Local Regeneration: Industrial Areas

Baroness Taylor of Stevenage Excerpts

Thursday 7th March 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, I congratulate my noble friend Lady Armstrong on securing this important debate. I first met her back in 1997, after the general election; she was incredibly kind to me then and has inspired me ever since, so I thank her for that. I thank the noble Lord, Lord Mawson, for the memory of a sweet-shop; my great-great-grandparents had a sweet-shop in the East End of London, which is also a happy memory.

This afternoon, we have heard about Teesside, Barnsley, Newcastle, Bradford, Dumfries, the East End of London, Sheffield, and seaside towns, and I am going to talk about new towns. The debate has demonstrated yet again, as did yesterday’s sticking-plaster Budget, a Government who have no clear plan for the economy or a cogent and comprehensive industrial strategy, or effective national devolution, and will simply fail in their vital task of ensuring that our country achieves its full and very considerable potential. Meanwhile, the so-called levelling-up mission runs into the sand, with cancelled projects, piecemeal funding bids, Ministers who cave in too easily to their Back-Benchers, failure to deliver the skills that business needs, and a devastating failure to deliver infrastructure, which means, for example, developers waiting longer to get a grid connection for one development—in some cases, eight years—than it took to build the whole core of our motorway network in the 1950s and 1960s.

Regeneration is needed across our country, a case clearly set out by my noble friend Lady Donaghy. Many areas are plagued by the sort of inequalities that the right reverend Prelate referred to so powerfully.

Although I do not come from one of the former industrial parts of the country, I can speak about regeneration from first-hand experience. Our new towns—a marvellous innovation of the post-war Labour Government—designed to provide the right conditions for the technological revolution that was taking place, and to provide good-quality, affordable housing for the skilled workforce that would be needed, were delivered over a relatively short timespan. Of course, if you build an entire city or town over a period of little more than a decade, some 50 years later it will need extensive renewal and regeneration all at the same time. I always think of it like putting new light bulbs in your house when you move in; then they all go at the same time.

We also had to create the right conditions to allow the town’s industrial base to move from the heavy manufacturing and engineering in the defence industry, which had provided the employment of the early decades, to developing the life sciences cluster—now the largest in the world outside the USA—and an established space, defence and communications cluster. In case noble Lords did not know, one in three of the satellites up in space, processing our phone and data signals and guiding our GPS and satnavs, is made in Stevenage in Hertfordshire.

We have not dragged our heels on housebuilding either, because we understand the co-dependency between housing and the economy which is deep in our new-town roots. That co-dependency was mentioned by the noble Baroness, Lady Bennett. Our new-town pioneers got their homes and their jobs together, enabling them to truly have a vision of a good life for them and their families.

We have also seen the decline and hollowing out of our town centre. This is the same problem faced across so many of our towns and cities in the UK, but exacerbated for us by the fact that when the development corporation was wound up in the 1980s—and in spite of determined local action to try and prevent it happening—all the property in our town centre was handed over to investment houses and pension funds. We ended up with a complex web of over 60 large landholders, with the council retaining only the expense of the public realm maintenance.

Nevertheless, in spite of one false start which crashed with the rest of the economy in 2008, we put our minds and very considerable efforts to the task of comprehensive regeneration. Helped by the noble Lord, Lord Heseltine, our community, our local enterprise partnership and an amazing collaboration between local leaders across public, private and community sectors, as well as party-political boundaries—there was no one-party state here, as the noble Baroness, Lady Bennett, talked about—we are now in the midst of a successful £1 billion regeneration which is transforming the heart of our town.

We are using town centre development to build a considerable number of the homes we need, which helps us with the constraints of tight town boundaries. We have optimised the opportunities that our east coast fast rail links bring by co-locating a new bus station, and both benefit from being linked into our 45 kilometres of cycleways. We are bringing the success of our cell and gene therapy cluster into the heart of the town, with lab space above the retail area. We set the conditions which enabled us to secure the £65 million European headquarters for Autolus, an American cell and gene research and development company. That scheme was taken from concept, through planning and a land deal, and on to site in eight months, so do not tell me that councils cannot move fast enough when they need to.

However, in the last 14 years it has felt too often that keeping the pace of this regeneration going from local government has been a battle and has been in spite of the conditions set by government, not because of them. The Centre for Cities has identified some of the barriers that areas face, and I recognise many of these. First, on risk, the private sector will lead where it is certain of a clear financial return, but often in the areas in most need of regeneration the risk for the private sector is too great on its own, so some level of public intervention will be needed. Too many government pump-priming funding pots—even where they are available—require sums of local match funding that are just unrealistic, and we do not have a system of local/regional investment funding in this country, as there is elsewhere in Europe, that could help.

Secondly, it must be recognised that social return—jobs, skills, local infrastructure and affordable housing—will need to be realised as well as private return, and that this is likely to need support. Andy Haldane, commenting on yesterday’s Budget, said that until we resolve the issues around millions of our workforce in this country not having the skills needed in our economy, we will not resolve our productivity and growth issues.

Planning and policy uncertainty are a real barrier for the private sector, as is access to essential infrastructure such as grid connections, water and high-speed data. The lack of a proper industrial strategy means that these are a real barrier to growth, and they are a barrier now. I have spoken before in this Chamber of my personal pain at having our local growth plans stalled, as our local plan was held for over a year on a holding direction by the Secretary of State. These kind of interventions really have to stop.

The Centre for Cities put it very clearly when it said that

“public-private cooperation can best maximise the private and social returns from a project”.

This is vital so that the people of the local area benefit, as well as those who have invested for profit. My noble friends Lady Armstrong and Lady Chapman, and the right reverend Prelate, have already mentioned, when they spoke about Teesworks, what happens when this balance gets tilted the wrong way. At the heart of that issue are the people of Teesside and the public assets formerly owned by them that should have been regenerated for their benefit to generate jobs, employment and industry. They should also be receiving sufficient return for their investment of land and the other value of the site. The governance of the project should have ensured an appropriate sharing of the risk taken by private sector partners to justify the returns that they have already accrued, as mentioned in the recent review.

The report’s scathing assessment and its 28 recommendations highlight the need for reviews of financial regulations and the make-up of the board, better oversight and scrutiny, reporting to the board, and for the public interest test being foremost in terms of transparency. The report also highlighted that not enough attention is paid to conflicts of interest, including those of the mayor. Seriously, the report highlights procurement issues, including the decision mentioned by my noble friend Lady Armstrong to change the balance of ownership in favour of the private owners to a 90/10 split, and the balance of risk between the public and the private sector, when to date the public sector seems to have taken the bulk of the risk and been responsible for the costs invested while the private sector has had the benefit of the profits.

There are very serious questions to answer about whether it has all been in the best interests of the people of Teesside. Have they had value for money for their public investment? As my noble friend Lady Armstrong indicated, the report asks more questions than it answers, questions that the people of the north-east deserve and have a right to have answered. As the noble Lord, Lord Shipley, said, why will the Government not accept the offer of the National Audit Office for a forensic financial assessment of what went on?

It is time for a reset on regeneration to ensure that it delivers for people in so many areas across our country who genuinely feel that they have been left behind—because they have been left behind. I hope that the Minister agrees with me on what is needed, a programme that the Labour Party have set out very clearly. We need a stable industrial strategy to create the conditions that businesses need in order to invest. We need to move away from insecure, low-paid jobs and strengthen our programme of apprenticeships, skills and training, and employment rights, to make sure that work pays. We need a national wealth fund to generate the private investment that we need. We need to get to work on building the affordable housing that we know we need as a matter of urgency. We need to speed up our critical infrastructure projects to get Britain moving again. There needs to be a complete reform of the planning system, so that it works for the builders not the bureaucrats, and investment in clean British power for cheaper bills and energy security.

We are all hoping on this side that the general election will come soon so that the British people can decide whether they want more of the decline of the last 14 years or a Britain where growth comes from the grass roots, where growth serves both people and businesses—a Britain with its future back.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)]

I thank the noble Baroness, Lady Armstrong of Hill Top, for tabling this important debate on local regeneration of former industrial areas across the whole of the United Kingdom. We have visited a very large swathe of the United Kingdom in today’s debate, also talking about the challenges constraining such regeneration. I thank all noble Lords for their considered and insightful contributions today, some of which I agree with—not all, but I am sure that we can work our way through them.

I too grew up in a former industrial area, in south-west Wales. I went to school during the miners’ strike as the granddaughter of a miner. I spent a large number of my years as an MEP supporting Welsh economic developments through the EU’s convergence funds, looking at how you regenerate some of those industrial areas. Therefore, I have some first-hand experience, share your Lordships’ aspirations for these areas and support their redevelopment.

However, as we all know, over the last 50 years the UK has seen fast and extensive deindustrialisation, with a lasting impact in many areas, including, as we have heard, the north, Yorkshire and the Humber, my own country of Wales and certainly the Midlands. That is to name but a few. We have heard today even more examples of where this has happened.

Although London and much of the UK have flourished under the new economic trends, former industrial centres that were once the beating heart of the Industrial Revolution have struggled, and continue to do so. I agree with the noble Baroness, Lady Donaghy, and all sorts of other noble Lords here, that this is not right. According to the Institute for Fiscal Studies, average wages in London in 2019 were 60% higher than those in Scarborough and Grimsby, with the top 10% of earners in London earning nearly twice as much per hour. Half of working-age adults in London and Brighton have university degrees, compared with less than one-fifth in places such as Doncaster or Mansfield. We are under no illusions about the scale of the challenge to regenerate these former industrial areas, and that is precisely why we have made it central to this Government’s levelling-up agenda.

I know that the noble Lords will have heard this before, but it bears repeating: for this Government, levelling up means ensuring that your life chances are not determined by where you grow up. It means addressing entrenched regional disparities to unlock economic growth everywhere and ensuring that people benefit from these rises in living standards and well-being. Nowhere is this more important than in our post-industrial heartlands—places where once, a location meant a life path. Now, while celebrating the cultural history and heritage of these places, we are committed to unlocking their full and wide-ranging potential.

Before turning to specific issues that noble Lords have raised in the debate, I will talk through some of what the Government are doing to try to make this happen. We are rolling out gigabit broadband across the UK; introducing education investment areas; opening freeports; increasing the national living wage; launching the long-term plan for towns and the anti-social behaviour action plan, while recruiting more police officers; and, importantly, delivering through our extensive local growth funds, including the levelling up fund and the UK shared prosperity fund. Through the third round of the levelling up fund, we are investing a further £1 billion in 55 projects across the length and breadth of the UK.

As many noble Lords have mentioned, we are using the levelling-up needs metrics to target funding at the places that need it the most, ensuring that every part of the country benefits. Multiple projects in former industrial areas are benefiting, such as the £20 million South Shields riverside transformation project, the £19.5 million River Tyne regeneration infrastructure project and, as the noble Lord, Lord Mawson, will appreciate, the £19.8 million project in Bradford to support and enhance Keighley’s engineering, manufacturing and economic role in the region, to name but a few. We have granted town deals exceeding £20 million to a number of other former industrial areas. As well as Barnsley, Doncaster and Wakefield, we are including 12 more that were announced yesterday by the Chancellor. They will receive £20 million each to invest in community regeneration over the next decade; it will be led by local people in order to be determined by local need.

Beyond our funds, post-industrial areas in the Midlands, such as Stoke-on-Trent and Mansfield, are being supported by bespoke and intensive levelling up partnerships. Levelling up requires a multifaceted approach, as many noble Lords have said today, from catalysing industrial clusters in the sectors that will drive the future economy to supercharging our city regions, to supporting our struggling towns and local areas.

We know that the challenge is large and recognise that it is not a simple task. It will not be achieved through quick wins. As the right reverend Prelate the Bishop of Norwich said, restoring pride in place across all areas of the UK, including those with a strong historic cultural identity, will take time. The current economic context makes this even harder, but even more essential, and so this is why structural and systemic change is so important, not least the empowerment of local leaders. I agree with many noble Lords who have spoken today that local decision-making is best. To this end, we have set ourselves a clear mission that, by 2030, every part of England that wants one will have a devolution deal, with powers at, or approaching, the highest level of devolution, with a simplified, long-term funding settlement.

Since 2022, we have announced nine new devolution deals, many of which are for post-industrial areas. These include, as many noble Lords know, a new mayoral combined authority deal for York and North Yorkshire, as well as Hull and East Yorkshire, the first ever mayoral combined county authority deal in the east Midlands and a second mayoral combined county authority deal announced with Greater Lincolnshire.

This May, the north-east will become the first region to be entirely covered by a mayoral devolution. A new north-east mayoral combined authority will be established, which will mean that every person in the north-east will have their own authority and elected leader, making decisions in their best interests. English devolution currently covers about 14.2 million people, taking the proportion now covered by a devolution deal to greater than 64%—up from 40% just a few years ago.

I turn to some of the other issues that were raised. We also recognise the challenges facing the local government sector and have committed to reducing the complexity of local government funding. I note the comments from many noble Lords. We have listened to local partners. In July 2023, we published our plan to simplify the funding landscape. Through this, we are delivering a more transparent, simple and accountable approach to funding and we are beginning to put this into action. For example, we have adopted a new approach to the third and final round of the levelling up fund, which has moved away from competition and made use of the large number of high-quality bids submitted in round 2. This was designed to reduce burdens on applicants and maximise efficiency.

Similarly, the UK shared prosperity fund provides local authorities more flexibility with a three-year allocation that they can choose how to spend on local priorities or projects. The most recent local government finance settlement for 2024-25 makes some £64.7 billion available to councils across the country—an increase in core spending power on 2023-24 of up to £4.5 billion or 7.5% in cash terms. We appreciate that they have more work to do and are therefore trying to fund them appropriately.

[Baroness Taylor of Stevenage (Lab)]

The Secretary of State made an outrageous statement this week about local authorities using consultants. They are used mostly to put together the very bids that the noble Baroness just set out. Can she please take back to the Secretary of State that it is absolutely wrong to criticise local government, which is starved of resources anyway for the reasons we all know about and is desperately trying to get hold of some of the funding to which she referred? The only way that local government can do this is by bringing in consultants to put its bids together; it does not have the resources otherwise. I ask the noble Baroness to take that back to the department and get it to think about this again.

[Baroness Swinburne (Con)]

I give the noble Baroness that assurance: I will take that back to the department. It is my first week in the department, so I do not have an answer for her now, but I will speak to the civil servants and my Secretary of State.

I will continue. The settlement includes additional measures for local authorities in England, announced on 24 January, which will be worth an additional £600 million. We are trying to provide local authorities with as much bespoke support as possible, knowing that they have more jobs to do to deliver some of these programmes.

The work that we have done to create a climate for investment through the development of our freeports and investment zones programmes will drive up living standards and regenerate selected areas. Unlike the noble Baroness, Lady Bennett, and some others, I think that the freeport initiative will be a source of jobs and investment. So far, we have created 12 freeports, eight of which are in former industrial areas—including in Teesside, the east Midlands, the Humber, Plymouth and the Solent—two are green freeports in Scotland and two are in Wales. All are now open for business and creating jobs.

Freeports are all about securing economic futures, and that of the UK as a whole, by reorienting regional economies towards innovative, low-carbon sectors such as renewables and advanced manufacturing. I believe that we are already seeing some movement here, with 6,000 jobs expected to be created and £2.9 billion of investment promised. They are also creating high-quality jobs across the UK, right in the communities where they are needed most.

Meanwhile, our investment zones programme recognises that the UK has underperformed in leveraging the success of key industries and certain research strengths, so they will be established in places with significant unmet productivity potential, many of which have a rich industrial history. For example, the zones in South Yorkshire, Greater Manchester and the north-east of England are focusing on clusters associated with advanced manufacturing, nodding to their industrial heritage while investing further in high-potential industries of the present and the future.

The Government recognise the crucial role played by the private sector in the levelling-up agenda through schemes such as investment zones and freeports. We aim to enable and empower the private sector to increase investment, jobs and growth at a local level. Good quality, self-sustaining growth will be delivered through capitalising on the growing industries of the future. That includes manufacturing, where our funding is targeted to ensure that UK industry copes with the fundamental changes to remain at the forefront of the global transition to net zero. We are committed to growing the economy and ensuring that funding does not focus solely on the most successful sectors today but looks ahead as we keep pace internationally and build the UK’s expertise for the industries of the future.

In acknowledging many noble Lords’ close ties to the north-east region, I am delighted to draw attention to the recent announcement of a £40 million funding package to accelerate Teesside regeneration. Middlesbrough, alongside Redcar and Cleveland, will receive £20 million each—a total of £40 million—to help ramp up improvements, with targeted projects planned to revitalise high streets, healthcare, transport and education, and to create more affordable housing.

Finally, in County Durham, where I understand that the noble Baroness, Lady Armstrong, served as Member of Parliament, the market town of Bishop Auckland, which expanded to serve the coal industry, has been awarded £53 million from the Government’s future high streets fund and towns fund to support its development as a visitor destination of national significance. I look forward to visiting, given that my grandparents come from there. This investment will help diversify and enhance the town centre, improve transport connectivity and provide new skills and enterprise opportunities for young people. I hope noble Lords will acknowledge that that is a fitting response to celebrate the town’s proud industrial heritage.

I have a very large number of questions that I will try to zip through. My handwriting is appalling, so please forgive me if I stumble. I really empathise with the pride that the noble Baroness, Lady Chapman, has in her home area. It certainly made me think about my upbringing in my area. To date, approximately £1.4 billion in levelling-up funding has been allocated to projects in the north-east and Tees Valley. This funding covers a range of regeneration priorities, including addressing the local skills gap and developing emerging sectors in former industrial areas. Across all three rounds of the levelling up fund, the north-east has received more per capita than any other English region, alongside wider programmes including devolution deals, levelling-up partnerships and our long-term plan for towns. This shows our commitment to level up the region.

I turn to some of the remarks that many noble Baronesses and noble Lords made with respect to the Teesworks controversy. Following the concerns raised about Teesworks and the actions of the Tees Valley Combined Authority, we commissioned an independent external review, which was published on Monday 29 January. This found no evidence of corruption or illegality but made a series of constructive recommendations regarding the governance and transparency of the project. For the two recommendations relevant to central government, we will carefully consider how to support the continued success of the mayoral development corporation across the country and the recommendations regarding the landfill tax. The Secretary of State made a written request to the Tees Valley mayor, asking him to set out how he intends to respond to the panel’s recommendations by 8 March. This has already been done, and we hope to publish all this in a very short time.

I have been asked why the National Audit Office should not examine this. I have a note here to tell me that the NAO’s role is not to audit or examine individual local authorities, and its powers would not normally be used for that purpose. It would therefore be inappropriate to expand its role so significantly by asking it to lead this inquiry.

The panel that did this investigation was made up of individuals with significant experience in assurance and local government. The panel spent months investigating thoroughly, and found no evidence of corruption or fraud. Its report has been published; I am sure noble Lords have all read it, as they have alluded to. It was published a week after we received it. We welcome the constructive recommendations and are actively considering the way in which these relate to central government.