Policy for Growth

Alison McGovern Excerpts

Thursday 11th November 2010 Commons Chamber

[David Mowat (Warrington South) (Con)]

One of the great pleasures of speaking in this place is occasionally hearing Members of the Opposition saying something that I agree with. I agree with both the hon. Member for Copeland (Mr Reed) and the right hon. Member for Wolverhampton South East (Mr McFadden) that we must ensure that growth is spread evenly across the country as the economy grows. Perhaps they should pause for thought, however, and consider the legacy that we have been left. The gross value added per person for the English regions that we have inherited is about half that for London and 20% less than that in the south-east. The fact that GVA in the regions is half that for the capital is staggering, and it is a situation that does not exist in any other OECD economy. We must fix that, and it behoves the Government to put into effect the policies that will stop that happening again.

I shall say it again: we have inherited a situation in which London has double the GVA per employee of the English regions, and that is not sustainable. The hon. Member for Copeland is right: it is a moral issue. Why has that happened? First, it has not happened simply because London is the capital. If that were the case, the same would happen in other countries, but it does not happen in the United States, in Germany or in Italy. In France, where Paris is dominant in the same way as London is dominant here, the disparity is not the same; it is not double. One small cause of the gap in the past few years has been the boom in financial services, which was unrestrained and went on for a couple of years. I should add that the widening of the gap accelerated during the last few years of the Labour Government.

That all happened here because we have a country that is very London and south-east focused. I spent 30 years in business constantly fighting initiatives to move functions to London, and fighting the idea, “This is important; we’ll have to do it in London.” That is a very tough thing to have to do, and it is like pushing water uphill all the time. Worse still, that attitude also exists in our civil service, in which London tends to be seen as the centre of everything. Another statistic that Opposition Members might like to consider is that capital spend per head under their Government was 50% higher in London than in the north-west. That is a terrible statistic, because capital spending at that level creates private sector jobs and all the good stuff that we need, and thereby creates affluence and prosperity.

We need growth in the regions, and as I have not heard a great deal from the Opposition about how to create that growth, other than by spending money on the regional development agencies, I shall make a number of suggestions. First, infrastructure matters more in the regions than in the south-east.

[Alison McGovern (Wirral South) (Lab)]

Like the hon. Gentleman, I am finding a lot of cross-party agreement and I agree with much of what he says. Will he pause to congratulate the Labour Government on driving forward the west coast main line upgrade, and will he back the rail infrastructure campaign for the north-west that could do so much to build the infrastructure that he says we need?

[David Mowat]

I am about to address infrastructure. We need High Speed 2 to link the north-west as quickly as possible, as we need our rail infrastructure to be linked through to the channel. Yes, I will give credit to the Labour Government for getting the west coast main line done. While I am at it, I shall give them credit for getting the BBC to move outside the M25 and up to the north-west, but that has not been enough, because of the massive disparity in value added per employee that is their legacy.

Like infrastructure, energy matters. I have not heard it mentioned in the debate yet, but energy is a very important component of growth. Broadly speaking, a unit of gross domestic product generated in an English region is more energy-intensive than a unit of GDP generated in London or the south-east, because we have more manufacturing and industry that uses energy. It is therefore very important to our prosperity in the regions for energy to remain competitive. A particular problem that we have inherited is the price of our electricity, which is 30% more expensive than in France. That is a tough issue to start with, but I am concerned that some of the initiatives we are taking will make the problem worse. We need to build more nuclear power more quickly.

--- Later in debate ---

[Jane Ellison]

It is unhelpful. The banking sector’s mistakes and the problems with lending are well documented. They have been covered, rightly, in this debate, but they should not obscure the wider interest that we all have in a thriving financial services industry. More than 1 million people are employed in that industry, two thirds of whom are outside London.

[Alison McGovern]

Will the hon. Lady acknowledge that our leading role in the financial services industry was one reason why the global crash in that very industry meant that Britain was exposed to that crash in ways that some other countries were not, and that it affected us more for that reason?

[Jane Ellison]

I am happy to take the hon. Lady’s point, and I have acknowledged it. I am trying to get across the point that we must see the wider picture. In most large banks and large City insurance and law firms, 40% of the staff are not professional; they are support staff. The wealth generated by those businesses supports many other businesses. It is essential to put some balance back into the debate.

I am a London MP, but I hail from north of Watford. I am not a banker, and never have been; I was a retailer for 23 years before coming to the House. Nevertheless, on behalf of the shopkeepers, restaurateurs, support staff, myriad small businesses, and the many thousands of people who work in the financial services industries at levels far below the super-rich, I call on all hon. Members to bear it in mind that a thriving City is good for the UK and for a great many people beyond those we hear about in the headlines. Let us not allow our frustration about bonuses and bank lending to blind us to that fact.

--- Later in debate ---

[Alison McGovern (Wirral South) (Lab)]

I never thought that I would stand in a Back-Bench debate on growth—the debate is most welcome—and quote Lord Lamont, but I am going to. Speaking of the 1992 exchange rate mechanism crisis, he said:

“I think it is worth emphasising that the ERM crisis was an international one…I am always surprised at the extent to which people see it as a purely British crisis. In that week in September 1992, eight countries either devalued or floated.”

The lesson that I take from that quote is that we forget the global picture at our peril. I have been pleased to listen to other Members reference the circumstances in which we find ourselves. We are trying to drive forward growth at a time when the world faces very difficult circumstances. We are not alone in our pursuit of growth, and we all need to heed that important point.

I want to make three extremely swift points in response to that global challenge. I can make the first very swiftly, because it has already been made this afternoon. On regional development agencies and growth policy in the regions, the Government appear to have wiped the slate clean. We have seen success with the regional development agencies, but there is a lack of understanding of the good practice that went on in them. In developing local economic partnerships, the Government might ask, in areas such as mine in the north-west, where the regional development agencies had success, what needs to be carried forward into the local economic partnerships to make sure that the RDAs’ practice of development—what one business I spoke to in the Wirral called their ability “to roll their sleeves up and help us out”—is not lost.

My second point, which has also been mentioned, relates to the importance of rebalancing. Like other hon. Members this afternoon, when I look at the global economy I wonder how we might provide and sell things that are needed around the world. I know from my constituency that science-led business is important in that. With the investment in superfast broadband and the other things that we hope to see in the Wirral, I hope that we will continue to be champions of science-led business, just as we have been historically, with Unilever at the heart of our borough. Through our expertise, we can lead the way.

Finally, we have real opportunities for export, given our historic links with India and China. I leave the Minister with one thought. The local economic partnerships need to be able to stand on the world stage and argue for those trade relationships. We all need to think what powers those local economic partnerships need so that they can stand on the global stage and argue for investment in Britain.