Local Growth Deals

Andy Sawford Excerpts

Monday 7th July 2014 Commons Chamber

[Andy Sawford (Corby) (Lab/Co-op)]

I thank the Minister for advance sight of the statement. As ever, the right hon. Gentleman is courteous and constructive. That is part of the reason why he is respected by MPs in all parts of the House and by local authority leaders around the country, including in my own area. The problem is that the Minister is something of a lone voice in the Government, trying to convince his colleagues to help all the regions of the UK to fulfil their promise.

For today’s announcement to represent the kind of progress that we need, three tests must be met. First, does it represent a truly ambitious devolution of power and funding? Secondly, have local communities, their businesses and councils determined the priorities? Thirdly, are today’s announcements new—is this new or additional investment? Of course, we welcome any investment. The Minister knows that I have supported the local enterprise partnership bid in my area, and people across Northamptonshire will welcome the announcement about Silverstone. However, today’s announcement is too little, too late from a Government playing catch-up.

One of the first acts of this Government was the dogma-driven destruction of the regional development agencies, without providing a proper replacement. It was economic vandalism, pure and simple. What of the Government’s flagship regional growth fund, mired in chaos and delay, creating more losers than winners, leaving successful bidders waiting for two years to receive their money, and leaving hundreds of millions of pounds to gather dust? Sadly, after four years of this Government, it is little surprise that we have seen regional imbalances become starker and local areas held back.

Lord Heseltine’s seminal report, “No Stone Unturned”, promised much and raised the hopes of many, but today’s announcement shows that the Government are happy to leave plenty of stones unturned all over the country. Will the Minister say how much of the funding that Lord Heseltine’s report recommended should be devolved has been devolved to local areas, and by how much today’s announcement falls short? The Minister is making the most of today’s announcement—he is one of life’s optimists—but deep down, surely he knows that although it signals some progress, it falls well short of what is needed, not only in scale but in terms of how the Government have gone about this.

The second test is about who makes the decision. Today’s announcement is not real devolution; it is a list of centrally agreed projects. The criteria required shovel-ready schemes; local enterprise partnerships were given the nod on the understanding that schemes needed to be ready for next May, so that it looked like something was happening before the next election. Is it not time to move on from making these kinds of decisions in Whitehall, where local areas have to take part in a beauty parade so that Ministers can pick winners? Why not devolve the funds properly and let local areas decide the priorities? Why not let them make the decisions that are right for their economy, not just right for the Minister’s political timetable?

The third test is whether this is new money. The Minister claims to be announcing £2 billion today, but it turns out that £1.1 billion has already been committed to local transport projects. Some £267 million of this money still has not been allocated. Will the Minister confirm when it will be allocated? As for the £6 billion figure, most of that, as the Minister well knows, is money from local sources that we would try to bring forward anyway; certainly, Labour local authorities are in the lead in doing that. [Interruption.] Well, the Minister has agreed that combined authorities in Labour areas all around the country are trying to show real leadership. Will he confirm how many unsuccessful bids there have been, and tell the House what estimate he has made of the total cost, to both local authorities and businesses, of putting together those failed bids? Is he aware that small businesses in particular have been put off applying by the amount of bureaucracy, and by the requirement to pay the cost of due diligence up front? Many successful applicants have not proceeded for the same reasons. What steps is he taking to address that?

The Minister will be aware that the Leeds city region deal, which he personally signed, has been undermined by the Secretary of State’s announcement on referendums and precepts. Will the Minister reassure me that he will sort this mess out—a mess of the Government’s making—so that the Leeds transport fund can be properly established?

In contrast to today’s much-hyped but severely limited announcements from the Government, Labour has committed to devolving £30 billion of funding from Whitehall to city and council regions to spend on skills, housing, transport, and business support, and to giving combined authorities the power to receive 100% of additional business rates revenue generated by growth to support infrastructure and future economic development. Whereas this Government are failing to deliver for businesses and communities across the country, a Labour Government will step up and genuinely pass down power and resources to local areas.

[Greg Clark]

What a ray of sunshine the hon. Gentleman is! I am grateful for his warm words, but if he thinks that I am a lone voice, I do not know who he thinks the people behind me and opposite him are. It is some “lone voice” that delivers £6 billion of funding from central Government to our local economies. If that is a lone voice, it seems a pretty strong one.

Why is it that whenever Labour Front Benchers get the opportunity, they talk the regions down—I say this to the hon. Gentleman’s colleague on the Front Bench, the right hon. Member for Leeds Central (Hilary Benn), too—while their colleagues back in their constituencies are talking the regions up? Contrast the comments of the hon. Member for Corby (Andy Sawford) with those of Labour leaders right around the country. The Labour leader of Leeds city council said today that this was tremendous news. He said:

“We are glad that the government has now listened to our exceptionally strong case to put the financial power in our hands”,

and that the announcement

“could be truly transformational”.

Sir Albert Bore, the leader of Birmingham city council—I was with him in Birmingham this morning—said:

“This is great news for Birmingham.”

Joe Anderson, the mayor of Liverpool, said:

“This is great news for Liverpool.”

Sir Richard Leese, the long-standing leader of Manchester city council, has said that there has been more progress towards the devolution of powers to the core cities in the last three years of the coalition than during 13 years of Labour. The only “lone voice” is the increasingly lonely voice of Labour Front Benchers opposing the increasingly unanimous view that we should be devolving power around the country in the way that we are. I hope the hon. Gentleman will get with that, because we have confidence in our cities and it is no wonder that the cities are losing confidence in their representation from the Labour party.

The hon. Gentleman asked about the funding that we have provided. I made it clear in my statement that we have gone further than was originally proposed. We made it clear that only £1 billion of the £2 billion figure was competitively available, but we have gone further by allocating £6 billion because the scheme was oversubscribed by 3.5:1, which means that the quality of the proposals was so high that we thought it would be ridiculous to say, “Come back in a year’s time.” Why not give investors confidence to get on with projects now so that they can create jobs around the country?

It is worth saying that this is not just Government investment. For every £1 of Government investment there will be at least £2 of local investment as a result. The hon. Gentleman asked about Lord Heseltine’s view on the scheme. I was with Lord Heseltine this morning, and he has travelled with me around almost every one of the 39 local enterprise partnerships to negotiate the deals. He expresses himself to be “thrilled” with the ambition that we have set through the programme, which exceeds what he thought possible. He is delighted with the programme.

I have thought about the hon. Gentleman’s suggestion that we should go further. Of course we should go further, and the Chancellor has committed at least £2 billion a year, but at no point during the 13 years of the previous Government was any of this suggested. It is important that such things should be rigorously funded. I read the Adonis report, and the small print states that 100% of business rates should be devolved to the cities. Under my right hon. Friend the Secretary of State for Communities and Local Government, half of business rates are now given to local authorities, which again did not happen during 13 years under Labour. Of course, £11 billion goes to the Treasury, so how will that £11 billion be found? Is there a black hole? In fact, the small print of the Adonis report states:

“This should be revenue neutral to the Exchequer through offsetting reductions in government grants”

to councils. In other words, it is a swizz: £11 billion of grant cuts to councils to pay for the headline with which he came up.

The difference between the Government and the Opposition is that we act on our ambitions by taking money from central Government to invest in local government, rather than the other way around.