Shared Prosperity Fund

(Limited Text - Ministerial Extracts only)

Tuesday 14th May 2019 Westminster Hall

[Dan Jarvis]

I do agree. My hon. Friend makes a very important point, and I will say more about that later.

When it comes to the funding criteria for the shared prosperity fund, it is important to understand that resources previously received support some of the most vulnerable in our society, through projects delivered by charities from Mencap and the Salvation Army through to local and voluntary community organisations, such as South Yorkshire Housing and Sheffield Futures, in my patch—organisations rooted in our communities, born out of need and surviving in some cases by the skin of their teeth. The resources also support investment in high-profile, multimillion-pound research and innovation schemes. They unlock town and city regeneration. They provide business support and finance in urban and rural areas. They deliver sustainable development projects that support the low-carbon agenda. Taken together, these local growth and European funds have been the glue that holds our communities together.

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jake Berry)]

I will be brief, as I know many others want to speak. Will the hon. Gentleman expand on that? Many of the areas he listed as the biggest beneficiaries of European structural funds were also areas that voted to leave the European Union. I was surprised to hear him say that we should have the same system, had the referendum result been different. Will he say why he thinks that people in many of those areas voted in such high numbers to leave?

[Dan Jarvis]

I do not think that that is an unreasonable question. We can have a debate if we like, although perhaps on another occasion, about why it was that people decided they wanted to leave the European Union. For many, it was because they felt that their local areas were not receiving the benefits that other, more affluent parts of the country were. This is a very good opportunity for the Government to seek to heal some of those divisions and invest in some of the communities that feel left behind. The United Kingdom shared prosperity fund must be designed and delivered so as to deliver on the aspirations of the communities such as the one that I am proud to represent. Those funds have previously done an incredibly important job in providing the glue that holds some of our communities together, creating new jobs, and in supporting disadvantaged and hard-to-reach communities that have often been neglected.

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[Paul Blomfield (Sheffield Central) (Lab)]

I congratulate my hon. Friend the Member for Barnsley Central (Dan Jarvis) on securing this debate.

In the 1980s, when the Thatcher Government broke the industries on which our economy was built—steel and coal—we faced really tough times in South Yorkshire. We sunk to become one of the poorest regions in Europe, and because of that, the EU stepped in with funding. In reply to some of the comments that have been made, I say that that funding responded to what we asked for locally and funded programmes that were delivered by local organisations.

European structural funds were key to rebuilding our economy. Objective 1 funding provided £820 million to more than 250 organisations and 650 projects, from major projects such as the Advanced Manufacturing Research Centre, which has become a national flagship for industrial innovation, to small community initiatives that reskill people. The economy grew by 8.5%.

Shamefully, under Government policy since 2010, regional inequality has grown again. We are back where we were before: below 75% of the average gross domestic product of the EU and one of the poorest regions in Europe—formally designated a “less developed region” along with Tees Valley and Durham, Lincolnshire, west Wales and Cornwall, which have been mentioned.

On those regions, the February report from Conference of Peripheral Maritime Regions of Europe, which my hon. Friend the Member for Barnsley Central mentioned, stated this for 2021 to 2027:

“All five of these regions would stand to receive EU support in excess of 500 euros per capita for the seven-year period.”

That would mean £605 million for South Yorkshire.

I was puzzled by the Minister’s intervention, as he seemed to suggest that because those areas voted leave they should not expect to receive that funding. That is not what they were promised in the referendum campaign, nor was it what they were promised subsequently.

[Jake Berry]

Nor was that what I said.

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[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jake Berry)]

It is a pleasure to serve under your chairmanship, Sir David. I start in the traditional way by congratulating the hon. Member for Barnsley Central (Dan Jarvis) on an excellent speech. As with so many things that we do together, with our shared passion to drive forward the economy of the northern powerhouse, there was very little I disagreed with in his speech, although there were a few things I will mention if I get the opportunity. Many Members asked similar questions, so before I deal with individual contributions I will address some of the more general points.

Let us be realistic about this debate: Members have picked me up on my saying that many areas that voted leave have been recipients of EU structural funds. One of my jobs in Government is administering many EU structural funds, and some Opposition Members may have done that job during the Labour Government. Those funds are hugely bureaucratic, and they do not target many of the things that we are desperate, across the Chamber, to drive in every constituency—including mine in east Lancashire, which is a deprived area in the north of England. Those funds are often inefficient. Although we have heard about some of the brilliant things they have done, such as supporting Mencap, which the hon. Gentleman mentioned, they have been hugely inefficient in many places.

My hon. Friends the Members for St Austell and Newquay (Steve Double) and for North Cornwall (Scott Mann) made interesting points about how some of those funds have been wasted in Cornwall. I suspect that may be part of the reason—although I would be the first to accept that the picture is very complicated—why 68% of the people who live in Barnsley and 60% of the people who live in Oldham voted to leave the European Union. We in this place have to address some of people’s deep frustrations about inequality, which traditionally have not been addressed or targeted by European structural funds.

We keep referring to European structural funds as European money. Let us be absolutely clear: this is British taxpayers’ money, which is given to the European Union and then, after a large percentage of it has been removed, returned to our country.

[Paul Blomfield]

Will the Minister give way?

[Jake Berry]

I will not, sorry—there have been many interventions.

That is why, looking to the future, in our 2017 general election manifesto, my party—the Conservative party—said we would come forward with a new UK shared prosperity fund that would be designed to reduce inequalities between communities across the four nations of our United Kingdom and target productivity. That was reiterated by my right hon. Friend the Communities Secretary in a written ministerial statement in July 2018 laying out some of the foundations of the UK shared prosperity fund.

The Government accept that tackling inequality is absolutely something we need to grip in this country. The hon. Member for Leigh (Jo Platt) mentioned that Leigh, which I know well—it is just down the road from my constituency—does not have a railway station. It is not the case that there was a railway station there that was closed by a Conservative Government; that is a sign of decades of under-investment in northern transport infrastructure by successive Governments. The UK shared prosperity fund should seek to challenge some of the inequalities that we see north, south, east and west across the United Kingdom.

[Stephen Kerr]

The Minister has mentioned inequalities several times. I want to be absolutely clear that the Government are committed to ensuring that the shared prosperity fund is led by need and, in respect of Scotland specifically, that the money is not Barnettised. It may be ring-fenced, but it must not be Barnettised.

[Jake Berry]

I am not able to give that commitment today, because we are going to have an active consultation.

[Stephen Kinnock]

When?

[Jake Berry]

If Members give me the opportunity to say when, I may try to provide an answer. One of the points we heard was that we must respect the devolution settlement across our United Kingdom. For me, as the Minister with responsibility for the northern powerhouse and devolution, that means respecting the devolution settlements that this Government have brought forward, by which I mean mayoral devolution in England, which now covers 48% of the north of England.

[Jim McMahon]

I understand why the Minister does not want to go down the cul-de-sac of the Barnett formula, but can he confirm that no region will be worse off than it is under the current programme?

[Jake Berry]

As the hon. Gentleman knows and I was just about to say, the quantum of the UK shared prosperity fund will be determined as part of the comprehensive spending review. That is the appropriate time for the Government to make commitments of the sort he seeks. However, he and the hon. Member for Aberavon (Stephen Kinnock) are correct that the Government must come forward with their consultation—I am clear that this must happen—before the comprehensive spending review to enable areas to contribute to that consultation.

We have not been sitting on our hands, as people who have listened to the debate may think. We have already engaged with more than 500 stakeholders. We have had 25 official-level engagements across the country, including with our counterparts in the devolved Administrations. In addition, in my role as Minister for the northern powerhouse, I have engaged with mayors. I have talked to them specifically about how we can work together to provide evidence to the consultation that demonstrates that, as so many people have said, the impetus for investment of the UK shared prosperity fund should come from our regions rather than being directed out of Whitehall.

Having listened to contributions to the debate, I think everyone believes that it would be nice if that happened. The point is that by working with our metro Mayors, our local enterprise partnerships and authorities across England—that is certainly my role as English Minister for local growth—to create the evidence base, we can move beyond thinking that it would be nice to proving that it is how we will get the biggest return on investment. There is work ongoing in my Department, in advance of the consultation, to ensure that that hugely important argument is made, and won, when my dear chums in the Treasury are making decisions about how the money should be distributed following the consultation. I hope that answers some of the questions that Members asked. My response to the main question is that the consultation will start very shortly.

Let me move on to some of the specific points that were made. On public transport investment, Members may not have seen the most up-to-date figures, which are available on the Treasury website. They show that transport capital expenditure is higher per capita in the north of England than in London. People often talk about total capital expenditure across the north of England versus London. There are some parts of the north of England where very few people live, so it is much more realistic to talk about capital expenditure per capita, and it is higher per capita in the north of England.

Many colleagues talked about the weakness of Green Book calculations for making investment decisions, which I think is acknowledged across the House. That is why the Government came forward with a rebalancing formula in the industrial strategy. That formula looks at areas that are less developed, depending on how we define that, and at factoring future growth into Green Book calculations. Changes have been made recently to ensure that community benefit is also included in such calculations.

My hon. Friend the Member for Newton Abbot (Anne Marie Morris) commented on the ring-fencing of coastal money. By the end of the current spending period, the Government will have invested £200 million directly in coastal communities through our coastal communities fund, which is about driving prosperity on our coasts. The UK shared prosperity fund must not be viewed on its own as the only support the Government give to drive regional growth. We have contributed £53 million to part of the exciting growth deal in the highlands and islands, which has resulted in things such as the north coast 500 route, which I hope to visit this summer, prospering.

[Drew Hendry]

rose—

[Jake Berry]

I will let the hon. Gentleman advise me about the best place to stay.

[Drew Hendry]

I am grateful to the Minister for raising that money for the Inverness city region deal. Will he go a step further and match 50:50 the commitment of the Scottish Government, who put considerably more money into that deal than the UK Government did?

[Jake Berry]

We will have to look at how much new money the Scottish Government have committed. Since we have talked repeatedly about devolution, particularly from a Scottish viewpoint, I note that the Smith commission agreement, which was signed by all parties in Edinburgh, contains a commitment by the Scottish Government to look at further devolution to local councils in Scotland. Devolution does not stop in Edinburgh, but I understand that no progress has been made on that.

I could go on, and I would like to, but I want to give the hon. Member for Barnsley Central the customary time to conclude the debate. I hope that colleagues do not doubt the Government’s commitment not just to devolution, but to regional growth. The UK shared prosperity fund, which we will consult fully on shortly, will continue that commitment to driving productivity and growth everywhere.