Speech to London First
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Speech by the Rt Hon Philip Hammond MP, Secretary of State for Transport.
Thank you for that kind introduction Adrian and thank you for inviting me to make a contribution to tonight’s proceedings.
It’s an absolute pleasure to be here - and for two reasons.
First, I get to make one of my very first speeches as Transport Secretary to an expert audience, at an important event- so no pressure there.
And second, I get a chance to a say a big thank you for all that you do.
London First and its members make a real and positive difference to our capital and our country - your commitment and sheer hard work play a huge part in communicating the message that Britain is very definitely open for business.
London First is always listened to and definitely taken seriously.
And, at the risk of making her blush, one of the keys to London First’s success is right here tonight - Jo Valentine.
Take it from me - nobody lobbies on behalf of London’s business community quite like Jo.
In fact, while I was shadow Chief Secretary to the treasury, Jo spent so much time knocking on my door and phoning me up that, at one stage, I felt as if I was being stalked.
If they make lobbying an Olympic sport in time for the 2012 Games then Jo will definitely be in the frame for a gold medal.
Jo - it was a pleasure working with you and London First in opposition and I look forward to doing so in government.
The government’s wider agenda
I’m conscious that I have the privilege of being the first cabinet minister to address this organisation since the general election.
The election was historic in every sense of the word. And its end result is a coalition government united by a common determination to tackle the fiscal crisis we inherit and a shared vision of Britain’s road back to prosperity.
So, before I move on to deal with the specific issue of transport, I want to briefly talk about the key components of the government’s wider agenda.
Our first goal is to restore balanced and sustainable growth - so of course that means getting the public finances back on track. That’s our a top priority.
But it also means supporting enterprise, getting credit flowing and rebuilding business confidence so that the private sector can generate the growth that will get us back on track.
And, because we want to protect our environment, as well as strengthen our economy, we regard a low carbon future as the only viable future for Britain.
We believe in a new politics where people can hold ministers and public services to account - where much greater transparency is the norm and where that transparency itself becomes a driver of behaviour change in the way government works.
But we also want this country to be a place where people think about their obligations as well as their rights.
So, as well as protecting civil liberties and modernising our democracy, we’ll promote individual and social responsibility as the building blocks for a better Britain.
An economy that’s strong and stable; an environment that’s clean and green, a society that’s free and fair- that’s the essence of the coaltion programme for government: the shared vision we are determined to make a reality.
A radically changed economic landscape
But all of our work, all that this government hopes to achieve is set against the backdrop of the inherited fiscal crisis - a crisis that has radically changed the economic landscape.
The legacy of debt is recognised by the theme of this very event.
Indeed, as Jo said in her recent Evening Standard article, the deficit is - “the biggest challenge facing the prime minister and his team.”
As a government, as a country, we have no option but to confront the debt crisis head on. And deal with it now.
This is the only way to restore confidence in our economy, protect our credit rating and help keep interest rates lower for longer to support the recovery.
If we ignore the debt crisis, if we act like a by-stander government hoping that it will go away of its own accord, then the consequences will be as stark as they are certain - no growth and no recovery.
And that’s why we are acting and acting immediately.
The Prime Minister has consistently said that we will cut the fiscal deficit in a way that protects the poorest and most vulnerable in our society - so compassion and fairness are at the core of our approach and we will strive to win hearts and minds and take people with us as we embark on this Herculean task.
Never-the-less, getting the deficit down, and keeping it down, will require hard choices and tough decisions.
Some will be deeply unpopular. Of that I have absolutely no doubt. But we will not shrink from taking them because, to do otherwise would lead us to disaster.
We’ve already laid out our plans to achieve over £6 billion of savings this year - for example, through a recruitment freeze, reducing the costs of QUANGOs, renegotiating contracts with major suppliers across government and taking an axe to discretionary spending.
And, my department is playing its full role in delivering these savings - £683 million worth to be exact.
And that is just a first installment. The emergency budget next week will set out further reductions in public spending for the years ahead.
Sir Alan Budd’s report yesterday, with its sobering review of Britain’s real growth prospects over the next few years will provides an independent forecast against which the Chancellor’s budget will be framed: a much needed move to evidence-based policy making.
London - the beating heart
There is a new economic reality and all of us, government and business, will have to adapt to it and work within it.
But, in these times of challenge and change, one thing is certain, one thing remains constant - London is the beating heart of our national economy.
And transport is London’s lifeblood - a vital support to its future prosperity.
And, if proof were needed of the crucial role played by this City and its transport networks then it can be found in London First’s latest research.
The ‘Greater Returns’ report you’ve just launched is a timely one, with a budget and a spending review fast looming, focusing as it does on how we should prioritise and where we should invest.
It’s an important contribution to the debate about the future of our economy and our transport system. I will study its findings with interest - and I hope my colleagues at the Treasury will do the same.
So we need to protect and enhance London’s transport infrastructure. But we cannot bury our heads in the sand and ignore the wider fiscal climate.
London has already shared in the in-year efficiency savings in the Transport budget. And if budgets are further reduced in the spending review, London will, of course, have to take its share of the burden. We are all in this together.
The challenge for all of us - a challenge our best businesses face daily - is to absorb budget reductions through efficiency gains, not by cutting services and projects.
That means working smarter and ending waste, improving productivity and prioritising spending. In short, doing more with less.
The scale of the challenge is awe-inspiring:
Every day over 24 million journeys are made in the capital.
Every month more than 9 million passengers pass through London’s airports.
And every year 53 million tonnes of cargo are loaded or unloaded at the port of London - making it the country’s second busiest port and a vital gateway to the global superhighway of the seas.
And all the graphs point inexorably upward.
So I know that, whether it’s investment in airports and seaports, or increasing road and rail capacity, every section of London’s business community will have its own priorities and favoured projects.
But I also know that you will understand better than any audience the need for an utterly rigorous approach to the spending of scarce taxpayer funding.
That demands we do three things:
First, get the most out of what we already have by sweating public assets - just as a good business will sweat private ones. So, for example, we have to actively manage our roads, targeting modest investments to clear bottlenecks; maximising the value of networks.
Second, apply a rigorous cost-benefit analysis to infrastructure projects and proposals, targeting taxpayers’ money where it really makes a difference;
And third, ruthlessly controlling costs of the projects we are undertaking - relentlessly value-engineering, risk managing - leaving no stone unturned in pursuit of value for taxpayers’ money.
And that brings me to Crossrail and Thameslink.
Both vital projects for London. Both supported by business - and both supported by this government.
As a practical sign of that support I paid a visit to the Crossrail station site at Canary Wharf earlier today.
And I’m pleased to report that, not only is it an impressive feat of engineering; it is on time, and on budget.
I believe that Crossrail and Thameslink can be growth generators, not only for London, but for the South East and the whole of the UK.
But they need to be tested and re-tested at every stage and along every mile so that we engineer costs down and drive value for money up.
And let me be clear - this is not just a fiscal responsibility. In the current public spending climate, it’s a moral obligation.
These transport projects have an able and articulate advocate in the shape of the Mayor.
In standing up for the people, and the businesses, of London Boris has proved himself a city-wide innovator, as well as a city-wide champion.
So I will work closely with the Mayor - as well as with Transport for London and Network Rail - to make sure we achieve those efficiency savings and get the best return for every last penny of public money invested in Crossrail and Thameslink.
But, London’s transport infrastructure doesn’t begin and end with these two projects - as important as they are.
Just yards away from where we are now we have the magnificence of St Pancras as an example of what has been achieved, and next to it, Kings Cross, well advanced with a bid to rival it as a gateway to this great city.
Less visible, but every bit as important, is London Underground’s major programme of investment in the tube.
Again, as well as looking to the Mayor to be relentless in pursuit of efficiency savings in this programme, I’ll be working with him and his team to make sure the new arrangements for Tube Lines demonstrate continuing value for money for taxpayers and farepayers.
I’ll also be engaging constructively with Boris on a range of other issues that matter to the communities and businesses of our City - from tackling the scourge of over-running street-works, to promoting cleaner and greener travel, to ensuring the 2012 Olympics is a window to the world for all that is great about London and Britain.
Another challenge of our time is finding innovative ways of funding capital expenditure and attracting investment.
So I’m especially pleased that the Mayor is doing just that by obtaining £25 million of sponsorship from Barclays for his cycle hire scheme and the new cycle super highways. In fact, I’m so impressed that I may yet be lured to ride one.
Innovation, fresh thinking and partnership working are in the DNA of the business community.
So I’m sure many of you here this evening will have ideas and proposals to put to us as we seek to tackle the crisis.
That’s something I welcome. And rest assured - I’ll have an open mind as well as an open door.
Heathrow - better not bigger
Something else we feel strongly about is that politicians should keep their promises. That’s the only way we’ll rebuild trust in politics.
During the election, both of the partners in the Coalition made a manifesto promise to scrap the third runway.
So, when I took up this job, day one, decision one was the cancellation of the third runway at Heathrow.
Now I accept this hasn’t been greeted with universal acclaim by business community - although it is also not true that all businesses favoured the runway project.
But I believe we have made the right judgement call, for the right reasons. And let’s be clear - this decision does not mean we are anti-aviation.
You have a Secretary of State, a department and a government that understands fully, and appreciates absolutely, the social and economic benefits of aviation.
But we also listened to those who would be most affected by the original proposals for expanding Heathrow - as well as those for Gatwick and Stansted.
And we carefully considered the wider environmental impacts in the context of our - and our predecessors’ - clear commitments on cutting climate change.
So, while that decision marks the closure of a chapter in the aviation debate, it also marks the opening of an important new one.
Because I believe that what our Capital, our country and our companies need is a Heathrow that’s better, not bigger.
A Heathrow that is properly linked to our planned nationwide high speed rail network. So that ‘modal shift’ can become a reality for domestic and even some short-haul European flights.
But it doesn’t end there.
A better Heathrow should offer a world class service to the travelling public and to business users.
That’s the reason we outlined our important new plans in the Queen’s speech to drag the current model of airport economic regulation out of its outdated framework, and into the 21st century where it belongs.
When you travel, your first encounter with any city is often through its airport.
And, when you arrive in London, the airport should say something positive about the kind of city this is. It should leave people thinking what a great place to visit, what a great place to do business.
What it should not say is “never ending queues, time wasting delays and second rate service”.
I believe our airport economic regulation bill will help ensure that this country’s airports always say the right thing and leave the right memory.
In the spirit of raising the game at our airports, earlier today I announced the establishment of a South East airports taskforce made up of key players from across the industry.
Chaired by my Minister of State, Theresa Villiers, it’s job will be to write that new chapter in our aviation history, exploring how to get the most out of existing airport infrastructure and improve conditions for all users. And I am delighted to be able to tell you that the group will include a representative from London First.
Tonight I’ve talked about this government’s wider agenda; I hope I’ve given you a flavour of our broad vision for the sort of transport system we want to build; and I’ve spoken about the consequences of the radically changed economic landscape we now find ourselves in.
But, before I conclude, I want to leave you with one last observation - and it’s about this great metropolis.
Because, the real question is not whether London, like the rest of the country, and indeed much of the world, faces challenging times.
The real question is whether London has the people and the businesses, the capacity and the character to meet those challenges head on and beat them hands down.
And I have no doubt whatsoever that the answer to that question is an unequivocal yes.
There are always things we could do better; there’s always progress to be made.
But let’s not sell this city, or the people who live and work in it, short.
London has advantages that other major cities around the world can only dream of:
- the language
- the time zone
- the sophistication of our business services
- the scale and breadth of our financial sector
- the global reputation of our legal system
- the unparalleled cultural life of our city
I am absolutely not complacent. But fate and history have dealt London a winning hand. If we lose the game it will not be the fault of the cards we hold.
But, a world class city needs world class transport.
I know that’s your ambition for London.
Tonight I came here to tell you that it’s also mine - and it’s one that, by working together and by working smarter, we can deliver.
Over the coming years, how we respond to the fiscal crisis; how we invest our scarce resources; how we rebuild a sustainable and diverse economy; all of these things will determine whether our city retains its place at the top of the world’s premier league. And I certainly didn’t go into government to preside over a relegation.
The challenges will be great - but I know we will rise to them and ensure that London remains the vibrant heart of a dynamic and prosperous Britain.