West Midlands Economy

Brian H. Donohoe Excerpts

Wednesday 19th December 2012 Westminster Hall

[Mr Cunningham]

The present economic situation started with Lehman Brothers in America, and the bankers. Some bankers in America faced Senate inquiries, and some were charged, but I do not want to go into that today. I want to talk about Coventry in particular, the west midlands in general, and some of the issues that affect Coventry and the west midlands.

We have issues concerning the police, and the problem of police numbers and cuts are well known. There are also issues with fire brigade cuts, and a running issue during the next few months will be changes to employment law. I will not develop the arguments too much today. Some have been well rehearsed, and some will be. There is a west midlands campaign for a fair deal for Birmingham, but there must also be a fair deal for the other districts that make up the west midlands, including Coventry. I am looking for a fair deal for Coventry.

Coventry was mentioned once in the autumn statement. It is one of the 12 smaller cities that will be included in the super-connected cities programme, and will receive funding for ultra-fast broadband. I am obviously pleased at the news, and I recognise the impact that superfast broadband can have on growth. I particularly understand the importance of encouraging small and medium-sized enterprises to realise the opportunities that superfast broadband can bring. A Lloyds Banking Group survey found that 45% of digitally mature small businesses had registered growth, compared with 35% of digitally immature SMEs.

Some research suggests an £18.8 billion opportunity for SME revenue growth through more high-tech approaches to marketing, data optimisation and more, so I am pleased with the Government’s commitment to broadband expansion. We can say something positive about the Government for a change, but we will be looking to ensure that they proceed intelligently to ensure that small businesses make the most of the available opportunities.

I am also optimistic about the city deal in Coventry and Warwickshire. Over the past month, Coventry MPs and councillors in particular have lobbied hard, as have Warwickshire MPs and councillors. The city deal could bring great benefits to the region, including giving cities the powers and tools they need to drive local economic growth, unlocking projects or initiatives to boost their economies, and strengthening the governance arrangements of each city. Each city deal includes at least one major commitment specific to the city, which generally involves leveraging private sector funding. Many have included tax increment financing and community infrastructure levies, and there is a focus on investment and trade.

I very much hope that Coventry and Warwickshire local authorities will make the case for Coventry’s candidacy for the deal. Coventry is a strong contender, and has been working for months to develop infrastructure plans that are ready to go ahead given sufficient funding and support. The plans reflect local understanding of the asset base, transport issues, the financial situation, and what can be achieved. An example of the work that Coventry is already undertaking to stimulate growth is the gateway project. It is controversial because environmental issues are involved, but I understand that it is on the way to obtaining planning permission, or has already received it. I am not clear about that. The project will be interesting, but controversial.

Another excellent example in Coventry is the Friargate project next to Coventry railway station. It is a 300,000 square metre development, which will extensively renovate the area to include 14 grade A office buildings, two hotels, new pedestrian routes, high quality public spaces, new residential buildings, and space for retail outlets and bars. Outline planning consent was granted in July 2011, and the first phase of the development has started. I hope that the development will transform the city centre, making it welcoming and lively. More importantly, I hope very much that the renovated city centre will raise optimism and encourage investment in the city.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I congratulate my hon. Friend on securing this debate. Coventry’s economy has been greatly assisted over the years by the car industry, particularly Jaguar. What does he think about Tata’s proposal to open a factory in China?

[Mr Cunningham]

There are a couple of schools of thought about that, but my understanding is that the trade unions are worried and will be having discussions with Tata. Some years ago, there was concern about Jaguar’s trade with China. Some people thought that cars would be built in China, but they were only assembled there, and there had been a misunderstanding. We need to find out more about the current deal, and discussions are ongoing.

Coventry city council is suffering from Government funding cuts. From 2010-11 to 2012-13, the council has suffered cuts of £101.89 per capita. That is among the hardest hit 20% of local authorities. More unjust and distressing is the fact that of those local authorities with cuts of more than £100 per head, including Coventry, 85.71 % are Labour-run, and only 5.36 % are Tory-run. Meanwhile, of those local authorities with cuts of less than £100 per head, 60.82% are Tory-run and 19.4% are Labour-run. It is hard not to be concerned about the Government’s fairness when the cuts seem to be distributed across local authorities on party lines. Coventry council had expected to lose 1,000 jobs over four years to 2014-15, but it is now predicting 1,600 job losses over the four-year period, with a cut of more than 10% in the work force.

Those cuts are impacting on the council’s services for the vulnerable. For example, its funding for early intervention will be cut yet again. Two years ago it was £22 million per annum, but from next year it will be £11 million. That is particularly damaging given the current increased pressure on social care. Every penny spent on early intervention in families with young children to help them help themselves is of paramount importance in taking people out of poverty and improving children’s life chances. Those pressures are increased by a social care budget for children of £64 million which has not significantly changed for two years. Similarly, the pressures are increasing daily on the adult social care budget because elderly people and disabled people are living longer, but that is not reflected in the budget, and the extra cost of care is not recognised in financial terms.

Those are only a few of the extreme budgetary pressures on the council; to put the huge cuts in funding into context, there are others. In my constituency alone, 920 households have already received letters from Her Majesty’s Revenue and Customs informing them that their child benefit is likely to be reduced or withdrawn. Across Coventry, that figure is 1,740 households. The jobseeker’s allowance claimant rate in Coventry and across the west midlands is 6.2%, well above the UK’s rate of 5.2%. Even worse, the rate of jobseeker’s allowance claims by 18 to 24-year-olds across the west midlands is 8.7%, far higher than the UK’s 7.1%.