Westminster Hall

Tuesday 20th July 2010 Westminster Hall

Tuesday 20 July 2010

[Mr Christopher Chope in the Chair]

North-West Economy

Tuesday 20th July 2010 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(James Duddridge.)

09:30

[Hazel Blears (Salford and Eccles) (Lab)]

I am delighted to have secured a debate on the future of the new economy in the north-west and to be joined by so many colleagues from both sides of the House. We will no doubt have a lively and interesting debate on an issue that is incredibly important for us and for our constituents, as well as for businesses, employers and employees in our areas.

We all know in our hearts that the new economy will be very different from the economy that we have seen over the past 20 or 30 years; it will certainly not be built simply on financial services or run in the south-east, with the engine of growth located in one particular part of the country. If it is to be successful, it will have to be driven by the regions, which have tremendous skill, expertise, depth of knowledge and creativity, as well as the ability to expand into new areas in which this country will have to be competitive if we are to continue to ensure that our people have the opportunities and skills that they desperately need. Nowhere is that truer than in the north-west, where we already have a fantastic base on which to build.

I want to concentrate on a number of issues, including digital media and the creative industries, about which my region has a great story to tell and which have a great future; the importance of green jobs, in particular some of the advanced manufacturing jobs; the emerging areas in the biosciences and the importance of research and development in building on innovation in our universities; and, finally, the construction industry, which is not always seen as a new industry, but is increasingly adapting to new innovations and construction techniques, which will give the north-west a significant competitive edge.

The creative industries are inevitably closest to my heart because of the establishment in Salford of MediaCityUK, which has emerged like a phoenix from the ground over the past couple of years. Anybody who visits Salford Quays cannot fail to be impressed by not only the buildings but the whole sense that a new city—a new metropolis—is being created in what was the Salford docks. It is difficult to believe that we now employ more people on Salford Quays than we did at the height of the docks’ success in the 1940s and 1950s. This is a tremendous success story, and when the current phase of development is completed, we should have 15,500 new jobs and £500 million of investment. That includes £450 million of private sector investment, which will have been levered as a result of the excellent work done by all the agencies involved. The current private-to-public investment ratio is about 4.5:1 so this is a big success story, and it is down to the work of the urban regeneration company, the city council and—I will say something about this later—the Northwest Regional Development Agency, whose work in recent years all of us have great cause to be thankful for.

In Manchester, we also have the Sharp project, which works with cutting-edge digital and creative media and provides jobs particularly for young people in the emerging industries around video games. I was disappointed that the Government decided in the Budget to take away the allowances and incentives for the video games industry. Just a few months ago, Salford received £1 million to pump-prime development of some of the tremendous emerging technology involved in video games, and it is a retrograde step to take that allowance away.

Digital and creative media currently account for 7.3% of GDP in the north-west. I absolutely believe that they are a growing sector and one in which we need to continue to invest. I make no apology for saying that I will bang on about MediaCityUK to every Minister I can because, in this instance, I do not really care where the investment comes from, as long as it keeps coming into Salford and helps my community.

The second area we need to concentrate on is advanced manufacturing, and I have no doubt that many of my colleagues will talk more about it. We are incredibly proud of the aerospace industry in the north-west, and we jeopardise at our peril the extensive high-level skills that have been developed in the industry over many years. The industry accounts for 12.9% of our GDP, giving the lie to the claim that manufacturing no longer really exists in this country.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I am grateful to my right hon. Friend for securing the debate and I am glad that she specifically mentioned manufacturing, which is still of huge importance to constituencies such as mine. Does she agree that one of the biggest concerns among manufacturers—certainly those I speak to—is what they perceive to be the Government’s lack of understanding about the relationship between the public and private sectors? Manufacturers in my constituency have clients across the world, but a key part of their business is supplying the public sector. The Government are ruthlessly cutting public sector procurement in the Budget, and manufacturers will be unable to drive the country out of recession and back into growth if they do not have the necessary support and stimulus from the Government.

[Hazel Blears]

My hon. Friend makes an extremely important point. The Government’s choice to take an extra £40 billion out of the economy—over and above what the Labour Government would have taken out to reduce the deficit—runs the severe danger of tipping us back into recession. All the independent forecasters say that the north-west is recovering, but that that recovery is tentative, and they do not expect to see full growth until 2013.

Advanced manufacturing jobs are also essential to the green agenda, but I am increasingly worried that, although we talk the talk about new green jobs to draw in investment, some of the action that is taken is almost in opposition to the need to invest in green jobs. At the end of last week, a report published by Innovas and commissioned by the Manchester Commission for the New Economy looked specifically at growth in green sectors. It said:

“Greater Manchester is a leader in the UK in carbon capture and storage technology, additional energy sources such as biofuels and contaminated land remediation. It is also strong in alternative fuels…and above average in wind energy, low carbon building technologies and energy management…Greater Manchester has the potential to be a world leader in low carbon building technologies”.

However, we have heard only this week of massive cuts in the funding to the green investment bank and in the proposed seedcorn funding to make sure that new jobs can be developed, particularly in manufacturing.

The final area that I want to mention is the biosciences. They are not new to Greater Manchester, but the rate of growth in the numbers of people working in research and development and in exploiting some of the technology that is increasingly coming from our universities is very encouraging, and I have no doubt that colleagues with more experience than me will make a contribution on the issue.

To attract all that investment and to keep doing so well, the north-west must have the right climate, and I emphasise to the Minister and other colleagues the importance of the city region. A consultation has been going on for the past couple of months—indeed, I think that it closed on Friday—about whether to confirm the statutory nature of the country’s first city region, which comprises the 10 local authorities in Greater Manchester. That is not just about moving governance around or about process; at its best, it should be about the devolution of planning skills, housing and transport from Whitehall to the city regions so that they can provide the right climate to draw in investment. There is no point addressing the skills gap if we do not have a decent housing offer, and there is no point trying to draw in investment if the planning system cannot get that investment on the ground and working as quickly as possible.

Despite their different political persuasions, the authorities in Greater Manchester have sat down and been very mature about agreeing—the Government will perhaps not like this phrase—to pool their sovereignty and work for the interests of the people of Greater Manchester, which is vital. On transport, for example, the chamber of commerce says that connectivity with the northern rail hub, the super-port at Liverpool and Manchester airport, which my colleagues will no doubt talk about, is key to our future prosperity.

[Derek Twigg (Halton) (Lab)]

I congratulate my right hon. Friend on securing this important debate. She will be aware of the importance of the proposed new Mersey Gateway, which the Labour Government committed themselves to before the election, but which the current Conservative Government have postponed, pending a review. How crucial is that to the north-west region, both as an important link for Cheshire and Merseyside, and more widely? That needs to be considered along with the rail links that my right hon. Friend mentioned. All the innovations and new industries will come about only if the infrastructure is established.

[Hazel Blears]

My hon. Friend is right and has championed those ideas for a long time. The proposals are important because, without the infrastructure it will not be possible to draw in the investment that will provide jobs and prosperity, enabling Merseyside, Greater Manchester, Cheshire and the northern part of the region to prosper, and giving them proper connections. That is fundamental to what we are trying to achieve. If we can get support for the city region, it could be a model for other city regions in the future. I urge the Government to proceed with that.

Even when there is devolution of housing, transport and planning, the issue of skills continues to be a challenge, as it has been for many years. There is a big skills gap between young people’s qualifications and abilities and some of the new jobs on offer. Unless we close the gap there will continue to be generations of people without work. The north-west has the highest percentage of neighbourhoods—more than 20%—in the most deprived 10% in the country. We have more out-of-work benefit claimants than any other region: nearly 700,000 people are out of work and in receipt of Department for Work and Pensions benefits. That is about one in six of England’s workless population. We have 375,000 people who have been claiming out-of-work benefits for two years or more, with 308,000 of them claiming for incapacity. In addition, 9.3% of our working age population is in receipt of incapacity-related benefit. That is not just a waste for the economy but a waste of lives—of opportunities and life chances for many people.

One thing that we should do to ensure that the economy prospers is tackle the deep generational structural worklessness in some communities. I commend the pilots that are happening in Greater Manchester on connecting people to opportunity. They are a new way of doing business and have been designed and championed by Chris Marsh, who works for the urban regeneration company in Salford. He has been commissioned on behalf of all 10 authorities to consider how to drill down into the families where there is generational worklessness. The early results are extremely encouraging. He has adopted a system called Total Place in which all the agencies—health, police, regeneration, education and employment services—are brought together. Budgets are pooled, the same targets are agreed and there is the same evaluation. That means more efficiency; things are not done 10 times. Everyone is targeting the families with the most problems. It makes absolute common sense. The total public sector budget in Greater Manchester, across all the agencies, is £22 billion. No one can tell me that we cannot get some efficiencies and savings, but also better results, by bringing together such public sector resources under the Total Place scheme. The pilots, which are getting people back to work because every agency is involved in targeting the relevant families, are a huge success.

I want to ask some pointed questions about how we are to work in the future. The Northwest Regional Development Agency has been a success story by anyone’s measure. It is probably second to none in the way it has levered investment into the region. There has been great confusion about where the new Government want to go in relation to RDAs. The Business Secretary appeared to change his mind three times in the space of just one speech. I think that we now know that the Government intend to abolish RDAs, and many of us are very concerned about that, but we are not sure what is likely to take their place. Local authorities have been asked to consider setting up local employment partnerships with business. We are not sure at what level that will be, or how many clusters of local authorities will be involved. Will they follow the economic footprint, which is a matter of practical common sense, or will they be artificial structures that will not, in my view, work?

[Alison McGovern (Wirral South) (Lab)]

I wonder whether my right hon. Friend agrees with me that one of the most worrying things about the present situation in relation to the Northwest Regional Development Agency is the effect on the many relationships that have been built up around it. I have been going around my constituency talking to representatives of big business and smaller business—I was at Unilever yesterday. Local economic partnerships may be two years down the line, and that leaves a hiatus. Those relationships and the work that was being done are falling by the wayside.

[Hazel Blears]

My hon. Friend is right. In her relatively short time in the House she has made a tremendous contribution to highlighting those issues. She understands that in many cases business works on the basis of relationships, and that some long-established relationships are in danger of fracturing and disappearing in the interim. We need to get on with whatever is going to be done, and make sure that it is properly established.

It is important, too, as we proceed with the local economic partnerships, that when investment is drawn in local people should have the opportunity to get the jobs that are on offer. I urge the Minister to talk to his colleagues in the Department for Education. For those of us who were lucky enough to get Building Schools for the Future programmes in our constituencies—many of us did not, and are rightly angry about it—I want the contracts for those major public building projects to include apprenticeships and construction job opportunities for local people. My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) is right to say that 40 per cent. of the construction sector’s business depends on public sector projects. Many BSF programmes would have employed bricklayers, joiners and plasterers and those jobs are now lost to our economy.

[Yasmin Qureshi (Bolton South East) (Lab)]

I congratulate my right hon. Friend on the fact that her constituency has BSF programme funding. My constituency, of course, has missed the opportunity. We are talking about job creation. Does my right hon. Friend agree that it would have been an excellent opportunity for apprenticeships? In my constituency 25,000 weeks of apprenticeship would have been created, and many jobs, on which we are now missing out.

[Hazel Blears]

My hon. Friend is right. The decision has completely wasted an opportunity to create for her constituency’s young people access to high-quality training, proper qualifications, and work experience on the job in a building environment. This country needs those skills, so the decision is particularly short-sighted.

[Bill Esterson (Sefton Central) (Lab)]

I congratulate my right hon. Friend on securing this important debate. Two schools in my constituency were in line for BSF wave 1, starting this year. Sefton council spent more than £1 million in preparation for BSF, and that will now be wasted.

I am also concerned about the review of other major projects in the north-west, besides BSF, such as transport and infrastructure projects—and the effect on the construction industry and the trades that depend on it for work. At a time of fragile recovery, as my right hon. Friend mentioned, that is very important. I would encourage the Government, and hope that she would too, to make the relevant decisions quickly so that further damage is not done to firms that have no other work and will end up unable to take up the slack if projects are approved.

[Hazel Blears]

My hon. Friend makes an important point about certainty. Hon. Members will all know that uncertainty is often more damaging to businesses than knowing what is to happen, which at least means they can plan. I disagree with the Government’s decision to take an extra £40 billion out of the economy at such a time. That decision was a matter of choice. The implications that my hon. Friend has outlined are very important.

[Graham Evans (Weaver Vale) (Con)]

May we have a bit of balance in this? Labour Members are talking of their areas, and I wish to talk about my constituency of Weaver Vale, which is a Cheshire constituency. The previous Government cancelled Mid Cheshire college’s new campus, an investment of £30 million. The college invested a considerable amount of money in the project, including £2 million in architects’ and consultants’ fees, and all the other stuff that has to go with such jobs, but the right hon. Lady’s Government cancelled it 18 months ago.

My children go to a state comprehensive school, but it has 30-year-old portakabins where the windows do not shut and the doors do not close. That, however, is in Cheshire, not Greater Manchester, Merseyside or the other conurbations that have been invested in over the past 13 years. Some areas of the north-west are regarded as prosperous and leafy, but they received no money from the Labour Government during the past 13 years.

[Hazel Blears]

The hon. Gentleman needs to have a word with his predecessor, who was a tremendous champion for his area.

[Graham Evans]

My predecessor did not stop that cancellation.

[Mr Christopher Chope (in the Chair)]

Order.

[Hazel Blears]

I think, Mr Chope, that we conduct ourselves slightly differently in Westminster Hall. The hon. Gentleman needs to speak to his predecessor. It is clearly important that all children and young people have the opportunity to learn in a good environment with state-of-the art information technology, and many of my colleagues here today were looking forward to their children having that possibility. The Tory Government have denied that opportunity to many thousands of children across the region.

I have some specific questions for the Minister and then I shall sit down as I know that many other Members wish to speak and I do not want to dominate the debate. The first is about the local economic partnerships. What are they, and what is their legal status? If they are to channel investment, particularly European funds and the new regional growth fund, they will need some status rather than being a loose amalgam of people who come together on an occasional basis.

Will the partnerships be funded? I understand that £300 million has already been cut from RDAs nationally this year. The original RDA budgets were £2.2 billion a year over the next two years, a total of £4.4 billion. The regional growth fund announced by the coalition Government is only £1 billion over two years. That is a massive cut in the funding available to support inward investment. This year, the Northwest Regional Development Agency has suffered a cut of £52 million, which leaves it a budget this year of £235 million, a cut of almost 20%.

At what level will the local economic partnerships operate? It may be at a city region level, or an economic travel-to-work area. However, as my hon. Friend the Member for Wirral South (Alison McGovern) said, many of the relationships are at a north-west level. What will be the mechanism for ensuring that, without the RDA, we have something that has a north-west oversight of the economy?

How can we deal with issues that cross local boundaries? In business, many do, including supply chains for manufacturing, which affect businesses across the region. Who will be responsible for innovation, business support, inward investment and access to finance such as venture capital funds? I doubt whether the local economic partnerships will be responsible for that. Will it be national organisations or perhaps the Department for Business, Innovation and Skills? How can we ensure that the key job of supporting innovation and the new jobs in the economy is carried out? At the moment, business, universities and even politicians operate at the north-west level, and we need information about how things are to go forward.

The north-west economy has been doing well, despite the difficulties and the worldwide global recession of the past couple of years. We have been narrowing the employment gap with the rest of the country faster than anywhere else. Business survival rates are better than those for the greater south-east and better than for London. Export growth is 12.2%, which is higher than the average for England.

The north-west economy is a success story. However, the independent forecasting panel has said that the recovery is fragile and that, although we have tentatively emerged from the recession, recovery will remain weak until 2013. At this moment, it is essential that our region receives the support that it deserves. There is a huge amount at stake for our constituencies and our communities.

We are pretty confident in the north-west that we can continue to thrive, but we need a Government committed to supporting that investment and growth. I do not believe that we have that kind of Government. I genuinely believe that the big decisions made in the last couple of months will put us back rather than take us forward. The public-sector cuts coming in the autumn, with a predicted 600,000 job losses, will have a devastating effect not only on our communities and our families but on our economy.

I believe that the cuts that we face are too deep and too fast, and that they will do a great deal of long-term damage. I hope that we in the north-west are strong enough to weather the storm, that we do not suffer the problems that concern me, and that we do not live to regret those decisions made now that will affect us in the long term.

09:55

[David Mowat (Warrington South) (Con)]

I congratulate the right hon. Member for Salford and Eccles (Hazel Blears) on securing this important debate and on her speech, the first half of which I pretty much agreed with.

It is important to put the size of the north-west economy into context. I shall talk about the regional development agency, but even in its heyday—before the cuts imposed about a year ago by Lord Mandelson, which were greater than this year’s cuts—regional aid for the north-west amounted to 0.2% of our economy, which is worth about £120 billion. We have 7 million people in the north-west, which is a bigger population than most EU countries have, and it is extremely important to understand that Government aid is not what will build the world-class businesses that we need.

I believe that the RDAs did much that was good, but it is important that all Members here today remember what the Office for Budget Responsibility forecast for our economy in the lifetime of this Parliament. In broad terms, it said the north-west should aim to create 200,000 private sector jobs at the same time as cuts take place and we will lose something like 70,000 public sector jobs. That means that each Member in this Chamber will need 3,000 new private sector jobs in his or her constituency. We should all be thinking about how that can happen.

If we want to fight homelessness, deprivation and unemployment, the creation of those jobs is vital. They will be created only if we become—or continue to be, as in some industries—a world-class economy. There are areas where the north-west is world class—they include defence, advanced manufacturing and nuclear—but we have to build on those. Principally, it is not about Building Schools for the Future. I have lost BSF schools in my constituency; that was a great disappointment to me and it will hurt the construction industry. In the end, however, the generation of a world-class economy in the north-west will depend on innovation and how we proceed.

The principal question for me is whether the supply side of our economy, particularly in the north-west, will enable those 3,000 jobs to be created in each of our constituencies. The supply side is vital, and three factors are important. The first is infrastructure, and I agree with what was said about the Mersey Gateway, which is important to the north-west. The next factor is regulation, and the coalition Government have made a strong start by getting rid of some of the regulations stopping our world-class businesses from developing.

The third factor is skills development. I have a real concern that our country is not positioned where it needs to be. It is not a particularly political point, but over the past 25 years our universities have failed to generate the applied scientists and engineers who will be needed to develop the businesses the right hon. Lady spoke about. Twenty-five years ago, when 8% of people went to university, we produced 20,000 engineers a year. We still produce 20,000 engineers a year, but out of five times as many graduates. To put that into context, France produces 50% more engineers than we do—I shall not even bother giving statistics for countries such as India or China.

That our higher education establishments have failed to produce the skills in applied science and engineering that will be needed to create a world-class economy in the north-west is close to being a scandal. A number of people should hang their heads in shame, because they have perpetuated something of a con. Many talented young people are leaving university unable to play a part in the industries of the future. In the nuclear industry, for example, the companies that will build our nuclear stations will be German and French. A recent Cogent Systems report said that we have a lack of key workers in chemical, geotechnical, mechanical and production engineering. Most ridiculous of all, National Grid is hiring engineers in—wait for it—Zimbabwe, to make the changes to our transmission and power engineering systems across the grid. Shell hires engineers in Russia. Those are opportunities that young people in our constituencies should be taking up, but they are not able to do so. If we are serious about rebalancing our economy away from the City, the financial services and oil and gas—frankly, we have had a free pass on oil and gas for a couple of decades—we cannot continue to fail in skills development. I shall be interested to hear the Minister’s response on that point.

Let me turn now to my concerns about the RDA. I know that the White Paper is still to come, but the proposals are centralising. I agree with the right hon. Lady’s comment that the regional fund represents a major reduction in budget from what the RDAs had in the past. The fact that it will be administered directly from London is a centralising measure. Notwithstanding how the local enterprise partnerships develop, ours could be the only major economy in the OECD that has no sub-regional intervention. I hope that that will not be the case, and that the Minister can give me some reassurance about that. It is hard to believe that the French, Germans, Americans and Canadians have got it wrong. It is not fair to have a Northern Ireland Office, a Scotland Office, a Wales Office and a Government office for London with economic intervention powers while the English regions are left outside.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I would not normally intervene because I know that Back Benchers want to have their say, but I must clarify that point. The regional growth fund is an entirely distinct element from how we develop local enterprise partnerships. The funding for one is not the funding for all. I will explain later how we intend to develop those partnerships.

[David Mowat]

The second point on which I seek clarification is how the partnerships are to be funded. Business people believe that they will be funded by the councils that make up the partnerships.

Another concern—a slightly more subtle one—is that our industrial regional policy is biased towards small and medium-sized enterprises rather than structural winners, such as nuclear power, defence and advanced manufacturing. If the regional fund is administered rather like the “Dragon’s Den” TV programme is run, it is hard to see how that can result in the emergence of organisations such as Daresbury and the Atlantic gateway infrastructure programme. It seems to me that there is a risk that the types of project that go forward will be related to SMEs. We need SMEs because they drive the economy, but they also feed off structural winners and world-class businesses, such as BAE Systems and AstraZeneca, and if those businesses are not growing and generating jobs, it will be tough. It also seems to me that there is a risk of the national insurance contributions holiday, which is a great policy, also being biased towards smaller companies, as is the procurement policy.

I have three questions for the Minister. First, can we do more on skills? There is a critical weakness that could result in the 200,000 private sector jobs in the north-west that the OBR forecast will be needed not being achieved, which would be a tragedy. Secondly, are the RDA proposals centralising and do they risk the English regions being left outside any formal structures? Thirdly, is there not a danger that our policy is orientated more towards SMEs than towards picking structural winners?

[Mr Christopher Chope (in the Chair)]

Before calling the next speaker, let me say that I intend to call the Opposition spokesman and the Minister at 10.40. I hope that Members will time their remarks so that everyone can get in.

10:06

[Graham Stringer (Blackley and Broughton) (Lab)]

There is a real regional imbalance in this country. Whatever criteria or measures we use, almost every region in the country outside London and the south-east has inferior wealth and health, which is a national disgrace and a waste of resources. We have an extremely congested south-east, with space elsewhere in both the economy and the transport system. I congratulate my right hon. Friend the Member for Salford and Eccles (Hazel Blears) on bringing this important subject to the Chamber this morning. I agree with her on almost everything, apart from what she said about the regional development agency, which I will come back to.

I also enjoyed the speech of the hon. Member for Warrington South (David Mowat). He made some extremely good points, but I have some questions for him to reflect on. They are rhetorical questions rather than arguments and relate to the fact that the relationship between capital, training and the economy is rather more complicated than just training a lot more engineers and scientists—although I agree we need to do more of that. After the second world war, where were most of the world’s scientists and engineers based? In the Soviet Union, which was an economic basket case. Where were there almost no trained scientists and engineers? In Japan, which saw huge growth. I make that point simply to stress that the issue is complicated.

Most Opposition Members have been asking what we will do without the regional development agency, but I think we will do rather better than we have been doing. The important thing is to ensure that money gets to where it is necessary to support business, but the regional development agencies have been a burden and a barrier to getting money into the right places. From their very inception, they have made life more difficult in the north-west. Let me explain why. It was my Government who created them, so this is not a party political point. When they were set up, money was transferred from the rest of the country into London and the south-east, where there had not previously been a development agency. That was a mistake. This is slightly unfair, but if we add up the administrative costs of all the RDAs over their lifetime, we find that they come to more than £6 billion, which is more than the Conservative Government’s first round of cuts. Is that money well spent? I do not think so.

Let us look at the number of jobs created. At the end of March, just before the general election, a National Audit Office report on all the RDAs was published which stated that the RDAs had claimed that, over a five-year period, they had created 413,000 jobs. However, an independent audit of that claim said that the figure was actually 375,000 jobs, and if the jobs that would have been created anyway without the intervention of the RDAs were taken out, it was only 178,000 jobs. The NAO recommended changing the system. I wrote to the chairman of Northwest RDA, Robert Hough, after the NAO report was published asking if he would change the statistics, so that they told us what was really happening. He replied:

“It would be inappropriate to adjust any of the information previously published.”

I thought that that was a bizarre reply, even though Robert Hough is a good man, whom I have worked with on many occasions. The cost of those jobs is £60,000 per job, according to the NAO. Those are terrible figures. I say to my hon. Friends: think about it. What matters is that we get money into the right places, not that we have a body that, when it was formed, centralised the grant-giving process away from local authorities.

The NAO report says that the measure of the RDAs’ activities is whether there is gross value added because of their work. However, what the report says about GVA is its most devastating aspect. The conclusion in paragraph 16 is worth reading out:

“We are unable to conclude that the regional wealth benefits actually generated were as much as they could and should have been, and are therefore value for money. Weaknesses which, in many cases, undermined the RDAs’ ability to make decisions and set priorities to maximise regional economic wealth do not support such a positive conclusion. These weaknesses included poor project economic analysis and appraisal, pervasive optimism bias, and weak evaluation. In particular, most RDAs were unaware, until 2009, of the types of projects which yielded the best and most enduring benefits.”

That is a devastating analysis. We in the north-west have experienced those perverse policies, which have not put money into the sectors that are the major players in the region—the sectors that would generate the most jobs and support the economy most effectively. I look forward to analysing this issue and I will be as critical as I can be if money is not put in, but I will not defend the indefensible in the structure of the RDAs.

I accept that a lot of wealth—indeed, the vast majority—will be created by having a more fertile and active private sector. On the other hand, when we look at some of the causes of the current regional imbalances, I do not think that we can get away from looking at the Government’s structural and spatial expenditure. Looking at transport in particular—I have spent a long time on the Transport Committee—we see some of the reasons why wealth in the north-west and the other English regions is not as great as it should be. Of all the spending blocks, the money spent on transport in the south-east of England has increased per head of population relative to every other region in the country. One can go over spending under the Labour Government, but that was happening before—this is not a party political point. More money is spent on education and health in London than in other English regions, but the gap in expenditure between London and the other English regions has not been increasing as it has been in the transport sector.

When we look at the detailed projects, we can see why that has happened. The public-private partnership for the tube in London was very expensive. Crossrail, too, is hugely expensive and is certainly of no benefit to the north-west. The costs of those projects add up to in excess of £30 billion-worth of expenditure, yet we are not getting investment in the rail system of the north of England, which has railway schedules that would have embarrassed Gladstone, because trains now travel more slowly between stations in the north of England than they did in the 1880s. That is a measure of the imbalance between the south-east and the other English regions. I know that we will have cuts, but only when we examine the major spending blocks and change them will we make a fundamental difference.

The Treasury, which inspired the Barker and Eddington reports, has come to almost exactly the wrong conclusions in those reports. The Barker report says, “Well, there’s a lot of people in the south-east of England, so we’ll build a lot more homes there and spend £20 billion on infrastructure,” when we need that expenditure in the north-west of England. The Eddington report said, “Well, we’ve got a transport structure and, effectively, we will invest where the transport system is now.” Those are the most reactionary conclusions that one could come to. If this Government or any other want to do something about the original regional imbalances that I talked about, they must adopt positive investment policies that do not carry on subsidising congestion—as the policies advocated in the Barker and Eddington reports do—but instead help the economies of the regions, spread out the jobs and wealth, and improve people’s health by doing so. I therefore hope that the Minister will reject a lot of the conclusions in Barker and Eddington.

I will finish with two very small points. First, there are other major projects that have gone to the south-east of England. One of them is the Olympics. I have always thought that the only part of the United Kingdom that should not have the Olympics is London, because one of the benefits of having the Olympics is that the city that holds the games effectively receives an incredible amount of advertising—it can show what it can do as a city. If anything, London is the capital of the world already; it is a great world city. It did not need the Olympics.

There is a little known and little publicised report by a professor in Nottingham, Professor Blake, which explained that the Olympic games in London would cost the regions between £4 billion and £5 billion in economic costs, because money would be dragged into the south-east. Certainly some things will be bought from the regions, such as steel from steelworks in Bolton, which will help, but essentially the net flow will be a cost to the regions of about £4 billion. Furthermore, Professor Blake wrote his report during a time of economic boom. The Minister may not have heard of that report, but I would be grateful if he wrote to me about the update on it.

My final point is in response to my right hon. Friend’s comment about city regions. I have long been a strong supporter of city regions. I think that today’s boundaries are, in many cases, left over not from 1972 or 1971 but from mediaeval England. The boundaries of many of our areas need changing. Working together to relate to the real political economy is what having a city region is all about. I just hope that we do not leave the electorate out of the system. It should not be merely a bureaucratic relationship between local authorities. People must still have the right to vote for the people who can influence their transport network.

Once again, I offer my congratulations to my right hon. Friend on securing this important debate.

10:18

[Esther McVey (Wirral West) (Con)]

I am delighted to be able to speak in this debate, which has been very constructive so far as people come to it with various ideas and views. It is true that we are all passionate about the north-west, and I know that the Government are too; it is a dynamic and thriving part of the country. It is also a powerhouse not just locally but for the whole country, and it is now viewed as one of the most vibrant parts of Europe.

The right hon. Member for Salford and Eccles (Hazel Blears) talked about manufacturing. The north-west is the UK’s second biggest vehicle manufacturing area, it accounts for nearly a quarter of British chemical output, and it is key to the aerospace industry. We have also talked about the creative industries. The media industry in the north-west is growing at twice the speed of that in any other region of Europe, with 31,000 businesses linked to the creative sector. In Liverpool, we have Sony Computer Entertainment Europe and Granada, one of the leading commercial television production and distribution companies. We also now have the introduction of MediaCityUK in Salford. The nuclear industry is worth £3 billion annually, and pharmaceuticals and biomanufacturing are pivotal industries employing 200,000 people. The region is also Britain’s biggest financial and professional services centre outside London.

Our area is dynamic and diverse. There is a lot that we can do, but I am concerned about the glue that will keep it all together. The region is diverse not just in what it does but in terrain and geography. How will we keep it together, looking forward to local economic partnerships? What will happen to the regional development agency? Do we need a strategic overview partner, of any size, to ensure that momentum is maintained? We know that the region is doing well, but on the other hand, life expectancy there is lower than in the UK as a whole, weekly earnings are below average and the number of jobseeker’s allowance claimants is above average. We have some of the worst unemployment statistics in the country, and more disadvantaged areas than any other region. We have done a lot, but we must continue to do a lot to address the incongruities from which the region suffers. The north-west is strong and united, but we must prioritise it to keep it going forward. My hon. Friend the Member for Warrington South (David Mowat) spoke eloquently about the need for education and skills, and plans for next-generation access.

The north-west is a main contributor to the economy in the field of transport manufacture, highlighting the need for continuing success in the sector. The region also had the lowest average daily motor vehicle use on the roads in 2008. We must keep it that way by increasing access to public transport. We need better rail links, and not only to the south-east and London. I am particularly keen on the development of the trans-Pennine rail link and links across the north-west, which are vital to our growth and could use and capitalise on features such as our super-ports. Infrastructure in our area is key.

More investment is also needed in high-speed broadband and next-generation access, especially in rural areas. In Wirral West, almost 55% of households are considered deprived in terms of access to broadband. That applies to many other areas in the north-west as well. Our Government have pledged to do more to link us all up and get faster broadband access. In Liverpool, a smart grid project is being considered that will bring together the private sector to connect socio-economically deprived areas, assess their energy use and make savings.

The north-west has the potential to be the European leader in renewable energy and the low-carbon industry. We have more sites devoted to creating energy from renewable sources than anywhere else in the UK, which gives us the capacity to generate the second largest amount of energy. We must see whether we can be first.

We have great potential to develop wind and nuclear power as well as continuing to focus on wave power. In Liverpool bay, various private industries are combining to consider next-generation wind turbines. We as a Government also need to consider where we can facilitate private industry and enterprise to gain a terrific return that would regenerate areas, provide work and draw money into the UK economy as a whole. Importantly, over the past few years the north-west has been the most successful UK region outside the south-east in attracting foreign direct investment projects. We have attracted some 511 projects between 2007 and 2010, and the equivalent of 7,000 new jobs have been created in the past year alone through 179 FDI projects.

Greater enterprise brings better job prospects and more employment to the north-west. That is particularly important for the young, as we have the most unemployment and the greatest number of young people not in education, training or work. It is key for young people to know that they have a future and that investment is coming into their area. There is a great drain of youth to the south and south-east, and I for one would like to keep some of those young people in the north-west.

The north-west is responsible for 20% of UK manufacture of chemicals, chemical products and man-made fibres. The sector is growing significantly, and we must ensure that it continues to do so. We need an investment strategy for the area. We cannot work in isolation; we must look outward, not inward. Although we know that we will be moving forward with city regions and local economic partnerships, how will those bodies work together for the greater good of the north-west? We are considering significant investment infrastructure that will cross sub-regional boundaries. How can we work as a whole to raise the region from its current plateau? We are vibrant and doing well, but how can we continue to do well, so that we can be a significant engine of employment and growth for the whole UK?

10:26

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

It is important to follow on from the comments of the hon. Member for Wirral West (Esther McVey). The enthusiasm with which she has spoken, endorsing the enthusiasm of my right hon. Friend the Member for Salford and Eccles (Hazel Blears), typifies the region. It is successful. We are not on a downward slide to nowhere; we are moving in the right direction. Ensuring that we continue in the right direction is key to what happens next. I do not want to be drawn into the rights, wrongs and merits of the case for the regional development agency; I want to ensure that whatever we do continues the momentum in the right direction.

One vehicle, for example, has been incredibly successful. The hon. Member for Warrington South (David Mowat) appropriately mentioned Daresbury. He will know what an interesting battle Labour Members had inside our own fraternity, with the last Prime Minister but one, about investment in Daresbury. The science community chose to invest Project Diamond elsewhere. One result of that debate was the sensible decision to create the Northwest Science Council, which has acted as a sounding board for some of the best ideas evolving. Some of the issues mentioned by colleagues from various parties owe their genesis to the work done by the science council and its prodding and poking.

Whatever happens within the RDA structure, I would like an equivalent body to bring together high-level scientists from the important clusters represented in the region, in order to ensure that we maintain the momentum necessary to be world class in the fields in which we have high-level skills. I pose that challenge to the Minister. I am not hung up one way or the other on any particular structure, but we must recognise that bringing together the science community has been beneficial. The hon. Member for Warrington South will know that the Daresbury site does not do obscure, blue-sky research—I say this as somebody who used to run an X-ray laboratory a long time ago, when I did a proper job—but is a dynamic and growing science base that reaches into new areas that were never thought of when it was a single-purpose laboratory. The consequence of our battle some years ago has been incredibly positive, and we need to keep that momentum going.

We have also had some interesting successes in other areas. A few years ago, it was presumed that the vehicle industry would continue to shrink; in fact, the opposite has happened. There has been growth in output in the region in not just finished products, but components—from very high end, such as Bentley in the south of the region, through the spectrum of vehicles. The success of General Motors has, of course, been important to my constituents. General Motors was presumed to be sliding into oblivion a while back, and we are now pleased that it does not need the loan guarantee that Lord Mandelson offered it just before the election. The argument between me and the Government has therefore become academic. That is very positive news.

It is now key to consider whether we can get the Ampera into Ellesmere Port—some colleagues saw that vehicle in New Palace Yard a while back—because it is a really exciting, next-generation vehicle that is the right platform to move us forward. The Ampera produces only 40 grams of carbon per kilometre, and is the right step forward. I hope that no one in this Chamber would argue against having the Ampera in Ellesmere Port, so what I want is a commitment from the Government. I am not asking for their money; I am asking for their commitment to working their socks off with us to ensure that no stone is left unturned in guaranteeing that we get that project in Ellesmere Port.

[Mr Prisk]

That is a very specific question, to which my answer is yes, absolutely. I have met the senior management in the UK and internationally. Ellesmere Port has an outstanding opportunity in this regard, and my ministerial colleagues and I are determined to do everything we possibly can. I am grateful to the hon. Gentleman for his determined advocacy for an extremely important part of this country’s industrial base.

[Andrew Miller]

I am grateful for the Minister’s comments. I will open the negotiations on getting good value for money for Government car fleets. The Ampera is a very comfortable car to drive, as one or two hon. Members here have discovered.

Other sectors within our region do not get talked about. We have the premier veterinary school at Liverpool university, part of which is at Leahurst in my constituency. There is a fantastic partnership between the university sector and the private sector, from which there has been a huge amount of investment. We must not forget the importance of that veterinary school in the context of zoonosis and other areas of science that will be increasingly important. That crossover between the public and private sectors is critical to the future of our university structures. We need to consider how we can evolve public sector jobs at the heart of such areas of research, and create the kind of successful spin-outs we have seen in research parks in other university communities across the country and elsewhere. How can we create the equivalent of St John’s, Cambridge in and around our north-west university clusters?

Some of our universities are doing particularly well. I began my speech with the subject of the Science Council, which has led to greater collaboration between north-west universities. That has been encouraged by colleagues from all parts of the House. For example, in the other place, Lord Oulton Wade, among others, and I have tried to pull together the universities and get the vice-chancellors to think collectively as a region. That has had an effect, so let us not kill the golden goose.

I shall make one final point, which is not intended to be negative. Will the Minister inform his colleagues in the relevant Departments that practices are going on within the public sector that leave a lot to be desired? Within NHS Wirral, there is a disguised attempt to get rid of numbers, or reduce head-count. That organisation is saying to people, “We don’t make redundancies.” However, they are doing so. A constituent of mine from Neston was told unequivocally that the service she provides is no longer required. She has 36 years’ experience as a nurse—not all in the same employment, but she does have a lot of experience—and we need to maintain such skills. However, instead of offering her a suitable alternative job elsewhere within the NHS that is within a reasonable travel-to-work area, the employer has come up with a clerical job that involves working permanent nights. Given her length of service, my constituent is obviously reasonably mature and, of course, all the case law indicates that that is not a reasonable job offer.

Such disguised attempts to reduce head-count cannot be tolerated, and I hope the Minister will pass that message on. I said in writing to the chief executive of NHS Wirral that I would raise that matter, because it is an outrage that people with such experience should be treated in such a manner. That is my only negative comment. We have to face the reality of pressures on public sector jobs, but any action that is taken must be taken in a humane and civilised manner, and in conformity with the law of the land.

10:36

[Stephen Mosley (City of Chester) (Con)]

As we have heard from all those who have contributed today, we have much to be proud of in the north-west. We are already Europe’s 12th largest regional economy and we have a larger economy than many European Union countries. We are home to more than 250,000 businesses and we consistently outperform in attracting inward investment to the UK. We are a world leader in nuclear energy, home to Europe’s largest bio-manufacturing region, the largest centre of chemicals production and the No. 1 exporter of pharmaceutical products. We have Europe’s second-largest media hub, and the UK’s largest financial and professional services centre outside London. We are also the UK’s largest aerospace and defence manufacturing region and one of the largest motor manufacturers.

However, the north-west has not been immune to the recent recession. Britain has had the longest and deepest recession on record and the longest recession in the G20, with six consecutive quarters of negative growth. We are seeing the effect of the recession across the region, and we need to ensure that we play our part in securing our nation’s future economic and financial success. Our biggest challenge is overcoming the fiscal inheritance of the new coalition Government. Failure to bring the deficit under control will only lead in one direction—higher interest rates and higher taxes. Such a situation will suffocate growth, strangle wealth creation and stifle people’s hopes of a better future.

[Rosie Cooper (West Lancashire) (Lab)]

I wonder whether the 1980s and early 1990s passed the hon. Gentleman by? I was not the MP for West Lancashire at that time but, in places such as Skelmersdale, the real unemployment rate was 50%. We are in a difficult worldwide recession and we have lots to do. That goes for all parties. You have your position and we have ours. I believe you are putting families and the needy—

[Mr Christopher Chope (in the Chair)]

Order. That was far too long an intervention. I am not involved in the debate and I am not going to become involved.

[Stephen Mosley]

The hon. Lady must remember that there was increased employment, growth and general prosperity by 1997, because of the action taken before then.

Taking urgent action is unavoidable and I am delighted that the Government have acted decisively to bring the deficit under control. The Government’s swift action has meant that we can be optimistic about the future of our region’s economy. There are two important drivers of economic growth in the north-west: first, the Government’s national action with respect to the country’s economy as a whole; secondly, the action we take locally as Members of Parliament to involve our local councillors and business communities in boosting our local economies.

I represent a constituency on the very edge of the north-west, and we have important economic ties to neighbouring regions, especially north Wales, so for me the idea of a unified north-western economy is rather abstract. For example, few would argue that Chester’s economic future is more closely related to the economy of Carlisle than to that of Connah’s Quay in north Wales. However, those external relationships have not been fully recognised, and the opportunities offered by our neighbours have not been fully followed up and secured.

The rigid regional attitude might even have proved to be a psychological barrier to growth in areas such as Chester on the edge of the north-west. That is why I am particularly pleased that the Government are replacing the remote Northwest Regional Development Agency with the more local, accountable and relevant local enterprise partnerships. This is not only my view, but the view taken by Cheshire West and Chester council, which, along with Cheshire East and Warrington borough council, has decided to pursue the aim of having a Cheshire and Warrington LEP. A recent statement from the Cheshire and Warrington Enterprise Commission shows that it is not only the elected politicians who support the idea of an LEP. It said:

“A new Local Enterprise Partnership (LEP) in Cheshire & Warrington could transform the local economy, bringing significant benefits for businesses and residents. We should grasp this opportunity with both hands. In the longer term this will enable us to deliver our ambitious growth targets and really put Cheshire & Warrington on the map.”

[Mr Christopher Chope (in the Chair)]

I must cut the hon. Gentleman off there, because otherwise we will not have time for the winding-up speeches.

[Stephen Mosley]

Thank you, Mr Chope.

10:41

[Roberta Blackman-Woods (City of Durham) (Lab)]

I congratulate my right hon. Friend the Member for Salford and Eccles (Hazel Blears) on securing the debate. Clearly, no matter is more important for us than how we seek to invest in our region. That is evidenced partly by the passion with which all Members who have contributed to the debate spoke about their region, and partly by the number of Members who have attended.

My right hon. Friend did an excellent job of pointing to the need to keep supporting the development of prosperity in the north-west and attracting inward investment to the area. She was absolutely right to identify key sectors where growth is possible and desirable. She mentioned, in particular, digital media and the need to invest in green jobs and to try to improve advanced manufacturing. I know from personal experience how Manchester and Salford have been transformed in recent years.

All Members are right to be concerned about how that programme of transformation will be continued without an agency such as the RDA, along with its public and private partners, acting as a real champion for the region. Several hon. Friends made interesting points on how RDAs have brought together the public and private sectors. My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) referred to how the agencies had brought about substantial job creation. Government Members, too, recognised the important role that RDAs had played.

[Bill Esterson]

Does my hon. Friend agree that one of the lessons that need to be learned from the Government’s handling of the abolition of the development agencies is the need to listen to business leaders and leaders in both the private and public sector about what is right for the region, rather than just coming up with their own solutions and imposing them from the centre?

[Roberta Blackman-Woods]

My hon. Friend makes an excellent point, and I will shortly address how the abolition of the RDAs is being handled. In response to comments made by my hon. Friend the Member for Blackley and Broughton (Graham Stringer), I do not think that we are framing the discussion around the retention of a particular structure, but we have to question whether LEPs will be capable of taking on the roles previously performed by RDAs.

It is also worth asking whether the Government have a democratic mandate for abolishing the RDAs, because the Liberal Democrats stood on a platform of keeping them in areas where they were deemed to be successful. Indeed, the coalition agreement, on page 10, states:

“We will support the creation of Local Enterprise Partnerships—joint local authority-business bodies brought forward by local authorities themselves to promote local economic development—to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.”

However, that does not seem to be happening in practice. We have been told that all the RDAs are going, but no legislation is yet in place for that to happen and we expect a White Paper on the matter to be produced only in the autumn.

The issue is about creating a structure that will deliver regional economic investment and growth. We know that the Northwest Regional Development Agency returns about £5.20 of economic benefit for every £1 spent, and in terms of foreign direct investment the programme delivers £30 for every £1 spent. That is a substantial record that will have to be met by any new structure.

I have several questions for the Minister and would appreciate specific answers to them. How will the economy of the north-west be affected by the removal of current funding streams from the RDA, such as the European regional development fund, and the absence of an effective system for disbursing funds and managing the bidding process? That is particularly important, as we currently need investment in green businesses. The RDAs have been successful in bringing together venture capital funds through European money and money from the private sector to create substantial funds.

How will businesses supported by the RDA cope with the reduction in funding when the £1 billion regional growth fund replaces the RDA budget of £1.5 billion a year over two years? That was an excellent question asked by my right hon. Friend the Member for Salford and Eccles. There are other questions on the advisability of moving key functions from the RDA to the Department for Business, Innovation and Skills, such as responsibility for inward investment and for fostering innovation. Surely there is a need to go the other way and to devolve those functions to local areas and enable them, particularly regions, to set their own priorities.

Several Members referred to the development of a regional skills strategy. That, as the Minister will know, was a function undertaken by RDAs. Without that, how will we know what the skills shortages are at a regional level, how they are to be addressed and what partnerships will need to be developed locally to deliver them? We know that local businesses need to work with education suppliers to increase the number of apprenticeships and to get more employers on board, and we know that universities are critical to the development of regional skills. However, it is necessary to have an overview at regional level, as the hon. Member for Wirral West (Esther McVey) noted in an excellent point. How will universities interact at a regional level without a body to encourage them to do so?

[Yvonne Fovargue (Makerfield) (Lab)]

Does my hon. Friend agree with me that, with the Government office for the north-west also under threat, there are concerns about the partnerships not only with businesses, but with the voluntary sector, which has been so well supported by that body?

[Roberta Blackman-Woods]

My hon. Friend makes an important point. The key question concerns the partnerships already in place and delivering at the regional level. How is what they are doing to be continued, and developed, by the new structure? We do not know the answer to that question.

The regional bodies are also working to address the number of NEETs—those not in education, employment or training—and to encourage all local education providers to come together and continue improving aspirations. Again, it is simply not clear how LEPs will achieve that.

We suggest that now might be the wrong point at which to get rid of RDAs, when we are not clear how LEPs will take on their functions. The degree to which the Government are centralising the RDA tasks is also not clear. I am not sure that that is a sensible way forward either.

10:50

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I begin by congratulating the right hon. Member for Salford and Eccles (Hazel Blears) not only on securing the debate but on setting a constructive and positive tone on what is a complex issue. I think we all share the view that the north-west is a part of the country with a tremendous future and a great industrial past; the question is, how do we enhance and develop that? The debate has been not only constructive but thoughtful, and I shall do my best in the nine minutes I have to canter through some of the questions, so bear with me.

Like much of the country, the north-west has suffered from the recession, but we are beginning to see early signs of improvement. How do we help to shape and enable a prosperous economy that will be different from what we have known in the past? One of our opening statements was that we as a Government passionately believe in the need to ensure that—

[Graham Jones (Hyndburn) (Lab)]

I am concerned about the context of this debate, which the hon. Member for Wirral West (Esther McVey) touched on. Our region has many disadvantaged communities—in fact, one of the highest proportions in the country. Will the Minister specifically address the disadvantaged areas? His priority tends to be the west of the region, where the nuclear and defence industries are located, rather than the deprived areas. What will he do about those?

[Mr Prisk]

I am only 60 seconds into my speech, so I shall do my best in the remaining eight minutes to get to the part of the region about which the hon. Gentleman is concerned.

We understand the need to rebalance the economy away from an over-reliance on financial services and one part of the United Kingdom. Therefore, instead of the approach we have seen in the last dozen years or so, we need to support the renewal of the industrial base and to encourage investment and innovation, about which several hon. Members rightly spoke. Some of those sectors have been talked about: advanced manufacturing, which the north-west is well supplied with, such as plastic electronics and robotics; the digital and creative sectors, to which the right hon. Member for Salford and Eccles referred; and, as several hon. Members mentioned, green technology, which needs to be developed.

[Hazel Blears]

If the green industries are so important, which I believe they are, why are the Government abandoning the green investment bank?

[Mr Prisk]

The right hon. Lady is wrong. We believe passionately in ensuring that we have an investment bank with financial expertise that can deal with green technologies. We will set that out in our papers on growth and finance, in which we will examine access to credit, which is crucial to small businesses that use conventional technologies, as well to those that use the new technologies. I know the right hon. Lady is keen to get answers, but if she can wait a few more days she will get the answers to her questions.

The north-west is well placed to benefit from our approach, involving long-term investment, a proper fiscal environment and, as several hon. Members have said, a reduction in the burden of regulation on small and medium-sized enterprises. The hon. Member for Ellesmere Port and Neston (Andrew Miller) was absolutely right to highlight the role of Daresbury and of excellent centres of innovation such as Ellesmere Port. I wish the media would look at industry with clearer eyes. They tend to see it as some sort of smoke-stacked centre, but it has moved on a long way, and Ellesmere Port is an excellent example of how we can progress our industrial base.

In the time I have left, I turn to the heart of our debate: the shape of our local and regional economies. As several hon. Members have pointed out, for many years there has been an evident gap between the greater south-east and the rest of the country, which has rightly generated discussion among politicians, economists and business men and women.

[Simon Danczuk (Rochdale) (Lab)]

Will the Minister give way?

[Mr Prisk]

With respect, I will not give way because the hon. Gentleman has not spoken in the debate and I need to answer the questions asked.

In 1999 the previous Government established the RDAs, which were expressly tasked with a clear goal: to close the north-south gap. Unfortunately, the evidence shows that that has not been achieved. Let me take the north-west as a simple example: between 1990 and 1999, when the RDAs were established, annual growth in the north-west averaged 1.7%, but in the greater south-east it was 2.3%, a gap of 0.6%. Between 2000 and 2008—the latest period for which figures are available—growth averaged 1.5% in the north-west and 2.1% in the greater south-east; again, a gap of 0.6%. Despite spending £3.7 billion over the past decade, the North west RDA failed to make a difference in closing the gap between its economy and that of the greater south-east.

Understandably, hon. Members may well talk about individual projects that they feel have merit, but we have to look at the overall impact over a decade.

[Simon Danczuk]

rose—

[Mr Prisk]

I give way to the hon. Gentleman.

[Simon Danczuk]

On Friday I visited Kingsway business park in my Rochdale constituency. It is one of the largest business parks in the region, if not the country, and a good thing about it is that it is creating jobs—many businesses are starting to locate there. One of the attractions is that businesses receive a relocation grant of about 20% of their costs, which has attracted businesses from all over the country. However, this week we were told that that grant would no longer apply. Why is that? What effect will that have on job creation not just in Rochdale but in the north-west as a whole?

[Mr Prisk]

That is a long intervention, which is a shame because it has prevented me from tackling the broader question. The individual case cited by the hon. Gentleman is a classic example of the danger of the debate: we can all find an individual project that might have merit. The question is whether the gap has closed in 11 years, after spending £3.7 billion. The answer, sadly, is no, which is why we need change.

In answer to questions from those Members who spoke in the debate, I shall set out the key changes that we want to achieve. We need to forge effective partnerships between local business and civic leaders in our communities—and yes, that will mean formal, legal entities. We want greater democratic accountability in what will be vital forums in deciding local economic priorities. The partnerships must be equal between business and civic leaders, because that will help them better understand the needs of local people. In response to the question about universities, I see universities, too, as having an important role in those partnerships.

As several Members said, local economic development needs to be based on real economic areas. Sadly, the boundaries of many RDAs often relate more to the administrative priorities of Whitehall or Brussels than to the actual needs of local areas. I very much welcome what the right hon. Member for Salford and Eccles said about city regions and the various benefits and challenges. Clearly, they are not relevant in every part of England; nevertheless, they are an important dynamic to understand. We must ensure that the boundaries of the economic area that the partnership is seeking to enhance relate to the real economy of today. We need to reform the system by replacing RDAs if we are genuinely to strengthen the local economies of this and other areas.

Our objective is simple: to encourage strong local leadership and to promote economic growth, based on institutions that match the economic reality on the ground and that have the freedom, and therefore the diversity capability, to make a real impact.

I also welcome what the right hon. Member for Salford and Eccles said about the pilots. I am not familiar with the details that she gave, but I would be happy to have a look at them. Total Place has considerable merit as an approach to examining some of the underlying questions.

[Graham Jones]

Will the Minister give way?

[Mr Prisk]

I will not because I have less than a minute left.

In drawing my thoughts to a brief conclusion, I apologise to hon. Members for having been unable to address all their questions. In my book, the north-west is an area with a genuine can-do spirit, as my hon. Friend the Member for Wirral West (Esther McVey) and others mentioned. We in government must therefore understand and enable that, rather than directing and tinkering. We need to ensure that businesses can prosper and grow, which means, yes, creating a new economic landscape. For a few weeks, the level of clarity and certainty might not be perfect, but we will set out our further plans over the coming weeks, and we look forward to dealing with the various requests appropriately and thoroughly.

Coastal Towns (Government Policy)

Tuesday 20th July 2010 Westminster Hall

11:00

[Mark Simmonds (Boston and Skegness) (Con)]

I am pleased to see you in the Chair this morning, Mr Chope. I am delighted to have secured this debate, which I hope will give the many Members with an interest in the subject an opportunity to highlight the numerous challenges that coastal towns and resorts face and the opportunities in which they want to take part.

It needs to be recognised that work on coastal towns was done during the previous Parliament, particularly by the Coastal Communities Alliance led by Lincolnshire county council, and by the Communities and Local Government Committee, which was chaired by Dr Phyllis Starkey. I am sure that the hon. Member for Blackpool South (Mr Marsden), who has just taken his place, will recall that the previous Government’s initial response to the excellent Select Committee report was hopeless and that they had to come back with another response. Also, the academic research of Professor Steven Fothergill of Sheffield Hallam university, particularly his benchmarking study, has informed much of the debate on coastal towns.

During that period, several hon. Members, some of whom are here this morning, some of whom are not, took a particular interest in the issues that affect coastal towns. There is no doubt that there was a general feeling in many coastal towns, particularly in England and Wales, that the previous Government sidelined them and did not give them their fair share of resources or put them at the forefront of policy thinking and policy making.

I am proud to have in my constituency Skegness, which is one of the country’s most famous seaside resorts. Members may not be surprised to hear that, according to Saga, it is the number one place in the UK to retire to. It is still a popular family tourist destination, with 600,000 visitors each summer and 26,000 caravans on the east Lincolnshire coast. I am pleased to report that, unlike some other historic coastal towns, Skegness is still a thriving success. It achieves that by continuing to attract visitors, from the UK in particular, but also by its private and public sectors working together, with excellent locally led innovation and entrepreneurial flair making a significant contribution.

Skegness is not alone. Most of Britain’s coastal towns have many positive features, including attractive scenery, excellent leisure activities and some significant Victorian and Edwardian buildings, but they are also significant and important economic bases. The population of our coastal towns is approximately 3.1 million, which is more than the total population of Wales. Members may be aware of the recent report produced by Professor Fothergill’s team, which concluded that 210,000 people are employed in tourism alone in coastal towns—more than are employed in the UK in the pharmaceutical or motor industries, or in radio and television combined. Economic activity in coastal towns contributes £3.4 billion to the UK economy. It is clear that such towns are assets, not liabilities, and need to be treated as such.

I am delighted to see Members here from all corners of the UK, but it is important to remember that, despite there being commonalities among coastal towns, each one is different, and each faces its own unique set of challenges. I am sure that other hon. Members will wish to highlight some of those that pertain to their constituencies.

It is important to set out some of the key challenges that are common to most coastal towns. The first is that they have severe pockets of socio-economic deprivation. Twenty-one of the 88 most deprived authorities are in coastal areas. There are high levels of benefit dependency: 15.2% of the working-age population in coastal towns claim benefits, compared with 12.6% across the rest of the UK. The average incapacity claimant rate in seaside towns is well ahead of the English average. There is poor housing stock in many of our coastal towns, with 50% described as “non-decent” compared with approximately 30% elsewhere.

Coastal towns face significant environmental challenges such as rising sea levels, storm surges and eroding coastlines. There are low levels of employment: the average unemployment rate is significantly higher in coastal towns than it is elsewhere. Those complex and interrelated issues need to be addressed in a co-ordinated and comprehensive way.

[Bill Esterson (Sefton Central) (Lab)]

I am grateful to the hon. Gentleman for giving way and for securing this debate. My constituency includes Formby and parts of Crosby and Hightown, which are coastal towns. Among other things, the Sefton coastline is characterised by its 20 miles of sand dunes. He mentioned the environment, which is an important issue to my constituency and to that of my neighbour, the hon. Member for Southport (Dr Pugh), who is also here today. Does the hon. Member for Boston and Skegness (Mark Simmonds) agree that it is vital to continue investment in, support for and investigation of adequate sea defences for coastal towns?

[Mark Simmonds]

I thank the hon. Gentleman for that critical intervention. He is right to highlight the importance of maintaining coastal and flood defences not just in his constituency but throughout the whole of the UK. I cannot give him the assurance that he is looking for, but I am certain that he and other hon. Members on both sides of the House will lobby vociferously to ensure that coastal defences are maintained. There is a big question about the efficiency and effectiveness of the Environment Agency, which sometimes hinders local schemes and solutions to such problems, and that needs to be looked at carefully.

In the short time since the coalition came to power, it has had a positive impact. Some of the policies that have been put in place and changes that have already been made will have a positive impact on coastal towns. For example, reducing the threshold for national insurance contributions and, as outlined in the Budget, reducing corporation tax, particularly for small companies, will have a particular resonance in many coastal towns, and the promised help for Britain’s tourism industry through reinstating favourable tax rules for furnished holiday lettings will avoid a significant detrimental impact.

Most significant of all are the coalition’s proposals to scrap regional strategies and regional development agencies and to devolve decision making and power to local authority level, thereby allowing decisions to be made at that level—in effect, returning decision making and power to coastal local authorities rather than distant RDAs and other quangos that did not really understand the importance of coastal towns and the complex issues involved. I very much hope that that will not be seen as a role for the public sector only, but that the private, voluntary, charitable and social enterprise sectors, which I believe have a significant role to play, will be stimulated.

One of the key messages that I want to get across this morning to the Minister is that although many coastal towns recognise that they must play their part in sharing the burden of reducing expenditure that will inevitably come from the Government’s difficult decisions, they must not take an unfair share of the burden. We all accept that there will be tough spending settlements for local authorities, Government Departments and Executive agencies, but we need to ensure that they do not have a disproportionate, negative impact on many of our coastal towns.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

When large Departments have to make cuts fairly deeply and relatively quickly, the tendency is to cut out all the smaller centres of service provision and concentrate on the larger centres. That works against rural communities and coastal towns. Does my hon. Friend agree that, although we recognise the severity of the situation and the need for speed, Ministers need to give local people the opportunity to deliver the savings and find a way of doing so that does not denude coastal towns and rural areas of the services on which they depend?

[Mark Simmonds]

My hon. Friend makes a powerful, important point. I understand that the Government direction of policy is to do exactly what he requests, in that decisions should be devolved down to the lowest possible level and those who really understand the needs of each community. One significant fault of the previous Government was that they regarded centralised decision making as the solution to many of these problems and they lacked understanding of the needs of and changes in specific local communities and how to reflect those.

I should like to trot through five specific areas that I think that the coalition needs to focus on if we are to improve the lives of those who live and work in and visit our coastal communities. First, on economic diversification, we need to find ways of putting the economic heart back in our coastal towns. Only a few years ago, coastal towns were not only people’s holiday location of choice, but the gateway to the empire, with goods leaving and coming into the country from many ports; but far too often, that economic dynamism has gone. Too many of our coastal towns are now magnets for the long-term unemployed, those on benefits and people with long-term medical conditions. More must be done to diversify the economic base of our coastal towns.

Understanding the macro-economic constraints, we need to put in place medium to long-term strategies to encourage business to locate and create employment in our coastal towns, creating economic diversification. An obvious example of that would be the establishment of green technology companies, particularly those connected to green energy generation. My hon. Friend the Member for Waveney (Peter Aldous) is particularly passionate about that work in his constituency.

The second area is funding formulae, which were the subject of significant debate in the previous Parliament. The independent National Audit Office should be tasked with examining the funding formulae to ensure that coastal towns and regions receive their fair share, albeit that perhaps it will diminish, of resources for public services. The formulae should reflect the visitor numbers to particular areas. I found the starkest example of that problem in Blackpool, where the vast majority of some 18,000 people a year who visit its walk-in health centre do not come from that town, yet Blackpool primary care trust, which is responsible for the centre, currently receives no extra money. There are similar problems in Skegness and elsewhere. There is a double whammy in funding for coastal towns because of the elderly and vulnerable population and the large number of visitors.

Thirdly, there are high levels of benefit dependency in coastal towns—significantly higher than in other areas. The Government are planning some innovative work on benefit culture that will incentivise people to come off benefits and get back into work, and ensure that work pays and that people are not better off on benefits. The Government may like to consider piloting some of these schemes in our coastal towns.

Fourthly, many coastal towns are blighted by poor-quality housing stock and many have high levels of houses in multiple occupation. Local authorities must retain the flexibility to deal with HMOs and prevent their development in localities where they are not wanted or where there is already over-supply.

Fifthly, many coastal towns’ public services are overstretched as a result of their demographics, limited catchment areas and poor transport infrastructure. If I could ask the coalition to focus on one area, it would be improving public health in coastal towns, where there are higher rates of alcohol abuse, smoking and teenage pregnancy. There are 74.8 conceptions per 1,000 girls between 15 and 17 in Blackpool, compared with the national average of 42.6. I accept that that is an historical statistic, but it still makes the point.

I urge the Government to work alongside not just the traditional local authorities with responsibility for health, but the broader charitable and voluntary sector, which has a significant role to play. I am sure that all hon. Members agree that in all coastal towns there are a significant sense of community and people who want to make a difference. There is a direct correlation between poor public health and high rates of people on incapacity benefit further down the line.

I should like the Minister to make a commitment. The previous Government set up a cross-departmental working group to pull Departments together on all the various aspects of that issue. I want to ensure that that working group continues and that it will focus particularly on coastal towns. Although that might sound administrative and bureaucratic, there is no doubt that cross-departmental working can lead to achievements. Perhaps the best example of that is the Office of Life Sciences, which has made a significant contribution to promoting the interests of the British pharmaceutical sector.

Many other hon. Members wish to speak, so I will draw my remarks to a close. There are many significant issues relating to coastal towns that I have not had time to mention, including communities running facilities; raising educational aspiration and achievement; the performance of the Environment Agency and flood defences; the importance of the public realm in attracting people to coastal towns; and support for the elderly, who are attracted to retiring to the coast. Too often under the previous Government coastal towns were ignored and marginalised, despite one or two Labour Members fighting to change that perception. I hope that the coalition will not make the same mistake. Coastal towns have a significant contribution to make. They need to be reinvigorated and focused on by central and local government.

11:17

[Brandon Lewis (Great Yarmouth) (Con)]

I commend my hon. Friend the Member for Boston and Skegness (Mark Simmonds) on securing this important debate.

I shall focus primarily on inter-departmental working, which my hon. Friend mentioned, because it is so important that we have joined-up thinking on coastal towns. If hon. Members will indulge me, I will deal with this matter mainly with reference to my constituency of Great Yarmouth, as others can speak for their own.

Great Yarmouth highlights exactly why coastal towns are so important, how diverse they are and why it is vital to tie together essential improvements in infrastructure—both transport and communications—and recognition of the tourism industry and the niche industries that some of our constituencies deal with. Companies in my constituency supply the defence industry and have dealings with the oil and gas industries. Obviously, being so close to what was the largest offshore wind farm in Europe, some of them are involved with renewable energy, with new wind farms to come. My constituency also suffers from coastal erosion, as do other hon. Members’ constituencies.

To see real economic growth we need improvements in transport infrastructure—both road and rail—and in broadband, so that companies looking to take advantage of niche industries can communicate. Broadband is an important tool.

As has already been mentioned, tourism is often undervalued, yet it is one of the most cost-effective industries, through which employment can be increased in constituencies such as Great Yarmouth. More than 5,000 people in Great Yarmouth are employed in the tourism industry, which is worth about £500 million to the economy. Given that my constituency is the second largest seaside resort in the country, we feel that we play our part in the economy. We cover the whole remit: from straight tourism and seaside tourism, to the Norfolk broads and stately homes—something we share with my hon. Friend the Member for Waveney (Peter Aldous). We also cover bingo and gambling, including horse racing and dog track racing.

We have offshore oil and gas, and there are renewables to come, but we suffer, as I said, from a huge amount of coastal erosion. A clear, transparent policy on coastal erosion is needed. None of us here and none of the residents in our constituencies genuinely believe that we can protect every inch of coastline: neither the economy nor nature allows for that. There is certainly a need for transparency and clarity about what we can do, and a need to ensure that the money the Department for Environment, Food and Rural Affairs and other Departments can put into dealing with coastal erosion is spent on protecting the coastline. A rough estimate is that during the past four or five years, the previous Government’s pathfinder and other schemes spent almost £500,000 on reports on Great Yarmouth, which often led to other reports with not a single bit of work being done to protect the coastline.

Scratby, which my hon. Friend the Member for Boston and Skegness has seen, is a key area that needs work to protect its coastline. Most of the necessary coastal erosion protection could have been finished with the money that went into more and more reports. The previous Government spent £200,000 in areas such as Great Yarmouth just before the election, coincidentally—I am sure that it was not intended to be an election tool. At the same time, they were penalising such areas—Great Yarmouth has a new deep water outer-harbour that can service our country—with a port tax. We must get away from that mixed-up thinking. We must send a clear message and be honest about what we can do to protect out coastline from erosion.

I will not speak for long because I know that other hon. Members wish to contribute. I have highlighted why cross-departmental work is so important. The Department for Communities and Local Government is important in allowing local authorities to look after residents by removing the regional spatial strategy, and by allowing council tax and business rates sometimes to move back to local authorities to allow those authorities to move forward. The Department for Culture, Media and Sport covers tourism and gambling, which are important for areas such as Great Yarmouth. DEFRA is important in dealing with coastal erosion, as is the Department for Transport for transport links, and DCMS for broadband. The Department of Health is also important in the context of the cost to our health service and our economy as a whole of the levels of alcohol consumption often associated with visitors to such constituencies.

All those Departments have a vital part to play in constituencies such as Great Yarmouth and coastal constituencies throughout the country. The most important request that I can make to the Minister today is for cross-departmental work at official and ministerial level to ensure that our coastal towns, which can provide so much in moving our economy forward, developing new renewable energy industries and developing our tourism industry even further, can work together to achieve that growth for our own communities and the wider country.

11:22

[Laura Sandys (South Thanet) (Con)]

I thank my hon. Friend the Member for Boston and Skegness (Mark Simmonds) for introducing this subject and for being a strong champion of coastal towns and the issues and challenges facing them. As many hon. Members have said, coastal towns have different and unique characteristics, and it is important to examine and address them in policy terms. South Thanet is one of the most beautiful parts of the country—I am sure that other hon. Members will claim that for their constituencies—but it is the 64th poorest district in the country, which is not exactly the usual profile of the south-east. We have the highest number of looked-after children in the south-east. Two wards have more than 80% of privately rented properties and most tenants are housing benefit recipients, and 39% of our economy is in the public sector. Some 15% of the private sector probably supports that public sector investment. That is a precarious economic model looking into the future.

During the past 13 years, despite many years of a booming economy, Thanet has not benefited proportionately to the rest of the south-east. In some areas, deprivation has significantly increased. With the difficulties that we face, we cannot build on, or support ourselves through, the previous economic successes of the past 10 years. The economic profile inland is totally and radically different, which I know is the same for many of my colleagues with seaside constituencies. Canterbury has a significantly different economic and social make-up from Thanet, Dover or Hastings and Rye.

During the past 13 years the previous Government pumped millions of pounds into my area. That was well-intentioned, but the result was an increase in deprivation. There were top-down assessments of what was needed, little or no involvement of the community, and outreach workers who had no knowledge of the area; and an increasing number of projects focused on deprivation attracted more deprivation to our area.

[Bill Esterson]

As a man of Kent, I am familiar with Thanet and the problems in Ramsgate that the hon. Lady described well. I understand her point, but cutting money is not the way to deal with the problem. Other hon. Members have called for cross-departmental co-operation, but pulling the plug disproportionately—that is what is on the table at the moment—will not solve the problem. I agree that money could be better spent and that lessons could be learned from the past, but I hope the hon. Lady agrees that we need continued investment, not cuts at a time when the private sector—

[Mr Christopher Chope (in the Chair)]

Order. I must cut the hon. Gentleman off.

[Laura Sandys]

I understand the hon. Gentleman’s point, but in many ways the money that was invested in our area was an incentive for deprivation, not aspiration. We need a different approach.

[Mr Graham Stuart]

Another aspect of the previous Government’s endless expenditure of money with little delivery for coastal towns was regeneration partnerships, which lasted for a short period and then came to an end. There was never any follow-through. Coastal towns need a consistent policy framework and consistent work to develop their economic potential. What they do not need is short-run, small projects that capture a headline, or eye-catching initiatives that do not deliver on the ground. That is what happened too often.

[Laura Sandys]

I absolutely agree. We had many short-term projects. My area of Kent ended up as a centre of excellence for deprivation, which was a result of money being deployed from the centre with little community involvement. I am talking not about less funding but funding that incentivises new businesses and builds a stronger economy, with a sense of future and aspiration.

We have become a magnet for vulnerable people. I was talking to a young couple who had been sent to Thanet from Rochester to ensure that they received all the services they needed, having kicked their drug habit. They looked to Thanet to provide them with rehabilitation and services such as mental health support. Many parts of the south-east, such as London and Kent, use some of our seaside towns to receive people with such issues. It is important to address those issues, but they should be addressed by the local authority in question. We cannot be a centre of rehabilitation services for the whole of the south-east.

My message is clear and important. Our NHS trust and our GPs are there to support our own community. We are there to support others when we can, but we must not have incentives or investment that further attract people, when we have ever-less capacity to ensure that we can support them into the economy with the necessary jobs.

We also have a problem with looked-after children from out of the area that has not been addressed in the past 13 years. Charities have been clear about the impact on those children, who come from as far away as Birmingham, Hounslow and Richmond, which may be two and a half to three hours away from where they are located, in Margate, Ramsgate or Broadstairs. That is not good for children and it is not right for them to be brought up in such places, away from their extended families. I am pleased that my hon. Friend the Under-Secretary of State for Education has made a clear commitment that he will enforce the guidance that looked-after children should not, except in extreme circumstances, be located more than 20 miles from their original local authority.



I am pleased that we are looking at the issue of housing benefit, because in my area, if someone owns a house in multiple occupation, they can receive a return of between 11% and 14% on their investment due to the low property prices. An equivalent HMO in Westminster—I do not know how many there are—would make a return of between 5% and 7%. We cannot have a system where the returns in coastal towns are so high that those places become a magnet for HMOs and landlords who are attracted to the cheap property prices.

I will add a word of caution. If housing benefit is to be universally reduced, we must take care to ensure that seaside towns with their low property prices and cheaper living costs do not once again become a magnet for those on benefits who come from outside the area.

[Ian Swales (Redcar) (LD)]

I am from Redcar, and on Thursday there is a planning hearing about having HMOs—which will involve secure accommodation for people on bail, remand and so on—in the heart of our resort. There will be massive financial returns for the people involved, but my concern is about the planning and the fact that even though local residents and the local authority would prefer not to have those hostels built in that place, they have little power to do anything about it because of the planning laws put in place by the previous Government.

[Laura Sandys]

The Minister for Housing recently announced that we are to give local authorities the opportunity for targeted selective licensing. I will urge my council—as I am sure other hon. Members will urge theirs—to ensure that HMOs undergo a severe and rigorous licensing process so that we start to create a deterrent, and so that seaside towns do not become a dumping ground for many different social problems.

[Mr Graham Stuart]

May I chide my hon. Friend a little? One of the great—and rarely remarked on—legacies of the last Labour Government was that they built so few houses. There was a tremendous increase in housing need and vast increases in council waiting lists. I would hate to see councils remove the one possibility for people to have a home and roof over their head because of the popularity of the local area. That is a result of the failure of the last Government and we must address the issue at its root. We must not ruin things before we do that.

[Laura Sandys]

My concern is specifically with housing stock. My constituency has enough housing, but it is in an incredibly bad state and there are a lot of empty properties that need to be brought back into the housing stock. One would not want to keep a dog in some of the flats I have been into. The neglect and lack of responsibility that some—not all—landlords have shown towards their tenants is not acceptable. More houses need to be built, but I would like to see a lot of empty houses brought back into the housing stock in a safe and adequate condition.

On the upside, there are great opportunities. As my hon. Friend the Member for Boston and Skegness has discussed during this debate and at many conferences, tourism is one of the most effective ways of stimulating small businesses and ensuring a greater number of start-ups, and not just specifically tourist-sector businesses. Tourism brings in foreign currency, spurs new businesses in associated companies and supports our high streets. It offers our less-skilled work force more jobs. Therefore, we must ensure that the domestic tourism agenda and the small business sector are seen as important drivers of the recovery that we badly need in our coastal towns.

I am delighted that following a parliamentary question, the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk)—he was in the Chamber recently—has agreed to meet a delegation of MPs and to focus on how we can boost the tourism sector. We need a clear set of policies to accommodate the vulnerabilities of our seaside towns. I believe that the coalition Government will put those policies in place and ensure that that we are not left, yet again, at the end of the line.

[Mr Christopher Chope (in the Chair)]

Before I call the next speaker, if we are to fit in everybody who wishes to speak, contributions need not be longer than five minutes—perhaps less.

11:35

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to sit under your chairmanship, Mr Chope, and having heard your instruction, I shall be very brief indeed.

Rather than list all the possible ills of public health and social deprivation found in my constituency, I shall focus on two topics—both thematic—in what I hope will be the first of my many contributions on this subject. I shall make a comparison between the coastal towns represented by hon. Members in the Chamber today and the experience in the rust belt of America—those aging industrial towns in the mid-west that, after their primary industries declined sharply in the middle of the century, had to go through a reinvention, a renaissance, almost a renovation.

A report was produced by the Brookings Institution, which is a centre-left think-tank. I do not always read centre-left think-tank publications, but on this occasion I thought it was worth while. The report, “Restoring prosperity”, it is worth reading in full. When I read it, I see my constituency and, I suspect, those of other hon. Members. That report states:

“Suffice it to say that each forgotten city has been accused of being the regional or even national ‘capital’ of one social ill or another. Such stories have a profound and harmful impact on the city’s collective mindset because they shape how local people see themselves. According to…a professor of American Studies at Youngstown State University, residents of highly stigmatised cities have ‘come to expect failure.’ This is a vicious cycle because as individual and collective expectations about the city consistently diminish, citizens become less hopeful and less likely to engage in civic affairs, thus decreasing civic capacity and governing capacity. They are also less likely to demand adequate city services and less likely to question other forms of dysfunction. Many people lose the recognition that things can change, that they could effect change—even those who work in local government”.

That is a bleak portrait of the situation in which we find ourselves, but I recognise elements of that description in my town of Blackpool. I do not say that with any pleasure.

For many years, people in Blackpool have suffered blow after blow after blow, not least the decision on the casino, which seemed to symbolise the fact that the Government had turned their backs on the town. I returned from Wembley a few weeks ago on a chartered train that the football club had hired for us. It was a six-hour trip with no air conditioning; the carriage was boiling hot, but full of happy people who, for the first time in a good few years, were displaying what I would call civic pride. Their team had got into the premiership and at last something good had happened to their town. That had not happened because of something that the state, the Government or the council had done. It was part of something that the community had done and because of a football club that enjoyed terrific community support. There were more people going to Wembley than could be crammed into the Bloomfield road stadium. People attended from across the Fylde coast.

In the two minutes I have left, I shall not focus on what the Government could or should do, although I welcome having a dedicated Minister responsible for tourism, as well as the fact that the threat to furnished holiday lets has been diminished and the way in which public health is to be promoted through the council and social care functions are to be brought together through changes to the PCT and the council. Although the report by Professor Fothergill, to which my hon. Friend the Member for Boston and Skegness (Mark Simmonds) referred and which highlighted the importance of employment in seaside tourism, was a very important statistical document, it was not a toolbox, which is what we now need. We need a range of policies from which local communities can choose what is best for themselves. We perhaps need less central Government prescription and less stigmatisation. It is important to have these debates, but each time that we have one, it almost underlines the fact that coastal towns are seen as a problem. I almost start to tear my hair out at that.

Reading the Sunday papers, my heart sank when I read the comments of Janet Street-Porter, a lady for whom I generally have a lot of time. She is a very well qualified architect—not many people know that—and her views on 20th-century architecture in particular are fascinating and spot-on. However, when she heard that Blackpool was to apply for world heritage status, a bit of metropolitan sophistication seemed to come across her and her eyebrows raised somewhat. She described it as “bonkers”. She stigmatised the town yet again and said that when she next visited, she would bring a picnic. I shall say one thing to her: when she does bring her picnic up to Blackpool, could she please get in touch with me? I would happily take her round Blackpool and show her many nice places where she can have a picnic, many nice places where she can eat, and many nice places—including one in the constituency of the hon. Member for Blackpool South (Mr Marsden), which has the nicest bed and breakfast in the country, in my view—where she can happily stay.

All Members of Parliament, when we talk about our seaside towns in this Chamber, need to focus not just on the negative things where we come top—I am talking about bad social consequences, social ills, deprivation and so on—but on the good things that happen. That is why it is good that in a debate on coastal towns, I can talk about the great opportunities that Blackpool will have in the next year in the premiership. Let us focus on the good things that happen in our seaside towns, not just on the negatives. I hope what when we next debate seaside towns, I can report back on Janet Street-Porter’s visit. Given that I have a few minutes less than I had hoped for, I shall leave it there.

11:42

[Dr John Pugh (Southport) (LD)]

I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on starting this important debate. One of the more useful things that I did in the previous Parliament was persuade the unwilling Chairman of the Select Committee on Communities and Local Government to do a report on coastal towns. I guess we could describe it as a relatively seminal report in so far as it provoked a number of other measures. We discovered, as hon. Members have already exhibited, that not all seaside towns are the same, but there is a family of problems that most of them appear to have.

One of the problems is transport. Most of the towns evolved in the age of the train; often, they have now lost the train and badly need a road now. There is a lack of quality employment, or a lack of the right mix of employment, and in many seaside towns wage levels are surprisingly low. There are the housing problems to which hon. Members have alluded, particularly in connection with HMOs. The hon. Member for South Thanet (Laura Sandys) might be aware that housing legislation on HMOs has been tightened up quite recently, but councils often lack the resources to administer and police such measures. There are issues that I think will affect the constituency of my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) with regard to licensing, nightlife and precisely what that does to a resort’s family environment.

In many resorts, there is clearly a severe demographic imbalance. I remember that one of the more disturbing aspects of our Select Committee inquiry was the discussions that we had with youngsters, some of whom I think lived in Kent. They were talking about leaving their resort and took that as axiomatic—when they got employment in the future, they would not work locally.

Of course, there is also the problem of coastal erosion, although coastal erosion is a mixed bag. The hon. Member for Sefton Central (Bill Esterson), who spoke recently about the loss of his coast, might be aware that almost on the same night that the material was lost from his coast, it appeared on mine. If any hon. Members are short of a bit of beach, please come to Southport and we might be able to help you out.

We found that lacking in many seaside resorts—this was a general conclusion—was a clear vision of where they were going and the political will to deliver on that. People ought not to underestimate the difficulties of managing change in seaside resorts with a largely elderly population. However, in the inquiry we did find many instances of genuine success and successful regeneration. I remember visiting Whitstable, where the regeneration seemed to be almost entirely based on fish, but as it is extraordinarily tasty and the restaurants are good, that seemed to be a very successful model. As I am sure many hon. Members know, Southport has become a classic resort. Other resorts were not quite certain of the direction in which they were going—an example of that was Margate: one lobby in the town wanted the old seaside environment to be recovered and restored, whereas another looked towards cultural developments associated with the artist Turner and more highbrow appeal.

Complementary to the report, and something that made an important difference to people’s thinking, was the BBC programme “Coast”. It started as an Open university, rather anoraky sort of thing, but it ended up being phenomenally successful and opened the eyes of many people to what the English coast offers.

Despite what we have heard today, the upshot all that activity was relatively positive. The Government, having first ignored the Select Committee report, came back a second time when asked to do so by a persistent Chairman and put some money on the table. I am referring to the Sea Change money, which I think amounted to a pot of £60 million. There was much activity in and around this place; there were many conferences; the relevant all-party groups sprang to life and there was much talk about the regeneration of the seaside. Then, come the election, there was even more activity. A lot of political attention is always paid to coastal towns, because for some peculiar reason, they end up being political battlegrounds. In fact, quite a few coastal towns—happily not my own—changed hands at the last election; I am thinking of Eastbourne, Hastings and others. Post-election, however, surely we have everything to gain by acting collectively over the next five years, because—strangely enough, in these dark and recession-ridden times—there is a great deal of hope around.

We are experiencing a genuine increase in inbound tourism in this country. It is a no-brainer for the Treasury that if it encourages inbound tourism, that is a win—a plausible win—in terms of the balance of payments and taxation. That is not a vain hope, because the Sheffield Hallam study, which the hon. Member for Boston and Skegness referred to, showed that in many places there is considerable scope for regeneration and genuine economic progress.

There are genuine concerns as well, though. One of the big problems for coastal towns, emphasised in the Conservative paper, “No longer the end of the line”, is transport. That is a big issue for many places—Southport, Hastings and all sorts of places. Looking at what is happening to the national budget at the moment, very few of us can be optimistic that the bypass that was always going to be built will appear soon. Also, there is the loss of the regional development agencies and the construction of the embryonic local enterprise partnerships. Those may be dominated by urban interests, and funding that might be regarded as coming our way might go elsewhere. I would welcome the Minister’s view on what will happen with the Sea Change money.

Before the election, all parties promised much. The Conservative pamphlet, “No longer the end of the line”, promised lottery funding for private piers. I think that we have to recognise that that probably will not happen, but the Conservatives did emphasise a new approach to local transport, which I think in constrained times we might want to consider. They also promised, or talked about, business rate discounts, which are certainly worthy of investigation.

The key test will be how the Government manage the reduced funds and, in particular, what happens to the Sea Change money. Those of us in a seaside community, if I can describe us in those terms, do not want to go back to square one, but at the moment it is not particularly clear what the next steps will be. The debate initiated today by the hon. Member for Boston and Skegness has done an enormously good job in focusing the Government on the fact that there needs to be a plan for the next steps. We need a degree of strategic thinking. That has gradually evolved and, in the future, it needs to be built on.

11:49

[Mr Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in the debate. I congratulate my hon. Friend the Member for Boston and Skegness (Mark Simmonds) on doing so much to highlight the needs and interests of coastal towns by producing the report “No longer the end of the line” and through his efforts today. Not only is he handsome and charismatic—he particularly liked that phrase when I asked him what I could say about him—but he has made a fine speech and he does a fine job on behalf of coastal towns.

Rather like my rugged friend, coastal towns sometimes fail to recognise all their qualities, but they are in fact tremendous, positive centres. To pick up on the point raised by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), we really need to celebrate coastal towns and what they do. As my hon. Friend the Member for Boston and Skegness said, they employ many people and they are great centres. Although there are issues about houses in multiple occupation and other aspects of housing, coastal towns often provide relatively low-cost housing, and they have acted as havens that people can live in and enjoy, albeit that that was the result of the previous Government’s failure to build houses elsewhere.

Overall, coastal towns are tremendous places to live, and the people who live in them love them. Sometimes they get a bit down, because coastal towns can be a bit inward looking; they can slag themselves off and see themselves as not being tremendously interesting or dynamic, and young people often look to leave. However, it is easy for people in coastal towns to underestimate the strength of what is on offer and their economic future, and I agree with what other hon. Members have said in that respect.

Given the state of the public finances that we have inherited from the previous Government, it will fall more than ever to local people—town councillors, county councillors and entrepreneurs—to step up to the mark. The Government are constrained in what they can do to promote coastal towns, and they need, most importantly, to get out of the way of entrepreneurs who want to make money and to build businesses, profits and employment. The incoming coalition Government have therefore done a number of things significantly to boost coastal towns, as has been said.

I want, however, to focus on an essential component of a successful seaside town economy—the amusement arcade. Colleagues smile, which I am sure is partly because they have enjoyed time in amusement arcades and because of the quintessential nature of such places. However, arcades are an important part of what is on offer in coastal towns; they provide a focus, and many retailers around them rely on the footfall that they bring with them.

Typically, arcades are small family businesses, and many have been operating for generations. The traditional amusement arcade machine sector is extremely fragile, and there has been a tremendous loss of jobs over recent years. The sector has experienced an average 21% reduction in revenues since 1 September 2007, and a lot of that dates back to the Gambling Act 2005, although, to a small extent, it also reflects the impact of the smoking ban and the downturn. Every week brings further business closures and redundancies, damaging local economies, communities and tourism. The British Amusement Catering Trades Association estimates that at least 216 arcades have been lost, representing 1,350 jobs.

Recent arcade machine manufacturing figures give an indication of the future for arcades. If arcades do not invest in new machines and do not replenish and renew their offer, they will be less attractive, so the manufacturing sector acts as a real indicator of their future business. Recent manufacturing figures indicate that annual machine production—that production takes place in this country and is an important employer—has fallen from 55,000 machines a year to 12,000. Two associated companies have been forced into liquidation this week, so we need action, and we need it soon.

William Clark, a constituent, was born in a flat above the Withernsea amusement arcade that his father opened 50 years ago, and he now runs 28 arcades in Yorkshire. He told me:

“We had 500 employees 3 years ago. Now we are down to 220. Three to four years ago I spent £1.4 million on new equipment. Last year it was £100,000…The cause of this was the provisions of the Gambling Act”—

which was brought in so thoughtlessly by the previous Government—

“preventing amusement arcades from having £2 stake machines. If the intention of this was to ban these machines, why are they still allowed in bookmakers, a far harder gambling environment?”

Why did the previous Government pick on family amusement arcades and boost hard gambling centres in betting shops?

Mr Clark says that owner-operators are an integral part of the local community and economy. As small business owners, however, they are hit disproportionately by the weight of regulation. He says:

“The new regulation and bureaucracy is forcing owner-operators out of business. I pay approximately £70,000 in regulatory fees alone.”

That is because of the quango that regulates this area. The coalition promised to do something. Mr Clark says:

“David Cameron said before the election that he supported the reintroduction of the £2 stake machine. We are asking for the government to deliver their promise. If they got their finger out Seaside arcade operators could benefit this summer.”

There are so many issues on which we need long-term thinking and vision. However, on this issue, which is absolutely at the heart of the business community, employment and what is on offer in coastal towns, which depend on tourism, the Minister could do something soon, and I ask him to do so.

[Several hon. Members]

rose—

[Mr Christopher Chope (in the Chair)]

Order. We have now completed the list of speakers who gave notice to Mr Speaker in advance. We have about 15 minutes, and about six Members are still seeking to catch my eye.

23:56

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

I will try to be brief and not to repeat what other hon. Members have said. I congratulate my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) because he hit the nail on the head in terms of my responsibilities in the town of Fleetwood. However, I should add that, although a recent study somehow missed Fleetwood off and instead included it in something called Greater Blackpool, anyone who has ever been to Fleetwood will know that Mr and Mrs Fleetwood do not regard Blackpool as either greater or a part of them. That, however, goes to the core of the issue.

Fleetwood is a 19th century town. It was once at the end of the west coast main line, and we actually have a North Euston hotel. The main line train from London used to come to Fleetwood to take the fish back to Billingsgate. The fishing industry was knocked out in the ’60s and ’70s. Since then, the town has somehow lost its heart. Today, what is left of the fishing industry—the inshore boats that face problems in other hon. Members’ constituencies, too—faces the consequences of the difficult balance that the Government will have to strike in terms of renewable energy. The fishing boats of Fleetwood are being laid up as a result of an increase in the number of wind farms on their territory. There is also a lack of any statutory compensation, and I find it incredible in this day and age that, even though fishermen are usually a one-man business, they have to negotiate compensation themselves when wind farms go up on their fishing grounds. I hope that that will be addressed nationally, and I know that other hon. Members feel the same way.

My hon. Friend the Member for Boston and Skegness (Mark Simmonds) raised other issues. There is real potential in coastal towns. For example, Fisherman’s Friend is an internationally recognised company in Fleetwood that exports to more than 100 countries. We also have a fish processing industry. Believe it or not, great articulated lorries come to Fleetwood from Hull, Brixham and all around the country night after night because of the skills of certain processing families, whose products are then transported out of Fleetwood to major hotels and restaurants. Those companies could expand and they say that they could take on more work.

Do hon. Members realise that we export 50 tonnes of whelks to Korea every year? Apparently, whelks are an aphrodisiac in Korea, and I would ask hon. Members to try them. [Interruption.] My experience of whelks is not too happy, I must say.

[Tony Baldry (Banbury) (Con)]

Were you successful?

[Eric Ollerenshaw]

There was certainly a lack of success.

I disagree to some extent with my hon. Friend the Member for Beverley and Holderness (Mr Stuart), who talked about freeing up businesses and deregulation. All of that will help, but even though our businesses can take on new people, we do not have the transport system. A railway line still exists, but there is no railway service on it. We have one major road—the A585—which is not dualled. We have actually got a tram and we are the end of the tram line from Blackpool, but the tram is not working at the moment because it is being upgraded to a supertram. The supertram may help with some aspects of tourism in the town, but there are inevitably delays to major projects and the repeated delays to the scheme—I hope that the Minister will take a look at it—have led to businesses closing down. They cannot wait that long.

What we need is, I think, the same for many coastal towns. The projects in question are not big infrastructure deals such as high-speed rail. Small investment is needed, but that small investment could in some towns—particularly, as the hon. Member for Southport (Dr Pugh) said, when it is for transport—bring extra jobs and release potential.

12:00

[Mr Alan Campbell (Tynemouth) (Lab)]

I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on securing an important debate so early in the new Parliament. I have represented a coastal seat in the north-east since 1997 and I am pleased to find what genuine understanding new Members have. Let me warn them, however, that their predecessors also understood the problems of seaside towns, but without action to satisfy the huge demands of local residents and visitors there is a price that may be paid.

If I understood the hon. Member for Blackpool North and Cleveleys (Paul Maynard) properly, he was talking about some specific policies for seaside towns that might be implemented locally, as opposed to the more generic issues such as housing and health that we tend to discuss. I agree with him very much. I also agree with the hon. Member for Southport (Dr Pugh) that the first thing that seaside towns need to decide is what they are for. That is an important first step.

I wanted to make some brief remarks in the debate so that I could add a certain balance to some of the comments that have been made. As far as I am aware the previous Government did not sideline seaside towns. The pleas from the hon. Member for Boston and Skegness and others for a continued joined-up approach across Departments is evidence that that Government took seaside towns seriously. In 2010, whatever the problems of seaside and coastal towns—they remain great—they are nothing compared with those of 1997. The previous Government at least began to try to come to terms with the changes to the economy, which happened in a slow process over two or three decades. Those changes were not like a factory closure, in which thousands of people are made unemployed; they took the form of the gradual decline—in some cases the death—of seaside towns.

[Mr David Amess in the Chair]

In my constituency millions of pounds of public money went into Whitley Bay and elsewhere, and, importantly, that levered in a large amount of private investment. However, when the local administration changed in 2009 it looked exclusively to private investment, with the result that the regeneration stalled. I look forward, in a local and central Government context, not just to words that people will say about seaside towns, but to resources being committed to them.

We know the fate of regional development agencies, but I want to say something about their importance to seaside towns, or at least my constituency. There would not have been a new shopping centre in the centre of Whitley Bay without the important input of the RDA. The renewal of the west quay on the Fish quay in North Shields would not have happened without resources and encouragement from the RDA. Also, the regeneration of the Spanish City site, which needs to be completed, involved a significant amount of public money, which was brought in through the RDA, which understood its importance.

It is in that context that we need to pay attention to the infrastructure. It is true that much of the infrastructure of seaside towns is Victorian and Edwardian, but it is beyond the wit of private investors to come into my constituency and deal with, for example, the sea front, which stretches for two and a half to three miles. It would serve no profitable purpose for the private sector to come and do anything with it. That is why the public sector has a role to play. I just cannot agree with the hon. Member for Beverley and Holderness (Mr Stuart) that the best thing that government can do is get out of the way.

As to tourism, which is important, one of the first things that One NorthEast has done, regrettably but in many ways understandably, is to cut millions of pounds from the budget. That includes some of the sub-regional and regional tourism money. I hope that that money finds its way to local authorities, because it is important that we advertise a delightful constituency to visit and stay in. If anyone is coming to the north-east and wants to go to Hadrian’s wall, or do the castles visit and go to the Metro centre to shop—all things that I recommend—we want them to stay at the coast. We have to be part of the offer that is made. Unfortunately for local authorities, one of the first things that happens is that the tourism budget gets squeezed, because all sorts of other things appear to be more important. In my view, the public sector needs to do what it can do, such as attending to infrastructure—in Whitley Bay we have schools that are among the best in the country, which I must mention to counter what has been said about educational provision in some seaside towns—and the private sector must be encouraged to do what it can. I commend the excellent small businesses along Park View in Whitley Bay, which have got on with things—in partnership with the local authority, and, indeed, in wider partnerships.

I want to ask the Minister about two things. First, the Conservatives said in opposition—and I presume that what they said has been translated into the coalition document—that they believed that community asset transfer was an important part of regeneration, in particular for seaside towns. I think that it was part of their seaside town policy. Is that still Government policy? What will happen, for example, if a local authority is reluctant to go down that route? Will central Government give it a push in one way or another? I commend the fantastic work that Culture Quarter is trying to do in Whitley Bay; but it is very frustrated sometimes by lack of support from the local authority.

Finally, does the Minister agree with the hon. Member for Boston and Skegness about the importance of the environment? The hon. Gentleman took a view about green and wind farm technology along the north bank of the Tyne, which could create thousands of jobs; would the Minister prefer that to the old industries such as, for example, dismantling ships, which have a huge environmental impact, and in the case in question are only a few miles from seaside villages and towns that we hope are in for a very good summer?

[Several hon. Members]

rose—

[Mr David Amess (in the Chair)]

Order. It is very unfortunate that six colleagues still wish to speak but there is not enough time for them all to do so; I understand that they have made the effort to be here. We have only three minutes before the winding-up speeches, and I am told that we have not heard from the south-west, so I shall call the hon. Member for St Austell and Newquay (Stephen Gilbert). If other hon. Members are minded to intervene on the Minister, perhaps he will allow it.

12:07

[Stephen Gilbert (St Austell and Newquay) (LD)]

It is a pleasure to take part in the debate and I congratulate my hon. Friend the Member for Boston and Skegness (Mark Simmonds) on securing it. I shall be very quick, as time is pressing.

There are two issues that I hope the Minister will address affecting people in Newquay, which is part of the new constituency that I am so proud to represent. The first is licensing policy. It seems that, as our seaside towns have changed from family destinations to places where younger people go to enjoy themselves perhaps a little too much on some weekends, the licensing regime has not kept up with the speed at which businesses can open, shut and reopen, often flouting the decisions that local authorities make when they finally get round to intervening. In particular I am thinking of the requirement not to solicit objections to bars, nightclubs and, indeed, lap-dancing clubs. It is a bizarre incongruity that in the planning context the local authority can seek people’s views, but in the licensing context it cannot.

Finally—I hope another hon. Member may have a minute or two in which to speak—I want to mention the issue of resourcing following footfall. My hon. Friend made the point that in Blackpool, 18,000 people go to the health care centre, but there is no additional funding. The population of Newquay goes from 20,000 in the winter months to 120,000 in summer, but there is no extra resourcing for policing. That gives rise to a question about how we sustain proper local services in periods of additional population pressure.

12:09

[Mr Gordon Marsden (Blackpool South) (Lab)]

I congratulate the hon. Member for Boston and Skegness (Mark Simmonds) most warmly on securing this debate on a subject in which, as a seaside Member, he has a long-standing interest. Although he was too modest to acknowledge it, he was the author or instigator of “No longer the end of the line”, which was mentioned earlier.

I declare several interests. Apart from speaking for the Opposition on the subject, I have a long-standing interest in coastal towns; I was carted off to Blackpool at an early age and saw some of the amusement arcades, about which some have waxed eloquently. When I was first elected to the House in 1997, I saw the need on the Labour Benches to establish a Back-Bench group of seaside and coastal MPs. Lastly, I had the pleasure recently, as the honorary president of the British Resorts and Destinations Association, of visiting the constituency of the hon. Member for Boston and Skegness, when the association held its annual conference at Butlins. I was delighted to see that Butlins is as thriving as it was when I first went there 40 years ago.

Coastal towns face a broad range of challenges. I call them challenges because that is what they are; it is not a negative term, nor is it necessarily positive, but it encapsulates some of the points touched on by the hon. Member for Blackpool North and Cleveleys (Paul Maynard). We know the challenges. In defence of everything done by the Labour Government, I have to say that when my hon. Friend the Member for Tynemouth (Mr Campbell) and I and many others who represent seaside and coastal towns were first elected in 1997, it was after a long period of neglect by our predecessors of the particular problems of seaside and coastal towns. We felt—it is clear from everything that has been said today that new Members feel the same—that a strong and specific light should be shone on the whole question and on the particular problems of seaside and coastal towns.

A light has been shone in recent years on rural areas, on coalfield areas and on inner-city areas. It needs also to be shone on seaside and coastal towns, not least because of what I would describe as the pepper-pot deprivation that they suffer. It is really important that the matter is considered by Ministers across Government. As others have rightly said, it is not a challenge that can be dealt with by only one Department; it has to be dealt with across Departments. That is why the points made by the hon. Member for Southport (Dr Pugh) and others about cross-departmental committees are so important.

A difficult double message needs to be put across in relation to seaside and coastal towns, and Members have touched on the dilemma. We need to discuss their specific problems—for example, deprivation in some of the inner wards of my constituency and, indeed, that of the hon. Member for South Thanet (Laura Sandys), is as strong if not stronger than in some inner-city areas, but that is often masked by grant procedures and formulae because of the larger areas covered by the latter. The Labour Government began to get to grips with the problem, but it was hell for civil servants. No doubt they gritted their teeth when dealing with the minutiae, but they got to grips with the procedures and formulae by considering smaller areas such as sub-ward areas. That was crucial.

The difficult double message is that although seaside and coastal towns have specific problems, they are also worthwhile places. As the Fothergill report shows, they have generated increases in tourism employment over the past few years despite those problems. Those points need to be put across strongly, but it is also a question of seeing seaside and coastal towns in the round. I know from my experience of Blackpool that people too often thought that not enough was being done for the residents, or that not enough was being done for tourism businesses. The truth of the matter is that if seaside and coastal towns are to flourish, things need to be done for both; and what is done for residents and for tourists must be integrated. After all, if residents do not feel good about their town, what sort of welcome will they give the tourists, and how will the tourists feel about it? There are big and important questions when it comes to not having silos and working across Government.

If I have a critique of “No longer the end of the line”, produced by the hon. Member for Boston and Skegness, it is that the document is often too generic—or too Pavlovian—in some of the reactions to Government intervention. When producing his report, the hon. Gentleman made a lengthy coastal tour, which was a good thing. In it, he speaks of Blackpool’s contribution to regeneration with the construction of the Spanish steps, but where did that money come from? I can tell the House that it came from the RDAs, the Sea Change programme and other Government initiatives. We should keep that in mind.

A lot has been said about the so-called neglect of the previous Government, although the hon. Member for Southport was good enough to acknowledge that the Sea Change programme was taken up by them. Indeed, I was pleased to play a part in persuading my right hon. Friend the Member for Barking (Margaret Hodge), then Minister for Culture and Tourism, to put the programme in place. Members are right to pass the question back to the Government, because in our “Strategy for seaside success” document, published in March 2010, we specifically mentioned the importance of continuing Sea Change or something of that nature. It has been an enormously important pump primer.

It is said that the sun often shines in seaside towns, and we did start to fix the roof in seaside towns while the sun was shining. In our March 2010 report, we say that the Northwest Regional Development Agency had invested more than £200 million in coastal towns, and that the Heritage Lottery Fund had given £234 million to 864 projects in English coastal resorts since 1997. Money came also from the working neighbourhood fund and the new deal for communities. In that document, we made a series of proposals, including new licensing rules, focusing on stronger co-operation, extending Sea Change and focusing on the new low-carbon economy.

None of those issues are party political; they have to be faced by civil servants, policy makers and Governments. The present Government need to do that, but they will not do it well if they start with cuts—a point made by the hon. Member for Beverley and Holderness (Mr Stuart) and touched on by the hon. Member for Boston and Skegness—especially if seaside and coastal towns get double hits in the cuts compared with other areas. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), was candid enough to admit that those with the greatest problems were now getting the greatest hit in terms of the funding streams to seaside and coastal towns. That is not something that seaside and coastal towns want to hear, nor should they.

I return to the general comments made today by those on both sides of the Chamber. We heard some good and useful contributions and everyone focused on community involvement. However, that needs pump-priming; it needs things to be done. I have some wonderful community activities in my constituency. Donna’s Dream House is amazing; it was set up for terminally ill children and is known countrywide. The Royal British Legion has its poppy song. However, it is a fallacy to say that such activities do not need pump-priming or some Government support. For example, if we do not have efficient, accurate and specific Government intervention on such things as HMOs—in March, the previous Government proposed good legislation on HMOs, which the present Government should consider—we will not get the results that are needed. If we are to have a big society, voluntary and charitable organisations will need a leg up in seaside and coastal towns, and not a pummelling down from local government or the Treasury through funding cuts.

There are new ideas for the Government to consider. Some were put forward by the previous Government, particularly those to do with Total Place. I would like the Government take up what was said about the funding of seaside and coastal towns but also to consider the specific points made this morning about Sea Change and the other measures needed to ensure that community cohesion in those places continues, and to improve on what was done under the previous Government.

12:19

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

It is good to serve under your chairmanship, Mr Amess. Thank you very much for inviting colleagues to intervene; I very much appreciated that invitation.

I thank my hon. Friend the Member for Boston and Skegness (Mark Simmonds) for bringing this subject to the Chamber. The fact that 10 Members have contributed to the debate and another six would have liked to is an indication of its importance. My hon. Friend tried to hide his light under a bushel, but failed because several hon. Members shook that bushel. He was, of course, the author of “No longer the end of the line” and has been a vigorous exponent of his cause for a long while. I thank him for that and for the eloquence of his contribution today. I shall do my best to answer the questions put by him and other hon. Members, but I will have to keep an eye on the time and be mindful of possible interventions.

As several hon. Members said, we should not talk down either the continuing appeal of our seaside towns or their potential. Anecdotes were related during the debate, but objective evidence was provided by Sheffield Hallam university, with the support of the Department for Communities and Local Government, which showed that coastal and seaside areas still have a very strong appeal and great potential for the future. That report, which was published last month, found that our seaside tourist industry is alive and well and continuing to grow. I will not repeat the figures that were given in the debate because we are running short of time. Let me make it clear, though, that the coalition Government recognise that coastal and seaside towns face many real problems. They all have unique histories and often differ widely in their economic, social and physical situations and indeed in their history and reputation. None the less, they face some common challenges, which include poor transport links, a dependence on low-wage and low-skill jobs, high levels of benefit claimants, low educational attainment—there is a mixed view on that, but it is a serious problem in some places—and shared private rented housing.

The Government believe that such challenges are best tackled through local solutions. In response to the hon. Member for Blackpool South (Mr Marsden), I am not talking about completely turning off the tap. The point at issue here is who decides how the money is spent. After considering example after example, we are clear that local areas need to be free to determine their own future. They need to be freed from central Government direction and regulation. Let me pick up on two points that were made in respect of that matter. The new Government will give each local authority the capacity to have its personalised approach to HMOs, rather than a blanket central prescription. That is the way to target what needs to be done without imposing burdens on those who do not need them.

My hon. Friend the Member for Redcar (Ian Swales) mentioned the planning system and the way in which it might result in projects being imposed on an area. We are devolving the planning framework to local authorities, so that they can establish their local plans and have the freedom to take those decisions. We are putting power into the hands of local people and local communities, which is very much at the heart of the big society.

[Martin Vickers (Cleethorpes) (Con)]

I accept what the Minister says about intervention and passing down power to local authorities. Will he also tell us about the powers that local authorities have in relation to Government agencies, such as the Environment Agency and Natural England, whereby they are mandated to do something, rather than given advice?

[Andrew Stunell]

We are, of course, having a cull of quangos. I cannot answer the hon. Gentleman’s specific point, but if he wants to draw my attention to particularly unhelpful prescriptive measures being imposed on his local area, I would be very happy to hear from him.

That leads me nicely on to the fact that we are publishing, probably in December, the localism Bill, which will devolve greater powers to councils and to neighbourhoods so that local communities can shape their own future. We want to give local communities, including those on the coast, the tools and incentives to support business growth and to create an enterprise culture. We recognise that coastal towns have unique challenges and that they need locally tailored solutions. It would be a mistake for us to say, “Here is the guide book that will apply equally to all the resorts in Britain.” That is why we are inviting local authorities and business leaders to come together to form local enterprise partnerships to replace the existing regional development agencies. The Secretaries of State for the Departments for Communities and Local Government and for Business, Innovation and Skills have already written to local councils and business leaders inviting them to come forward with proposals. I know that a number of coastal local authorities are already considering proposals that would take them into local enterprise partnerships. The list with which I have been provided includes the Fylde coast in Lancashire, which may or may not include Fleetwood—incidentally, I will not be trying whelks any time soon, given what has been said—Bournemouth, Poole and Dorset and Portsmouth, Southampton and Hampshire. I am sure that others will be doing the same. Those local enterprise partnerships will empower groups of councils and businesses working together to provide the strategic leadership that their areas need to set out local economic priorities.

[Dr Pugh]

As much as I subscribe to the doctrine of localism, there is a degree of pump priming needed. Most local authorities carry huge deadweight costs—if I can put it like that—because of their social services budget, and have little financial freedom to carry out some of the big infrastructure projects that are very much part and parcel of regeneration. That specific problem does not seem to be directly solved by the localism agenda.

[Andrew Stunell]

My hon. Friend anticipates the next paragraph of my speech, which talks about the £1 billion regional growth fund. I do not know how we do that, but there must be some kind of electricity between us. The Government intend to ensure that local areas have the capacity to deliver on their priorities. We are taking away the walls or barriers between the different funding streams that local authorities receive so that they can set their own priorities. I was astonished to find that there were 115 different income streams launched from my Department to local authorities. We are trying to break down those walls, so that the money that arrives in the vaults at the town hall can be spent in the way that the elected representatives at the town hall believe is best.

A number of other points were made, but let me reassure all hon. Members that we intend to maintain the existing co-operation between Departments and I shall look hard to see what opportunities there are to strengthen it, and the Minister with responsibility for tourism will, I am sure, do the same. We will retain the concept of drawing together all the different public service funding streams in an area, and ensure that we get the maximum value out of them.

The hon. Member for Tynemouth (Mr Campbell) spoke about community asset transfer, and we are keen to ensure that such capacity is there for voluntary and community groups. I believe that the localism Bill will contain specific provisions that open the door to that.

I am looking at the time; I do not have very long and I have not answered all the questions. If hon. Members want to reinforce their points by writing to me or getting in touch with me, please do so and I will do my best to give informative answers.

If we are to ensure that coastal towns have the resilience that they will need in the tough economic times that lie ahead, they must diversify their economies and widen their economic bases. That means attracting a range of employers offering jobs at different skill levels and in new sectors. We need to ensure that coastal towns become more attractive places for people of working age, so that not everybody thinks that people are only born in such towns or die there; we must show that there is something to do in between times. That is an important part of the economic thinking of coastal towns—

[Mr David Amess (in the Chair)]

Order. We now move to our next debate.

University Funding (Yorkshire)

Tuesday 20th July 2010 Westminster Hall

12:30

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Mr Amess, Huddersfield is not a coastal town, as you might have noticed, but I am very fond of all things Whitby and Broadstairs. So that is a declaration of interest in the subject of the last debate.

This is the first Westminster Hall debate I have secured in the new Parliament and I do not apologise for returning to a subject that is absolutely crucial to all our regions. I say “all our regions”, but I remember the Chancellor’s recent speech, in which he said:

“Between 1998 and 2008, for every private sector job generated in the north and the midlands, 10 were created in London and the south.”—[Official Report, 22 June 2010; Vol. 512, c. 176.]

In so many ways, we are two countries. We are, first, a country of the regions outside London and the south; and secondly, a country of London and the south. I understand that when the future of the regional development agencies was being discussed, it seemed that London, the south-east and the south-west would lose the particular focus that had been put on them. Is it not true that we must address the imbalance between the regions in terms of employment and innovation?

Many years ago, when Sir Keith Joseph became the Secretary of State for Education he gave a reading list to all his civil servants and junior Ministers. My approach in my speech today will be rather like that. Furthermore, I would like anyone who takes note of this debate to appreciate that Yorkshire and Humber is a microcosm of all the regions: the problems that Yorkshire and Humber has are similar to those that all the regions outside London and the south-east have.

I would like to refer everyone to the recent reports from the National Endowment for Science, Technology and the Arts and the ERA Foundation about the productive capacity of our country and innovation. In particular, the NESTA report sets out four scenarios for the future of Britain’s productive capacity, which go to the very heart of the concerns I am expressing today about the funding of universities. In doing so, the report is concerned with how we will make a living and achieve a good standard of life for the citizens of this country.

The first scenario that the NESTA report sets out is that we carry on doing more of what we are already doing—we carry on as we are. However, all the testing that NESTA has done of that scenario shows that it will not work; it will not increase productivity and jobs or get the economy moving again. The second scenario is that we invest entirely in and focus completely on a rebirth of manufacturing. Although that scenario is not entirely discounted, it is certainly not seen as an overall answer to the question of how we can re-energise our productive capacity.

The NESTA report focuses on the third and fourth scenarios for the future. They involve changing the whole nature of our economy, turning it into an innovative one in which we seriously apply innovation to all its sectors. On reading the NESTA report, time and again we find that the real agent for delivering such change is our universities, and that if we do not use them to take a lead and innovate, we will not achieve the increase in productive capacity that we must achieve if our constituents are to have “the good life”.

The ERA Foundation report is also interesting. Many people do not know this, but the royal commission for the great exhibition of 1851 made so much money that Prince Albert was able to invest in buying most of Kensington. Imperial college, the Victoria and Albert Museum and other such institutions are built on that land, and they have the freehold and receive the rents. Through the ERA Foundation, they provide a lot of money—between £60 million and £80 million, I think—for research into productive capacity, manufacturing and much else.

The ERA Foundation report, which came out at about the same time as the recent NESTA report, puts more emphasis on manufacturing than the NESTA report does, but like the latter it says that manufacturing must be highly innovative. Indeed, it says that manufacturing must be led by innovation and by small and productive new enterprises. Again, universities figure prominently in improving our capacity to deliver. So when I talk today about the particular challenges in Yorkshire, I am actually talking about something that is good for our whole country—investing in higher education.

The data show that we invest about 5% of GDP in education. That figure is a little higher than the average for OECD countries but it is not the highest—I think the average is about 4.6%—so we should not get carried away. Even with all the work and investment in education that has gone on during the last 13 years, we have still not become the OECD or world leader in investing in education.

I used to chair the Education Committee, or whatever else it was called during the 10 years I chaired it, and time and again we looked at the increase in per capita spend on education. Of course, the great fashion—it was also absolutely the right fashion, in that it was an evidence-based policy—has been to invest in early years education: education of the youngest age group through to school-age. Later on in the age range, one sees that investment in higher education has been less than in education generally.

Higher education has therefore been fighting to do more with less for a long time, and people must bear that in mind. Those who campaigned against what the Labour Government called “variable fees” and what the then Opposition called “top-up fees” should bear it in mind that the reason why I was always totally in favour of top-up fees and why the Committee eventually came out in favour of them was that we could not see any other way of getting a high level of investment in university teaching and research salaries. Indeed, Mr Amess, if you look at the figures you will see that nearly all the money that has been raised from the top-up fees fund—whereby people make a payment towards their fees, capped at £3,000—has gone into the salaries of researchers and lecturers. British universities have been greatly blessed by having that ability to pay a decent wage, so that they can attract and retain the top talent.

Mr Amess, I want to refer you and everyone else here to three other pieces of reading. The first is the recent speech on higher education by the Secretary of State for Business, Innovation and Skills; the second is a speech by Professor Malcolm Grant, the president and provost of University college London; and the third is an article by Professor Steve Smith, the president of Universities UK. I hope that people will read those speeches and articles and balance them against each other. The Secretary of State made a good and balanced speech, saying that we must do even more with less. He also indicated that there were certain ways in which we can raise funding and he spoke about how that funding is retained—or not retained—in universities.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I should first declare that I worked for Leeds university for 11 years and did a lot of work on open innovation in conjunction with other Yorkshire universities. I examined a lot of research on universities, which I will elaborate on later if the hon. Gentleman gives way again.

Sometimes, the debate is about whether some universities should be privatised, but in fact, only 3.6% of the income of the American Ivy league universities comes from the private sector, and British universities already receive 2.8% of their income from the private sector. Having listened to the hon. Gentleman’s arguments about university funding, I just want to say that privatisation of universities is not the route to go down.

[Mr Sheerman]

I will certainly not be advocating the privatisation of universities in my speech. Some privatisation has taken place already. The university of Buckingham was much vaunted and much publicised, but what does it do? It specialises in the easy stuff—training lawyers and accountants. At the moment, all the private sector seems to be choosing the easy, soft stuff on the margin. I have certainly not seen anyone come forward and say, “We’re going to start a proper university that teaches the tough, expensive subjects.” I agree with the hon. Gentleman.

The Secretary of State’s speech was good, but it failed to address innovation, universities’ role in leading it and recent partnerships between universities and the private sector—partnerships with small and medium-sized enterprises, with manufacturing and with the service sector, which employs 57% of the people in my constituency. Only 10% now work in manufacturing; 33% work in health, education and the local authority. Universities have good partnerships with SMEs country-wide and, interestingly, worldwide. Universities working in partnership have a role to play. The Secretary of State underrates their key role in future investment in this country. This is my most serious point: if we are going to haul our country properly into the 21st century and compete with the productivity of Germany, France and emerging countries such as India and China, we must use our universities in a way that we have not done in the past.

This is not the time to cut back; this is the time to invest in universities and to increase the money flowing into them. I have talked to all the universities in Yorkshire. A 25% cut will mean tremendous staffing cuts. One leading university in a major city told me that it will mean cutting 1,000 jobs in the city. A university in the next largest city—hon. Members can guess from the size which cities I am talking about—says that it will lose 600 jobs. Those figures are from one university; both cities have two universities. The 25% cut in the higher education sector may not be a disaster in the short term—perhaps we will be able to live with it for a while—but it will have enormous long-term effects on our industrial future.

I will not speak for too long, as I want to give the Minister a chance to respond. Yorkshire’s universities boost the region’s economy by £3.68 billion and play a critical role in generating jobs, creating innovation and driving enterprise. They are the most important source of innovation and partnership in the regions. That is recognised across parties; I am not making a narrow party political point. We are discussing a potential decision arising from the present state of the economy.

It does no one any good to exaggerate the state of the UK economy. I refer people to a recent article by Sam Brittan, a known Conservative, the brother of a well-known Conservative politician and a supporter of the coalition. He says that it does nobody any good to exaggerate how bad the UK economy is, and shows carefully that the exaggerations are not true. We have gone through an international meltdown of financial services and a world recession, but Britain has not come out as badly as people think.

I know that the coalition Government like to exaggerate, because that is what all new groups do when they take over. They say, “We’ve looked at the books, and it’s so bad we’ve got to take draconian measures.” That does not help anybody. We must take a realistic view of what we can and cannot afford. I could make myself unpopular outside this room by saying this, but if I were seeking to reduce overall expenditure, I would cut other areas that are perhaps more sensitive in the public imagination—health, education and other Departments—long before cutting into the potential of our productive sectors and our capacity to grow through the higher education system.

We have two countries, as I said. To make things more dramatic, I return to the provost of University college London. Unfortunately, he echoed quite a deplorable comment made in a speech by an Education Minister in the present Government who was a good member of my Select Committee. That Minister said that he would prefer an Oxbridge graduate with no teacher training qualification over someone from a rubbish university with a postgraduate certificate in education. I thought that that was a terrible remark. Malcolm Grant fell into the same trap, saying that research money to rich universities should not be cut and that he would rather see “pile ’em high and sell ’em cheap” universities go to the wall.

Malcolm Grant should visit the university of Huddersfield, which is a cracking good, innovative university. We do not pile ’em high and sell ’em cheap; we emphasise quality. Recently, I went to an end-of-year exhibition by our design students that ranged from high fashion right across to automotive design. People graduating from that university are snapped up all over the world for their talent. I have here a document announcing a new programme in Huddersfield: “Towards an alternative nuclear future: Capturing thorium-fuelled ADSR energy technology for Britain”.

I say to the provost of University college London that there are nine universities in Yorkshire and 43 in London. If I were considering the economic regeneration of the regions, I know what I would do if cuts had to be made. I do not want to cut anyone’s money; I do not want to close universities serving communities in the most challenged parts of London. However, if push came to shove, I would move 10 of those universities to other places in the country. That would ease congestion in London and make a real difference to some towns that do not have the privilege of a higher education institution.

The universities sit at the centre of what I call my big society. When I go back to my constituency, what is the centre of my big Huddersfield? It is the university. The university employs the biggest and most talented group of people, a lot of whom are well paid. Many live locally and are leaders in the town’s civic pride. That is important to a big society. Also, they are often close to the third sector. I have been a social enterpriser all my life—I am told that I have started about 48 different social enterprises—but we in the third sector are in danger. Despite what the coalition Government have said about being in favour of the third sector, it is going out of business rapidly. The people who used to fund social enterprises and the third sector have either been abolished or think they are in danger of being abolished, and the funding used by social enterprises is unavailable. Many of them are going out of business or battening down the hatches until we find out what the alternatives are to the funding we have become used to.

We need to be a highly innovative nation and to invest in higher education. There ought to be someone—I hate to use the word “tsar”—who is responsible for innovation in every university campus. They should report directly to the Secretary of State on how much innovation there is, how successful it is, and what partnerships there are. I approve of all that. There needs to be new ways of doing things more efficiently and effectively, and of using resources better. I believe in all that, but for the future of our country, our regions and Yorkshire we must move steadily and steadfastly. We must invest in higher education, in innovation and in our future.

12:50

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing the debate. In the last Parliament, as Chair of the Select Committee on Children, Schools and Families, he was a very authoritative voice on all aspects of education and he brings that knowledge and skill to today’s debate. I am very sorry that my right hon. Friend the Minister for Universities and Science is not here, but as I am sure the hon. Gentleman is aware, he is attending the Select Committee on Business and Enterprise. My right hon. Friend sends his apologies—I am very much a stand-in.

The hon. Gentleman is passionate and knowledgeable about this subject and he has shown that today. I thank him for the role he plays in partnership with Kingston university in my constituency. He is a trustee of the Rose theatre in Kingston, which has a partnership role with the local authority, local business and Kingston university in relation to creative arts. That is the sort of partnership he was talking about during his speech.

[Mr Sheerman]

I am an honorary doctor.

[Mr Davey]

The hon. Gentleman is also an honorary doctor. I should put it on the record that I am an honorary fellow of Birkbeck college, London, which is showing the way in how we can be more innovative in the higher education sector. I was interested to note that he referred us to Sir Keith Joseph’s reading list. I am not sure if he wanted us to read the books on that list—probably not; I think he was creating his own reading list. I was delighted that he included a mention of the recent speech made by my right hon. Friend the Secretary of State for Business, Innovation and Skills. He was generous enough to say that it was a good and balanced speech, although he made the point that it did not mention innovation, which was the main focus of his speech today.

I reassure the hon. Gentleman that the Government are keen to do what they can to promote innovation. We share his desire to ensure that higher education institutions in Yorkshire and, indeed, across the country are able to maintain their reputation for world-class research, which has been one of Great Britain’s key comparative advantages in recent decades. Although there will be some tough decisions to make, we are determined that when we make them, we will not put that huge reputation and the benefits that the wider economy gets from the work of our great universities at risk.

[Alec Shelbrooke]

On the point about innovation, something to which the hon. Member for Huddersfield (Mr Sheerman) did not refer—or he may have done in part—is that when universities in the Yorkshire region come together, they have an outstanding opportunity to be the leading nanotechnology specialists in the world. Indeed, York university has one of only four machines in the world that can photograph molecules down to that level and see them lined up, and Huddersfield university has one of the most precise measuring instruments in the world.

Overall, innovation is part of the bread and butter of universities. Will the Minister give some thought to how he can free up universities to enable them to capitalise on the intellectual property that they develop? At the moment, they struggle to do so because their charity status means they are unable to make a profit. If they did, they would be hit by VAT, which would be bad for them. If we can change some of the rules that they play by, a huge income stream would be available to universities, which would bring into universities the investment that we all want to see.

[Mr Davey]

I am sure that my right hon. Friend the Minister for Universities and Science will want to reflect on those remarks, because we will be searching for new revenue streams. It is incumbent on this Government to do so as we make some difficult decisions about public funding. The hon. Gentleman’s comment is therefore very helpful. The university of Huddersfield is exceedingly expert in that area and has a unique nano-lab facility. As he was saying, that shows the great research facilities that are in the Yorkshire higher education institutions and how they benefit when they work together either across Yorkshire or, indeed, in the N8 group more broadly across the north.

[Mr Sheerman]

Yorkshire ranks No. 1 in all the regions in terms of attracting inward investment—£28 million a year—for new start-up businesses.

[Mr Davey]

I understand that. It is one of the reasons why I wanted to say to the hon. Gentleman that, although there will be a difficult funding climate—as colleagues are well aware—it is worth putting it on the record that Yorkshire universities tend to fare reasonably well compared with their counterparts in other parts of the country. That is in no small part due to their strong research performance. Yorkshire universities receive a level of research funding per higher education institution that is above the UK average, and two of its institutions are among the 20 that receive the most research funding in the United Kingdom. He is absolutely right. The Government are keen to ensure that they can build on that success.

The higher education sector is a success story for Yorkshire. The university of Huddersfield in the hon. Gentleman’s constituency illustrates what Yorkshire universities can achieve. I have mentioned the nano-lab, but the cutting edge Centre for Precision Technologies is also showing what Yorkshire universities can do for precision engineering. Huddersfield university has other areas of expertise, including automotive engineering, motor sport, computer games, electronic and electrical engineering, and multi-media and music technologies. Kingston university in my constituency also has many areas of expertise in engineering. Given Kingston’s past, those are particularly related to the aeronautical industries. I share his commitment to ensuring that universities are able to develop the innovative capacity they have shown in the past. Despite the problems that will arise over the next few years in ensuring the funding is fair, we must ensure that such a capacity to innovate is not lost, as it can play its part in reducing the public sector deficit.

The hon. Gentleman said that we should not talk down the state of the British economy. There is no desire to talk the economy down, but there is a desire to deal with the huge challenges we face—a public sector deficit that is 11% of GDP, and the highest public sector deficit within the OECD. The Government cannot sit by and do nothing. I am sure he will admit—he is such a reasonable person and is very knowledgeable—that the previous Government were considering some significant reductions in funding in this area for this year. If anything, compared with the grant letter of December last year, this Government are putting more money into HE this year for the 10,000 places, which has led to some debate. The previous Government were planning £600 million of spending reductions to take place in future years. On financing the HE sector, this Government have not uniquely decided that they want to consider reducing spending; they are taking on the previous Government’s proposals.

[Mr Sheerman]

I am sure that the Minister’s officials will have looked at the speech I made in this Chamber in January, in which I complained about the previous Government’s cut to university funding. So I agree with him on that. However, what does he think our competitors are thinking? Higher education is the one sector in which we are the world leaders—we compete with the Americans, the Australians and the Canadians—but suddenly we are going to start cutting it by 25%. That is what he is predicting—25%.

[Mr Davey]

I am glad to see that the hon. Gentleman is claiming consistency in that he says that he criticised the previous Government for their spending cut proposals. We share his vision of the crucial role that universities and innovation play in our economy, the productive sectors and so on. There is no dispute in that area, but there is a dispute about the role that the university sector must play in facing up to the immediate public finance problems facing the country.

I apologise to the hon. Gentleman because I am running out of time. I shall conclude by saying that there are no easy solutions to the challenges that this country—this Government—faces on public spending. We should not run away from those challenges, because it will be in the long-term interests of our university sector if we face up to them. With the help of Lord Browne’s review, which will conclude in the autumn, we will have the knowledge base and understanding to put forward a fair and equitable settlement. Such a settlement will ensure that our universities have sustainable funding and that access to universities is not undermined.

Equitable Life

Tuesday 20th July 2010 Westminster Hall

13:00

[Nicola Blackwood (Oxford West and Abingdon) (Con)]

I am grateful for the opportunity to debate Equitable Life. As a parliamentary candidate, along with many others from all parties, I signed a public pledge to support and vote for proper compensation for the victims of the Equitable Life scandal and the setting up of a swift, simple, transparent and fair payment scheme, independent of Government, as recommended by the parliamentary ombudsman. I am here today, along with many concerned colleagues, because, with the Chadwick report due imminently, I wanted to give the Minister an opportunity to hear the views of parliamentary colleagues and Members an opportunity to raise the concerns that have been brought to them since the election.

I must confess that I spent much of Sunday watching the Opposition day debate from 17 March on Parliament TV—although that may raise doubts about my sanity, it was very reassuring. The Minister showed a real understanding of the appalling injustice that has been suffered by Equitable members. According to the Equitable Members Action Group—EMAG—more than 1,000 policyholders and 2,000 group scheme members live in my constituency. He understood the anger felt at the previous Government’s delaying tactics. Most importantly, he was clear in committing a future Conservative Government to implementing an effective compensation scheme in a timely manner. I am pleased that that commitment has been restated in the coalition programme.

Nevertheless, concerns have been raised with me and my colleagues since the election. As many of us are new Members who did not have the chance to contribute to the most recent debate on the matter, I know that the Minister will appreciate the opportunity to hear their views as he considers the Treasury response to the Chadwick report and decides on future plans for a payment scheme.

I am not inclined to give a summary of the Labour Government’s attempts to avoid the findings of the Penrose inquiry and hobble the ombudsman in her first inquiry, only to refuse to accept her conclusions of maladministration and injustice in her second inquiry and the subsequent judicial review, which determined that much of their refusal failed the cogency test. I am sure that all Members present are familiar with that sorry saga; if they are not, there is an excellent Commons Library standard note on the matter, which they can peruse at their leisure. Suffice it to say that the Minister has been left with a scandalous legacy by his predecessor, and one that I would not wish on my worst enemy.

I will focus on some of the main barriers to progress that we face. The first barrier is that Equitable members have had all their faith in Government systematically destroyed by the transparent attempts by the previous Administration to delay and obfuscate—one of the few instances of transparency they can boast. The accusation that the Treasury made the cold-hearted calculation that the longer the process took, the less it would have to pay out, as Equitable members were dying off at such a rate, has never been verified. Nevertheless, the accusation sits uncomfortably in the middle of the negotiating room, making it difficult to build a constructive relationship when attempting to create a scheme that Equitable members can support.

Together we will have to find a way to build that relationship, however painful the process, and to start rebuilding trust, and I suspect that no amount of rhetoric will do the trick. The only way Equitable members will be able to move past the consistent abuse they suffered at the hands of the previous Government will be by seeing concrete action replace warm words. I urge the Minister to remember that history as he moves forward.

Many of us feel that, after our active championing of the cause of EMAG members when in opposition, they should feel that they can trust us. It is clear, however, that having suffered so much from Labour’s broken promises for so long, they now find it difficult to trust so easily. The only remedy for that distrust is to prove the doubter wrong by delivering in government what we promised in opposition. At the same time, Equitable members must meet us halfway by working in partnership with, rather than just in opposition to, the Government as we try to find a way to bring them justice.

[Dr Sarah Wollaston (Totnes) (Con)]

Another point is that so many Equitable Life members are very hard up. I have received letters from many constituents, and one couple I heard from are now surviving on pension credits and rent rebates after a lifetime’s savings were decimated by the Equitable Life scandal.

[Nicola Blackwood]

That is the message I receive in my post box day after day, and I am sure that many colleagues have similar cases.

The second problem we face is uncertainty. For decades, Equitable members have been treated with the utmost contempt by the management of Equitable Life, the regulators and, latterly, the Labour Government, who refused to give them clear answers, denied their claims of injustice, even in the face of all the evidence and, even after accepting some measure of responsibility, have consistently refused to give the victims any indication of the timetable or costing.

[Sarah Newton (Truro and Falmouth) (Con)]

Does my hon. Friend agree that, as we are determined to rebuild a savings culture, in addition to honouring our manifesto pledge, it is vital that people can invest in pensions with confidence, knowing that they will be compensated if those are mis-sold?

[Nicola Blackwood]

I agree entirely. A key concern during the general election campaign was the fear that the saving culture in this country, which for so long had been part of our economy, had been completely destroyed. We must do everything we can to avoid entrenching that destruction.

[Mr Andrew Smith (Oxford East) (Lab)]

The hon. Lady, who is my fellow Oxford Member, makes her case passionately and effectively. Is not the crucial point that we get a commitment to transparency and fairness, which is what EMAG has been calling for, and that it would therefore be helpful to hear from the Minister on how the coalition Government intend to change and enhance the remit that was given to Sir John Chadwick?

[Nicola Blackwood]

Transparency must clearly be at the heart of any process we now embark upon. As I have said, with trust at an all-time low, the only way we can ensure a process in which all partners can take part is by showing that we are not in some way trying to brush under the carpet some of the problems that the previous Government did.

[Mr John Redwood (Wokingham) (Con)]

My hon. Friend is making a strong case. Like her, I wish to see justice for the victims of the problem. Does she agree with me that it would be helpful if in the meantime all the work proceeds on cleaning up the records and ensuring that the lists, and therefore the potential eligibility by category, are in the best possible order so that my hon. Friend the Minister can make a speedy disposition of funds once he has made a decision?

[Nicola Blackwood]

My right hon. Friend makes an excellent point. With all the delays we have seen, the last thing we want is to come to an agreement on the terms of a payments scheme, only to have to embark on a lengthy period of making the data ready for that. It would be excellent to hear the Minister’s comments on that point.

On timetabling, it does not take much imagination to see how such long-term uncertainty would eat away at an Equitable member, causing as much damage as a shrinking pension. The Minister was vocal in calling for a clear timetable in his statement on 17 March, so I am sure that he will be able to offer a timetable today, or very shortly in a statement to the House.

The final problem I will mention is the deep suspicion with which EMAG members view the Chadwick process. Indeed, the fact that they pulled out of that process less than 24 hours before the most recent debate on the matter was noted, as was the fact that as a result the final Chadwick report might be subject to serious dispute, if not to judicial review proceedings, which will also delay proceeding.

The concerns they have raised include concerns about the assumption of the third interim report, which asserted that regulators should be assessed on the basis of the lowest common denominator, despite the fact that the High Court judgment in EMAG v. Her Majesty’s Government found that it was reasonable to assess injustice on the basis of not only strict legal liability, but the policyholder’s reasonable expectation of a regulator. During those court proceedings, the ombudsman expressed concern that the Chadwick process broke the link between injustice arising from maladministration and the provision of any remedy by limiting future payments to those who had been disproportionately affected. Also, among current EMAG members is a sense that, in our straitened economic times, the Chadwick report will find a way to underestimate the losses.

[Mr Sam Gyimah (East Surrey) (Con)]

Does my hon. Friend agree that addressing the loss, even in straitened times, is important? The Government ought to send out the signal that people who do the right thing should not be penalised, which is what has happened in the Equitable Life situation.

[Nicola Blackwood]

Yes, and that speaks to the earlier comments on the need to protect and enhance the saving culture and on sending the right message to people that they can put faith in how we regulate savings.

Could the Minister comment on two proposals that might address the concerns about the Chadwick process which EMAG has raised with all of us? First, the Chadwick report should not be the foundation of a payment scheme but, rather, one of the resources used in creating an independent payment scheme. Secondly, the final assessment of losses should accurately reflect the cost that Equitable Life members have borne.

[Andrew Bingham (High Peak) (Con)]

We have all received lots of letters from EMAG, as candidates and as Members of Parliament, but two things have not been mentioned today—the dependants of policyholders who are now deceased because there has been such delay, and the issue of not means-testing such people. Does my hon. Friend agree?

[Nicola Blackwood]

I believe that those issues were raised on 17 March and that there might have been a subsequent commitment. However, hearing the Minister’s confirmation would be helpful.

Two issues are at stake in the process. The first is purely financial.

[Charlie Elphicke (Dover) (Con)]

With respect, I add that Equitable Life victims in Dover are deeply concerned. I congratulate my hon. Friend on securing the debate and on her excellent argument.

[Nicola Blackwood]

The first of the two issues at stake is purely financial—the technical problems of designing a scheme that is fair, transparent, swift and simple. The second issue, which is almost more challenging, is ethical—the admission of responsibility by the Government for regulatory failures and the acknowledgement of what that failure has meant to Equitable Life members.

By failing to admit the full extent of the losses, we will fail on the latter issue, ethically, even if we succeed on the former, financially. I do not see any reason why we need to go down that route. All parties have consistently stated that final payments will have to be balanced against other calls on the public purse. The High Court stated that, as the Government were not required to create a compensation scheme, any legal objections to the nature of such a scheme were bound to fail, so there seems to be no legal barrier.

In my dealings with EMAG, representatives have clearly stated that they understand that full payment may well not be possible, but they want an acknowledgement, at least, from the Government of the full cost that they have shouldered.

[Neil Carmichael (Stroud) (Con)]

We all have big postbags on the subject, obviously. We need clear milestones for delivery. That is what most of my supporters in this connection want—milestones.

[Nicola Blackwood]

Along with the rest of the country, Equitable Life members know that we have been left to clear up Labour’s financial mess. All sections of society will have to do their bit in getting our national finances back on track. If we ask EMAG members to trust us, as their Government, we should trust them to accept that we might be able to pay back only a percentage of their losses. If we attempted to pay out in full, according to calculations that do not have the confidence of the public, we would do significant damage to our credibility for the long term.

The Equitable Life case is a prism of the wider legacy of the Labour Government: public distrust in politicians and Governments is at an all-time low, as a result not just of media-induced cynicism but of Labour’s chronic inability to deliver on its promises or to take responsibility for its mistakes. The case is one of our key tests, a barometer of how straightforward we will be in the face of the tough choices that we have spoken about so often.

I have the greatest confidence that the Government will be honest and open about the extent of the damage inflicted on Equitable Life members and of the capacity of the Government to remedy it. According to the Minister’s own words, he has the compassion to lose no time in setting out a detailed programme for that remedy, putting to an end the decades of injustice and uncertainty endured by hundreds of thousands of Equitable Life members.

13:14

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

First, I congratulate my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood) on securing the debate, the first in this Parliament on Equitable Life. I am certain it will not be the last such debate.

I want to respond to a couple of points made in interventions before returning to the main thrust of my remarks. My right hon. Friend the Member for Wokingham (Mr Redwood) asked about the quality and cleansing of the data. It is important to place on the record that there are 1.5 million policyholders holding 2 million policies, and that 30 million premium transactions have taken place over the period in question. The quality of data is a huge problem. I am grateful to EMAG for the offer of access to its database to help us cleanse the information. Equitable Life and others will be working with us to ensure the best-quality database. My right hon. Friend is absolutely right that such work needs to proceed in parallel with other work streams, so that we can make payments to policyholders as quickly as possible.

Reference was made to the importance of savings. The regulatory reforms that my right hon. Friend the Chancellor announced last month include the establishment of a consumer protection and markets agency, which will help to improve the regulation of our financial services, hopefully contributing along with other measures to rebuilding a savings culture in this country.

I did not need this afternoon’s debate to remind me of the importance of Equitable Life to so many of my colleagues, having received a number of letters, answered a number of written parliamentary questions and had a number of oral representations from colleagues about how important the matter is. I understand the strength of feeling, and I hope that, over the past four or five years in this role in opposition and now in government, I have come to be seen by policyholders as a strong advocate for ending the plight of those who have suffered as a consequence of Government maladministration. I want to see a swift response but, vitally, one that is transparent and fair to all policyholders and to the taxpayer.

[Andrea Leadsom (South Northamptonshire) (Con)]

Does my hon. Friend agree that the problem is that, because it has taken so long to get to the point we have reached today, we are in a worse position than if the situation had only recently occurred? Therefore, having promised to make good the damage left by Labour, we must put the matter to rest as quickly as possible—even quicker than in normal circumstances.

[Mr Hoban]

My hon. Friend makes an important point. The crisis has gone on for too long. Lord Penrose’s report was back in 2000, and the previous Government could have tackled the issue then. They blocked the ombudsman’s second inquiry into Equitable Life, and they took six months to respond to the ombudsman’s report. At every step in the process, the previous Government delayed. We want to make rapid progress, but fairly and transparently for policyholders and taxpayers.

In our coalition agreement we pledged to make fair and transparent payments, through an independently designed scheme, to policyholders for their relative loss as a consequence of regulatory failure. In the two months since we have been in office, we have made real progress and will continue to do so over the coming months. In May, in the Queen’s Speech, we announced an Equitable Life Bill, which will give the Treasury the statutory authority to incur expenditure in making payments to those who have suffered loss in connection with maladministration and the regulation of Equitable Life. The Bill will be introduced shortly and will be an important step towards resolving the issue.

Another important step will be the imminent publication of Sir John Chadwick’s final report on Equitable Life. It will give us a greater understanding of the losses that policyholders have suffered. Some have called for us to abandon the Chadwick process or to alter Sir John’s terms of reference. However, after careful consideration, I decided to allow Sir John to continue with his work under the current terms of reference. His work has been the culmination of almost 18 months of detailed analysis and evidence gathering. He and his actuaries have delved deeply into the issues, and their work has been informed by consultations with interested parties. For example, his flexible approach to establishing loss removes from policyholders the burden of proving what they would have done had they been aware of problems at Equitable Life. It is important to have his work available, as it will aid us in providing a swift response.

[Gavin Barwell (Croydon Central) (Con)]

The Minister certainly has the reputation with EMAG members that he mentioned earlier, but an issue of concern is the Government’s attitude to Chadwick. The Minister said that their response would be published imminently. Is there likely to be a statement before the summer recess?

[Mr Hoban]

I believe that there will be a statement before the summer recess. I recognise the concerns about Sir John’s work, but it is a useful building block in the process. To dismiss it and not give it due consideration would be an error.

[George Hollingbery (Meon Valley) (Con)]

Has the shape of the Minister’s thoughts on moving this issue forward changed from what he announced as the Conservative party’s plans in March?

[Mr Hoban]

My views have not changed in that period. An option one gets as a Minister is to drive the process forward further and faster, and to change the approach. What hon. Members will have seen over the past eight weeks, which will become clearer when Sir John’s report is published, is that we have adopted a much more transparent and open approach to the resolution of the problem.

As part of that transparency, I will publish with Sir John’s report the advice provided by his actuaries as well as correspondence he has received on the matter. In the light of the sensitivity of the issue, we must know how he developed his methodology and what has informed his thinking. To restore trust in the process, I want to be as open and transparent as possible about our approach and the losses suffered by policyholders. I believe that that is the best way to tackle the distrust that my hon. Friend the Member for Oxford West and Abingdon referred to in her speech.

[Dan Rogerson (North Cornwall) (LD)]

I am sure that people listening to this debate will be reassured by the approach that the coalition Government are taking, in contrast with that taken by the previous Government. Can the Minister confirm that, in taking into account what the Chadwick report says about the scale of the losses suffered by Equitable members, the coalition Government’s approach to how payments will be judged is new and not built on any of the previous Government’s work?

[Mr Hoban]

I will come on to the commission shortly, if Members will bear with me.

As I said, I want the process to be as open and transparent as possible. I have said to the House that when we publish Sir John’s report, I will provide a substantive update on the next steps in the process. We have already set out the important steps in how we will take the work forward, and some points about how the scheme will work.

My hon. Friend the Member for High Peak (Andrew Bingham) raised a couple of points in his intervention. I wish to make it clear that there should be no means-testing, and that the estates of deceased policyholders should be included in the scheme. We felt it important to clarify those two issues early on in order to settle some policyholders’ worries, and I am happy to reiterate those commitments today.

I will establish an independent commission that will advise on how best to allocate funds to policyholders and to help develop the scheme design. One of the key aspects of the ombudsman’s recommendations was that any scheme should be independent of Government, and I agree with the thinking behind that recommendation. The commission will be given a remit that will allow it truly to add value to the process.

The process will be time-consuming, and there is the potential that payments will be delayed if we ask the commission to start the process of determining relative loss from scratch. However, we want it to play a role in developing a fair outcome for all policyholders.

[Amber Rudd (Hastings and Rye) (Con)]

The Minister kindly mentioned how the funds will be paid out. In my constituency, a number of people are concerned that because it will take a long time to appoint the commission, which will then have to go through its own procedure, further delays could be added. Can he tell us how the commission will be put together and what his expectations are of the timing?

[Mr Hoban]

I am keen that the commission should work as quickly as possible. In many respects, the process would have been shorter without the commission, but it is an important guarantee of transparency and openness, and it is right that it be given a remit to do this work. Equally, I am mindful of the fact that we need to give it a tight timetable, so that it has time to think about the issues but is not seen as delaying the process of making payments to policyholders.

[Bob Blackman (Harrow East) (Con)]

One of the concerns is that, sadly, many policyholders have died or are dying. Can the Minister give some comfort on the issue of giving interim payments once the decision has been taken, so that people can receive payments before the commission has completed its work?

[Mr Hoban]

I am conscious of the fact that many policyholders are elderly, but there is a challenge: we need to ensure that the scheme is designed transparently and fairly, and that there is fairness between groups of policyholders as well as between policyholders and taxpayers. The commission should look at where priority payments should be made, but I am wary of the question of how we can make interim payments to people on a sound basis that will not lead to further problems later. I take on board my hon. Friend’s point, but there are some challenges in taking the idea forward.

A key issue for many policyholders and Members of Parliament is how much the scheme will cost. As the ombudsman said, it is appropriate to think about that, and we will consider the potential impact on the public purse of any scheme, and what is affordable, before we decide how much we can allocate to the scheme. We will ensure that fairness is at the forefront of our thinking when making those difficult decisions.

I would like to take a moment to mention the excellent work of EMAG, which has campaigned for many years for a fair resolution to the matter. In opposition and now in government, I have met members of the EMAG board, who have relayed to me their concerns about the Chadwick process. I will say to hon. Members what I said to them: Sir John is only a building block in our approach, and I am willing to listen to EMAG and other interested parties who can give useful and productive insight into this complex issue.

I remind hon. Members that no final decisions have yet been made on many of the important issues associated with the scheme. I want the decisions to be in the best interests of policyholders and taxpayers, and I encourage EMAG and others to be involved so that we can move the process on and find a resolution, for which policyholders have waited for many years.

I will give more details on our approach and the next steps in the process when Sir John Chadwick’s final report is published, but I can confidently say that we are moving towards our objective of resolving the issue. We are now reaching a crucial stage in the story of the Equitable Life payment scheme. What happens in the coming months will be decisive in laying out how the scheme operates and the quantum of payments that will be made to policyholders. I encourage all MPs to engage in the debate. This is certainly an issue that we must get right.

13:26

Sitting suspended.

Ministry of Defence (Statistics)

Tuesday 20th July 2010 Westminster Hall

13:30

[Angus Robertson (Moray) (SNP)]

I am pleased to have secured this debate on Ministry of Defence regional and national statistics, because as we speak the strategic defence and security review, which is looking at the shape and role of United Kingdom conventional defence policy, is under way in the MOD. Given the extreme financial constraints, we expect to learn about radical changes to the UK armed forces when the SDSR reports before the end of this year. The Royal United Services Institute expects a 20% reduction in manpower and a budget cut of between 10% and 15%. In that context, MOD statistics and facts relating to UK defence are key in informing the SDSR, as well as in holding the MOD and UK Government to account.

Although it is essential that the SDSR be driven by defence, foreign and security policy priorities, it must also be relevant to consider what defence footprint there has been and what there will be in the future. I fear that the SDSR will lead to large parts of the UK having no defence infrastructure, with fewer bases, reduced units and manpower, and severely imbalanced defence spending.

There are reasons to believe that Scotland, Wales, Northern Ireland and some English regions will come off worst. That worrying prospect is supported by past regional and defence statistics issued by the Ministry of Defence. In recent years, the MOD has confirmed that more than 10,000 defence jobs have been lost in Scotland and that there has been a defence underspend in excess of £5.6 billion. The defence underspend statistics for Wales and Northern Ireland in the same period are £6.7 billion and £1.8 billion respectively. No doubt, if the MOD provided regional breakdowns for the English regions those would show that other areas have also been badly disadvantaged.

Most shocking of all in an advanced modern democracy is that the UK Government have decided that, rather than explain the impact of their policies, manpower cuts and spending disparities, they will simply stop providing the statistics. I should point out that regional and national defence statistics are available in other countries. With a mouse click, one can access such information down to state level in the United States. In Canada, a nation with close parliamentary and military links to the UK, the Department of National Defence produces similar statistics, both at provincial and constituency level. Those and other countries think that it is right and proper to confirm their employment and spending decisions, and that clearly impacts on their policy thinking. Until recently, that was also the case in the UK, where the Ministry of Defence answered questions relating to regional defence employment and regional spending.

The MOD has confirmed that there are now 10,480 fewer people employed in defence jobs in Scotland than in 1997, which amounts to 1,880 fewer services personnel and 4,600 fewer civilian jobs in addition to the loss of 4,000 jobs that were supported by defence expenditure. Those are MOD statistics. That leaves the current uniformed contingent in Scotland roughly at around 11,000, which is less per head of population than the armed forces of the Irish Republic.

A series of parliamentary questions on defence spending has, until recently, been answered by the MOD making estimates of how much it has spent in each nation of the UK. That has been broken down by service personnel costs, civilian personnel costs, equipment expenditure and non-equipment expenditure, such as utilities and maintenance, and so on.

There is a complete MOD data set from 2002 to 2008 that shows a significant and widening structural defence underspend relative to population in Scotland: it has increased from £749 million in 2002-03 to £1.259 billion in 2007-08, which represents a 68% increase in six years. Between 2002 and 2008, the underspend in Scotland totalled a mammoth £5.6 billion. Between 2005 and 2008 there was a drastic real-terms decline year on year in the defence spending in Scotland: in total, the previous Labour Government slashed defence spending by £150 million in those years. There was a 3% cut in defence spending between 2006-07 and 2007-08 in Scotland. Those are MOD statistics. Widening the statistics to include Wales and Northern Ireland, in the six years from 2002 to 2008, there was an accumulated underspend of £14.2 billion. Looking at the overall trend, in Scotland and Wales in each of the past six years the underspend figure has gone up faster than the overall budget of the MoD, highlighting a situation that is getting progressively worse, squeezing each country more each year.

Although the MOD budget has not increased every year in real terms, figures on the percentage change from 2002 to 2008 show that its budget increased by 24%, but the underspend increased by more than 50%. In each of the past five years, the amount spent in Scotland, Wales and Northern Ireland combined has been less than the UK spends overseas. Money spent overseas does not include current operations, such as Afghanistan, and the like. For example, a larger contingent of troops is stationed in Germany than is based in Scotland, Wales and Northern Ireland combined.

These facts are shocking and they pose problems for the MOD to answer. Hansard shows that despite numerous attempts to get Ministers and Prime Ministers to explain the underspend and jobs cuts, no explanation has been forthcoming. Instead, the MOD hit on the novel idea of simply not answering the questions any more. In 2009, tucked away in a report, the MOD confirmed that:

“Ministers have agreed that after this year (2009) the Ministry of Defence (MOD) will no longer compile national and regional employment estimates because the data do not directly support MOD policy making and operations.”

On 6 April, the then Secretary of State for Defence provided what turned out to be the last parliamentary answer on defence expenditure in Scotland. He explained:

“Since 2008 the MOD has not collected estimates of regional expenditure on equipment, non-equipment, or personnel costs as they do not directly support policy making or operations.”—[Official Report, 6 April 2010; Vol. 508, c. 1200W.]

Rather than provide the information, which is readily available in the Ministry of Defence, the decision was taken just to stop providing it. Of course, that decision was taken under the Labour Government. I hope that the rhetoric in the public pronouncements about transparency and new politics by the incoming Government is matched by their openness.

On page seven of the coalition agreement, the Prime Minister and Deputy Prime Minister say:

“we are both committed to turning old thinking on its head and developing new approaches to government. For years, politicians could argue that because they held all the information, they needed more power. But today, technological innovation has—with astonishing speed—developed the opportunity to spread information and decentralise power in a way we have never seen before. So we will extend transparency to every area of public life.”

Section 16 of that agreement, which is entitled “Government Transparency”, says:

“The Government believes that we need to throw open the doors of public bodies, to enable the public to hold politicians and public bodies to account.... Setting government data free will bring significant economic benefits”.

Two specific commitments are mentioned. The Government say that, first:

“We will require full, online disclosure of all central government spending and contracts over £25,000”;

and secondly:

“We will create a new ‘right to data’ so that government-held datasets can be requested and used by the public, and then published on a regular basis.”

That is good. Given those clear, unambiguous commitments, I was delighted to hear similar claims of openness from the new Defence ministerial team during the House of Commons debate on the strategic defence and security review a few weeks ago. Hansard records that the new Armed Forces Minister, whom I welcome to the Chamber, said:

“Hon. Members—and everybody else—have the opportunity to contribute and make whatever representations they wish to make. If there are hon. Members who feel that they are under-informed, and want more information to inform representations that they might make during the review, they need only let us know. Ministers have an open-door policy, and Members are welcome to any further information that they feel they need.”

That prompted me to intervene, saying that the previous Government had provided this information and asking whether the new coalition would do so. He replied:

“Yes. Whatever information right hon. and hon. Members need in order to make representations to the review”.

I intervened to make doubly sure, asking,

“Is that a yes?”

The Minister answered unambiguously,

“That is a yes. Hon. Members need only ask for any information that they need.”—[Official Report, 21 June 2010; Vol. 512, c. 132.]

Naturally, I was delighted and impressed, and I wrote a grateful letter to the Minister. I received a reply on the same day. In the blink of an eye, he wrote:

“I regret that I may have given you a misleading impression on what information the Government can provide… I am sorry to send you what I know will be a disappointing response”.

In an instant, the Ministry of Defence reneged on its promise to the House of Commons and, by extension, the Government reneged on their coalition agreement on openness and transparency.

There are other vital clues that should make everyone who is concerned about a defence footprint across the UK examine the matter closely. Apparently, the UK Government believe that there is

“no clear defence benefit to be gained”

by collating statistics by region. Apparently, national and regional data do not directly support MOD decision making. Frankly, that is code for there being no benefit to the Government from being open, honest and transparent about their policy decisions and how they impact on the nations and regions of the UK.

In recent years, UK Governments have cut back manpower, amalgamated regiments and closed facilities in Scotland. Since the last strategic defence review, defence jobs in Scotland have been cut while numbers have risen elsewhere in the UK. A mammoth multi-billion pound defence underspend has opened up and we hear from the SDSR that serious cuts are pending. Despite Scotland having fewer airbases and aircraft than our Scandinavian neighbours of comparable size, the SDSR is considering base closures. Despite only three Army battalions being based in Scotland, there are fears that Scottish-recruited units could be further cut and barracks closed. Despite the reduction in the number of conventional naval craft to a handful of minesweepers on the Clyde, there is an option to cut them still further.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

The hon. Gentleman clearly knows his material and will be aware that published Ministry of Defence statistics show the vital role that the shipbuilding and refitting industry plays in many regions in Scotland. He will know the devastating impact that cancellation of the second aircraft carrier would have on the Scottish economy. Will he join me in congratulating the Labour and Scottish National party leaderships on Fife council, who have put aside their political differences, such is the importance of the shipbuilding and refitting industry to Fife and elsewhere?

[Angus Robertson]

I am delighted that SNP-led Fife council and the Labour Opposition are working as colleagues, because the matter is one of concern in Fife and on the Clyde, as well as in other parts of the country where a defence footprint remains. That is all the more reason why we need as many facts and figures as possible to understand the current situation and what it might be in future. The areas that I have mentioned are not the only ones to be affected; there are also questions involving military command functions that have recently been downgraded in Scotland, and apparently a further downgrading is being considered.

A real danger in the defence review is a further geographical concentration of the UK defence footprint away from Scotland, Wales, Northern Ireland and some English regions. Hon. Members should look where the current service headquarters are, where the main operating bases and garrisons are, where the main training facilities are, and where the defence budget is being spent, and ask whether the trend of geographic concentration will continue.

The Government may believe that they can hide the consequences of their centralising priorities and policies by refusing to publish key statistics, but it will be hard to avoid the facts on the ground. UK Governments have been content to recruit young men and women from across these islands and often to send them into harm's way. At some point soon, the MOD must ask itself whether it is acting in the interests of the whole UK. Defence policy is not just about strategic and foreign policy considerations, which must of course drive any review; it is also about the defence footprint, about where our personnel are stationed and about where defence resources are spent.

The UK Government must end the secrecy on regional and national defence statistics and the SDSR must consider the impact of its deliberations on the nations and regions of the UK. If it is good enough for other countries to do, it is good enough for the UK Government to do; if it is what is in the coalition agreement, it is what they should deliver on; and if it is what was promised in the House of Commons, it should not be reneged on.

13:45

[The Minister for the Armed Forces (Nick Harvey)]

Ministry of Defence national and regional statistics may sound a fairly obscure subject for a debate, so you can imagine my astonishment, Mr Amess, when I walked into the Chamber and found it packed to the rafters. I thought that there must have been some misunderstanding, and it was soon cleared up when hon. Members trooped out. Nevertheless, I congratulate the hon. Member for Moray (Angus Robertson) on raising the matter, which is clearly one about which he feels keenly. He demonstrated that the crux of the matter is not statistics. Rather it is in the size and structure of our armed forces and how we go about equipping them. The subject could hardly be more serious.

The hon. Gentleman clearly feels strongly about the matter. He has two major RAF operating bases in his constituency, and a significant number of his constituents are armed forces personnel. Clearly, he has done something to impress them at the last three elections because they continue to send him back as their MP. He has also spoken as his party’s spokesperson on defence matters. That party is, of course, the Scottish National party, and because of its pursuit of independence for Scotland comes with a certain perspective of the world. He will understand that I do not share that perspective, and as Minister for the Armed Forces, I could hardly be expected to do so.

The hon. Gentleman has spoken forcefully about the implications for Scotland of how the defence budget is spent, but I and my ministerial colleagues are more concerned with the implications for the men and women in the armed forces. Let me be absolutely clear that the purpose of the defence budget is to maintain the armed forces so that they can contribute to our nation’s security—the whole nation’s security. Every pound that the MOD spends must contribute to the security of the United Kingdom. Decisions on where personnel are based, and on which contracts are let to which firms are based fundamentally and totally on what is best for the armed forces.

I fear that the thesis that the hon. Gentleman advanced is based on a completely false premise of how defence works—for example, the idea that a variation in the number of servicemen and women permanently based in Scotland is somehow related to Scotland’s significance to our armed forces. That is simply not the case. The armed forces offer amazing opportunities to those who want to join, regardless of which part of the United Kingdom they come from. Scots may join any part of the Royal Navy, Royal Marines, Royal Air Force, or the Army, and have a tremendous career. I am sure that the hon. Gentleman knows that even joining the Royal Regiment of Scotland does not mean that a soldier will necessarily stay in Scotland.

The 4th Battalion the Royal Regiment of Scotland is currently based at Fallingbostel in Germany. Its personnel would not appear in any statistics as being based in Scotland, but that does not lessen the battalion’s connection with Scotland, or the contribution that it makes to Scotland’s economy. Of course not. Scots serving in the various parts of the Army, the Royal Navy, or the Royal Air Force, but not necessarily based in Scotland, do not, in any sense, lessen the contribution that those Scots make to the armed forces. As the Secretary of State said recently in the House, the service personnel we meet do not care whether their comrades come from Cardiff, Edinburgh, Belfast or London. They are all members of the armed forces under the Crown, and proud of it.

The hon. Gentleman spoke passionately about patterns of defence spending. He referred to the defence footprint, and then alleged that there was a defence underspend in Scotland, but that is simply not the basis on which defence could possibly be organised by a Department with specific responsibility for the provision of defence of the entire realm. We have an interest in the defence footprint to some extent, but only in so far as it enables our military functions to be performed better. We must ask whether footprint is an issue in military terms, and whether it affects our ability to recruit from and defend the whole of the United Kingdom. That is the beginning and end of the Ministry of Defence’s responsibility to consider the defence footprint.

It cannot be repeated often enough that every pound of the defence budget must deliver as much as possible for the men and women of our armed forces, and through them, our national security. As Minister for the Armed Forces, I make no apologies for seeing beyond where a firm is based and looking at the overall benefit to our service personnel. It is the duty of Government to ensure that the defence budget is spent wisely, maximising the resources available to the front line and ensuring that every pound counts.

Operating at a national UK level is the only way that we will achieve the best value for money and deliver what the armed forces need. That is what matters. The hon. Gentleman seems to propose a different method of spending the defence budget. He implies that there should be a quota for each region and nation of the United Kingdom. Perhaps he thinks that a set proportion should be spent in each region; perhaps a set proportion should be spent overseas. He seems to believe in a concept of a “fair share” to be calculated per head of population, and the implication seems to be that we should do that irrespective of the capabilities that it would provide for the armed forces. Surely he does not think that that would be a wise way to allocate the defence budget? If that argument is taken to the extreme and we look at regions where there are no defence manufacturers, the logic would suggest that we should artificially stimulate the creation of a defence manufacturer.

[Thomas Docherty]

Will the Minister give way?

[Nick Harvey]

With great reluctance, since the hon. Gentleman has not observed the normal courtesies.

[Thomas Docherty]

Does the Minister understand that his arguments about making decisions based purely on defence would have more credibility in Scotland if the previous Conservative Government had not taken the Trident contract away from Rosyth and sent it to Devonport? That was not in the interests of the MOD or the taxpayer; it was about political chicanery.

[Nick Harvey]

I listened with interest to the opening speech from the hon. Member for Moray. His thesis seemed to be that the 13 years of the previous Labour Government had—according to the construct in his mind and his ideas about the fair divvying out of jobs and investment—counted against Scotland’s interests. It is not my role or responsibility to defend the previous Conservative Government or any decision that they made. However, if the previous Government did what the hon. Gentleman alleges, one presumes that they did it according to their best calculation of how to act in the interests of UK defence. One might not necessarily agree with each and every decision that the Government took, but they took those decisions from that perspective. The Ministry of Defence’s responsibility is the defence of the realm. Other Departments have responsibility for stimulating economic growth in different parts of the country. If hon. Members wish to form cross-governmental policies, they are welcome to do so, but that is not the purpose and locus of the Ministry of Defence. Our role is to secure the defence of the realm and to ensure that our armed forces are properly supported and equipped to carry out that function. There would be no sensible alternative way to organise our defences. Any alteration to that general approach would be a function of industrial policy.

I make no apologies for differing with the hon. Gentleman on that matter. We do not allocate money on a regional basis and it should be clear why the MOD stopped producing estimates of its regional expenditure two or three years ago. Quite simply, the estimates did not add anything to the decision-making process, given that that process was founded, fairly and squarely, on defence considerations.

The decision passed me by at the time—I make no bones about that. However, I can see no sinister motive, cover up or scramble to hide uncomfortable truths. The hon. Gentleman presents his concern as if it is part of some preconceived plot, but it seems from the time scale that the MOD had stopped gathering those statistics before it conceded the principle of a strategic defence review. The idea that one action went hand in glove with the other to mask the impact of the strategic defence review is far-fetched in the extreme. Let me return to my point: every pound counts. I readily acknowledge that those estimates may have been helpful to the hon. Gentleman in pursuing a political agenda, but they were not helpful to the Ministry of Defence in furthering decisions that had to be based on defence considerations.

The previous Administration drove down the cost of MOD head office by about 25%, which meant that the number of analytical staff in head office was reduced by a similar proportion. That was achieved by cutting some low-priority outputs, and one output deemed to have lower priority was the estimate of defence expenditure by region, and the employment dependent on that expenditure. That decision was made two or three years ago and I was not party to it, although I understand the logic behind the decision. By all accounts, the figures were difficult to produce and resource-intensive to maintain. They relied on analytical tables produced by the Office for National Statistics, which have not been updated since 1995. As I explained, that did not support the MOD’s decision making.

I have looked into how much it would cost to reintroduce the estimates, and I am told that reproducing the ONS tables would cost in the region of £150,000. Every three years or so, another £100,000 would have to be spent updating the underlying data. Additional statistical staff would have to be employed to perform regular updates at a cost of about £50,000 a year. As much as I respect the hon. Gentleman, I agree with my predecessors that one struggles to justify that expenditure as being in the interests of United Kingdom defence.

The hon. Gentleman challenged me about the exchange that we had on the Floor of the House. I have already apologised to him unreservedly, and I will do so again today. I raised a false hope and expectation that production of the figures could recommence. I understood that he was asking me to stop suppressing some information held by the Ministry, and I agreed to his request on that basis. Had he explained in large letters that he wanted to recompile figures that had ceased to be complied two or three years ago, I would have looked into the issue more seriously before replying. My impression was that the information was still held and that the previous Government had chosen, for political reasons, to suppress it. I turned to the Secretary of State for Defence and asked what he thought about it, and he replied, “He can have whatever we’ve got.” The hon. Gentleman can have whatever we have got, but we do not have what he asks for. It would cost a lot of money to get it again.

In conclusion, it would be a mistake to believe that we are singling out Scotland—I know that the hon. Gentleman feels that we are, but we are not. We are ceasing to produce such figures across the board. I would be interested to know whether he can point to any other central Government Department that goes to a lot of cost and expense to break figures down on a regional basis in that fashion. We cannot find any comparator in the ways that other Departments spend money on UK-wide projects, but if the hon. Gentleman can point to one, I will have another look. This debate should not be about competition between different parts of the UK. As far as we are concerned, it is about the security of the nation. We must spend our money on that basis, not on compiling the figures that the hon. Gentleman asks for.

14:00

Sitting adjourned without Question put (Standing Order No. 10(11)).