Economic Regeneration (Harwich)

Bernard Jenkin Excerpts

Monday 11th March 2013 Commons Chamber

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I am extremely pleased to have secured this debate on regeneration in Harwich. Harwich is both typical and exceptional. Harwich, Dovercourt and the surrounding area have suffered from the economic dislocation and isolation that have affected so many seaside towns and ports in the past 60 years or so. Throughout the Anglo-Dutch war of the 1670s, when Samuel Pepys was the local MP and secretary to the Navy board, to the Napoleonic wars, when Nelson himself oversaw the construction of the town’s defences, and the two world wars of the 20th century, Harwich was a key naval base. It closed, however, after the second world war.

During the ‘70s and ‘80s, the dock labour scheme drove the final nails into the coffin of the traditional ports industry, ensuring that the containerisation of freight was concentrated elsewhere. The huge opportunities promoted by Hutchison Ports for a five-berth container terminal at Bathside bay have so far been stymied by an excessively complex planning system and the downturn in world trade. Latterly, the chance of using that vast site for alternative economic development has been frustrated by the EU habitats directive.

Over the years, the growth of civil aviation and the channel tunnel have intensified competition for Harwich as a gateway to Europe. As elsewhere, traditional manufacturing businesses have gradually died out and the sea fishing industry has declined to one small commercial boat. Furthermore, Harwich is at the extremity of the commuting distance from London—a fact not made any easier by recent decisions to end the running of direct trains to and from Liverpool Street. Such things show up in the unemployment figures: just 5.1% of people are recorded as unemployed in Harwich, but that is well above average for the county as a whole at 2.8%, and above the national average of 3.8%.

Harwich is also exceptional. It has an outstanding history and heritage and is surrounded by the stunning Essex and Suffolk countryside and coast. The spirit of the place has not diminished and some industries thrive. Harwich has a specialist oil refinery and a major firework and explosives factory, and I watched on Friday as JCBs arrived at the old Navy yard for export. The railway, and the ferry and cruise liner terminal at Parkestone quay—now known as Harwich International—serve hundreds of thousands of passengers every year.

However, Harwich desperately needs new jobs and new sources of wealth creation, as well as improved infrastructure, a recognition of the importance of high-speed broadband, and to ensure that the A120 has the appropriate designation at national and European level to attract the funds needed for improvement. The immediate and pressing issue is for Harwich to respond to the exceptional opportunities offered by the offshore wind energy sector, which now employs around 4,000 people in the UK. Harwich is the UK’s largest windport. It has extensive experience with the Gunfleet Sands Array and is currently working on the Greater Gabbard and London Arrays. It has deepwater facilities and it is ideally located to take advantage of billions of pounds of investment in the future Thames Array and East Anglia 1 Array in the North sea over the next 10 to 15 years. However, if we do not provide the necessary infrastructure of skills and businesses to serve the tier 1 primary contractors that deliver that investment, there is a real danger that business will be transferred not just elsewhere in the United Kingdom but out of the country altogether, perhaps to Flushing in Holland. I therefore very much welcome the fact that Harwich is to be at the centre of one of the nine employer ownership of skills pilots launched by the Department for Business, Innovation and Skills. It is questions about this that I wish my hon. Friend the Minister to address today.

The Harwich scheme is called “Energising Harwich”, and is aimed at being a passport to work for local people across the Haven Gateway low carbon supply chain. The Government are injecting £875,000 into the scheme over two years. It is being led by the Colchester Institute, and I am grateful to Gary Home and Brian Cairns of the institute for arranging a briefing for me on Friday. That was attended by the lead employer, AJ Woods, a leading steel fabrication business that has already been closely involved in the development of the Gunfleet Sands and Greater Gabbard wind array, and part of a concerted attempt to attract wind energy inward investment to Harwich.

The aim is to co-ordinate up to 40 other employers—small and medium-sized enterprises—in this scheme. A new social enterprise, the Harwich Mayflower project, aims to build a replica of the Pilgrim Fathers’ vessel, the Mayflower, which sailed from Harwich in 1620. It also aims to re-establish Harwich as a wooden boat and shipbuilding centre, providing training and apprenticeships for future generations.

The chairman of the Haven Gateway initiative and the chief executive of Tendring district council were also present at our briefing. Tendring district council is taking a close interest not only in this debate but in the whole project. Essex county council was represented by county councillor Ricky Callender, who represents Harwich. Together, the institute and Tony Woods have appointed Mandy Morris as project manager for “Energising Harwich”. This is a formidable team infused with creativity and determination to succeed. There have been too many Government training initiatives with the aim of simply filling schemes with people who may well finish up with qualifications, but find that they are of little relevance to the requirements of local employers. The challenge for “Energising Harwich” is to ensure that the skills learned equip local people and enable them to apply for jobs that will otherwise go to people from outside the area.

Working offshore is a huge challenge. Unlike Teesside, for example, Harwich has had zero involvement with the offshore oil and gas industry. The key to the success of this pilot will be the ability of local employers to train people in the particular skills for the particular jobs they have on offer; otherwise it will prove a waste of time and money. Success depends on a breadth and depth of understanding between employers and the Colchester Institute. Employers are having to adjust, because the scheme requires companies, who may well be competitors, to co-operate and to deliver it. They need to understand the constraints attached to public money. Culturally, it is also hard for traditional training providers, such as Colchester Institute, to adjust to allow commercialism to lead the allocation of the funds available, but they must be supported in doing so.

I commend the Government for allowing the structure of this funding allocation to be so much more flexible than others before it so that it can fit employer needs. The UK Commission for Employment and Skills and the Skills Funding Agency should be congratulated. I am concerned, however, that it is too early to say how easy it will be in practice for the bid leader to provide the necessary paper trail to meet audit needs once the project is in progress. This is where I must press my hon. Friend the Minister to support necessary flexibility, or the pilot will fail.

There are three other main hurdles for the pilot. One is that employers must provide match funding to the value of 50% of the training fees—a big ask for small companies in the present climate. The second concerns legislative accreditations, which are not covered under this or any other funded programme and yet are essential to the employers’ survival. In most cases, the life of such accreditations is only two years and full retraining is required again thereafter. Maybe some rationalisation of training could be made. The pilot must have the flexibility to address that need, which includes statutory requirements for qualifications in manual handling, first aid and working at heights, and such things as machinery operation that are never, or very rarely, publicly funded. At Friday’s briefing, it was mentioned that even caterers and the food industry need to be trained to deliver support to offshore workers. These are referred to in the bid as “mandatory accreditations” and comprise a group of what are known as “tickets” that allow workers to go offshore. In their own way, they could be seen as legislative accreditations, but the bid explained that workers could not go out to sea without them and that each contractor required a different set. I would be grateful if the Minister confirmed that he is in favour of using this bid funding to support such training.

Finally, working offshore places huge demands on these businesses as employers. This issue arose during conversations between the Colchester Institute and employers. Offshore contractors need ISO 9001 accreditation and to be registered with Achilles or First Point Assessment Ltd, the trade bodies that approve and monitor suppliers on behalf of the utility and offshore oil and gas industries. Without accreditation, businesses cannot bid for contracts. Applying for them takes time and can cost hundreds of thousands of pounds, but building the businesses’ capacity to operate and employ counts as much as does the training. There is a danger, however, that by concentrating on training the work force, this other aspect is neglected. Clearly, this support might not be available from the “Energising Harwich” fund, but funds will have to be found if these relatively small and vulnerable employers are to be able to compete effectively for the contracts on which these jobs will depend. I would be grateful if the Minister acknowledged that, and I look forward to his response, for which I am extremely grateful.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on securing the debate. The hour is late and we are deep into apprenticeships week, so it is right that we debate the importance of skills in his constituency. As he started with Samuel Pepys, so I shall start with Chaucer, who first mentioned apprenticeships more than 650 years ago. Although this is a novel and innovative project, it has a rich history.

I was in Lowestoft earlier this month looking at the links between the skills system and the offshore industry developing all along the East Anglian coast. It is critical that, as new industries develop, we provide the necessary skills, but in the past our skills system has perhaps not been good at responding to the needs of new industries as they emerge. I am delighted that, like other parts of the country, my hon. Friend’s constituency is benefiting from the reinvigoration of apprenticeships. There was an 18% rise in the number of apprenticeships in his constituency last year and 740 starts.

We must do more to make the system more rigorous and responsive to the needs of employers, however, and the employer ownership pilot is a critical part of that. It is about a shift towards delivering skills through the needs of employers and seeing employers as customers of vocational skills. That is the big picture for the employer ownership pilot, for which my hon. Friend has set out a crucial and innovative bid.

In total, in round 1, which I announced within the first week of being in this position, the bid comprised £80 million of training activity over two years. The AJ Woods proposal, “Energising Harwich”, is an important part of that, bringing together local employers, working together, and the Colchester Institute, as my hon. Friend said. Bringing together different players in the consortium also ensures that the whole supply chain gets the chance to participate in the skills enhancements that are supported.

Regional employers in the project will contribute some £3 million over two years, which will be supported by more than £850,000 in public sector funding. The first thing he asked about was the need for flexibility in the paper trail and the audit. This is a pilot scheme, the purpose of which is to investigate new ways of delivering skills that employers need, in exactly the way he described, in order to support wider regeneration efforts. It is therefore crucial that we keep under constant review the audit needs and the bureaucracy surrounding the bids. With public sector money it is critical to have appropriate audit. However, we have to ensure that that does not get in the way of delivering the project. I will therefore take that point away and very much keep my eye on it, as the project develops, and try to ensure that the burden is minimal, considering the necessity for good audit, given that we are putting public sector money into the project.

My hon. Friend’s second point was about match funding of 50%. Co-funding of skills provision is an important principle. The beneficiaries are the wider economy and the employer, as well as the individuals who do the training. In this case the 50% match funding was agreed locally as part of the bidding process. It was not a ratio set by the Department for Business, Innovation and Skills, although we require some co-funding. Of course I recognise the challenge for some companies, especially smaller ones, in contributing their own cash and time, and it is appropriate that the model was developed locally.

[Mr Jenkin]

I am listening carefully to my hon. Friend. The first two concerns might be related, because the permanent secretary in his Department, as the chief accounting officer, will need to be satisfied that match funding has been delivered. However, given the way in which time and benefits in kind are costed in a small business, we all know that it is rather unlikely that some hard and fast, actuarially justifiable figure for match funding will be available. I therefore suggest that a little flexibility or generosity of understanding of what has been committed to meet the match funding will be required, and it is the accounting officer in my hon. Friend’s Department who will have to be satisfied.

[Matthew Hancock]

That is an important point. In a way, it answers the question about the need for flexibility in the audit requirements and the need for the accounting officer in the Department to be content that this is an efficient and effective use of public money, as well as being confident about surviving the ferocity of the Public Accounts Committee, should any hearing take place—not that there needs to be one on this subject.

[Mr Jenkin]

Forgive me, but my other point was that the businesses that are providing the 50% matched funding will account for it from their own resources. Some of these small businesses have their accounts audited, but they probably do not have the sort of comprehensive audit that one would expect of a bank or a major manufacturing business. There will have to be some leeway on that and, not so much a flexibility, but a recognition that everything is being done in good faith, rather than as a means of defrauding the taxpayer and getting away with committing less than 50%.

[Matthew Hancock]

Yes, I recognise that that is a strong argument. We are running this pilot precisely to work out those kinds of issues, especially with respect to small businesses, with which the Government are, frankly, not particularly well equipped to deal. We do not have a good history of engaging with them, and skills is an area in which the Government as a whole need to improve.

That links to my hon. Friend’s third point, which was funding for legislative accreditations, or accreditations that are near-legislative. The skills system has a general rule that legislative accreditations should be paid for by the employer, so as not to crowd out private sector funding with public sector funding, except in the case of unemployed people who need accreditations in order to get a job and who have no employer to take on the burden.

There is a link to co-funding. We recognise that funding for accreditations can in some cases be expensive. In many cases it is necessary, and it also forms part of the co-funding of the project. The two can therefore be linked. A limited amount of resources go into skills funding, and we try to focus it on skills that are transferable and that would not otherwise be paid for by an employer. After all, there is a £40 billion to £50 billion economy in skills provision across the whole economy, and the Government budget for adult skills is £4 billion, so it is important that we do not end up trying to pay for the entirety of training across the whole economy. We simply would not be able to afford that.

Those are my responses to my hon. Friend’s specific points, but I want to give him a broader, more generic, response as well. We are going into round 2 of the employer ownership pilot. The bids for round 1 of the pilot are important, in that we can learn from them how the system can work better and in different and innovative ways. This is an innovative example of companies large and small coming together to provide for a specific need, so it is important for the Government to learn from what works and what does not, and to change what needs to be changed to make the pilot deliver.

This is called the employer ownership pilot for a reason. Each of the projects is, in itself, a pilot, and I give my hon. Friend the undertaking that I shall take a personal interest in his project. I shall ensure that the necessary understanding of the context of running a small business and the costs relating to time that he mentioned are taken into account. I will ensure that I watch his project very closely, because it has the potential to unlock a new industry in an area that, for too long, has not had the vibrancy of a new industry. It has the potential to do a lot, not only for the town but all the way up the East Anglian coast. I will take away the points that he has raised and look into them in more detail.

I congratulate AJ Woods on the work that it has done, but I also urge the company to work closely with others to bring the project to fruition. As my hon. Friend said, the area has higher unemployment than elsewhere in the region, as well as skills shortages. That tells me that, for too long, the skills system has not been working properly. Where we have unemployment alongside skills shortages, there has been a problem. It is my job to try to fix that, and the employer ownership pilot is an important element of finding the solution. I want to work hard to make it happen and to learn what the Government need to do to deliver better and innovative skills, and I shall be happy to work with my hon. Friend on that.

Question put and agreed to.