GEORGE Osborne must rip up the rule book when it comes to borrowing to ensure Yorkshire gets the investment it needs, Labour’s Rachel Reeves has said.
The former Shadow Work and Pensions Secretary who now sits on the Treasury Select Committee believes rail and digital investment are worth carrying debt for when the long term financial picture could be so much brighter.
With interest rates an all time low, the former Bank of England economist claims the Government will find no shortage of lenders.
Speaking to the Yorkshire Post ahead of the Chancellor’s March budget, she said: “Investment in infrastructure should be treated differently from day to day spending. The Government should be borrowing to invest in infrastructure. One reason we aren’t investing in flood defences is that there are rules on how much they can borrow.
“But it’s a false economy. When you are investing in infrastructure you are investing something that will reap benefits in the future.”
The Leeds West MP’s economic suggestions comes at the start of a week likely to be dominated by moderate Labour MPs regaining their voice.
Former front-bencher and Barnsley Central MP Dan Jarvis, who also left the shadow team after Jeremy Corbyn’s appointment, will also address the party’s future economic agenda in a speech in Central London.
Ms Reeves said when it comes to flood defences, green energy projects, electrification of the Leeds-Manchester line and rolling out 100% broadband coverage, she believes the long-term payback of productivity and security for families makes short-term debt worthwhile.
She said: “It is also not hard to find areas where additional infrastructure investment would quickly bring benefits to British businesses and their employees.
“Reversing recent cuts to investment in flood defences is obviously a matter close to my heart, having seen the devastating impact on small businesses in my own constituency of the flooding we saw in Leeds on Boxing Day.
“So too is the plight of carbon capture and storage projects, one of them sited in Yorkshire, from which the government pulled £1bn of critical capital funding in November.”
She said the independent National Infrastructure Commission set up by the Conservative Government and chaired by Labour’s Lord Adonis should be the final arbiter when it comes to deciding which projects require borrowing.
She said: “This independent commission should say ‘these schemes will pay back more than it costs and therefore they should be able to borrow’.
“There’s never been a better time when interest rates are so low. Let’s not hold ourselves back because of the rules. If you need to invest, it’s a great time to do it.”
The latest list of infrastructure projects nationally, published in July, showed just 114 out of 565 projects were “in construction” while Transport for the North’s latest report asks the Government to commit to electrifying the Leeds- Manchester rail line and add extra carriages.
Dubbed the ‘shadow, shadow chancellor’ by Sky presenter Dermot Murnaghan during an interview on Sunday morning, the MP’s other policy idea she would like the Labour Party to consider adopting is universal childcare.
But she denied free childcare, as common in Scandinavian countries, is even more ‘radical’ then Mr Corbyn’s left-wing vision for the party and praised the leader for focusing on the Government’s slow roll out of help for parents in the Commons last week.
She said after having two children, helping families with childcare is far from radical and a simple matter of practicality.
Around £1bn of the £2.5bn overall cost could be met by reversing the Government’s plan for slashing inheritance tax, she said.
She said: “I recognise t’s not something that you can achieve overnight, it is expensive.
“One way to put money into child care is to scrap the cuts to inheritance tax.
“Universal childcare is far more important than cutting inheritance tax for the richest 5% of families. Even paying to expand free childcare for three and four-year-olds to cover the whole year, and not just term time, would help 850,000 families. A cut to inheritance tax would help 26,000 families.
“Certainly in Yorkshire the inheritance tax cuts would help very few. This is a policy aimed at people living in expensive houses in the South East.”