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Margaret Curran (Glasgow East) (Lab)
Thank you very much, Mr Gale. I am very pleased to speak here this morning. This is my first Westminster Hall debate since I was elected as a Member of Parliament at the last election, and I am pleased that the subject is my own city of Glasgow—the great city of Glasgow. I am sure that you will hear much of that this morning, Mr Gale.
Of course Glasgow is vital to the current economy of Scotland, and over the years it has also contributed a great deal to Scotland and the United Kingdom. Although Glasgow has suffered many setbacks and difficulties along the way, I argue that the city has fought to overcome them with significant success. It is important that we understand the key ingredients of that success and that we do not repeat the mistakes of the past. Instead, we must deepen and enhance the processes of regeneration, so that we can benefit from them in the future.
The second city of the empire, Glasgow inspires great pride and loyalty in its people: pride in the skills and contribution made by working people to the economy, and loyalty to a city famed for its humour and resilience. By 1870, Glasgow was producing more than half of Britain’s tonnage of shipping and a quarter of all the locomotives being built in the world. Of course, our interest in shipbuilding continues to this day, as I am sure Ministers know. In my constituency, Glasgow East, we had Parkhead forge, which was a powerhouse of the steel industry. It was one of the biggest steel employers in the world—at one point, it employed 30,000 people—and it made an enormous contribution to the war effort. The plant finally closed its doors in the 1980s.
I argue, with some regret, that that great contribution to Scotland’s economy has not been properly recognised or rewarded over the years. There is a real sense among Glaswegians that our work and contribution were used when times were good, but that we were abandoned when change was under way, and we cannot let that happen again. As a result of that abandonment, we were left with a legacy of ill health, high poverty and mass unemployment. That situation was particularly bad during the 1980s, when unemployment soared. There was a sharp decline in public services, urban decay set in and a cycle of worklessness and hopelessness became embedded in too many communities and too many families. The next generation worked hard to tackle that legacy through economic and social regeneration. As I mentioned at the beginning of my speech, there were many successes along the way. As a result of economic diversification and increased investment in infrastructure, health and education, Glasgow achieved a great deal.
More than 53,000 jobs were created in the city between 2000 and 2005, which was a growth rate of 32%. Between 1998 and 2001, the city’s financial services sector increased by 30%, and it is now one of Europe’s largest financial centres. In 2005, more than 17,000 new jobs were created. In 2006, private sector investment in the city reached £42 billion, which represented a 22% increase in such investment within a single year. That shift in Glasgow’s fortunes marked very significant progress and played a vital part in helping to change Glasgow’s image of economic decline and worklessness. In doing so, it inspired confidence in the people of Glasgow, and it inspired investors to have confidence in the city. Of course, it also demonstrated that the famous Glasgow resilience pays off.
A debate about regeneration is about not only the physical aspects of a place but its people. Glasgow has had a strong sense that the process of economic regeneration and the accompanying process of cultural renaissance that it experienced in the 1980s and 1990s should benefit all its citizens and not only those who were skilled and able to make the most of those opportunities. Too often, Glasgow was characterised as a city of two halves, and there was a real push to ensure that all the people of the city benefited from any regeneration process. Glasgow’s problems of ill health, poverty and deprivation were so deep-rooted that there needed to be a step change in how we tackled them. A vital ingredient was the regeneration of some of the most disadvantaged communities, a number of which are in the east end of Glasgow in my constituency. Long before the big society was ever heard of, Glasgow pioneered community development.
We are all aware of the mistakes that were made in the past when things were “done to” communities rather than “with them”, particularly in relation to housing. Economic regeneration is at its best when we work with people who have experienced the problems and have a vested interest in finding the solutions, rather than when we impose top-down reforms. That is best illustrated in the housing sector. Through housing stock transfer, the city has been able to bring additional major spend into housing investment. That process not only involved tenants in a completely new way but delivered a programme of sustainable housing in Glasgow. In my previous role as a Member of the Scottish Parliament, I was the Minister with responsibility for housing in different ministerial capacities, and I was substantially involved in housing stock transfer. If anyone wants to hear me talk for half an hour about housing stock transfer, I am very willing to oblige, but such talks are obviously not in great demand at the moment.
Given the challenges facing Glasgow, it is important to understand how we made progress. Glasgow city council was instrumental in building a lasting partnership with the private sector, a partnership which continues to this day. That partnership with the private sector will be the theme of my contribution to the debate, including how it is possible to get the public and private sectors to work together. My real fear is that that partnership is being jeopardised at the moment. The experience that we had in Glasgow of the partnership between public and private is relevant to the discussions of today and the priorities that we set.
In Glasgow, the private sector understood the need to invest in education and the benefits that it accrues from that investment. The private sector benefited enormously from the developments in housing and in particular from housing stock transfer. For example, the £1 billion investment by Glasgow Housing Association has seen unparalleled improvements in housing throughout the city. Perhaps the employment opportunities that arise from such housing investment are not properly understood, but in fact 4,000 people were directly employed between 2006 and 2010 as a result of the investment in housing in Glasgow. Nearly half those people were employed through community benefit clauses, which shows that public intervention works by creating sustainable employment. Of the 2,000 people who were employed through community benefit clauses, half of them were trainees or apprentices. Once again, that employment has had a real impact in the communities in which those people lived and worked.
We have experienced a bit of a jolt to the process of regeneration in Glasgow in recent years, since the Scottish National party came to power. I would argue that during that time the partnership approach to regeneration has been undermined. That is exemplified through the development of the Scottish Futures Trust. That trust was set up by the SNP Administration, and it was meant to be part of a new approach to raising private finance, allegedly for investment. However, it has failed to commission the building of a single new school, and funding for capital investment projects has fallen by £1 billion at the cost of 37,000 jobs in the construction industry.
The SNP Government have refused point blank to listen to the pleas of the business community in Glasgow, and as a result of that cut in capital investment and other cuts, the construction of school buildings has been scrapped and thousands of teachers and nurses have lost their jobs. The “Salmond slump”, as it is now termed in Scotland, has also seen the cancellation of vital capital infrastructure projects such as the Glasgow airport rail link. The cancellation of GARL has meant the loss of 1,300 jobs. For the first time in a long time, Glasgow unemployment figures have begun to fall behind those of England.
There is no doubt that the decline in investment under the SNP Administration has hit Glasgow hard. In my own constituency, the number of new or refurbished schools between 1999 and 2007 was 14, so we had 14 brand new or refurbished schools in the east end of Glasgow in that time. Since the SNP came to power, not one school in my constituency has been built or refurbished—there has been no investment at all in schools. Recently Glasgow city council has had more than its fair share of budget cuts, as the council itself will confirm. There has been a 3.6% budget cut, which is the highest cut for many years and above the national average.
Glasgow is battling on, and there are still regeneration projects that matter enormously. I want to refer to two of those projects that are of great importance—first, the Commonwealth games, and secondly the Clyde Gateway. The 2014 games will be an exciting occasion, and there was great celebration in Glasgow when we won them. It is an occasion to celebrate sport in a city famed for its sporting achievements. As the Member of Parliament for the great football team of Glasgow Celtic, I expect everyone to be aware of our great expertise on the football field, and I am sure that we will inspire interest in other sports when the Commonwealth games are held. It is, however, also an opportunity to foster economic regeneration, most particularly in areas of the city that still need rejuvenation. More than 9,000 businesses entered the bidding process for affiliated contracts and subcontracts, and it is expected that the games will create 1,000 jobs and stimulate £1 billion of infrastructure investment in Glasgow, most particularly addressing our urge to ensure that the most deprived areas benefit. In the east end of Glasgow the games are of great significance, so will the Minister, in his response, focus on the games? We could perhaps learn things from the UK’s experience with the Olympic games, and the UK Government could perhaps play a part in ensuring that the Commonwealth games are an important success.
The Clyde Gateway is another important development in the east end of Glasgow. It has been identified in the national planning framework as Scotland’s top regeneration project. It has the target of creating 21,000 jobs and 10,000 homes over two decades. It is vital to the success of Glasgow, but recently there have been some problems with its funding. The SNP Government have taken some action to address the concerns, but the role of Scottish Enterprise has, I think, been controversial in its support of the gateway. We cannot afford to let the project slip, and some of my hon. Friends will perhaps want to make more detailed reference in their contributions to the progress, or lack thereof. Hopefully, we can particularly focus on that in the coming months, as it is key to the regeneration of Glasgow. Both the Clyde Gateway and the Commonwealth games are important to regeneration, particularly as they have a focus on and locus in addressing the issue of deprived communities, as well as having a stake in Glasgow’s future.
Glasgow is, of course, facing the double whammy of a Tory-led Government—hon. Members will have expected me to move on to this topic. In debates such as this, I always want to be polite, so I will say this in the most generous personal terms, but I cannot resist making political criticisms and I hope that the Minister will take what I say in the tenor in which it is meant. We have seen some difficulties and challenges since the election of the new Government, including the cancellation of the future jobs fund, which was doing so much to tackle problems of unemployment and particularly of youth unemployment, where we were just beginning to grapple with some of the more deep-seated issues. We have seen the cuts in public expenditure, and we have heard from the Government that when cuts are made in public expenditure, the private sector will step in to fill that gap. I say assertively to the Government that that did not happen when the SNP cut expenditure. In fact, the business community put quite a different case in Glasgow, where it said that when public expenditure is used wisely, it can assist private sector development, and we have seen the details of that in Glasgow and the real success of the model.
We have also seen a raft of cuts in housing benefit, which has undermined that twin process of economic and social regeneration. I would be the first at the barricades saying that welfare reform is important, particularly because of the constituency that I represent. I was a great supporter of the welfare reforms introduced by the previous Labour Government, but how reform is done is critical. The number of people on incapacity benefit tripled under the previous Tory Government, but fell during the previous Labour one. It is concerning that this Government’s welfare reforms are perhaps undermining regeneration. A particular example is the Government’s decision to take away 10% of housing benefit from someone who has been on jobseeker’s allowance for a year. Even if that person is doing all that is required of them and is desperately looking for work, they will still lose their benefit. That not only has a harsh impact on the family but undermines housing-led regeneration, because it affects funding for housing associations in Glasgow, which would be a desperate setback for our city. In all honesty, such a punitive, nasty cut reminds Glaswegians of the bad old days. We have had the higher education cuts that have come through the block grant, and investment in education, particularly at university level, matters so much for a skilled work force, because it enables growth in key sectors such as life sciences and finance.
Centre stage in this discussion has to be unemployment. The numbers have been creeping back up in Glasgow, particularly with the real concerns about the retraction in the economy shown in the recent growth figures. In Glasgow in December, 15 claimants were chasing every vacancy—in my constituency, the figure was 25. That is deeply worrying for those individuals, families and communities, and it has an enormous impact in the city as a whole. It is all very well telling people that they must go back to work, but there are no jobs to go to, which cuts the feet from under the policy. We cannot have welfare to work if there is no work, and it is employment and the lack of it that lies at the heart of the regeneration debate.
For generation after generation, Glasgow has experienced surges in unemployment through profound economic shifts without the right action to protect its people and to get its economy back on its feet, and it looks as though we are experiencing that yet again. I have no doubt that the Government will respond by saying that it is all the fault of the previous Government, and that there is nothing else that has to be done apart from tightening our belts. That has been said to Glaswegians before, and it is has been proved very wrong indeed, many times. I argue very strongly that the people of Glasgow understand that the banking crisis was the fundamental cause of the recent economic experiences, and there is great resentment that that sector is not being made to contribute more to the solutions. Britain’s debt was among the lowest in the G7, and the Tories actually argued that we should perhaps have gone further in our plans for public expenditure. In reality, as Glasgow has shown, it is not “public sector investment bad,” as if that were somehow a drag on the economy that stifles private sector development; it is both the public and private sectors working together in partnership that is good and that matters.
I will draw my remarks to a close, and I thank hon. Members for attending the debate. One of the first demands that I had when I became a Member of Parliament came from Glasgow’s Evening Times, that other significant element of Glasgow life, which my hon. Friends know. The paper contacted me and insisted that my job here is to stand up for Glasgow and that I should make that one of my central claims, which is what I agreed to do—we always agree, I am sure, with the Evening Times. I will continue to do that, because it is our job here to highlight the city’s strength and potential.
People have many images and stereotypes of the city of Glasgow, and I never deny the problems that we face. I have hopefully done some work to try to deal with some of our city’s great difficulties, but it is also a city of great strength, promise and resource, and we have to learn from not only its problems but its great successes. I hope that the Minister will listen and will take back Glasgow’s message to the Government. That message is that they should think again about cuts in housing benefit in particular and that they should support our fight for jobs, particularly as we have seen the job crisis increase. They should recognise Glasgow’s contributions and work with us to support economic and social regeneration.
Mr Roger Gale (in the Chair)
Four hon. Members on the Back Benches wish to participate in the debate. The Chair chooses to give preference, when possible, to Members who have written to Mr Speaker to indicate that they wish to take part, so I propose to call Mr Greatrex next. It might be for the convenience of Members if I also indicate that I shall then call Ms Swinson, Mr Bain and Mr Sarwar, in that order. If hon. Members would be good enough to confine their remarks to 10 minutes, that will enable me to call the Opposition Front-Bench spokesperson at 10.30 am.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I will endeavour to keep my remarks as brief as possible, so that other Members are able to make their points.
I congratulate my parliamentary neighbour, my hon. Friend the Member for Glasgow East (Margaret Curran), on securing this important debate. She rightly spoke of the history, character and legacy of the city of Glasgow and, importantly, of the city’s potential. I pay tribute to her and the other hon. Members who are standing up for the great city of Glasgow in this debate.
I speak as somebody who definitely does not represent a Glasgow constituency. My constituents who live closest to Glasgow are not slow to remind me that they live in the Royal Burgh of Rutherglen. They might have Glasgow postcodes and phone numbers, but the River Clyde forms a natural boundary between Rutherglen and the east of the city, although that natural boundary might not be respected in future by the Boundary Commission, depending on the outcome of deliberations elsewhere today. However, I suppose that that is a debate for a much later hour.
Although my constituency interest is not directly in Glasgow, the fact that my constituency neighbours Glasgow gives me a strong connection with the city across the river. The southernmost part of my constituency shares many characteristics with the east end of Glasgow, as described by my hon. Friend in her speech. Due to that connection, my constituency has a direct interest in the regeneration of Glasgow, particularly through the Clyde Gateway project, which she mentioned and I will discuss briefly.
I realise that the Minister will get both a geography and a history lesson during this debate. I hope that the Clyde Gateway is a fairly self-explanatory description of the regeneration area. It takes in the area to either side of the Clyde and east of the city, and includes the constituencies of my hon. Friends the Members for Glasgow Central (Anas Sarwar) and for Glasgow East on one side, and mine on the other. The Minister might be less familiar with the work of the Clyde Gateway urban regeneration company. I pay tribute to the work of Clyde Gateway, which has learned the lessons from sometimes less successful regeneration initiatives in other parts of the country. Clyde Gateway has actively involved and engaged communities since its establishment in late 2007, and its priorities have been led by what local communities say they need and want for the area.
It is fair to describe this as a once-in-a-lifetime chance to make a difference to some of the most deprived areas of Glasgow and South Lanarkshire. The opportunity has been created partly by the Glasgow bid for the Commonwealth games in 2014, as my hon. Friend mentioned, and partly by the construction of the final, missing section of the M74 from Cambuslang in my constituency to join the M8. The improved transport connection and legacy sports facilities from the games will make a massive difference to the area. At the same time, an opportunity is at stake to do much more in relation to housing, industry and jobs—not only construction work but sustainable long-term jobs.
So far, only some of those benefits have come to fruition in the form of improvements in and around Rutherglen station, the opening in the past few weeks of small business units in Stonelaw road in Rutherglen and an innovative arrangement with Campbell Construction Group to ensure that the construction jobs and training associated with the Clyde Gateway project are geared as far as possible towards local people.
The Clyde Gateway area on the side of the river that I represent has a long and proud industrial history, but history does not always get us far. It does not provide many jobs, keep local people in the communities where they want to live or help economic growth. Although the pits have long gone and the Cambuslang Hoover factory has been closed for several years—some of the physical structure is still around—the steel works continue. There is huge potential to help regenerate what was once and can again be a thriving economic base in my constituency.
The potential is clear. Thanks to the work of Clyde Gateway, public support exists and some of the first projects have been delivered. Visible progress has been made not just in Rutherglen but in Bridgeton on the other side of the river. The project has also gained the support of business organisations, Glasgow city and South Lanarkshire councils and, until recently, Scottish Enterprise, the regeneration agency in Scotland. Clyde Gateway has been an evolving success story, with huge potential and the support—at least in words—of Ministers in the devolved Administration in Edinburgh.
It was therefore of great concern when in January this year, without notice, consultation or explanation, Scottish Enterprise announced that the budget of Clyde Gateway and other URCs in Scotland would be cut by nearly half, which is well beyond the level anticipated or warned about and places in doubt the future of Clyde Gateway and its ability to deliver some key projects. Many people felt utterly betrayed, not by Clyde Gateway or by their local authorities, which were keeping to their side of the bargain as founders of the regeneration company, but by the crass actions of Scottish Enterprise.
The once-in-a-lifetime opportunity has been left cruelly in limbo by Scottish Enterprise. Last week, after pressure, John Swinney, the Finance Minister in Holyrood, managed to find the money to reinstate the sum cut from the budget for URCs for this year by creating an underspend elsewhere, a juggling act of the type I am sure Treasury Ministers are practising for March.
Clyde Gateway is still at the mercy of Scottish Enterprise. A week later, Scottish Enterprise has still not confirmed how much money will be redirected back into the projects to which it committed, nor what the long-term position is given its previous commitments to funding until 2016. Scottish Enterprise said in its business plan, published less than a year ago, that it will
“continue to work…to deliver national regeneration priorities”
such as Clyde Gateway, ring-fencing £12.5 million in 2011-12 and 2012-13 and maintaining funding until 2016.
As I am sure the Minister will understand, the continued ability to lever in private sector investment and commitment from potential employers depends on stability and confidence that plans will be delivered, not left in the lurch. It is not good enough that, although John Swinney was forced to restore the money cut from the budget, Scottish Enterprise has failed to explain what that will mean for Clyde Gateway next year. There is no sense of what the position will be in the further two years for which money was previously committed.
We have heard in this debate and will continue to hear about the importance of regeneration to many communities in Glasgow. Clyde Gateway covers one aspect of that regeneration in a specific area, but it is a crucial time for the east end of the city and the areas across the river in Shawfield and Rutherglen. If taken, this opportunity can make a difference to many people. If it is missed, they will be cruelly let down. The area has needed regeneration for far too long, as is obvious to anyone travelling through it. Progress has been made recently, creating hope, but there is now a danger that due to the twisted logic of Scottish Enterprise, the opportunity could be lost.
I realise that it is not the Minister’s direct responsibility, but I take this opportunity to place on the record my hope that Scottish Enterprise will do what it can to make clear its ongoing commitment to Clyde Gateway so that crucial capital projects can progress. Failure to do so will let down the communities in my constituency and other hon. Members’ in a shoddy and disgraceful way.
Jo Swinson (East Dunbartonshire) (LD)
I congratulate the hon. Member for Glasgow East (Margaret Curran) on securing her first Westminster Hall debate on this very appropriate topic, and on how she introduced it. She is well known for being dedicated to her constituency and constituents, and she captured the city of Glasgow’s past and continuing energy.
Like that of the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), my constituency is just outside the city of Glasgow, although it does not have the same natural boundary. The town of Bearsden in my constituency is right next to Anniesland in Glasgow, and Bishopbriggs in East Dunbartonshire runs into Springburn in Glasgow. It is fair to say that people in the west of Scotland who live near the city are very aware of whether they are within Glasgow city boundaries, but the further away they live, the more solidarity they feel with Glasgow. As a student in London, I recall sometimes feeling like an outpost of the Glasgow tourist board. When I said that I was from Glasgow, people would say to me, “Oh, that’s a dirty, horrible industrial city,” and I found myself putting those myths straight.
Although Glasgow has a proud industrial heritage, it is also a city with stunning Victorian architecture—indeed, it was the UK city of architecture and design in 1999—and an exciting mix of culture. It was the European city of culture in 1990, which was in itself a great catalyst for regeneration, similar to that which we have seen in Liverpool recently. Glasgow is now very much a modern, vibrant and confident city, and people with an outdated view of it should visit in order to experience what it is like today. Many of my constituents work in Glasgow—the transport links are good—so the economic regeneration of the city is important for the health, well-being and prosperity of people living in East Dunbartonshire. Glasgow has a wide hinterland. It is very much the focal point for all of the west of Scotland in terms of economic activity, which covers everything in the region, from the bustling city centre to the tranquillity of the shores of Loch Lomond.
On regeneration, I want to touch upon a particular part of the hinterland, namely the town of Kirkintilloch in my constituency. It is celebrating its 800th anniversary as a burgh this year, and it is the focus of much regeneration. I think that the hon. Member for Rutherglen and Hamilton West will know a great deal about Kirkintilloch’s initiative from his previous work for East Dunbartonshire council. The initiative has brought together a multimillion pound regeneration package, including a new leisure centre, a new health centre and a newly opened link road, which, as well as alleviating some traffic problems, makes Kirkintilloch much more accessible to people travelling there from Glasgow. It has helped to regenerate the town, which certainly needed it—it is, perhaps, the part of my constituency that has been in most need of regeneration. That has been successful and much of it has now been completed.
The town has recently been allocated £361,000 for town centre regeneration from a Scottish Government fund. Therefore, although the hon. Lady has genuine criticisms of the Scottish Government, it is perhaps fair to say—particularly because no representative of the Scottish National Party is present—that the Government in Holyrood have done some things right. However, I agree with her complaint about the cancellation of the Glasgow airport rail link. I do not now fly to London—I take the train instead—but that was an important project that would have been helpful had it not been cut. Kirkintilloch has a great deal of heritage—as I have said, it is celebrating its 800th anniversary. The Forth and Clyde canal runs through it, and it has much Roman heritage. In fact, much of my constituency runs along the line of the Antonine wall, which not long ago became a world heritage site.
That brings me to the issue of economic regeneration and tourism. It is frustrating that we underperform in that area in the west of Scotland. One of Scotland’s biggest industries is tourism, but so many people I meet who say that they have visited Scotland have been only to Edinburgh and think that that is enough. We must and can do more to draw people across, even if it is only for a day trip, so that they do not just think, “We’ll go to Edinburgh.” After all, the two cities are only 45 minutes apart on the train, and the west of Scotland has a wealth of activities and things to offer people that they would not necessarily get in Edinburgh. We should be promoting that more.
As I have said, we have the world heritage site of the Antonine wall. We also have the west highland way, which is one of the world’s greatest long-distance walks and which starts in Milngavie in my constituency. We have not properly exploited its economic benefits. Obviously, there is a current economic benefit, but it could be so much greater. The recent opening of a tourist information centre in Milngavie was a welcome start to that process, but it speaks volumes that, until recently, this world-famous, long-distance walk did not even have a tourist point at its start. It has not been given the priority that it should have for many years.
Another reason why we should attract more people to Glasgow is that—if I may be slightly biased—we are a much friendlier city than Edinburgh has a reputation for being. I am sure that if people come, they will want to come back and become ambassadors. Those of us who represent the west of Scotland in this place and in other Parliaments have a responsibility to be ambassadors, as the Evening Times rightly told the hon. Lady. We need a renewed focus on tourism at all levels of government.
The 2014 Commonwealth games provide a great opportunity to sell Glasgow, and they are also clearly a huge boost for economic regeneration through the investment for building various facilities. We should make sure that there are good links—I understand that this is the case—between the teams preparing for 2012 and 2014, but we should also use the expertise of Manchester, which had such a successful Commonwealth games in 2002. Beyond the boundaries of the city, enlightened local authorities surrounding Glasgow have the opportunity to do what some of those surrounding Manchester did in 2002—own the Commonwealth games and use it for economic, educational and cultural benefit by linking up with countries that may want to base their training camps in those parts of the west of Scotland. They could also create much more meaningful links with local school projects and get the whole community involved. Moreover, the 2012 London Olympics and the 2014 Commonwealth games even have the potential to encourage some countries partaking in both games to base their training camp for 2012 in and around Glasgow and to return there in 2014, so there would be a relationship over several years.
This is a Westminster Hall debate, so there is a general spirit of consensus, which has been well noted this morning. I will end, however, on a slight note of discord. The hon. Lady is right that it is essential that the public and private sectors work together and that that can be successful. I take slight issue, however, with the suggestion that we have a low level of debt and that it is not a major problem. The fact that we have more than a trillion pounds of national debt is a threat to economic regeneration. The fact that we are spending £120 million every single day in debt interest almost makes me want to weep, because it makes me think about what else that £120 million could be spent on. We can all think of things in our constituencies that would promote regeneration and on which that money could be well spent, but at the moment it is, effectively, just dead money going on debt interest.
In the grand scheme of things, much needs to be done to promote economic regeneration in Glasgow and elsewhere, but I agree that tackling the deficit has to be a key part of that. If we do not do that, we will not have the environment that is essential for confident business growth, which will, ultimately, deliver the further improvements that we all want to see in Glasgow and elsewhere.
Mr William Bain (Glasgow North East) (Lab)
It is a pleasure to serve under your chairmanship again, Mr Gale, in this important debate on the Glasgow economy. I congratulate my hon. Friend the Member for Glasgow East (Margaret Curran) on securing the debate and on speaking with the experience of 12 years as a parliamentarian serving Glasgow, both in this House and the Scottish Parliament. She was also a champion for social justice when she was a Minister in a previous Scottish Executive.
It is clear that, prior to the global economic downturn in 2008, Glasgow was on the cusp of a real economic renaissance. Between 1998 and 2008, there were more Glaswegians in work than ever before, while 30,000 jobs were created in business services—a 60% increase—and more than 4,000 new jobs in the financial services sector. Glasgow experienced strong retail growth in that period, with 1,500 shops in the city centre, which even now generate £2.4 billion per year in retail sales turnover. Glasgow also extracts real economic benefit from tourism, as the hon. Member for East Dunbartonshire (Jo Swinson) has said. The current expansion in hotel capacity is key to attracting new events and to the hosting of a successful Commonwealth games in 2014.
Even in recent times, major companies have continued to invest in Glasgow’s biggest asset, its people, by announcing major recruitment programmes. In autumn 2010, Vertex, a provider of customer management outsourcing, announced plans to create 368 jobs, while 1,500 new jobs have been announced in the financial sector by Barclays, Santander, esure, Morgan Stanley and Odyssey Financial Technologies. There has also been a 75% increase in the leasing of office space in the city.
I would like to emphasise three points. First, investment in infrastructure is needed if Glasgow is to remain competitive in increasing its output in retail and business services. The particular priorities are upgrading Glasgow’s drainage and water catchment system to mitigate flood risks, and improving transport networks. There is an overwhelming case for constructing a high-speed rail network from London through the major English cities to Glasgow and Edinburgh at the earliest opportunity. That is worth £20 billion in economic benefits to both cities. The city council, the business community, the Scottish Council for Development and Industry, and Labour Members are concerned about the lack of momentum by the Department for Transport in initiating the necessary discussions with the Scottish Government on the planning and financial issues involved in the construction of high-speed track in Scotland. I hope that the Financial Secretary and the Secretary of State for Scotland will encourage the Secretary of State for Transport not to leave that essential work in the slow lane. The Scottish Government also need to play a central role in increasing capacity, principally between Glasgow airport and the city centre, through the reinstatement of capital funding for the Glasgow airport rail link, which has—as my hon. Friend pointed out—the potential to create 1,300 jobs in the west of Scotland. A further priority is the upgrade of major roads, such as the completion of the M74, because half of those who work in Glasgow live in constituencies outside the city’s boundaries—for example, that of the hon. Member for East Dunbartonshire.
Secondly, more has to be done to tackle Glasgow’s historic underperformance in labour productivity, particularly in the service sector. BAK Basel Economics benchmarked Glasgow against a group of 35 European cities, and Glasgow averaged an annual growth rate of 2.3% in productivity from 2000 to 2005, which puts it in the top 10 cities. However, Glasgow lay in 33rd place in relation to measures of labour productivity in 2005, which is relatively low in comparison with other major EU cities. Thirdly, Glasgow’s economy needs to diversify in order to take advantage of the expansion in the renewables sector, of our universities as centres of scientific and other research excellence, and of high-value-added manufacturing.
The life science community within the west of Scotland is home to 180 companies, including those in Nova park, Robroyston in my constituency. Those companies range from major pharmaceuticals, to diagnostics, therapeutics, medical devices, contract researchers and manufacturers, all of which jointly employ more than 80,000 people. However, continued business support from the Government is required to ensure that they flourish in the coming decade.
Glasgow is home to a quarter of the west of Scotland’s core energy sector businesses and many other energy sector supporting businesses. Research undertaken by the sustainable Glasgow initiative found that Glasgow currently emits around 4 million tonnes of CO2 per annum, which is linked to its energy use. The initiative proposes a series of measures to reduce those carbon emissions, such as renewable energy systems, fuel switching and energy management systems.
Ann McKechin (Glasgow North) (Lab)
I am speaking as a Glasgow constituency Member rather than as an Opposition Front Bencher. I very much welcome what my hon. Friend has said. Does he agree that Glasgow is a perfect location for the new green investment bank proposed by the Government, given its track record not only in financial services, but in innovation and in having a connection with the renewable energy sector?
Mr Bain
I am most grateful for that intervention. As on so many other matters, my hon. Friend anticipates the argument I was about to advance. She has pointed out why it is particularly regrettable that the creation of the green investment bank, which could kick-start many renewable energy projects in Glasgow, has been caught up in a game of Whitehall pass the parcel. As the Secretary of State for Business, Innovation and Skills revealed last week, plans for capitalisation are unlikely to be published before May at the earliest. It is still uncertain whether the green investment bank will have sufficient operational independence from the Treasury, and there is a wider need for capital for new innovatory business start-ups. In addition, there is a strong argument for investigating the case for a wider British investment bank.
The city council has identified low pay as an area requiring urgent attention. In 2006, the average Glaswegian earned 2% less than the UK average, but thanks to the adoption of a living wage policy—first of £7 an hour, but rising to £7.15 an hour this year—by 150 businesses that employ 50,000 people in Glasgow, average earnings are now 3% above the UK average.
It would not be fair to leave out the records of the Scottish and UK Governments in recent months on assisting Glasgow in developing a strategy for growth. I regret to say that Glasgow has not been particularly well served by either Government. The city council experienced a cut in funding of 3.6% from the Scottish Government, which was 1% more than previously indicated and is the worst financial settlement since 2007. Despite that, the city council has made job creation, particularly for young people, a priority. It has invested in the Commonwealth apprenticeship initiative, through which 241 companies took on 600 apprentices last year, and the Commonwealth jobs fund, which aims to create 1,000 jobs for young unemployed people across Glasgow through a £6,500 subsidy per job. That is open to every private and third-sector employer in the city.
However, it is clear that, at a UK level, the cut in capital and investment allowances is affecting manufacturing exporters and harming Glasgow business. The UK Government’s failure to continue the future jobs fund beyond the spring and the revelations this morning that fewer people will proceed through the Government’s work programme than under the initiatives of the previous Government add to concerns that the hard-earned progress on employment levels of the past 13 years will slip backwards. As my hon. Friend the Member for Glasgow East intimated in her remarks, incomes will also be damaged by the Government’s proposals on housing benefit, which it has been estimated will cost £10 million to £12 million a year in lost spending capacity by the poorest families and individuals in the city.
The Glasgow economy has the potential for continued growth in existing and new areas in the next decade, but it will require Government at all levels to exhibit a sustained and credible strategy for growth, rather than simply a plan for an over-hasty fiscal retrenchment that may cost jobs and damage Glasgow’s competitiveness.
Anas Sarwar (Glasgow Central) (Lab)
I join my colleagues in congratulating my hon. Friend the Member for Glasgow East (Margaret Curran) on securing the debate. During 12 years as an elected Member of both this House and the Scottish Parliament, she has demonstrated her commitment to the city of Glasgow. I am delighted to stand side by side with her and every other Glasgow Member of Parliament to say that our first priority is and always will be to stand up for the great city of Glasgow, which we are all proud to be from and serve.
From the outset, it is important to recognise the huge amount of regeneration that has taken place in the city of Glasgow over the past 13 years. Within my constituency, we have seen tremendous regeneration next to the Clyde, involving the media Hub, the BBC, ITV, the Scottish Exhibition and Conference Centre development, the Clyde auditorium and the science centre. I am pleased to say that all that development is happening within my constituency. There has also been tremendous development in the city centre. Sauchiehall street and Buchanan street have the second highest footfall of any UK city centre, second only to Oxford street in London. There has also been a huge amount of housing regeneration right across the city. However, sadly, that has stalled through the recession and as a result of these difficult times.
As the hon. Member for East Dunbartonshire (Jo Swinson) rightly pointed out, the 2014 Commonwealth games will provide a great opportunity to sell Glasgow not only nationally but globally, and will bring opportunity for the east end of the city. It is important to recognise that Glasgow has had a tumultuous economic history, and that the growth and development seen in recent years is extremely fragile, particularly in such a tough economic climate. All hon. Members present today understand that regeneration is driven by economic growth, be it a particular area or the nation as a whole. The regeneration that Glasgow enjoyed under 13 years of a Labour Government is at threat at its roots as a result of inaction from the Scottish Government and a new UK Government policy. However, as with all development and regeneration, cutting off support too early means cutting the lifeline to projects, which will end before they have begun, squandering the initial investment and leaving communities back where they started.
Therefore, in spite of the current climate, it is important that we ask the Government to remember fragile areas such as Glasgow when they make cuts and choose where to invest. That includes cuts to initiatives such as employment zones, and investment in projects such as high-speed rail. The people of Glasgow have been forgotten in the past, when the closure of the shipyards left generations unemployed, and I hope this debate will help to ensure that Glasgow is not forgotten again.
It is important to remember that regeneration is not only about the physical development of new areas through Government and developers investing large amounts of capital, but giving renewed energy to existing systems and supporting the local economy and local people, so that Glasgow can regenerate itself from within. One way that the previous Government began to achieve that was by supporting unemployed people back into work—an essential step to bring growth back into deprived areas is to increase employment.
Despite investment in Glasgow in the last decade, which has improved prospects for thousands of people, the city still has one of the highest unemployment rates in Scotland and has been hit hard by the recession. The announcement by the Government that they will scrap the future jobs fund, which created more than 1,100 jobs for Glasgow and 15,500 jobs across Scotland, is devastating. The Government insist that their replacement back to work programme—when it eventually appears—will provide a more effective system for getting people back to work. However, in the news just yesterday, we heard that the number of people expected to benefit from the scheme in 2012-13 will be down by almost 300,000 on the number who benefited from the previous Government’s programme nationwide.
Labour’s employment zones, which were due to be scrapped six months before the new work programme, were also of great benefit to the city of Glasgow. I am pleased that the Government have done a U-turn on scrapping them six months before the new work programme had begun. It is a shame that it took Labour party pressure from the Opposition Benches and Glasgow Labour MPs having to fight with the Government to make them do that U-turn. The Government should have seen sense in the first place.
We have to recognise that with regeneration and unemployment, one size does not fit all. The Government need to demonstrate that they are paying attention to areas with serious long-term unemployment problems through plans to provide focused support to get people in those areas back to work, particularly given their plan to penalise the long-term unemployed with policies such as a 10% cut in their housing benefit.
Poverty and a lack of opportunity are huge problems in my constituency, and the cuts to regeneration projects such as the Glasgow airport rail link and the Clyde Gateway, coupled with cuts in employment programmes, only threaten to compound the situation. It is important to recognise that the people are willing to work, but jobs must be available for them to fill. It is the growth of Scottish business that will ultimately drive the creation of the economy that Glasgow requires to regenerate itself. Therefore, in addition to supporting work programmes and investing capital in Glasgow itself, the Government must be mindful of longer-term policy decisions that will affect Glasgow’s independent growth. That includes supporting Glasgow’s growing sectors and ensuring that it remains well connected.
The Glasgow to Edinburgh improvement project will go a long way toward supporting Glasgow’s growth by improving connectivity between the two cities, reducing travel times and costs to businesses, and creating one central hub. Although strengthening Scotland’s internal links is important, Glasgow will struggle to present itself as a viable place for start-ups, or to maintain a good environment for growth, if it is not adequately connected to the rest of the UK. The Scottish market alone is not large enough to support very large businesses, particularly those in manufacturing, and international businesses will require strong links with London and the rest of the UK market before they will be attracted to settling in Glasgow. That is why it is such a concern that the plans for High Speed 2 do not currently include an extension to Scotland. Under the present proposals, journey times between London and Glasgow will be reduced by only half an hour if High Speed 2 terminates in Manchester. With current proposals planned for completion as far off as 2025, that prompts the question of how long Glasgow, and indeed the rest of Scotland, will have to wait before they benefit from an adequate rail connection to the rest of the UK.
Britain is already behind our European counterparts in providing proper high-speed connections—the French TGV began operating more than 25 years ago. Scotland’s growth will be actively disadvantaged if there is not even a longer-term plan to link Scotland with the rest of Europe. When we add to that the recent announcement that British Midlands International is to stop its Glasgow to London service, we can understand the deep concerns the Scottish business community will have when it finds competing in the international market increasingly challenging. Both Glasgow and Edinburgh city councils have come together on this. I can assure you, Mr Gale, that Glasgow and Edinburgh do not come together on many issues, but they have on high-speed rail. Independent research conducted for both councils has shown that a high-speed link could be worth up to £7 billion to the Scottish economy. What Glasgow needs in order to grow is a long-term commitment from the Government that high-speed rail for Scotland is a top priority, and that they will endeavour to make it happen at the same time it happens for the north of England.
Glasgow is a vibrant city and a great place to live, and I wholeheartedly believe that it will continue to grow if we can create opportunities for the people living there. There is no real reason why, given the right support, Glasgow cannot become an economic hub in its own right and help to drive growth for the rest of Scotland. What Glasgow needs is continued commitment from the Government to ensure that those opportunities will begin to appear, and evidence to show that Glasgow has not been forgotten, as it sadly was in the past.
Mr David Hanson (Delyn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Gale. I begin by congratulating my hon. Friend the Member for Glasgow East (Margaret Curran) on securing this debate, which is of crucial importance not only to Glasgow and to those who have a concern about and an interest in Scotland, but to the wider UK economy. I am pleased that she has been supported today by my hon. Friends the Members for Glasgow Central (Anas Sarwar), for Glasgow North East (Mr Bain) and for Rutherglen and Hamilton West (Tom Greatrex) and by my hon. Friend the Member for Glasgow North (Ann McKechin), the shadow Secretary of State for Scotland, who is speaking in a personal capacity today. I also very much welcome the contribution from the hon. Member for East Dunbartonshire (Jo Swinson).
What struck me about the debate is that my hon. Friends have made an important case that is applicable not only to Glasgow, but to many other parts of the UK. The key to economic growth and the success of local economies is partnership. It is about not only what government, the voluntary sector or individual entrepreneurial spirit can do, but the partnership that brings those things together. My hon. Friends have discussed national UK Government investment in Scotland, economic projects that link Scotland to other parts of the United Kingdom, the clear benefit that public expenditure brings to Scotland and how such public expenditure relates to the private and voluntary sectors and to the social progress of people who live and work in the great city of Glasgow and the surrounding community.
My hon. Friend the Member for Glasgow East began by pointing out that Scotland has a great manufacturing, cultural and social history, including shipbuilding, the automotive industry and football—one of Glasgow’s great exports is Kenny Dalglish, who has brought great success to my part of the world. The key point is that that manufacturing history and support is where we need to build that partnership for the future. What I have taken from the debate is the issue of partnership. Secondly—my hon. Friends have touched on this, and I shall return to it—a strategy for growth is needed that involves the public sector, looks at key infrastructure projects and helps to develop the voluntary and private sectors. There is also a need—this is key to where the Government are currently failing—for that strategy, that partnership, that development, and that active government to focus on social fairness. Even at a time when there are challenges with the deficit, which we have all recognised, the way in which the Government implement their deficit reduction strategy can, as my hon. Friends have touched on, damage social fairness and the social fabric of our communities.
That is particularly important because—I do not yet have the figures for Scotland—unemployment in the United Kingdom rose by 44,000 in the last month to 2.5 million people. Particularly worrying is the rise of 66,000 in youth unemployment, which has now risen to 965,000 people between the ages of 16 and 24, which makes a total unemployment rate of 7.9%. When the Labour Government left office in May last year, unemployment was starting to fall and there were signs of growth after a difficult period. Sadly, I have to report that unemployment will undoubtedly hit the city of Glasgow, as it will elsewhere in the United Kingdom.
My hon. Friends made the case that the Minister has to explain key policies that he has promulgated in the House and now has to follow. Those policies are having and will have a severe impact on Glasgow’s economy. We need to challenge them, as my hon. Friend the Member for Glasgow East has by securing this debate, and look at alternatives. We must ensure that however we tackle the deficit, which we need to do in part—the Minister knows that when I was a Labour Minister in the Home Office, the Department had plans to make £1.5 billion of savings, so it was something that we were planning to do. However, the scale, pace, depth and front-loading of this Government’s cuts are severely damaging communities in Glasgow and other parts of the UK.
The budgets for the devolved Administrations—this is key to my area, Wales—show that the capital budget, which impacts on housing, education and infrastructure in Glasgow and elsewhere, is being cut by the Government, and in Scotland that process is being supported by the unfair application of the cuts by the Scottish National party-led Government. The £3.4 billion of capital spending in 2010-11 that was planned by the Labour Government will be cut by this Government to £2.3 billion of capital spending in 2014-15. The cut is from £3.4 billion this year to £2.5 billion in 2011-12, which makes a £900 million cut in the capital programme.
My hon. Friend mentioned that her constituency has had no investment in schools thanks to the SNP Government in Scotland and that it faces difficult challenges in respect of housing and infrastructure. Those issues will be magnified tremendously by this Government’s £900 million cut to the Scottish Executive’s budget. Again, there are ways in which we can tackle deficit reduction, but that level of drop front-loaded in the first year will hit Glasgow and other parts of the UK extremely hard. The £900 million cut for Scotland will mean that the private sector, which is so dependent on recovery in Scotland, will suffer. It will be hit by not being able to create the jobs that would have met some of that capital expenditure demand. My hon. Friend pointed to real challenges in her contribution and was supported by other hon. Friends. The Minister needs to recognise that the front-loading will cause real difficulty. The cuts, which are too quick, will exacerbate unemployment, as we have seen with the rise today.
I am sorry that there is no one here from the SNP, but I do not wish to intrude on private grief. I represent a constituency in Wales. The nationalists in Wales, to give them their due, would have been here to argue their case if the debate had been on the economy of Cardiff or Swansea. I am sorry that we have not had a contribution from SNP MPs. They might have explained how they would implement the draconian cuts at a local level. Perhaps that is something that we will return to at a later date, perhaps even outside this Chamber. My hon. Friend may wish to raise this issue elsewhere and discuss the SNP’s lack of interest in this debate and in Glasgow.
The capital cuts and, indeed, the revenue cut, which, cumulatively, is a 7% reduction in real terms in the resource budgets of the Scottish Parliament, will impact heavily on the ability of Glasgow to weather what is still a difficult period coming out of a recession which, as my hon. Friend said, was not the fault of the people of Glasgow East, yet they are the very people who will have to bear the real hardships caused by public sector reductions and the Government’s social policies. The rise in VAT and cuts to housing benefit will be extremely difficult. The unfairness of those changes hit hardest the poorest people in Glasgow, whom my hon. Friend has represented for 12 years here and in the Scottish Parliament.
There are some good news stories which should not be forgotten in this debate. Hon. Friends from both sides of the Clyde have mentioned the Clyde Gateway project and the importance of progressing it. I want to support them from the Opposition Front Bench in their endeavours to influence not only the Scottish Executive but the Westminster Government to ensure that it is a success. The project embodies the partnership that my hon. Friends have discussed today. It has the potential to develop large areas of the east end of Glasgow plus Rutherglen and Shawfield in South Lanarkshire. It involves investment of more than £62 million between 2008 and 2011, with Scottish Enterprise hopefully bringing forward £42 million to 2016. It will lever in private sector investment of up to £1.5 billion for private development, which will create jobs and homes.
The project is symptomatic of why the Government’s approach to public spending is so wrong. The Clyde Gateway scheme shows that public-private partnership can create jobs, homes and social progress. It is not a one-size-fits-all scheme, in which the public sector appears to be the devil to all other aspects of society. The Government are committed to reducing the public sector, not only to reduce the deficit but because they do not like public spending and public investment as a whole.
I hope that the Minister will endorse and support the Clyde Gateway scheme, that the UK Government will give it succour, and that that will also apply to the 2014 Commonwealth games. As my hon. Friends have said, the games will be a key economic generator and will put the spotlight on Glasgow’s tourism potential. They will be a showcase for the great skills of the people of Glasgow and for the city’s great attributes. They will involve £1 billion of investment in infrastructure, 1,000 additional jobs and 15,000 volunteers—the big society will be alive in Glasgow, irrespective of any Conservative party initiatives, which mean, in effect, a small state. I hope that the Minister will touch on that proposal today, recognise that it will result in economic growth and development in Glasgow, and support it.
Despite those positives, the Government’s policies on public spending and also on social issues will damage the economy of Glasgow. My hon. Friend the Member for Glasgow East picked up on various points. Linking local housing allowance to the consumer prices index will result in lower income for people locally. The cut to housing benefit ignores the fact that, in an area with rising unemployment, long-term unemployed people who are trying their best to find work, who are going to interviews and sending out applications and who are turning up at the Jobcentre but are still unable to secure employment will face a reduction in their income.
My hon. Friend knows that if the people of Glasgow East find that they are unemployed and that their housing benefit has been cut, the money that they lose will not be spent in Glasgow. They will not be spending in local shops, supporting the local economy and voluntary organisations, or creating local jobs with that resource in the east end of Glasgow. We add poverty to poverty by taking unfair cuts forward.
Glasgow has a younger population compared with the rest of Scotland, and, sadly, youth unemployment will disproportionately hit that area hardest. The future jobs fund has been mentioned. It had the potential to create 200,000 full-time, paid jobs for young people up and down the country, and Glasgow would have had its share. There will be real problems in the future because of that cut.
I was pleased that my hon. Friend the Member for Glasgow North East mentioned the living wage campaign. That is a big society issue: companies, voluntary organisations and the council are agreeing to pay a living wage and working together because they recognise, without the Government telling them to be part of a big society, that they have a partnership interest in the future of Glasgow. Many of the challenges are self-evident, but the Government are adding to them by front-loading public expenditure cuts too fast and too deep. However, Glasgow has real positives for future growth, such as the Commonwealth games and the Clyde Gateway, which we should celebrate on a UK basis.
Another issue that has been mentioned today is tourism. I was struck by the strong representations to extend the high-speed rail link along the west coast main line from the current proposal, which would run from London to the west midlands and through to Manchester. I use that London to Glasgow main line, because I get off at Crewe and go west. There is an argument for looking at such investment over the long term, to ensure that we enhance the high-speed link.
My hon. Friends pleaded for serious consideration of developing new industries in Glasgow and made a strong case for the green investment bank to be placed in the city, growing the financial services sector not only in Edinburgh but in Glasgow. The growth and development of renewable energy projects, with the support that the UK Government can give, are real and positive things.
My hon. Friends and I came to the debate with severe criticisms of Government policy. While needing to tackle the deficit, the Government have gone too far, too fast. However, we can work with the UK Government on some real positives, as well as with the Scottish Executive which, hopefully, will be under the control of the Labour party after May this year. We could build on the strengths and the will of the people of Glasgow to develop their own future by attracting new businesses and visitors, and by ensuring that the success of the Commonwealth games showcases that great city to the rest of the United Kingdom.
I am grateful for the opportunity provided by today’s debate, which is the first that my hon. Friend the Member for Glasgow East has secured in Westminster Hall; I hope that it will be a success. I look forward to the Minister defending his draconian cuts but also, I hope, working with my colleagues to ensure that he can mitigate those cuts and develop a strategy for growth for Glasgow into the future.
The Financial Secretary to the Treasury (Mr Mark Hoban)
I congratulate the hon. Member for Glasgow East (Margaret Curran) on securing the debate. She struck me as passionate about her city, its people and their prospects. I commend that, and it will serve her well in this place.
I have to disappoint the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), but I am not sure that I need much of a history or geography lesson about the city. I have visited Glasgow quite frequently, I have met businesses in Glasgow and I am going to Edinburgh next month. [Interruption.] I know there is some fraternal rivalry between the cities, but the hon. Member for Edinburgh East (Sheila Gilmore) is in her place representing Edinburgh and ensuring that the Glaswegians do not get everything their own way. I understand some of the challenges in the Scottish economy. Having been born and brought up in the north-east, I recognise from my own region some of the trends referred to by the hon. Members, such as the decline in shipbuilding, or in coal mining, as mentioned by the hon. Gentleman. I see strong parallels.
I congratulate other right hon. and hon. Members, including my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on participating in the debate and making the case for their constituencies.
Before I turn to the main text of my contribution, let me deal with four areas mentioned by a range of speakers. First, it is vital for Glasgow to use the Commonwealth games as an opportunity for economic development. I note the job creation initiatives around the games. Some lessons could be learnt from the London Olympics, not only in the regeneration provided for east London but in how the games are a focal point for businesses to promote the benefits of London as a place of inward investment. I encourage people in Glasgow to work closely with the Olympic authorities in London to understand the opportunity to attract inward investment and to raise the profile of the city.
The Clyde Gateway, as with the spending for the Commonwealth games, is a devolved matter, for prioritisation by the Scottish Government, but I am sure that Scottish Enterprise will have heard the strong messages from this morning’s debate. However, if MPs and others from Glasgow wish to see funding devoted to that project, they must place pressure on the Scottish authorities.
I will raise with my right hon. Friend the Secretary of State for Transport the issues about the completion of High Speed 2, which affects a number of areas of the country not covered by the current route, such as the northern part of England as well as Scotland. I will ensure that he is aware of the concerns expressed.
On the green investment bank, I am afraid that Glasgow will have to join the queue of bidders for the headquarters. A number of parts of the country have made representations through their Members for the site of the headquarters. Green investment is a huge opportunity for economic growth and development. Existing skills in local communities or in the universities serving those areas can be used to promote renewable energy and green industries. The issue affects all parts of the country but, at the time of the Budget, my right hon. Friend the Chancellor of the Exchequer said that at least £250 million from the green investment bank will be spent in Scotland. We have not lost sight of the important role such investment can play in stimulating economic growth.
As pointed out by the hon. Member for Glasgow East, Glasgow was at the forefront of the industrial revolution and it remains one of the most important and innovative cities in the UK. It is Scotland’s largest urban economy, generating £13 billion gross value added each year and supporting 400,000 jobs. As we heard, the jobs are enjoyed by those living not only in Glasgow but in the surrounding areas, as part of the economy of the west of Scotland.
We want to work in partnership with the Scottish Government to promote our shared objective of increasing economic prosperity for all in Scotland and Glasgow. As mentioned, economic regeneration policies are largely a matter for the Scottish Government and their local authorities and agencies, which was evidenced by the criticism made by the hon. Lady of the Scottish National party Government. I am sure she will take every opportunity over the coming weeks to remind SNP Members of that and to question their non-attendance today.
Setting out the Government’s economic strategy and its impact on Scotland—in particular, Glasgow—will be helpful. We set out three strands last year: first, to reduce the deficit inherited from the previous Government; secondly, to increase economic growth, including by rebalancing the economy throughout all the countries and regions of the UK; and, thirdly, to promote fairness for all.
As my hon. Friend the Member for East Dunbartonshire rightly pointed out, we have a deficit to tackle and we are spending £120 million on interest every day—we spend more in interest than we do on schools. Clearly, we need to resolve that issue if we are to support economic growth, keep interest rates low and protect jobs in all parts of the UK.
The reality that the right hon. Member for Delyn (Mr Hanson) keeps trying to escape from—he and I have had many debates on such issues—is that the previous Government set out cuts starting from April this year that would have been only £2 billion less than the cuts we have outlined. When he talks about front-loading, he ought to think about the previous Government’s plans and acknowledge that the cuts this year are only £2 billion more than in the plans we inherited. All parts of the UK, including Scotland, must bear their share of the deficit reduction made necessary by what we inherited from the previous Government.
Funding for the Scottish Government in the spending review reflects the Government’s commitment to invest in infrastructure and to ensure that conditions for growth are in place throughout the UK. The spending review increased capital funding in the UK by £2 billion compared with June’s Budget plans, which is more than what the previous Government had set out as their capital plans for the new Parliament. I repeat, the right hon. Gentleman must be careful what he criticises: we have been more generous in our capital settlement than his Government had intended. We are keen to ensure that capital expenditure is used to protect projects with high, long-term economic value and that spending is focused on investment promoting economic growth, including in transport, science, regional growth, digital infrastructure and supporting the low-carbon economy. Glasgow MPs need to challenge the Scottish Government on how they will prioritise their budgets to deliver those objectives. These are devolved matters, and the Scottish Government are accountable for the priorities they set and how they respond to the needs of Scotland.
Margaret Curran
I take the point about devolved matters, and we do pursue those. Housing benefit, however, is a reserved matter. Will the Minister confirm whether the Government are going ahead with the 10% cut in housing benefit after a year to those receiving jobseeker’s allowance?
Mr Hoban
I will return to the issue of housing benefit in a moment. Let us be clear: the Scottish Government have not suffered disproportionate cuts. Funding has been determined by the Barnett formula in the usual way. The percentage of Scottish Government total reduction in departmental expenditure limits for 2014-15 is below the UK average—they are getting a better spending settlement than the rest of the UK. Public spending per head in Scotland is substantially above the UK average and is expected to remain so over the spending review period. The Scottish Government have benefited from substantial increases in spending since devolution.
If we are to promote strong and sustainable economic growth that is evenly shared across the country and between industries, we need to tackle the debt and deficit that we inherited. The Government are inviting businesses to take part in a fundamental review into what each area of Government is doing to address the barriers facing industry. They have already acted to remove barriers to growth, and the growth review announced last year set in train an intensive programme of work to drive forward action on the Government’s priority areas. That relentless focus on growth will continue to form the basis of the Government’s agenda for the rest of this Parliament. We started by focusing on planning, trade and inward investment, competition, regulation, access to finance and corporate governance.
The review will look at all sectors of the economy, but we have first identified six key sectors: advanced manufacturing; digital and creative industries; business and professional services; retail; construction; and health care and life sciences. Manufacturing is a strong part of the Scottish economy, and it has seen six consecutive quarters of growth. That is a helpful sign of the rebalancing of the economy.
As the Financial Secretary to the Treasury, financial services is my specialist topic, and the importance of financial services to Glasgow has been mentioned a couple of times during the debate. In 2009, I visited National Australia Bank at the Clydesdale branch in Glasgow and spoke to management and businesses from the west of Scotland. The financial sector is one of the most significant contributors to UK GDP and employment, and although London is the heart of that industry, there are important financial centres across the country, including in Glasgow. Financial services firms in Scotland account for 9% of total UK employment in the sector.
Financial services is one of the biggest employers in Glasgow. In 2008, 95,000 people were employed in financial services firms in Scotland, and many of those jobs were based in Glasgow. Major local employers include National Australia Group, which I referred to earlier, and Lloyds Banking Group. I know that Glasgow has recognised the potential role that financial services can play in a growing economy. The £750 million joint public-private venture investment in the international financial services district could bring an extra 20,000 jobs to the city.
We often think of the strong tradition of businesses that are based in Scotland, but we should not lose sight of the fact that many international financial services that we associate with Canary Wharf and the City have significant operations outside London. Morgan Stanley is in Glasgow, as are Deutsche Bank and Citibank. Those global businesses chose to locate some of their operations to Glasgow, which shows that the benefit of having London as a global financial services centre spreads beyond the boundaries of the square mile. We are doing as much as we can to ensure that the UK remains an attractive and competitive place for financial services to do business.
As well as measures for the financial services sector, we must ensure that the UK is a good place for inward investment. In the Budget we announced plans to reduce the rate of corporation tax from 28% to 24% over the next four years. We published a corporate tax road map that set out a significant programme of corporate tax reforms designed to restore the UK’s tax competitiveness, including reform of the controlled foreign company regime. The Government are responding to business concerns about the instability and unpredictability of the UK tax system while taking action where they can to improve the UK’s competitiveness. We will work with our partners in the Scottish Government and elsewhere to ensure that Scotland is an attractive place in which to do business.
Increasing fairness is a strand of our work, and that point was touched on by a number of hon. Members. We must be clear about the important reforms to welfare set out by the Government. I recognise that there is a degree of support for those reforms from Labour party Members, but we clearly need to improve work incentives and get more people into work. Too many people must make a decision about whether they can afford to go to work, or whether the system means that they are trapped on benefits. That is why my right hon. Friend the Secretary of State for Work and Pensions is setting out plans for the universal benefit, which will be introduced from 2016. It means that for new claimants, it will always be better to be in work than on benefits. That sends a positive signal that people should take employment opportunities and will be better off if they do. That is not just economically better off—significant social benefits flow from people being in work.
The future jobs fund was mentioned by a number of hon. Members, and it is a convenient soundbite to say that the fund has been scrapped. We should all recognise, however, that many of the jobs that were funded were temporary and many were in the public sector and did not represent good value for money. That is why we are bringing forward the Work programme that will strengthen support for those seeking to get into work.
The hon. Lady mentioned housing benefit. She will recognise—as do a number of her colleagues—that the bill for housing benefit increased significantly under the previous Government. There are some anomalies in how the system works and the way that it distorts incentives. That is why it is important to restructure housing benefit and engage in reforms. We recognise the challenges that that will create, which is why additional money has been set aside to help manage the transition.
The hon. Lady also spoke about defence and shipbuilding. She will know that some of the work on the new aircraft carriers is being done on the River Clyde, just as some is being done in Portsmouth just outside my constituency in the Vosper Thornycroft yard. The Astute class submarines will also be based in Scotland and there is a great deal of support for Glasgow from central Government. However, if we are to achieve the great goals of this Government to rebalance the economy, spread wealth and prosperity, create jobs and ensure that prosperity continues across the nation, not just in London and the greater south-east, difficult decisions have to be made. We must tackle the deficit and find ways to remove some of the barriers to growth in the UK. That is why the Government are committed to the growth review and to ensuring that we do as much as possible to remove the barriers to economic growth.
Having claimed part of Merseyside and north Wales, the right hon. Member for Delyn (Mr Hanson) spoke about the importance of partnership. It is important to recognise the way that Scottish local authorities have worked with the private sector on a number of initiatives to support economic growth. We need to see more such partnerships but we must also tackle some of the underlying issues that we inherited from the previous Government, including the deficit and the national debt. Alongside tackling those things, we must lay the foundations for increased prosperity across the whole United Kingdom.