North-West Economy

Bill Esterson Excerpts

Tuesday 20th July 2010 Westminster Hall

[Hazel Blears]

My hon. Friend is right. The decision has completely wasted an opportunity to create for her constituency’s young people access to high-quality training, proper qualifications, and work experience on the job in a building environment. This country needs those skills, so the decision is particularly short-sighted.

[Bill Esterson (Sefton Central) (Lab)]

I congratulate my right hon. Friend on securing this important debate. Two schools in my constituency were in line for BSF wave 1, starting this year. Sefton council spent more than £1 million in preparation for BSF, and that will now be wasted.

I am also concerned about the review of other major projects in the north-west, besides BSF, such as transport and infrastructure projects—and the effect on the construction industry and the trades that depend on it for work. At a time of fragile recovery, as my right hon. Friend mentioned, that is very important. I would encourage the Government, and hope that she would too, to make the relevant decisions quickly so that further damage is not done to firms that have no other work and will end up unable to take up the slack if projects are approved.

[Hazel Blears]

My hon. Friend makes an important point about certainty. Hon. Members will all know that uncertainty is often more damaging to businesses than knowing what is to happen, which at least means they can plan. I disagree with the Government’s decision to take an extra £40 billion out of the economy at such a time. That decision was a matter of choice. The implications that my hon. Friend has outlined are very important.

--- Later in debate ---

[Bill Esterson]

Does my hon. Friend agree that one of the lessons that need to be learned from the Government’s handling of the abolition of the development agencies is the need to listen to business leaders and leaders in both the private and public sector about what is right for the region, rather than just coming up with their own solutions and imposing them from the centre?

[Roberta Blackman-Woods]

My hon. Friend makes an excellent point, and I will shortly address how the abolition of the RDAs is being handled. In response to comments made by my hon. Friend the Member for Blackley and Broughton (Graham Stringer), I do not think that we are framing the discussion around the retention of a particular structure, but we have to question whether LEPs will be capable of taking on the roles previously performed by RDAs.

It is also worth asking whether the Government have a democratic mandate for abolishing the RDAs, because the Liberal Democrats stood on a platform of keeping them in areas where they were deemed to be successful. Indeed, the coalition agreement, on page 10, states:

“We will support the creation of Local Enterprise Partnerships—joint local authority-business bodies brought forward by local authorities themselves to promote local economic development—to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.”

However, that does not seem to be happening in practice. We have been told that all the RDAs are going, but no legislation is yet in place for that to happen and we expect a White Paper on the matter to be produced only in the autumn.

The issue is about creating a structure that will deliver regional economic investment and growth. We know that the Northwest Regional Development Agency returns about £5.20 of economic benefit for every £1 spent, and in terms of foreign direct investment the programme delivers £30 for every £1 spent. That is a substantial record that will have to be met by any new structure.

I have several questions for the Minister and would appreciate specific answers to them. How will the economy of the north-west be affected by the removal of current funding streams from the RDA, such as the European regional development fund, and the absence of an effective system for disbursing funds and managing the bidding process? That is particularly important, as we currently need investment in green businesses. The RDAs have been successful in bringing together venture capital funds through European money and money from the private sector to create substantial funds.

How will businesses supported by the RDA cope with the reduction in funding when the £1 billion regional growth fund replaces the RDA budget of £1.5 billion a year over two years? That was an excellent question asked by my right hon. Friend the Member for Salford and Eccles. There are other questions on the advisability of moving key functions from the RDA to the Department for Business, Innovation and Skills, such as responsibility for inward investment and for fostering innovation. Surely there is a need to go the other way and to devolve those functions to local areas and enable them, particularly regions, to set their own priorities.

Several Members referred to the development of a regional skills strategy. That, as the Minister will know, was a function undertaken by RDAs. Without that, how will we know what the skills shortages are at a regional level, how they are to be addressed and what partnerships will need to be developed locally to deliver them? We know that local businesses need to work with education suppliers to increase the number of apprenticeships and to get more employers on board, and we know that universities are critical to the development of regional skills. However, it is necessary to have an overview at regional level, as the hon. Member for Wirral West (Esther McVey) noted in an excellent point. How will universities interact at a regional level without a body to encourage them to do so?