Rebalancing Regional Economies

Afzal Khan Excerpts

Wednesday 14th May 2025 Westminster Hall

[Andy MacNae]

I agree 100% with my hon. Friend. It is the pride that we have in our towns that really matters. Good things should happen in our towns, not just in some distant city that only a tiny proportion of people in a town might be lucky enough to be able to travel to. That includes pride in our neighbourhoods; neighbourhoods are important to their residents.

Having said that, I do not deny for a moment that cities are our economic engines and that we desperately need to address the productivity gap between our regional centres and London—but, as we have said, this process cannot just be about the cities and the big towns. It matters little to the people of Bacup how well Manchester is doing. Instead, we need to see the good things happening in Manchester mirrored in places such as Bacup. That is the true test of whether we are delivering for all.

[Afzal Khan (Manchester Rusholme) (Lab)]

I thank my hon. Friend for securing this important debate. Greater Manchester has the fastest growing economy in the UK, with the most diverse range of sector strengths in the country, but despite that, Greater Manchester’s productivity is still 35% below London’s. Does he agree that we cannot rebalance our regional economies without major investments, such as the Northern Arc, which could double the size of the region’s economy in 30 years?

[Andy MacNae]

I thank my hon. Friend for that intervention. That is largely the point: we must rebalance our economies by bridging the productivity gap between our cities, including our northern cities, and the rest of the country. At the same time, though, we must make sure that that growth in cities such as Manchester, which in many ways is doing great, is felt in Lancashire and other places at the same time.

--- Later in debate ---

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

It is a pleasure to serve with you in the Chair, Mr Dowd. It was a pleasure to hear the outstanding contribution by my hon. Friend the Member for Rossendale and Darwen (Andy MacNae). I am grateful to him for securing the debate, and I am grateful to my colleagues who have come and found a way to contribute to it as well. This is a very important debate. The frustration over the imbalances both between and within regions is felt locally, whether it is in Teesside or Cornwall or anywhere in between, so it is right that colleagues are interested in this.

I have a whole argument to set out, but instinctively I will start with something I have said for a number of years, both when I shadowed this brief in opposition and throughout my time in government—something, most importantly, that the Prime Minister has said on multiple occasions: we see the fundamental transfer of power and resources from this place to local communities as a huge priority for this Government. We do that because we believe it is right that people should have a stronger say over their future, be it their economic future, their social future or the future of the fabric of their community, but we also strongly believe that that is what delivers.

It is right that the No. 1 mission for this Government is growth, but if we are to get that, the heart of our growth mission must be making sure that everybody has good opportunities, and that prosperity is spread across the UK. This is hard to say, especially as a Minister, but also from Westminster itself: it is an inside job. When I became the Minister for local growth, a job I loved doing, I did not walk through a sheep dip that gave me omniscience over Lancashire, Teesside, the west Midlands or Halesowen. The experts are my hon. Friends, but more importantly they are their constituents. My role—and our job as a Government—is to get those resources and powers out to them, so that they can change their communities and shape their economic futures. That is an important and huge goal.

It is very hard not to get into a conversation, as my hon. Friend the Member for Camborne and Redruth (Perran Moon) says, about either north or south, urban or rural and city or town, and that is a feature of this debate. But certainly when it comes to growth across those areas outside London and the south-east that have had the hardest time over the past few decades, I do not see these things as either/or’s. I think they interlock.

[Afzal Khan]

This is an important debate. In Manchester, a shocking 11 children in a class of 30 are living in poverty, which we know impacts their development, experiences, education and mental health. We must ensure that the economy works for the people we serve, so does the Minister agree that tackling child poverty must be central to our plans for regional rebalancing, especially in areas such as Manchester Rusholme?

[Alex Norris]

I agree that child poverty is particularly cruel. It is cruel because of the hardship that those children grow up in, but it is also cruel because their potential is snuffed out before they have even had a chance, and we should want everybody to have a chance to play their role in their community. That speaks to the very important point that even within communities that are thriving, there are still some of those neighbourhoods. This is a conversation about towns, but it is also a conversation about neighbourhoods. The very poorest neighbourhoods exist in all parts of the country, and we should have a real neighbourhoods focus for how we tackle that.

As I said, I think that these things interlock. I make no apology for believing that there is an importance in ensuring that our cities thrive. If our largest 11 underperforming cities got to the national average, that would be worth £20.5 billion; to the Exchequer, it would be £63 billion of additional output. That is a huge prize. I am thinking about Belfast and the incredible success story that is going on there in banking and finance, in the creative industries and in tech generally. These are incredible opportunities, which have the potential to change that community and change lives.

However, it is right that colleagues here, such as the hon. Member for Strangford (Jim Shannon), should ask, “But what does that mean for Newtownards? What does that mean for Coleraine? What does that mean for Ballymena?” Those conversations are very much in the spirit that my hon. Friend the Member for Rossendale and Darwen led us off in. We will as a Government—this has been part of the debate already today—look to back those projects that have a potentially transformative impact. Whether that involves the Oxford, Milton Keynes and Cambridge corridor or unlocking the growth potential of our cities, we are going to do those things. We think that that should be at the core of our industrial strategy. I am talking about backing places with potential for growth, and growth with a degree of speed as well. There is the clustering that is going on. I am thinking about Liverpool and Manchester and some of the technology clustering. We are going to back those things. We think that is the right thing to do. But I want to give colleagues a real assurance that our approach has a lot more than that, too. As I have said, it is about power and it is about resources.

With regard to the power piece, I am very proud of our devolution agenda. As a Government, we have built on what the previous Government did. They did good things in establishing the mayoralties that they did. We want that to go wider and deeper, which I will talk about in a second. In recent months, I have been working very closely with our mayors on the development of local growth plans, so that—again, in the spirit of what my hon. Friend the Member for Rossendale and Darwen says—rather than Ministers sitting in Whitehall with a map and working out where they think there might be some potential, we are saying to the leaders of those communities, “Get together with your community. Tell us where your economic future is. Tell us what the hurdles are to realising that economic future. Tell us what resources you need to deliver that economic future. We will agree those plans with you and we will back you. We will give you the power to do that. You can use tools, such as investment zones or freeports, but we want you to say what it takes.”

I am very pleased to say that as we get to the spending review this year, we will see those plans come out. Whether we are talking about the Liverpool city region, the east midlands—my area—the Greater Manchester combined authority, the west midlands or elsewhere, people will see emerging very exciting plans that will be about a new vision, a new understanding of where this country’s potential and opportunities are, because suddenly they will be popping up all over the country. I am really excited about that, but we need more people to be part of the settlement.

The devolution steps taken by previous Governments were good ones, but it could go much further, so we have made a commitment to a deeper devolution settlement—more powers across housing, planning, transport, energy, skills, employment support and more, so that locally those tools are there to shape place and to shape the economic future. I am delighted to say that Lancashire is soon to be part of this. We want more people to be in on that settlement because we think it delivers for their communities, so it is great that the Lancashire combined county authority is up and running. Of course, there are six areas in the devolution priority programme. That means that when those priorities are delivered and over the line, in addition to the devolution we have already, the proportion of England covered by devolution will rise to 77%, or just over 44 million people, by next May.