The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, I thank the noble Lord, Lord Liddle, for moving the Motion so ably and bringing this matter to the House. He has, quite rightly, a reputation for having a brain the size of a small planet and that was evident in his contribution, as my noble friend Lady O’Cathain said. I thank all noble Lords who participated. The debate has shown a remarkable consistency of theme and generality of approach with regard to the things that we should be looking at and doing—not necessarily identical policies but very much recognising some of the challenges that we face and some of the approaches we should be taking. I am grateful to the noble Lord, Lord Shipley, for talking about coming together and ensuring that we have a truly national, cross-party approach.
The 2008 recession brought to the foreground the debate over the scale and nature of the imbalance in the British economy, but an economic divide between the north of England, the Midlands and the south can be traced back to the 19th century. During the Industrial Revolution, regions built on their strengths: engineering and metal trades in the West Midlands; coal and steel in south Wales; shipbuilding in the north-east and Scotland. London was an important centre for manufacturing but it had already established itself as an international city in finance, law and commerce. We find this in evidence. In 1911, London’s output was already 65% higher than the UK average, compared with that of the north, which was 11% lower. As the UK economy transitioned from industrialisation to services and new technology, the upheaval was felt most acutely in the north of England, Wales and Scotland.
London’s strengths are unparalleled. It is a city like no other. Indeed, it is the world city. It occupies a unique position in the world and government policy should not hold it back, as noble Lords recognised. We do not make regions stronger by making London poorer—a theme developed by my noble friend Lord Shinkwin. But I am sure I speak for all noble Lords in this Chamber when I say that we cannot afford to rely on the strength of a few regions, or indeed a single region, of our country; nor should we seek to—it is fundamentally unfair that a few regions share in the proceeds of economic growth while other regions are left behind.
Questions were asked about the industrial strategy and the attitude towards relocating jobs to the regions on the part of public bodies. I think there was a suggestion from the noble Lord, Lord Liddle, that Defra would benefit from the cleaner air and lower house prices of Cumbria. So it would. We are committed to looking at the relocation of arm’s-length bodies and departmental functions to support growth across the United Kingdom, as we have made clear in the industrial strategy.
It is great to see my noble friend Lord Heseltine in his place today. He was responsible for creating the government offices in the 1990s; those ceased, but we are looking again at the industrial strategy. I am sure that he will have an important continuing role in public life. As in the Frank Sinatra song, he certainly did it his way and I hope that he will continue to do so.
The 2008 recession was the deepest since the 1930s; output fell by more than 6%. This took place during a global recession and the recovery has been held back by lacklustre productivity. Decline was not experienced equally between British regions, as has been said. GDP declined less in London and the south-east but, again, it has not been uniform there. Hastings has been mentioned and there are certainly parts of the south-east that face serious challenges, as Hastings has historically—it was Mugsborough in The Ragged-Trousered Philanthropists. This is nothing new but it still suffers enormous challenges. The recession was felt most acutely in areas that were already behind. All this shows that the policies of successive Governments have not gone far enough to reduce regional disparities.
Since the Industrial Revolution, we have become one of the most centralised developed economies, a point made by the noble Lords, Lord Monks and Lord Bird, and others. London has a magnetic effect, and not just on the people who are relatively wealthy. It means that people are coming to what is the world city. Government can set national policies and create an environment where business can prosper, but economic success depends on businesses and individuals themselves. This is acknowledged by past and present Governments. The previous Labour Government agreed devolution settlements with Scotland, Wales and, building on the groundwork laid by John Major, Northern Ireland as well as in London. I certainly pay tribute to the considerable work of the noble Lord, Lord Prescott, in that regard.
The coalition Government devolved further powers to Scotland, Wales and Northern Ireland. In relation to Northern Ireland, we will of course devolve corporation tax to it once there is a devolved Government there again. However, devolution is not reserved for nations. By reversing the flow of power to the centre the 2010 Conservative-led coalition Government, along with the Liberal Democrats, renewed trust in local institutions for the first time in 40 years. In 2010 we published the Local Growth White Paper, which brought an end to top-down government policy. Local enterprise partnerships formed across England and enterprise zones formed throughout the United Kingdom—including in Cumbria with Kingmoor Park, which has helped more than 100 businesses in that area. This policy has been effective throughout the United Kingdom including, I am happy to say, in Northern Ireland where one was set up over the course of the summer.
Two years later, my noble friend Lord Heseltine published his independent report No Stone Unturned—a seminal report with very important recommendations. It set out 89 recommendations to rebalance the responsibility for economic development between central and local government, and between government and the private sector. The Government responded by enacting 81 of the recommendations, including the devolution of centrally held funding into a single, competitively allocated pot of money. My noble friend Lady O’Cathain, in what was a very persuasive speech, talked about the importance of that and of the fact that it has made a great difference to the way that we approach industrial policy in this country, and regional policy as well.
We have also created new mayoral combined authorities based in the northern city regions of Greater Manchester, Liverpool and Tees Valley, as we have in the West Midlands, the West of England and Cambridgeshire and Peterborough, as well as creating a non-mayoral deal in Cornwall. The Government have progressed these developments with broad support, for which I am grateful, from the other parties. We have given these authorities powers over areas including transport, skills and healthcare. To back that up, we have awarded more than £4.8 billion to mayoral combined authorities over a 30-year period. One-third of the population of England now has a directly elected mayor. It means decisions are made by those they affect, and they are accountable to the people whom they serve.
In all parts of England, local enterprise partnerships have increased private sector involvement in decision-making and encouraged greater collaboration across old political and geographical boundaries. They have bid for more than £9 billion of funding through three rounds of growth deals. In Manchester, we have invested £38 million in the National Graphene Institute; in Birmingham, the Institute of Transitional Medicine benefited from £12 million; in Norwich, the International Aviation Academy will train cabin crew, mechanics and pilots of the future; and, in Cumbria, the local enterprise partnership invested £1.43 million in a new centre that will support more than 1,000 apprentices in the manufacturing, biopharmaceutical and nuclear industries, which are clearly very relevant to that area.
The noble Lord, Lord Hunt, referred to the crowded nature of some cities and the Government’s policies to make sure we have something that will counter the effect of Bath becoming too crowded. This is again something that has to come from the bottom up, but it is a point well made, and we see towns such as Margate, which was referred to in the debate, coming up with new developments. The Turner Contemporary in Margate is making a real difference. Other towns must come forward with their ideas. Blackpool was mentioned during the debate and may be an example.
This shift from centralism to localism is exemplified by the northern powerhouse. The Government are giving more power and influence to northern towns and cities through metro mayors and Transport for the North than any Government in decades.
We must not forget that disparities exist between the four nations of the United Kingdom as well. The noble Lord, Lord Richard, spoke powerfully about this and very modestly did not mention his considerable role in chairing the Richard commission, which gave many signposts for the future, some of which are still being taken up. I take his point about the political symmetry not being perfect, but he will know as well as I do—we have been at conferences together at Ditchley and so on, although I cannot discuss the content—that the nature of the United Kingdom with, for example, the separate legal system in Scotland, means that we are coming at these things from different angles. It is certainly untidy and ad hoc, but that does not mean that it does not broadly work. I take the point that we have to ensure that there are not disparities that we cannot live with. We have to ensure that that is not the case.
When Theresa May made her first speech as Prime Minister, she spoke of the burning injustices that still exist in our country—for example, that one’s prospects are still determined by the lottery of birth. This cannot continue. Since 2010, this Government, initially in coalition, have achieved much of which they can be proud. In October, we published the race disparity audit, which cannot be ignored and shows that people from different backgrounds are treated differently. We continue to tackle health inequalities. Like the noble Lord, Lord Hunt, I expected that there would be much more on health inequality than was the case, but there are health inequalities that need addressing.
In the Budget last week, the Chancellor of the Exchequer announced plans to improve performance in every region of the United Kingdom. They build on the principles set out in the Local Growth White Paper in 2010. We announced our intention to enter into a new devolution agreement with the north of the Tyne, to which the noble Lord, Lord Beecham, referred. That likely lad was extremely honest when he indicated that there have been difficulties with south of the Tyne and north of the Tyne, but I think they have nothing to do with the amount of money being invested there. It is traditional that people in Gateshead will not listen to a radio programme broadcast from Newcastle. We look to the noble Lord, Lord Beecham, to use his good offices there to ensure that things improve. The noble Lord, who is generally extremely fair, made a point about the money being spent in the Oxford-Cambridge corridor. It is being spent there for the very good reason that we are looking at an enormous expansion of housing there, which is something that he, with another hat on, is quite rightly pressing for. To do that, we must have investment in the infrastructure that we indicated on that occasion.
In the Midlands, the second devolution deal with the West Midlands mayor and combined authority will focus investment on productivity, with a government commitment of £250 million from our new Transforming Cities fund.
The devolution deals and the powerful metro mayors that we are seeing—regardless of party—indicate how important it is that we invest, both financially and in terms of energy, in ensuring that these go forward. I hope that Yorkshire comes forward with a deal. Hull should certainly be a part of that, and I look to the noble Lord, Lord Prescott, to use his good offices for Hull and other areas of Yorkshire to come forward. The Siemens issue, as he said, makes Hull unique—as does the noble Lord himself and the lack of BT and the different telecommunications system. There are many things that make a devolution deal effective, and we certainly look forward to that and to effective leaders coming forward in that regard.
Shortly before this debate, we launched our industrial strategy for the United Kingdom, which is set against the backdrop of our exit from the European Union. The changes that confront us are profound, but they present an equally great opportunity to become a confident, competitive trading country. This modern industrial strategy sets out how government can help businesses create better, higher-paid jobs in every part of our country with investment in skills, infrastructure and industries of the future. It is key to our future, as many noble Lords have said.
The industrial strategy puts great emphasis on place and on some of the historical developments we have seen where individuals have made a massive difference. I think of Sir Tim Berners-Lee redefining the way we can communicate with one another. I think of Sir Frank Whittle, an RAF officer working on a base in Lincolnshire and patenting the jet engine. I think, too, of Sir Alexander Fleming discovering penicillin, one of the greatest medical advances in human history.
All this is important, and it is not just happening in London and the south-east. There are life sciences in Edinburgh, focused on the university; cybersecurity in the University of South Wales; and the Jodrell Bank observatory near Manchester, which was mentioned by the noble Lord, Lord Hunt. I look forward to these being linked with food—there is space research in Leicester, which could perhaps be linked with Stilton and Red Leicester cheeses. This is a challenge I expect these institutions to respond to now. Great work is going on in our universities—and not just in Oxford, Cambridge and the London universities, although of course it is natural that they, as established research centres, would expect to see significant investment.
I turn to infrastructure. The Government know we have more to do to improve journeys between our great cities outside London. Many noble Lords mentioned issues of infrastructure, including the noble Lord, Lord Scriven, and the noble Baroness, Lady Pinnock, and that is absolutely right. In addition to the £56 billion investment in HS2, which is a massive amount, we have of course announced £300 million for northern powerhouse rail, which is being looked at in the context of HS3, as I agree it must be.
Also important, and again referenced by the noble Lord, Lord Scriven, and the noble Baroness, Lady Pinnock, is the issue of fast broadband. The noble Baroness in particular will know the importance of the telecommunications Bill we are taking through at the moment, which is due for Third Reading on 6 December, in providing business rate relief for those businesses investing in fibre for at least the next five years. Again, I thank the parties opposite for their support on this.
In every decision we make, we commit to take greater account of the disparities between places. That is absolutely important. I noted with great interest the very cerebral contribution of the noble Lord, Lord Parekh, on equality. I think it is perhaps a debate for another occasion, but I would certainly like to engage with him on that issue and on the importance of the views of Rawls and Nozick. To some extent, I go along with the importance of a genuine sense of community and shared goals. I was never comfortable with those who said they did not mind people becoming filthy rich. That seemed to me slightly unseemly, but of course it was not somebody from this side who said that but somebody from the other side, in the last Labour Government—possibly the noble Lord, Lord Mandelson.
The United Kingdom has one of the most successful employment markets in the world, with the employment rate nearing a historic high point. Of course, that does not mean there is not more to be done. Our universities are respected the world over and businesses work more closely with educational institutions than ever before. My noble friend Lady O’Cathain, mentioned how students from disadvantaged backgrounds are now 43% more likely to go to university than in 2009. This is based on UCAS acceptances. Still, I note the point about the regional disparities there; Barnsley in the north and Hastings in the south, for example, face massive challenges. This year alone, though, universities have committed to spend £800 million to give students from disadvantaged backgrounds the best chance of taking up a place. We will be watching that like hawks. This week, we committed to putting technical education on the same footing as our academic system, establishing new T-levels—technology levels, I think—and we will invest an additional £406 million in maths education, which again was something rightly mentioned by my noble friend Lady O’Cathain as of key importance.
We are already home to half of Europe’s fastest-growing companies and the most attractive country to invest in in Europe. I accept that there is a challenge to retain that position and we all need to put our shoulder to the wheel to ensure that that is the case. The Budget and the industrial strategy provide support for businesses in every part of the country to get the help they need to improve our productivity. The strategy can succeed only if businesses continue to invest and become more competitive. We have identified areas that need reform in management, access to finance and exporting. These are national problems that the Government have a role in reforming, but these do not replace the ingenuity of businesses themselves. Rather, we will seek to improve the environment in which businesses operate.
The success of our economy depends not just on the size of our gross domestic product but on the reach of that prosperity to all corners of the UK, as this debate has demonstrated. I am sure there are individual points that I have missed but I undertake to write to all Peers who have participated in this debate—including my noble friend Lord Heseltine, who clearly takes a great interest in this area—and place a copy in the Library. Once again, I thank all noble Lords who have participated in this first-class debate that has showed the House at its best.