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Mr Jim Cunningham (Coventry South) (Lab)
This is probably only the second time, Mr Bayley, that you have chaired a debate of mine, and I welcome you. This is a short debate, and all the issues relating to Coventry and the west midlands cannot be covered, so I will be brief. The present economic situation developed in America, but the Government’s policies have not helped the general situation nationally or locally. [Interruption.]
Hugh Bayley (in the Chair)
Order. Will the hon. Gentleman wait a moment while colleagues leave the Chamber? Their conversation should take place outside the Chamber so as not to disturb this debate.
Mr Cunningham
The present economic situation started with Lehman Brothers in America, and the bankers. Some bankers in America faced Senate inquiries, and some were charged, but I do not want to go into that today. I want to talk about Coventry in particular, the west midlands in general, and some of the issues that affect Coventry and the west midlands.
We have issues concerning the police, and the problem of police numbers and cuts are well known. There are also issues with fire brigade cuts, and a running issue during the next few months will be changes to employment law. I will not develop the arguments too much today. Some have been well rehearsed, and some will be. There is a west midlands campaign for a fair deal for Birmingham, but there must also be a fair deal for the other districts that make up the west midlands, including Coventry. I am looking for a fair deal for Coventry.
Coventry was mentioned once in the autumn statement. It is one of the 12 smaller cities that will be included in the super-connected cities programme, and will receive funding for ultra-fast broadband. I am obviously pleased at the news, and I recognise the impact that superfast broadband can have on growth. I particularly understand the importance of encouraging small and medium-sized enterprises to realise the opportunities that superfast broadband can bring. A Lloyds Banking Group survey found that 45% of digitally mature small businesses had registered growth, compared with 35% of digitally immature SMEs.
Some research suggests an £18.8 billion opportunity for SME revenue growth through more high-tech approaches to marketing, data optimisation and more, so I am pleased with the Government’s commitment to broadband expansion. We can say something positive about the Government for a change, but we will be looking to ensure that they proceed intelligently to ensure that small businesses make the most of the available opportunities.
I am also optimistic about the city deal in Coventry and Warwickshire. Over the past month, Coventry MPs and councillors in particular have lobbied hard, as have Warwickshire MPs and councillors. The city deal could bring great benefits to the region, including giving cities the powers and tools they need to drive local economic growth, unlocking projects or initiatives to boost their economies, and strengthening the governance arrangements of each city. Each city deal includes at least one major commitment specific to the city, which generally involves leveraging private sector funding. Many have included tax increment financing and community infrastructure levies, and there is a focus on investment and trade.
I very much hope that Coventry and Warwickshire local authorities will make the case for Coventry’s candidacy for the deal. Coventry is a strong contender, and has been working for months to develop infrastructure plans that are ready to go ahead given sufficient funding and support. The plans reflect local understanding of the asset base, transport issues, the financial situation, and what can be achieved. An example of the work that Coventry is already undertaking to stimulate growth is the gateway project. It is controversial because environmental issues are involved, but I understand that it is on the way to obtaining planning permission, or has already received it. I am not clear about that. The project will be interesting, but controversial.
Another excellent example in Coventry is the Friargate project next to Coventry railway station. It is a 300,000 square metre development, which will extensively renovate the area to include 14 grade A office buildings, two hotels, new pedestrian routes, high quality public spaces, new residential buildings, and space for retail outlets and bars. Outline planning consent was granted in July 2011, and the first phase of the development has started. I hope that the development will transform the city centre, making it welcoming and lively. More importantly, I hope very much that the renovated city centre will raise optimism and encourage investment in the city.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate my hon. Friend on securing this debate. Coventry’s economy has been greatly assisted over the years by the car industry, particularly Jaguar. What does he think about Tata’s proposal to open a factory in China?
Mr Cunningham
There are a couple of schools of thought about that, but my understanding is that the trade unions are worried and will be having discussions with Tata. Some years ago, there was concern about Jaguar’s trade with China. Some people thought that cars would be built in China, but they were only assembled there, and there had been a misunderstanding. We need to find out more about the current deal, and discussions are ongoing.
Coventry city council is suffering from Government funding cuts. From 2010-11 to 2012-13, the council has suffered cuts of £101.89 per capita. That is among the hardest hit 20% of local authorities. More unjust and distressing is the fact that of those local authorities with cuts of more than £100 per head, including Coventry, 85.71 % are Labour-run, and only 5.36 % are Tory-run. Meanwhile, of those local authorities with cuts of less than £100 per head, 60.82% are Tory-run and 19.4% are Labour-run. It is hard not to be concerned about the Government’s fairness when the cuts seem to be distributed across local authorities on party lines. Coventry council had expected to lose 1,000 jobs over four years to 2014-15, but it is now predicting 1,600 job losses over the four-year period, with a cut of more than 10% in the work force.
Those cuts are impacting on the council’s services for the vulnerable. For example, its funding for early intervention will be cut yet again. Two years ago it was £22 million per annum, but from next year it will be £11 million. That is particularly damaging given the current increased pressure on social care. Every penny spent on early intervention in families with young children to help them help themselves is of paramount importance in taking people out of poverty and improving children’s life chances. Those pressures are increased by a social care budget for children of £64 million which has not significantly changed for two years. Similarly, the pressures are increasing daily on the adult social care budget because elderly people and disabled people are living longer, but that is not reflected in the budget, and the extra cost of care is not recognised in financial terms.
Those are only a few of the extreme budgetary pressures on the council; to put the huge cuts in funding into context, there are others. In my constituency alone, 920 households have already received letters from Her Majesty’s Revenue and Customs informing them that their child benefit is likely to be reduced or withdrawn. Across Coventry, that figure is 1,740 households. The jobseeker’s allowance claimant rate in Coventry and across the west midlands is 6.2%, well above the UK’s rate of 5.2%. Even worse, the rate of jobseeker’s allowance claims by 18 to 24-year-olds across the west midlands is 8.7%, far higher than the UK’s 7.1%.
Mr Cunningham
I want to get on. If I have time, I will let the hon. Lady in.
Looking at the proportion of people referred to the Work programme who have had a job outcome, there has been poor progress. In Coventry South, 1,670 referrals were made to the Work programme last year. In the same period, only 50 job outcomes resulted from the programme—a success rate of only 3%. Although employment levels have increased, we do not have enough information about the type of work being gained. There are clearly many people in part-time work who are not earning the income they need to survive. We need to look closer at the numbers, as it is not a question of simply being in or out of work; we need to know more about the type of work.
Karen Lumley
I congratulate the hon. Gentleman on securing this debate. Does he not agree that under this Government, unemployment is falling month on month, and that new business start-ups in Redditch have increased by 14%? Does he not think that that is good news for the west midlands economy?
Mr Cunningham
We do not have a breakdown of those figures. We do not know how many people are part-time workers or are in temporary jobs. I want to know more about those figures.
Budgetary pressures on the council are made all the more damaging in light of the financial pressures individual households face. For example, I am extremely concerned about the coming introduction of the under-occupancy penalty, or bedroom tax—in other words a new poll tax, but no one has grasped that. It will cut the housing benefit of working-age tenants in the social rented sector who have spare rooms.
The Government say that if people do not want to face the benefit cut, they can simply move into a smaller property. However, there are simply not enough smaller homes available in the current housing market. There is a national shortage of one-bedroom houses, particularly in the social housing sector. Furthermore, there are concerns that tenants are not being sufficiently prepared for the changes and do not know anything about the penalty.
The Department for Work and Pensions estimates that the introduction of the social sector size criteria measure is likely to affect 60,000 working-age housing benefit claimants living in the social rented sector in the west midlands at the time of its introduction in 2013-14. The change will mean that anyone in social housing with a spare bedroom will lose 14% of their housing benefit, or 25% if they have two spare rooms. Most people with a spare bedroom are pensioners who live in two or three-bedroom houses. There is a national shortage of one-bedroom houses, particularly in the social housing sector. In many areas, moving is not an option, because there are not enough smaller places to move into. I have long been concerned about that issue and want to prepare those who will be affected in Coventry as much as possible.
Another factor that is putting pressure on households is fuel prices. Petrol prices have fallen by less than 4p a litre, despite a 10p drop in wholesale prices—almost mirroring what happened six months ago.
Mr Cunningham
No. I want to finish my speech, and my colleagues want to come in.
The average pump price of diesel has fallen, but only by 40% of the fall in the wholesale value. The Government should be doing all they can to try to mitigate the impact of high prices, and doing all in their power to make the prices at the pump fairly reflect any drops in the wholesale price.
I have a number of serious reservations about High Speed 2. I wish to be given all possible assurances that Coventry will not lose out from the development of HS2. We have had a meeting with the Secretary of State for Transport, who will look at the situation and at how to ensure that Coventry does not lose out. I am concerned that HS2 might drive up prices in existing services to Coventry and reduce services on the west coast main line, which could blight inward investment in Coventry.
European attempts at high-speed networks are concerning. There have been criticisms that the high-speed route in France has meant that towns near but not on the route have suffered, as investment was sucked into the cities on the route. Coventry’s proximity to Birmingham is making me anxious that a similar loss of investment to Birmingham may occur.
Furthermore, I am extremely concerned about the compensation package being offered by the Government. I understand that the existing package does not cover all who will be negatively affected by HS2, particularly those at the fringes. Households may experience negative equity on their properties but will receive no compensation, therefore making it difficult to sell the properties on the periphery. I have been having meetings, but will seek more to gain every reassurance that Coventry households, as well as the local economy, will not be negatively affected by HS2.
In conclusion, I want to know what the Government intend to do to support Coventry. The city is working extremely hard to encourage investment and regeneration and to free up land to provide space for manufacturing facilities and many other projects. The council is doing all it can to continue providing essential services, particularly for Coventry’s vulnerable people, despite difficult budgetary pressures. The people of Coventry want reassurance that such hardships are not going to continue without the Government also taking action to stimulate growth in the region.
Mr Geoffrey Robinson (Coventry North West) (Lab)
May I say what a pleasure it is to serve—for the first time, I think—under your chairmanship, Mr Bayley? I thank Mr Speaker for granting this debate, and my hon. Friend the Member for Coventry South (Mr Cunningham) for inviting me to take part in it. The debate is timely, given the dreadful news that came in the autumn statement, the downgrading of the Government’s forecast, and the implications that has for continuing poor economic performance throughout the country and in the west midlands in particular. Sadly, we have yet to see a pick-up there.
Mr Robinson
No, I will not. If I had the remotest hope of the intervention being intelligent or relevant to what we are talking about, which is the west midlands and Coventry, in the way that the intervention of my hon. Friend the Member for Central Ayrshire (Mr Donohoe) was, I would. However, we know that it would be a recital of what the hon. Member for Nuneaton (Mr Jones) believes are the great Government accomplishments. That is not what we are here to do. Nor are we here to criticise the Government point blank—there are one or two things that I am pleased to say that they have done well on. If he will forgive me—I will not expect to be invited to intervene in any of his speeches; I can give him that reassurance—I will not, on this occasion, give way.
My hon. Friend the Member for Coventry South gave us a tour d’horizon. In 15 minutes, he drew us through every aspect of Coventry’s activities, particularly the interface with the Government and the impact of Government cuts on the city. I want to pick up on one point, initially: the cuts to early intervention, to which he referred. Over two years, Coventry’s receipt from Government for early intervention has been halved from £22 million to £11 million. That is a massive cut by any standard. Those figures are from the council; I am sure that they must be pretty accurate.
I am not trying to say that that is the direct consequence of my next point, which is a sad fact: in Ofsted’s latest rankings, Coventry’s primary education has been ranked the worst in the country for giving opportunity to its youngsters. It is always argued by people who are much more knowledgeable about education than I am that early intervention in the primary stage is key to the child’s whole chances in life. In my opinion, education is the vital provider of life chances to all children. If, at that early stage, we are offering the worst possible opportunities in the country for youngsters, that is clearly a matter of great concern to Coventry and its Members of Parliament.
I have made some criticisms in that regard. Using the rather grand BBC euphemism, I suggested that the director of education should follow the director-general’s example and step aside. It was not well accepted, but I still say it. If someone asks me what that means, I will say, “Resign.” If someone has been in a position of public trust for so many years, as the director has been, but local children are judged to have the worst life chances at a key stage in their education, they have to ask themselves, “What am I here for?” I make no excuses for saying that, but nor do I say that we are in this situation just because the Government have cut the funding in half. I am not sure how far the correlation can be pushed; I do not think it can be pushed all that far. I think that what we are up against—I do not know whether my hon. Friend the Member for Coventry South agrees—is an acceptance of poor standards, a belief that we cannot do better.
For that reason, the first thing that I want to say today, pursuing the initiative that I have already taken through the local press and media in the city, is that much stronger, much more powerful pressure is needed on the education establishment in Coventry. Fortunately, we now have as a councillor—this was well timed, in that respect—a former head of a secondary school in my constituency who, after 21 years, can proudly say that his school was top in Coventry every single year, and was within the top 10% for performance in the whole country. He is now a Labour councillor; I am pleased to say that he is the council member for education. Again, I make no excuses for saying this: I pushed for him to be encouraged to take on the responsibility of replacing the director, and for much-improved status, quality and priority to be given to the education department in the council. I think that I am within my time limit, if there is one. Perhaps it will be indicated to me if I am not.
Hugh Bayley (in the Chair)
I should remind the hon. Gentleman that the debate ends at 5.10 pm. It is for him to decide how much time the Minister has to reply. There are eight and a half minutes to go.
Mr Robinson
I am grateful to you, Mr Bayley, but I know the Minister personally very well. He is extraordinarily succinct in everything that he has to say, and I am not sure that he is going to tell us very much when it comes to it, but I do have a question or two to ask him, if I may.
We are so pleased to be in the broadband scheme. Unfortunately, I do not think that broadband will play a big part in getting the primary education sector right, but I am sure that it will play a huge part in improving the secondary and tertiary sectors of our education system, and also in business. Can the Minister tell us how much money will come to us, given that we have been named, thankfully, as one of the cities involved? Can he tell us what the timing is, what speed is envisaged and, above all, when we in Coventry can expect to feel the benefit? Those are my few questions for the Minister. I am mindful of your advice, Mr Bayley, and would hate to build a reputation with you, Sir, for being other than adherent to your orders. On that note, I will sit down, but I do hope that the Minister can reply.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I, too, commend the hon. Member for Coventry South (Mr Cunningham) on securing the debate and on his contribution. I also note the contribution from the hon. Member for Coventry North West (Mr Robinson) and the refreshingly frank things that he said about the need for educational improvement. That probably applies not just in Coventry, but in many of our cities.
No one is under any illusions about the scale of the wider challenges that we face as a country, but we are not just dealing with the deficit; we are rebalancing the economy and helping to protect the most vulnerable. In the west midlands, we have taken 22,000 people out of income tax altogether, and 2 million people in the region will pay less income tax as a result of the personal allowance reforms that we have announced.
The economy of Coventry and the west midlands is a vital part of our national economy. It accounts for more than 7% of the UK’s gross value added, and it is important for us all that it is successful and prosperous. Of course, Coventry has long been at the heart of Britain’s manufacturing sector. In recent years, there has been much welcome news of private sector investment, including investment by BMW at Hams Hall, by Jaguar Land Rover near Wolverhampton and at its other plants and, most recently, by JCB, which is investing £31 million to develop new engine technology. All that is welcome news and a tribute to the efforts of businesses and employees in Coventry and the west midlands.
The Coventry and Warwickshire local enterprise partnership has brought together public and private sector partners to work to deliver economic success. We have provided Coventry and Warwickshire with some £13 million from the Growing Places fund. We have also invested directly in encouraging business growth through the regional growth fund. The west midlands was awarded the largest regional allocation of all in round 3 of the regional growth fund: £184 million was provisionally allocated in October to programmes and projects with a strong focus on high-value manufacturing growth. In addition to that, the Coventry and Warwickshire LEP has been allocated more than £24 million to unlock key sites and drive local business expansion. Companies from Coventry and Warwickshire that were successful include Jaguar Cars, Pailton Engineering, Aston Martin and Bladon Jets. The Government have also announced a range of other investments.
The hon. Member for Coventry North West specifically mentioned superfast broadband. I hope to get him some figures on that. I may not be able to do that today; if I do not, I will certainly write to him.
Mr Marcus Jones
I thank my right hon. Friend the Minister for giving way; that is very generous of him. The positive news that he mentions is extremely important. Does he agree that it includes a fall in unemployment since May 2010 in my constituency of Nuneaton, and the fact that in Nuneaton we have had the largest business growth, at 22% nearly, in the country over the past three months? Does he agree that that is a good success story and we should build on it?
Michael Fallon
It is a good success story, and I note that unemployment continues to fall. Coventry and Warwickshire was one of the areas invited to submit an expression of interest in developing a wave 2 city deal. I cannot guarantee its success. Twenty cities have been invited, and they will not all make it; it is a competitive process. However, it sounds from what my hon. Friend the Member for Nuneaton (Mr Jones) has said as though good work is in hand there.
The hon. Member for Coventry South mentioned some specific issues. I look forward to the Friargate development beginning to roll out in 2013; that is important. He asked me about the Coventry gateway. That has not yet, as I understand it, fully secured planning permission; I think it is before Warwick district council today, as a matter of fact, so I had probably better not comment on it. He made some criticisms of the cuts in grant to Coventry council. There was some suggestion that those were somehow politically motivated. The cuts seem to have fallen more heavily, he said, on Labour councils than Conservative councils. The fact is that they have fallen on all councils. We must get our public spending under control. However, I will certainly refer what he said about the impact on social services to my ministerial colleagues.
The hon. Gentleman then raised two or three very specific issues, including the bedroom tax. If people continue to live in a property that is larger than they need, it is not unreasonable to expect them to make a contribution to its cost through a reduction in housing benefit. However, the Government have listened to concerns about that, and an additional £30 million has been allocated to the discretionary housing payment budget from April 2013.
The hon. Gentleman asked me about fuel prices. Cancelling the fuel duty rise in January, which I think the last Government programmed in for us, will reduce the running costs for the 3.5 million vehicles in the west midlands, saving the typical motorist in the west midlands £40 a year.
The hon. Gentleman asked me about HS2. HS2 is a fundamental part of the Government’s plans to promote national economic growth, benefitting the whole country, but of course HS2 also puts the west midlands at the heart of a new high-speed rail network. That is a great opportunity for the region as a whole, with the benefits spreading beyond the station sites and into the wider city region. There is a challenge for councils in the west midlands and their partners to work together on how to achieve that.
I was asked about broadband funding and I can reassure the hon. Member for Coventry North West that it will be a share of some £50 million of funding. There will be an invitation to tender to Coventry, issued in January. He asked me about the timetable. If we stick to that timetable, the contract for the broadband should be agreed in May. I hope that that is helpful to him.
The Government share the desire expressed by the hon. Member for Coventry South to see Coventry and the west midlands flourish, and people in Coventry and the west midlands are responding to the real challenges of that economy. Whether that response is in the established industries, such as the automotive industry, or in developing sectors, such as low-carbon technologies and digital games, the resurgence is being led by the private sector. It is leading the growth of the west midlands economy. There are no guarantees of success. It will obviously require hard work, the ability to harness innovation and the winning of new businesses opportunities, but the Government are there to support the regeneration of the west midlands. That is why we are going all out to create the best possible business environment that will give companies the confidence to invest and grow in the west midlands.