the centre ground.

There is still a long way to go, but our stronger economy in a fairer society is beginning to take shape. We are rebuilding an economy that is sustainable, balanced and resilient. And we are making progress. Activity in the manufacturing sector has reached a two-and-a-half-year high, in construction a five-year high and in the services industry a six-year high.

Business confidence is at its highest level in six years. British businesses have created an extra 1.4m jobs in the private sector, supported by the decisions this Government has taken.

We have the lowest number of people claiming unemployment benefit in four years. A record number of women in work. A higher rate of employment than the US.

The highest number of people in work. Ever. Labour’s failure to regulate the banks meant that they had to spend billions of pounds of your money to bail them out. We’re fixing the banks and the economy is on the mend. So last night following advice from the Treasury we decided to start to get your money back.

The first sale of Lloyds’ shares, at above the price Labour paid, is an important milestone. And in future sales we will look for ways in which the British public to get involved. Because we are mending the economy, the tax payer is at last getting their money back.

The recovery is under way. Much more needs to be done to secure it.

And we won’t flinch from our task. Anyone who claims the better economic news is all down to the Conservatives is just plain wrong. The decisions we have implemented in government, decisions you have taken in this hall. The brighter future that lies ahead – it’s only there because of us. And we should shout it from the rooftops.

We still have work to do to finish the job. That’s not a task than can be entrusted to either of the other two parties. I say to the British people, if you want that job finished right – with balance, fairness, and resolve – you need the Liberal Democrats to do it.

We’ve taken tough decisions to get the deficit under control. And, yes, there will be more in the next Parliament. It will be another five years shaped by the necessity of fiscal restraint. But by the middle of the next Parliament we will have eliminated the structural deficit.

That doesn’t mean the country can then go back to bad old habits. There’s no spending bonanza round the corner. Our nation’s debt will need to be reduced. It wouldn’t be fair to pass it on to future generations. The pressures of an ageing and growing population will have to be paid for. Conference, when those difficult decisions need to be made, the British people now know that they can trust the Liberal Democrats to make them.

We’ve delivered long-held commitments too. This year, for the first time, the UK will deliver our long-held commitment to spend 0.7% of our nation’s wealth on international aid. Making a real difference to lives all over the world. Four weeks ago I met a young girl who told me how much she was enjoying school, and about her ambition to be a lawyer. Nothing extraordinary about that, you might think, but I met this girl in Kabul.

She is one of around two million Afghan girls who, thanks to the bravery of our armed forces and our international aid commitment, is now attending school on a regular basis. I also had the privilege of meeting an extraordinary group of serving men and women in our armed forces in Helmand, whose skill and bravery is making that change possible.

So, I hope you will join me in paying tribute to our armed forces in Afghanistan and across the rest of the world. As we look to the next Parliament, the tax policy we agreed yesterday puts us in a strong position to tackle the remaining deficit fairly. By committing to raise taxes on the very wealthy, through the mansion tax, through restricting pension tax relief, through increasing capital gains tax rates further, Liberal Democrats will ensure that those who have the most will continue to contribute the most.

These taxes on the very wealthy will be one of our central promises for the next Parliament. Making sure they can’t avoid their taxes is a job we are getting on with right now.

Benjamin Franklin said: “Nothing is certain except death and taxes.

And a conference announcement from Danny Alexander on tax avoidance”.

Ok, maybe he didn’t say that last bit. But conference, I make no apology for going after tax dodgers. Thanks to our efforts, by 2015 we will be clawing back an extra £10bn a year.

New investment, new specialist units, new tax rules announced from this podium are now closing the net on the immoral minority who believe paying the proper amount of tax just isn’t for them. But we must do more. We are cutting corporation tax to encourage firms to invest, not to give the wealthy a way to avoid the 45p tax rate.

So when the vast majority of people in an industry are finding ways to exploit that difference, and that industry is the preserve of the very wealthy, I have no hesitation in acting. So I can announce today that following a brief consultation we will be closing the loophole that allows private equity shareholders to siphon money out of their firms while dodging the intended income tax.

And it’s why I can also announce that we will also be closing the loophole that allows partners in partnership firms to structure their staff arrangements so that they avoid paying the correct amount of income tax. It’s wrong, it’s unfair, and it’s got to stop and with Liberal Democrats in government, it will.

Conference, the pressures on household budgets in this country are real. Liberal Democrats are doing all we can to help. We have introduced 15 hours of free childcare for all three- and four-year-olds, and this month introduced it for the poorest 40% of two-year-olds too.

Next year we will legislate for tax free childcare worth £1,200 for every eligible child. Unlike tax breaks for marriage, that’s a fair way to help families. We have frozen council tax for every year of this Parliament. Our triple lock is protecting the value of the basic state pension.

We have scrapped Labour’s fuel duty rises. So thanks to us petrol is now 13p a litre cheaper than it would have been. 18p a litre if you live on a remote island. Saving every business and family in the country money. And helping literally to keep the wheels of the economy turning. But there is more to be done.

In January we will launch the next phase of Help to Buy. Too many young people aspiring to get on in life are stuck. They earn enough to repay a mortgage, but don’t have the funds for a large deposit. It is right that the government should step in to help them. And it is also right that we need to build more homes, including affordable homes.

Over the last decade rents have risen twice as fast as wages, stretching family budgets. But some landlords still failed to pay the right tax due on the rents they receive. I’m talking about landlords who own more than one property, who rent to students, people with holiday lets and those who let houses in multiple occupations.

And it adds up to a staggering £500m owing to the taxman. And we want it back. So we’re launching a campaign with a simple message for the rogue minority of landlords. Pay up or face the consequences.

In my three-and-a-half years in the Treasury, tackling avoidance has been one of my obsessions. But my true passion has been delivering our tax promise to Britain’s working people.

It was Mr Gladstone, whose portrait hangs on the wall of my office, who said; “The idea of abolishing income tax is highly attractive.”

Now, conference, we don’t go that far. But we have abolished it for nearly 3m low income workers.

What’s more, we have given 25m working people the biggest tax cut in a generation. This would have been a big deal in times of plenty.

To have achieved it now, in these difficult times is extraordinary. Practical help for millions of working people – Liberal Democrats, we made it happen. And conference, yesterday, we committed to cutting the tax paid by ordinary workers even further.

So you don’t pay any income tax until you earn more than a full time salary on the minimum wage. £700 a year back in the pockets of 25m working people – that’s our record of action. Our promise of more – another £500 off your tax bill, if you put the Liberal Democrats back in government next time.

Conference, Liberal Democrats in Government has already helped businesses create more than 1m jobs, and now we’re working to help them to create a million more. That’s why this April, every business and charity will have their National Insurance cut through our £2,000 Employment Allowance. That’s enough money for a small business to employ four adults.

Or ten 18-20-year-olds on the National Minimum Wage. Without paying any employer national insurance at all. Real, tangible help for every small business in the country. At its heart, the next general election will be about who the British public trust to deliver a stronger economy. And who they trust to deliver a fairer society.

Because the benefits of a stronger economy must be shared. Shared in every corner of the United Kingdom. Shared across all the people of Britain. ‘The economy’ is not some abstract concept. It’s about people. It’s about their jobs, their aspirations and their hopes.

Only the Liberal Democrats can deliver a stronger economy in a fairer society so that everyone can get on in life. The last thing Britain needs is a Labour or Conservative majority. Labour can’t be trusted with the economy. The Tories can’t be trusted to create a fair society.

So if you’re looking for work and want a Government that will help you, if you have a job, but want security in your job, if you want to expand your business and employ more people, then there is one party that is on your side, The Liberal Democrats.

Danny Alexander – 2013 Speech to Grampian Chamber of Commerce

Below is the text of the speech made by the Chief Secretary to the Treasury, Danny Alexander, to the Grampian Chamber of Commerce on 1st March 2013.


Good morning.

I was especially pleased to be invited to speak in Aberdeen this morning, because for a Treasury Minister – in fact for any Government Minister – the biggest priority for the country has to be sustainable economic growth. And this city is a key hub for providing growth in the UK.

I want to talk about the steps this Government is taking to help support growth now. Most importantly though, I want to talk to you about why I believe this region – and Scotland as a whole – will have a far more economically prosperous future as part of the United Kingdom.

Aberdeen is – quite simply – one of the UK’s most continuously resourceful and inventive cities. It was Robert Louis Stevenson who said that ‘everyone lives by selling something’, and this is a city that has thrived on mining its rich local resources and selling them to the world. Some of these have been natural resources – granite, or fish, or oil – some of these have been human resources – like the graduates of the two excellent universities here – but this city has always thrived by trading. And it has always been a real asset for the UK in doing so.

We need to continue to provide the right conditions for the economy here to continue growing. Of course, many of the ‘growth’ levers that the UK Government deploys – areas like education, skills and infrastructure investment – are rightly devolved to the Scottish Government. And the UK Government is continually supporting the Scottish Government with additional funding to take their reforms forward.

But crucially, the UK Government also delivers for Scotland through reserved policy – meaning the people of Scotland benefit from the best of both worlds with two governments acting in their interests.

The action we are taking to tackle the deficit, support low interest rates and create a stable environment for the private sector is crucial in helping us to rebalance our economy and support sustainable growth throughout the UK. And specifically, I know a number of the businesses represented here will benefit from the changes the UK Government are introducing.

Like the steps we’re taking – particularly on corporation tax – to create the most competitive tax system in the G20. Or the support we’re providing to thousands of companies as we work to improve access to finance for SMEs, so badly damaged by the financial crisis. And I hope business here can also benefit from the support we’re providing to companies with overseas export opportunities.

I know businesses will benefit from reduced energy costs, and my colleague Ed Davey is just down the road today to announce that the Government intends to maintain the ‘Hydro benefit’ relief – worth £50 million on energy bills across the North of Scotland.

Reforming our financial services industry will also be a key step towards growth, and I’m pleased to see a number of people from the finance sector here today.

Our economy has yet to fully recover from the effects of the financial crisis, with the flow of credit in particular remaining impaired; So we’ve learned the hard way that financial stability is another pre-requisite for growth and investment in all sectors of the economy.

The reforms that the Government is taking forward in the Banking Reform Bill will produce a more stable banking system that is focussed on serving the needs of its real economy customers, and thus better able to support growth and investment in the UK.

And of course, it wouldn’t be a trip to Aberdeen without mentioning oil and gas, and I see we have a number of representatives from the sector here this morning. As a highlander I know how important this industry is to the area, and you can rest assured that as a member of the UK Government, I will continue to do whatever is necessary to ensure the oil industry remains the beating heart of the North of Scotland. A prosperous economic future for this area is reliant on fully exploiting the reserves here. That’s why the UK Government is implementing significant new tax reliefs and, for the first time, giving the industry long-term certainty (through Decommissioning Relief Deeds) that they will be supported to decommission when the time comes.

This is something the sector has needed for a long time, and our measures have been a real game changer for the North Sea, with new investments announced on what seems like a weekly basis. Just last month EnQuest announced a £169 million GBP programme of investment for Thistle to deliver threefold increase in production; and

Oil and Gas UK reported earlier this week that we now have the highest level of investment in 30 years.

In the last six months alone we have seen around £8 billion of investment, creating over 5000 jobs, and I’m sure there will more to come soon.

We also took steps last year to allow two new field allowances for large shallow-water gas fields and brown fields. Allowances that will support billions of pounds of investment in the North Sea, which will benefit growth and jobs across the sector in Scotland. We are taking these steps to encourage the levels of investment in the North Sea that are needed to extend the success of the industry and make the most of our reserves;

The UK Government is taking the long term decisions to secure the best future for this vital Scottish industry.

Now, for any Scottish business looking at its long term future, there is one rather big question on the horizon. And that question is whether your companies will be operating in the UK, or a separate Scotland. I’ve always been vocal about my support for a strong Scotland within the UK.

As you’ll well know, the Scottish Government likes to claim that taxpayers in an independent Scotland will be better off financially. These calculations are dependent on revenues that flow from the natural resources in this region. And let’s be categorical that these figures are based on a Scottish economy that benefits from being integrated and insulated within the larger UK economy. The Government Expenditure and Revenue Scotland – or GERS – figures do not reveal the fiscal position of an independent Scottish economy, which is what the Scottish Government would have you believe.

The figures show that with a geographic share of the North Sea, Scotland – as part of the UK – has contributed broadly the same proportion of the UK’s revenues since devolution as it has received in public spending. This geographic share averages almost £6bn a year since devolution [from 1999-00 to 2010-11].

But crucially, the geographic share of North Sea oil and gas revenues has fluctuated from just over £2bn to almost £12bn, depending what year you look at. Of course, with where the oil price and production levels have been the last couple of years, the GERS figures that will be published next week may well look favourable. But the volatility of price and production cannot be wished away, nor can you ignore the fact that these figures represent Scotland within the UK.

The UK as a whole can absorb such volatility by pooling tax revenues from a broad and diverse tax base. Within the UK economy North Sea revenues represent around 1-2% of total tax receipts. But for the figures produced for Scotland, this geographic share of the North Sea would represent around 10-20% of their revenues – a huge dependence on a volatile source of revenue.

Far more important than these past figures though, is what will happen in the future.

How the revenues, and liabilities, of the North Sea would be split in the event of a vote for independence would clearly be a matter for negotiation. But the independent Office of Budget Responsibility have forecast that oil revenues will be on a downward trajectory over the medium and long term. What this means is that by 2016-17 – which is the Scottish Government’s preferred year to begin independence – it is forecast that revenues will be around half the average of recent years. While this can be managed by the broader and more diverse UK-wide economy, a halving of North Sea revenues would equate to a significant reduction in Scotland’s total revenues – somewhere in the region of £4bn.

As I said, I expect that this week’s GERS report will show us that last year’s oil and gas receipts were strong. That’s great news for the sector, for Scotland and for the UK as a whole.

The oil and gas industry will surely play a strong role in the years and decades ahead, but its revenues will remain volatile while on a downward slope. And that is no basis on which to make an argument for independence.

Now to those who will say, predictably, that this is a negative argument, I say that in fact it is a simple truth. And we must not be afraid to speak the truth and inform this most crucial, constitutional debate. People must be allowed to decide how they will vote on the basis of how things are; not on how the Nationalists assert that they will be.

The truth is a positive thing.

Due to this decline in receipts, and due to acute demographic challenges – which will see a smaller working-age population in Scotland and therefore a smaller tax base – the independent Institute for Fiscal Studies has said that “over the longer run… an independent Scotland would face a bigger fiscal adjustment than the rest of the UK”.

Put simply, if there ever were an independent Scotland, it would be under fiscal pressures from Day One. Under fiscal pressures at the exact time that it would be required to enter financial markets and prove its fiscal credibility for the first time. And under fiscal pressures at the same time as the Scottish Government is promising to cut taxes and raise spending.

This is a false prospectus that does not add up. Just as when it comes to the stability of this sector, it is the same when it comes to the macroeconomic and fiscal stability of the United Kingdom. We are stronger, and we will be more prosperous together than we would be apart.

So where does this Government see the region continuing to support growth?

It is essential that we continue to look towards new and renewable energy sources, and I’m very pleased that someone from the Aberdeen Renewable Energy Group is here today.

Last summer the Government set the level of support for renewables under the Renewables Obligation out to 2017. We also introduced the Energy Bill which will reform the electricity market to allow renewables to have certainty on the price they will receive for the electricity they sell, and we will be consulting on the levels of support for renewables coming forward under electricity market reform in the summer. This is a step that will give investors the clarity they need to bring forward new renewables projects out to 2019; and

In November last year, the Government announced that the Levy Control Framework in 2020 would be £7.6bn. This is a commitment to tripling the resources available to support low carbon growth, backed by over 60 million UK consumers.

Yet again, a reminder that we are better together.

As well as meeting our energy needs for the future, we also need to create an infrastructure fit for our future, so that our businesses can compete in the 21st century. Much of our spending in this area is being invested in our road and rail networks, but of equal importance is the investment being made in our digital networks.

We remain committed to supporting UK-wide roll-out of superfast broadband, and £100m has been allocated to the Scottish Government in this area – nearly one fifth of the total superfast broadband commitment. In addition, Aberdeen is one of the 22 cities to successfully compete for a proportion of the £150m fund to support ultrafast broadband in a network of UK cities.

Aberdeen’s very impressive plans will enable cutting edge connectivity to be delivered throughout this city, and commercial roll-out of 4G mobile services will further enhance its digital connectivity.

I’m wary that we’ve got a Q&A session coming, so I’d like to leave you with these thoughts.

This Government wants to see balanced, sustainable and strong economic growth for the UK, and we will do our utmost to support those cities and regions which make growth happen.

Aberdeen is such a city – Aberdeenshire is such a region – and we are confident that the actions this Government has taken will continue to support you to achieve that growth.

I strongly believe though, that the region is more likely to remain prosperous, more likely to achieve growth if it continues to be part of a United Kingdom.

Thank you for listening.

Danny Alexander – 2012 Speech on the Welsh Funding Announcement

Below is the text of the speech made by the Chief Secretary to the Treasury, Danny Alexander, on 24th October 2012 in Cardiff, Wales.



I’m delighted to be here today making a statement that brings more good news in the form of new commitments on the future of Welsh funding.

Today the UK and Welsh Governments are announcing that we will regularly review relative levels of Welsh funding.  Take from me that this is a very clear signal that the UK Government recognises that this is a major concern in Wales.  I have also agreed that capital borrowing powers should be devolved in Wales, as long as there is an independent revenue stream in place to support them.

In July, in a joint article, the Chancellor and I outlined the Government’s commitments to restoring competitiveness and infrastructure across the UK.

We put our money where our mouth is when we announced one of the biggest overhauls of our railways since Victorian times, including the electrification of the lines from Cardiff to Swansea and the Welsh Valleys.

And today, UK and Welsh Government support is enabling a partnership of leading universities and multinationals led by Swansea University to launch a new Knowledge and Innovation Centre with the aim of creating a range of renewable energy products that could revolutionise the construction industry.”

The joint statement on funding that we are announcing today is another major step forward for Wales

I’d like to pay tribute to Jane Hutt.  Jane it has been a pleasure to reach this agreement with you and be a part of talks that have been so genuinely collaborative.  The fact that our governments can work together in this way is another shining example of the benefits of one United Kingdom.


Historically, Welsh funding per person has been higher than in England but has been converging towards English levels.

Our joint forecasts show that convergence is not currently occurring. In fact over the next few years Welsh funding will diverge away from England.

However by planning for the long term best interests of Wales, we recognise that this is an issue of deep concern here. It is with this in mind that for the first time the UK Government will jointly assess forecasts of relative funding levels at every spending review. If convergence is forecast to resume we will look at the options to address it; and we are committed to only implementing changes that both governments can accept as being fair and affordable.

The Silk Commission

Today’s agreement establishes a solid platform to consider the Silk Commission’s report, to be published this Autumn. Having seen the hard work of Calman come to fruition I am very proud to have been part of a negotiation that delivered this for Wales and I believe their recommendations could represent an historic step for Welsh devolution.

Fiscal devolution is a necessary next step for the Welsh Government and opens up new opportunities to boost financial accountability and greater spending power.

For the first time the UK Government agrees that the Welsh Government should be given capital borrowing powers, on the condition that this is supported by an independent revenue stream – like devolved taxes, currently under consideration by the Silk Commission. Let me be clear: if Silk recommends devolving revenue raising powers, and Wales implements them, then we put in place commensurate new borrowing powers for Wales.

Devolved capital borrowing powers could be used to supplement long-term infrastructure investment, building on the measures the UK Government has already supported in Wales such as the unlocked funding to electrify the valley lines, and the funding to establish Cardiff as one of the first ten ‘Super-connected cities’ in the UK.

I am delighted that the UK and Welsh Governments have worked so closely and effectively together to deliver on this outcome today.

I am hopeful that we will be able to build on what we have achieved by making real progress on the Silk agenda over the next few months.  We need to move quickly towards lasting reform based on consensus.

This agreement opens the prospect of a new financial settlement for Wales: greater accountability, greater responsibility, more revenue raised and spent here, and more ability to shape growth, safe in knowledge that the rug will not be pulled from under their feet by some future UK Government.

We have demonstrated once again that all parts of the United Kingdom benefit from working together.  We are better together.

Danny Alexander – 2012 Speech on Financing Capital Infra-Structure

Below is the text of a speech made by Danny Alexander, the Chief Secretary to the Treasury, on 10th September 2012 at The Stock Exchange Forum in London.


Rarely has there been a time when the issue of growth and economic balance has been so prominent in public discussion, nor has there been a time in recent memory in which the circumstances for growth have been so challenging.

So it has never been more important for Government to be focussed on meeting those challenges and delivering long term growth that is strong and sustainable, and an economy that is balanced across geographic regions and economic sectors.

The role of infrastructure in delivering that goal cannot be underestimated, and so it gives me great pleasure to address you on financing and delivering through both the public and the private sector, working in partnership – to deliver on public priorities efficiently at a time when finance is in short supply.

Our priority is to return the UK to sustainable prosperity and rebalance the economy. Central to achieving that is our focus on fiscal consolidation to return sustainability to the public finances and ensure the UK retains the confidence of international markets.

But fiscal consolidation, though essential, is only part of the story. Delivering sustainable and balanced growth means supply side reform – to ensure that Britain is more than ever an excellent place to do business, and to raise our growth potential by creating an environment in which all sectors can thrive.

There have been long standing weaknesses in the quality of our infrastructure. The quality of our roads, railways, energy and telecommunications infrastructure is an effective driver of our fiscal economic growth package, as well as a key driver of the ability to give our cities the right chance to realise their potential.  This is why infrastructure is at the centre of our strategy to kick-start our economy.

The Government’s National Infrastructure Plan, and the steps we are taking to implement it, are a clear recognition of the importance of infrastructure in achieving our goal. That Plan takes a comprehensive look at the UK’s infrastructure requirements across both the public and the private sector, and sets out how those requirements will be met.

It outlines major spending commitments to improve our transport and broadband networks, and to attract substantial private sector investment into priority projects.

It sets out concrete measures to improve the efficiency and effectiveness of infrastructure delivery – responding to and addressing concerns from businesses and investors. And it sets out the path to a stronger, more sustainable, more balanced economy.

A newly established Cabinet Committee, which I chair, is ensuring that plan is delivered in full, and that all parts of Government play their part in tackling barriers to delivery and addressing commercial and public concerns.

Of course, while the scale of construction and operational challenges are significant, it is the challenge of attracting the substantial necessary investment that is perhaps the most remarkable – over £200 billion of infrastructure investment over the next five years alone.

Given the pressures on the public finances, and the disruption to long-term lending caused by the ongoing instability of financial markets and the Eurozone, that is no easy task, and not one that will resolve itself. Stock Exchanges like this one play a very important role providing an efficient market for that finance in such difficult circumstances, and Government has a major role to play too.

I want to talk to you today about how key private sector organisations like this can work together with Government to meet the impressive challenge that we face to deliver for the UK in this challenging climate, and how we are using the best of the public sector and the private sector to promote a strong and balanced recovery.

First, we are making tough choices to prioritise capital spending on infrastructure within a shrinking government budget. At the Spending Review, we took a conscious decision to protect the most productive public sector investment, and actually increased the capital spending envelope despite pressures elsewhere.

In particular, we prioritised economic infrastructure that supports growth, such as investment in transport and communications – where we are investing even more tax payer’s money than at the height of the spending boom.

The Spending Review supported the delivery of £18 billion of rail investment over the course of the parliament, including work that is underway on major capacity upgrades into London via Crossrail and Thameslink, a major upgrade of the Great Western Main Line, and a new electric route between Liverpool Manchester, Leeds and Newcastle, with significantly faster journey times as a result.

That is alongside £4 billion to maintain and enhance the national road network, and £6 billion for major local transport projects and enhancements.

At last year’s Autumn Statement, we announced a further £1billion for road schemes, and increased the £1.5 billion committed to major local transport projects at the Spending Review by a further £170 million.

At Budget this year, we announced ten cities that will now enjoy ultra-fast broadband and high speed wireless connectivity as a result of Government investment, with funding set aside for a further ten. And a £150 million Mobile Infrastructure Project to deliver coverage to 60,000 rural households and at least ten key roads by 2015.

In July, we announced a further £9.4 billion of infrastructure enhancement, including further targeted rail electrification, increased rail capacity on key commuter lines, and a new corridor linking the core population and economic centres in the East and West Midlands and Yorkshire with the South of England.

And we plan to continue that commitment to investment beyond the current spending review period – delivering a big uplift in capacity and connectivity between our key cities through High Speed 2, and continuing a long term electrification strategy to deliver a high capacity, sustainable railway. On present plans, we will support almost £22 billion of rail investment between 2015 and 2019.

Better rail and broadband infrastructure across the UK will allow businesses to flourish more easily without locating in the South East corner of the country.

It will allow for a growth in rail freight and improve links between our major ports, airports and corporate centres. It will allow firms to recruit from a wider pool of workers, and workers who may otherwise be unemployed or underemployed to access a wider variety of jobs.

At the same time, our investment in rail is supporting development of skills more directly – Network Rail is taking on a substantial number of apprentices and funding a programme to give placements to unemployed graduates across the industry. This is alongside our broader programme of Government funding to equip young people to deliver for the UK – funding which means that this Government will deliver at least 250,000 more apprenticeships over this Parliament then planned by the previous government.

Of course, though we prioritised capital investment at the Spending Review, it is neither possible nor desirable for taxpayer money to do everything. The vast majority of the investment the UK will require will come from the Private sector. And we want to ensure that finance is as easy and cost effective to raise as possible.

So second, we are doing more to help private sector investors access finance for priority projects. We are making sure that money goes further by reducing costs due to unnecessary complexity in areas like planning and regulation. And we are working with investors at home and abroad to see what we can do to help British business.

While prioritising capital spending has provided the necessary public finance, our fiscal strategy also helps to improve conditions for private sector finance, against the headwinds caused by the global financial troubles.

Our focus on fiscal consolidation has achieved credibility with the markets that has driven interest on government borrowing to record lows of around 1.5 per cent. That keeps interest rates low for households and businesses, as well as the taxpayer – and a 30-year yield of 3 per cent is particularly helpful for long-term investment, with benefits for infrastructure expansion and its costs to consumers.

Fiscal consolidation also gives the space for the Bank of England to keep interest rates at an all time low of 0.5 per cent, and to pursue further monetary policies to support investment, such as quantitative easing and the new Funding for Lending scheme, which came into operation last month. Both policies are helping to ease credit and balance sheet conditions for financial organisations, freeing up more money to lend; and the new Funding for Lending Scheme in particular will provide strong incentives for lending, by offering more finance on more favourable terms to Banks that lend more.

Our hard won fiscal credibility has also allowed us to support investment directly, for example through the ‘UK Guarantees’ scheme, also announced last month. By allowing high priority projects to benefit from the UK Government’s balance sheet credibility, we will be able to accelerate and bring forward up to £40 billion of major projects that are struggling to access private finance.

Although it is still early days, interest from industry has been strong. In the six weeks since launch, Treasury has had discussions with over 30 companies and project sponsors responsible for projects worth over £5bn in priority investment areas such as energy, transport, water, waste and telecommunications. Detailed discussions are already taking place with the Mersey Bridge Gateway project, considered one of the world’s top 100 infrastructure projects, and the Green Deal project I announced a few weeks ago will also be considered to ensure it goes ahead on time.

While the measures we are taking will greatly improve companies’ access to debt finance, we should recognise that the days of cheap and readily available bank originated debt finance are over. As a result, new sources of capital are increasingly important. Equity markets, for example, serve as a significant source of long term non-bank finance – during the height of the crisis, between 2008 and 2010, the amount raised in equity for publicly listed companies was similar in level to the amount pumped into the economy through Quantitative Easing.

The growing retail bond market also presents potential for improving access to finance by offering issuers the opportunity to reach out directly to retail investors. National Grid raised a record £260 million through this medium in October last year.

Following Tim Breedon’s report, that we commissioned to examine the structural and behavioural barriers to alternative debt markets in the UK, we are committed to ensuring a proportionate regulatory regime to support these important lending channels.

More broadly, we are working with private sector investors to understand what more we can do to ensure that the deepest possible sources of capital are available to the widest possible range of projects, and to promote inward investment from abroad.

For example, the new Pension Infrastructure Platform, which we have committed to establish with the National Association of Pension Funds and the Pension Protection Fund, will allow UK pension Funds to invest directly in UK infrastructure assets and projects in a new and more efficient way.

We have now obtained written confirmation from seven UK pension schemes to fund start up costs, and soft commitments for initial capital allocations. We expect the Platform to raise its target £2 billion by January to start investing in key projects.

Another productive area of collaboration has been the Insurers Infrastructure Investment Forum we set up with the Association of British Insurers. Through this, we have looked at how projects can be better structured to meet the investment propositions of annuity funds and liability-driven investments, and found ways to maximise opportunities for insurance fund managers to invest in infrastructure debt instruments – engaging with credit rating agencies, improving performance data reporting to creditors, and developing a private market for unrated or lower rated debt.

Meanwhile, UKTI continue to do excellent work promoting UK infrastructure for inward investment from sovereign wealth funds and other institutional investors overseas.

And we have seen a number of high profile successes this year, including from China, Japan, Qatar and Kuwait.

While we have achieved much both through targeted government spending and through freeing up private finance, there is still scope to improve how the private sector and public sector can work together in more innovative and productive ways. While past PPP arrangements have on occasions been less than perfect, I firmly believe that with the right approach and focus, the right partnerships can use the skills and innovation of the private sector to deliver on public and social priorities more effectively than ever before.

So to finish off, I want to talk about what we are doing to improve our work with the private sector to deliver real value for money for taxpayers.

The UK Guarantees Scheme, which I mentioned earlier, could also allow up to £6 billion pounds of public-private partnership projects to proceed without delay.

And we are looking at how more innovative modes of working with the private sector can allow us to meet the UK’s infrastructure demands.

At Budget, we announced options to improve A14 capacity that could be part financed through tolling, and more broadly, we are looking at ways to increase the role of private investment in the strategic road network. For example, looking at how a Regulatory Asset Base could be used to expand private investment in roads infrastructure, while improving efficiency. We will be announcing the results of that study later this year.

With sovereign bonds and other long term assets either seen as riskier, or with yields at all time lows, investors are queuing up for utility assets to invest in with guaranteed returns over long periods, and we hope to be able to unlock some of that investment to good effect.

That rise in investment could bring England’s roads up to the best in Europe – reducing congestion and travel time on key routes through expanding hard shoulder running schemes, dualing existing A roads, and adding lanes to existing motorways. In the longer term it could be used for new routes.

Another area where private money can help to deliver our public goals is in Energy.  By 2020 we plan to generate 15 per cent of our energy from renewable sources, and Ofgem estimates that £200 billion in energy investment will be required between now and then.

That is a challenge that cannot be met with the often haphazard and wasteful approach to Government subsidy taken in the past. The private sector will need to take the lead, supported by a Government committed to removing the barriers and uncertainty that have for too long prevented the necessary investment.

At the end of July we launched the Banding Review for the Renewables Obligation. We also recently published our draft legislation on Electricity Market Reform, which will reform the Energy Sector to ensure that it can access the finance required to meet our Carbon reduction and energy security needs.

That will be achieved through a number of instruments:

  • contracts for Difference, to provide stable and predictable incentives to invest;
  • a Capacity Market, if needed, to provide security of electricity supply by ensuring sufficient reliable capacity is available; and
  • transitional arrangement to ensure that the existing Renewables Obligation can operate stably once it is closed to new generation in 2017.

In addition, we have granted development consent to 24 energy generation projects all over the country since 2011, supporting over 4000 construction jobs and producing enough electricity to power over eight million homes.

Finally, we are reforming PFI to ensure that it secures long-term value for money for the taxpayer, while also making sure we retain the benefits that successful PFI can deliver – getting projects built to time and to budget, and creating the correct disciplines and incentives to manage risk effectively.

We’ve seen high levels of engagement, with over 150 written responses to our call for evidence, and around 100 stakeholder discussions to support this process.

We are now considering the wide spectrum of views expressed on how best to achieve more effective use of private sector innovation, skills and investment, to reduce costs, improve flexibility and increase transparency, and we will be setting out our conclusions this Autumn.

By being proactive and innovative about helping the private sector deliver for the UK, we can promote a recovery that will allow Britain to rise from the economic turbulence as a stronger and more balanced economy.

We are already starting to see returns to our approach – 840,000 private sector jobs created since early 2010, and the UK rising to 8 in the World Economic Forum Global Competitiveness Rankings this year – up from 10th last year, and ranked 6th in the world for infrastructure.

Of course, there is still much to do, and I hope I have shown you today that we are getting the most out of Government’s strong fiscal position and the private sector’s creativity and expertise. We will continue to look at what more we can do to make it easier for investors and firms to help us deliver on the UK’s priorities, and I look forward to hearing from you today about the challenges faced and how we can continue to help to address them.

Thank you.

Danny Alexander – 2012 Speech at the IFS

Below is the text of the speech made by the Chief Secretary of the Treasury, Danny Alexander, to the IFS on 23rd April 2012.


Good morning, it’s a pleasure to be here at the IFS.

When this coalition government came into office, Britain faced some of the most substantial fiscal challenges anywhere in the world.

We had the largest forecast budget deficit in the G20 – bigger than many of those European countries whose fiscal challenges are regularly in the news.

The gap between what we raised and what we spent was the greatest in our post-war history.

It’s because of this Government’s leadership that we have sheltered the UK economy from the worst of the storm that continues to affect our Eurozone neighbours.

Britain is contributing to the global rescue package, not seeking support from it.

It’s worth remembering that it’s almost two years since the first Greek bailout, the trigger for a crisis that rumbles on today.

In contrast, only two weeks ago, Standard & Poors reaffirmed the UK’s triple A rating with a stable outlook.

In S&P words “We believe that the UK Government maintains a strong commitment to implementing its fiscal mandate, and has the ability and willingness to respond rapidly to economic challenges.”

Fiscal discipline is not ideological.

It is core to good Government. And it necessary to deliver fairness too.

Be in no doubt, it is the poorest and most disadvantaged, not the wealthy, who are hit hardest when a country loses control of its public finances.

It is fair that we tackle our debts today so that we don’t burden our children tomorrow.

Ensuring that we can continue to provide high quality public services and support to those who need it the most.

And even as we take the tough decisions to tackle that debt, we are making sure that it’s not the poor and vulnerable who are forced to carry the burden, and that those who have the most contribute the most.

Secondly, fiscal discipline is the vital precondition of growth.

Our commitment to fiscal discipline and economic stability has helped secure record low market interest rates.

Rates that support households paying mortgages, and businesses securing loans, right across the UK.

It is that credibility that is the essential precondition for private sector investment, growth and job creation…

226,000 new private sector jobs in the last year

634,000 since we came into Government

Private sector growth built on a foundation of economic stability.

Our Budget went even further in that ambition.

Sticking to our plans on fiscal consolidation to safeguard our economic stability.

Driving through reforms to support the private sector enterprise and innovation that is critical to our recovery.

Reforms that include an extra one percent cut in corporation tax…reducing it to 22 per cent by 2014.

The lowest rate in the G7, the fourth lowest in the G20.

Cutting the ineffective top rate of tax…a rate that was higher than the likes of America, Germany, Italy and France – and replacing it with new measures that ask the wealthy to pay 5 times more than the cost of lowering the top rate.

Increasing the personal allowance – within a hairs breadth now of our £10,000 tax free goal – through the largest tax cut for a generation for the working people of this country.

Investing to provide ultra-fast broadband in ten super-connected cities, with plans to fund a second wave of cities.

And continuing to support the establishment of a new Pension Infrastructure Platform owned by pension funds to bring as much as £2bn of investment by early 2013.

Investment that is critical to renewing our nation’s infrastructure, and catalysing growth in key and established industries right across the UK.

Of course, the damaging legacy of the financial crisis, and the headwinds in the global economy, means the road to recovery is a long one.

The latest assessment of the scale of the damage done to our economy by the financial crisis shows that the damage is greater than was thought at the time.

According to the Office for Budget Responsibility, the part of our deficit that is structural was greater than previously thought.

The structural element of the deficit is the part that will not disappear as a consequence of economic growth – it requires policy choices, tax rises or spending cuts, to deal with it.

Put simply, our economy is now forecast to be 11% smaller than it would have been had the crisis not taken place.

For every £9 we thought we would have, we will only have £8. We simply can’t afford to go on spending and borrowing as a country as if we will still have the £9.

There were basically three options about how we could have reacted.

We could have done nothing- and put at risk our country’s economic credibility, seemingly as the official opposition continue to urge us to do.

Or we could cut more now.

But when you have set out detailed spending plans as we have done, credibility comes from implementing those plans, not tearing them up.

The credibility which we have secured means that we have not been forced by the markets to tear up our plans because of rising interest rates and economic instability – as some in Europe have been forced to do.

Instead, we set out plans for further spending reductions into the next parliament.

We have made clear that the total amount of public spending in this country will fall at the same annual pace as in this Parliament, for a further two years.

The OBR forecasts that at that point we will have successfully eliminated the structural current budget deficit as promised, and of course different political parties will quite properly have different ideas for the appropriate path thereafter.

But even as we galvanise our efforts to tackle the deficit, we are also concentrating our minds on the much longer term prospects for public spending.

As last year’s OBR Fiscal Sustainability Report said “There is considerable uncertainty surrounding the scale of the fiscal challenge that confronts future Governments, but the fact there is such a challenge is not in doubt”

In particular it says that “future Governments [are likely to have to undertake some additional fiscal tightening beyond the current parliament in order to] (have to) address the fiscal costs of an ageing population.”

Quite simply, the world is a different place to than it was two, ten or twenty years ago. These are pressures that have been building for many years.

The simple truth is that the choices we faced in the last Spending Review and the choices that will have to be made in the next Spending Review are inescapable.

If we want to continue to act fairly, improve social mobility, provide good public services,  provide capital investment that continues to grow, and educate a workforce that is able to drive this economy forward, we will need to work out where and how we save to make those things possible.

And we will need to respond so some of the huge challenges that governments in the past have mistakenly believed they could afford to duck.

That debate is a vital one for the country in the coming years.

But today I want to dwell in more detail on the progress we are making on the plan we have set out, and announce some further measures that reinforce our commitment to delivering on it.

In an environment of economic uncertainty, with ongoing instability in the Eurozone, the UK’s large deficit remains a crucial economic vulnerability.

It remains a clear and present danger to stability.

Carrying on as we were means accepting that we spend even more on debt interest as a share of public spending.

Leaving things as they are for longer would mean higher debt, higher interest payments, and that means even bigger cuts in the long run.

Instead, we argue that we have to cut our cloth today to reflect our means, and show that we can be trusted to restore our public finances to health.

Building that trust has two elements: figures that people believe, and a plan that is being delivered.

The significance of the creation of the Office for Budget Responsibility is often underestimated in the UK debate.

Historically in the UK, politicians had been tempted to adjust their economic forecasts to suit their policies.

So when last autumn the OBR chose to substantially change its assessment of the damage done by the crisis, and so of the spare capacity in our economy, the government could not sweep this uncomfortable judgement under the carpet.

Instead, as I explained earlier, policy had to respond.

This is a structural shift that will shape Government for decades to come.

Never again will politicians be able to fiddle their forecasts in the face of the uncomfortable truth…

And never again will Government’s be able to spend the financial mirages these forecasts create.

It is also an example of the UK leading the way.

The existence of a strong, effective institutional framework is a significant strength for the UK compared to other countries, and the creation of the OBR has further enhanced that strength.

Many other countries are now seeking to emulate this change as they seek to rebuild their fiscal credibility

For instance, the European Commission has now proposed that Euro area Member States put in place an independent fiscal council to monitor the implementation of national fiscal rules.

At home, we set out in the 2010 Emergency Budget, the standard by which we would measure our success: the fiscal mandate.

Achieving a cyclically adjusted current balance by the end of the rolling five year forecast period.

And for debt to be falling as a share of GDP by the end of this Parliament.

As well as some tax increases, we set out a fixed envelope for public spending for the remaining four years of this Parliament. And in the spending review in 2010, we set out budget reductions by department.

In particular we focused on reducing welfare costs and wasteful spending, for instance…

Saving £18bn by 2014-15 through welfare and public sector pension reforms

£6bn through efficiency savings in 2010-11, and another £6bn by 2014-15 by cutting Whitehall by a third

£3.3bn through a two year freeze in public sector pay

And £1.5bn a year by 2014-15 by abolishing the Regional Development Agencies.

In all, Departmental budgets other than health and overseas aid were cut by 19 per cent.

These were tough decisions to make, but within these overall reductions, we were able to make some important positive choices for the country to promote growth, fairness and social mobility:

Protecting health and schools spending in real terms

Investing more in the life chances of disadvantaged children, and shifting education spending towards the early years

Investing more in transport infrastructure than our predecessors had managed in the previous 4 years

Reforming the welfare system

Getting defence spending under control

And we are already making good progress.

According to the OBR, in 2011-12, departments exceeded budget reductions, forecasting around £6bn of lower spending than planned.

By the end of 2011-12, almost 30 per cent of the spending reductions planned for the 2010 Spending Review period will have been achieved.

And the deficit in the cyclically adjusted primary balance, a key measure of fiscal sustainability, has been halved from its peak in the last two years, going from 7 per cent to 3½ per cent, and is forecast to approach zero by 2014-15.

The cyclically adjusted primary balance is a strong measure of the structural consolidation we need to deliver debt sustainability.

It excludes debt interest payments and the economic cycle on the deficit, and is widely used by international organisations to illustrate the underlying fiscal position.

It shows that we are on the right path.

But with 3 years to go, very difficult decisions remain to be implemented.

And while many departments have made significant changes, we need to do more to change the Whitehall spending culture for good.

We need to ensure that old habits that led to waste and unnecessary spending cannot re-emerge, and that new focus on getting better for less is permanently ingrained.

So today, I am setting some new and tougher rules around spending that the Treasury will be enforcing from this year on.

These are rules have been drawn up with finance directors from across Whitehall, and are designed to fundamentally change and improve financial management across all organisations spending public money.

Rules that demonstrate the collective determination of government to ensure that never again will our nation’s finances be allowed to get into such a mess.

From arms-length bodies, to Whitehall departments, to devolved administrations…we must all work together to play our part in improving financial performance.

There are three core elements to this more rigorous approach:

Improving our monitoring of spending…

Improving our management of spending…

And improving our oversight and scrutiny of spending.

Let me take monitoring first.

Delegated responsibility for spending cannot be an excuse to hide information, close the books, or weaken financial management.

For too long financial management in Government has been stifled by poor information sharing and poor incentives.

On the one hand, this Government has made huge strides to make more information available to the public as part of our drive for transparency.

But that same ambition has not been matched within our own walls.

That has to change.

From now on, all departments must monitor and share spending information with the Treasury on a monthly basis.

And that data must be consistent, allowing us to build a shared understanding of where the risks lie and how they are managed, as and when they arise.

Not months or years down the line.

Not when we’re trapped in the wrong track.

But in real time.

And improved monitoring will help change incentives on financial management.

The old system of financial management implicitly rewarded those who didn’t manage their finances.

In the end, when departments faced policy problems or where difficulties have emerged, they felt they could simply turn to the contingency reserve to bail them out.

We have to change those incentives.

That’s why in the spending review, we deliberately kept the reserve small in order to get the most money out to departments.

It means that departments have to be able to deal with problems that arise from within their own budgets.

Many departments already operate a small ‘unallocated provision’ in their annual budgets, to meet smaller pressures that arise.

And, under the new rules I have asked all departments to identify around 5% of their resource budget that could be re-prioritised if new pressures emerge or new policies have to be funded, so there is a shared understanding of how it could be paid for.

To be clear, no departmental budget is being changed as a result of this exercise. It is simply about good financial management, of the sort practised by families and businesses across this country.

And in future I will take performance in financial management into account when deciding whether to grant claims on the reserve.

That means punishing poor management, but it also means rewarding those with a record of good financial management with greater freedom over their budgets.

But that freedom comes with higher scrutiny. Where the Treasury has concerns that Accounting Officers may be falling short of fulfilling their responsibilities for managing public money, I will write to the Secretaries of State and the Head of the Civil Service to set our those concerns.

These new controls are not just a tweak to the Whitehall machine.

They are another signal of our unwavering determination to deliver the fiscal consolidation we promised.

It is this focus on delivery that is the cornerstone of our country’s credibility. Credibility, let us not forget, which is delivering the record low interest rates that are benefitting millions of families across the UK.

We have taken some very difficult decisions to restore this country’s financial credibility and economic prosperity.

The delivery of those commitments will be enhanced by the measures I have announced here today. And it will require further difficult decisions to be taken as this Parliament progresses.

Because we literally cannot afford not to change the way we do things.

Thank you.