Shared Prosperity Fund

Dan Jarvis Excerpts

Tuesday 14th May 2019 Westminster Hall

[Dan Jarvis (Barnsley Central) (Lab)]

I beg to move,

That this House has considered the UK shared prosperity fund.

It is a pleasure to serve under your chairmanship, Sir David. I am pleased to see so many colleagues present to debate an issue that will affect all corners of the United Kingdom and all our communities.

There has been considerable discussion and debate, especially within the Welsh, Scottish and Northern Ireland devolved Administrations, about the shared prosperity fund. Many of us have raised it formally with Ministers in written and oral questions, meetings and correspondence with the Government over the past year. However, it is right that today we take the opportunity to lead a national debate that seeks to heal the divisions in our country—divisions that were laid bare by Brexit but whose seeds were sown long before. Today is an opportunity to look at an important issue through the eyes of our communities, rather than through the prism of party politics.

The Government must respond to three key challenges: to accept that they cannot leave local areas facing major financial uncertainty, to signal that they trust devolved Administrations, mayoral combined authorities and local authorities to know their communities best, and to commit to a clear timetable for action. I speak not only as the Member for Barnsley Central, but as elected Mayor of the Sheffield city region—a unique position that gives me a unique perspective.

[Mr Clive Betts (Sheffield South East) (Lab)]

I congratulate my hon. Friend on securing this important debate; I apologise that before too long I will have to leave it to chair a meeting. Is it not disappointing that, despite the promise to consult on the shared prosperity fund by the end of last year, we still do not know its terms or the amounts involved? Secondly, should the Government not make a simple promise that no area will be worse off if we leave the EU than if we had stayed in?

[Dan Jarvis]

I agree. I will make those points later in my speech.

I have seen at first hand what local areas can do when they come together to drive economic growth, but also how they can be limited and constrained by the powers and resources available to them. European or Government funding can often come with limitations that inhibit creative thinking, making it difficult to deliver significant structural changes.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate my hon. Friend on securing this debate. When I was leader of Coventry City Council a long time ago, we badly needed regional aid, which at that time came from Europe. One thing that investors asked was what our skills, transport systems and so forth were like. If we could not answer those questions, sometimes we did not get the aid, and as a consequence we lobbied for regional aid for a couple of years. It is very important that we get some guarantees out of the Government, because whether we happen to live in Wales, Scotland or the west midlands, we need real answers. If we do not get them, investment will fall, costing us jobs. This is a very serious situation; I cannot stress that enough.

[Dan Jarvis]

My hon. Friend speaks with great authority on these matters. He has put his finger on the nub of the issue, which is that decisions that will have an impact on local communities are best made by those communities themselves. Through the devolution agenda, the Government have a very exciting opportunity to devolve not just decision making, but the powers and resources required to deliver those decisions.

I was expressing frustration about the criteria that are sometimes applied to pots of funding. Central Government funding in particular can often be short-term or pit places against one another. Sadly, at times it can be driven by political short-termism, by pork barrel politics or by who shouts loudest and longest. Under such circumstances, it is hard to plan for the future, and it can be more difficult to be strategic.

From 2020 onwards, the funding allocated to regions from the European Union will come to an end. From 2021, so will the funding allocated through the local growth fund programme. Together, the programmes have totalled billions of pounds of investment. The European funding element in the current programme alone has been worth €207 million for the Sheffield city region, €796 million for Yorkshire and the Humber, €513 million for Northern Ireland, €895 million for Scotland and €2.413 billion for Wales.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

In the highlands, the European structural funds were awarded on properly assessed need for roads, harbours and suchlike. That funding was fantastic in halting continuing depopulation, that great curse of the highlands. If we get this wrong—if we do not get something proper in place of the funding—I fear that that ghost will haunt the highlands once again.

[Dan Jarvis]

The hon. Gentleman makes a valuable point.

[Jo Stevens (Cardiff Central) (Lab)]

My hon. Friend mentioned the timing for the funding running out and the possibility of taking a strategic view of funding for the future. Does he agree that the delay in publishing the consultation makes it even more difficult for people throughout the UK to think about strategic funding for the future and delivering projects for our communities?

[Dan Jarvis]

Yes, I do. My hon. Friend makes an incredibly important point.

[Albert Owen (Ynys Môn) (Lab)]

My hon. Friend rightly noted that in previous schemes that we have had in this country, assisted areas were pitted against one another. The European structural funds were just that—they were structural. They allowed us to invest in infrastructure, but also, importantly, in social projects. That dimension must not be lost.

[Dan Jarvis]

My hon. Friend makes an important point, which I will address in just a moment.

If we remained in the European Union, research produced by the Conference of Peripheral Maritime Regions suggests that UK regions would receive €13 billion under the future EU cohesion programme.

[Sarah Newton (Truro and Falmouth) (Con)]

I congratulate the hon. Gentleman on securing this debate. He is making a powerful case, but as one of three Cornish MPs present, I have to note that he omitted Cornwall from his list of regions of the UK that have benefited significantly from regional growth funds and from European funds. It is important that we have this debate and that we encourage the Government to publish the consultation, but it is also important that we should work right now, as we are doing in Cornwall, on how to spend regional growth funds to the benefit of our communities. We do not have to wait for the consultation to come out; we can all work with our local authorities and businesses to shape the future funding arrangements. Will the hon. Gentleman encourage colleagues in this Chamber to work together to ensure that we learn from the lessons of the past and have funds that work for our areas?

[Sir David Crausby (in the Chair)]

Order. Interventions should be short.

[Dan Jarvis]

I hope very much that this debate will provide an opportunity for hon. Members to make points that they have sought to make for some time. On Cornwall specifically, if the hon. Lady bears with me for no more than a few seconds, she will, I hope, be pleased with what I am about to say.

I was saying that certain areas with a specific interest in the work of the Conference of Peripheral Maritime Regions were due to get an even greater proportional increase: South Yorkshire, Tees Valley and Durham, Lincolnshire, southern Scotland, parts of outer London, Cornwall and the Isles of Scilly, west Wales and the valleys.

[Anne Marie Morris (Newton Abbot) (Con)]

And Devon.

[Dan Jarvis]

And Devon—I am grateful for that intervention.

Let me move back from Devon and Cornwall to South Yorkshire for just a moment. In South Yorkshire, we would have seen an increase from €117 per head to more than €500 per head. It is therefore my view that any future shared prosperity fund needs to replace the funds on the basis of what would have been received, had the referendum result been different.

[Wayne David (Caerphilly) (Lab)]

On the question of how funds are allocated, does my hon. Friend agree that if there is any combination of needs-based formulae and competition, allocation on the basis of need should overwhelmingly be the most important factor to be taken into consideration?

[Dan Jarvis]

I do agree. My hon. Friend makes a very important point, and I will say more about that later.

When it comes to the funding criteria for the shared prosperity fund, it is important to understand that resources previously received support some of the most vulnerable in our society, through projects delivered by charities from Mencap and the Salvation Army through to local and voluntary community organisations, such as South Yorkshire Housing and Sheffield Futures, in my patch—organisations rooted in our communities, born out of need and surviving in some cases by the skin of their teeth. The resources also support investment in high-profile, multimillion-pound research and innovation schemes. They unlock town and city regeneration. They provide business support and finance in urban and rural areas. They deliver sustainable development projects that support the low-carbon agenda. Taken together, these local growth and European funds have been the glue that holds our communities together.

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jake Berry)]

I will be brief, as I know many others want to speak. Will the hon. Gentleman expand on that? Many of the areas he listed as the biggest beneficiaries of European structural funds were also areas that voted to leave the European Union. I was surprised to hear him say that we should have the same system, had the referendum result been different. Will he say why he thinks that people in many of those areas voted in such high numbers to leave?

[Dan Jarvis]

I do not think that that is an unreasonable question. We can have a debate if we like, although perhaps on another occasion, about why it was that people decided they wanted to leave the European Union. For many, it was because they felt that their local areas were not receiving the benefits that other, more affluent parts of the country were. This is a very good opportunity for the Government to seek to heal some of those divisions and invest in some of the communities that feel left behind. The United Kingdom shared prosperity fund must be designed and delivered so as to deliver on the aspirations of the communities such as the one that I am proud to represent. Those funds have previously done an incredibly important job in providing the glue that holds some of our communities together, creating new jobs, and in supporting disadvantaged and hard-to-reach communities that have often been neglected.

[Mike Amesbury (Weaver Vale) (Lab)]

The Employment Related Services Association has highlighted the very point that my hon. Friend makes—that these initiatives and organisations support people furthest away from the labour market. I used to be a Connexions manager and would draw down some of that funding to help young people who were not in education, employment or training. Does my hon. Friend agree that 2020 is just around the corner and people are getting desperate to plan and deliver those programmes?

[Dan Jarvis]

I do, and furthermore there is a real opportunity to place these resources in town halls and in mayoral combined authorities—in people who have their own democratic mandate to take decisions and allocate the resources in the most effective and efficient way.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I commend my hon. Friend on securing this debate. He will know that, apart from Cornwall, the north-east and the Tees Valley are the areas that have received the most funding from the European regional development fund and social fund. He will also know that by the Government’s own economic analysis, those areas are also set to suffer most from the impact of any Brexit outcome, however delivered. Is it not incumbent upon the Government to take this opportunity not only to match up to the promises that have been made on that funding, regardless of our departure from the European Union, but to do that in a fair and properly targeted way, so that it gets to the areas that need it most—the areas suffering from poverty and low living standards—regardless of our patchwork of local devolution?

[Dan Jarvis]

My hon. Friend is exactly right; she makes a powerful point. This is a big opportunity for this Government and the next Government to invest money in our regional economies. I said at the outset that I hoped we would see this debate through the eyes of our communities and what is in their best interest, not through the prism of party politics. There will be a range of different views about Brexit and what it may or may not mean for our country, but I hope there is a unanimity of view on wanting to do the best for our country, whatever happens. We want to invest money wisely and effectively in the regions and nations of our country. If we are serious about doing that, the shared prosperity fund is an incredibly important element and ingredient in it, but we have to design it in the right way. We have to get the criteria right. We have to make sure that the formula in place is agreed by the regions and nations. That is why we need to get on with the consultation and make some progress.

[Caroline Flint (Don Valley) (Lab)]

It seems to me that, for one reason or another, moneys that have come from Europe—or that we have put in and that have come back to us from Europe—and moneys that a number of Governments have allocated have not dealt with the inequity in our country between north and south or between cities and towns. Does my hon. Friend agree that, whatever else happens in the future, unless there is an offer for our smaller towns and communities, no fund will match the expectations of those communities, or the demoralisation that they feel at how they have been treated by national Government and, for that matter, city government?

[Dan Jarvis]

As always, my right hon. Friend makes an important point. I hope that what is starting to emerge as a consensus in this place is that whatever happens over the next few weeks, months and years, business as usual and the way we have done our politics previously are not going to cut it. This is an opportunity to look at how we invest in our regional communities and to empower decision making at a regional and local level. That is not a silver bullet solution—it will not necessarily address all the challenges that we face—but it has to be part of the solution to many of the concerns that our constituents have.

My right hon. Friend provokes me to make another point. This country has one of the most centralised systems of public finance, policy making and political control of all the OECD nations. The Guardian—I am not sure whether the Minister is a regular reader—reported that local government in this country controls only 1.6% of GDP. That figure is 6% in France, 11% in Germany and 16% in Sweden, yet local government delivers around a quarter of all public services. The inevitable consequence is that decisions, however well meaning, do not always adequately reflect the needs or opportunities of local areas.

The issue is no more acute than in the way that successive Governments have decided where to prioritise investment. I have made this point many times before: when it comes to spending on transport infrastructure, the gap between more affluent areas, such as London and the south-east of England, and the north is particularly stark. Despite the work of the Minister and those in Government supporting the northern powerhouse, it is still the case that, since the northern powerhouse was introduced by the Government in 2014, public transport investment per person has been three times higher in London than in Yorkshire and the Humber.

It is no surprise that that is the case. However herculean the efforts of individual Ministers, the rules of engagement are stacked against us. The inequalities are built into the criteria of the Treasury Green Book model, which favours infrastructure development in more affluent areas, meeting existing demand rather than stimulating latent potential. In the words of my friend and neighbour, the Mayor of Greater Manchester, Andy Burnham—himself a former Chief Secretary to the Treasury—the Government have

“a tendency to shovel more and more into the areas that are already doing well.”

We see that in transport investment and other Government programmes.

[Scott Mann (North Cornwall) (Con)]

I am grateful to the hon. Gentleman for securing this debate. Does he acknowledge that it is not just the north that suffers this problem? Some areas in the south-west have exactly the same difficulty. Does he agree that the Treasury should have other mechanisms, rather than looking at just the economic benefits? Perhaps it could look at the social benefits of putting money into areas such as his and mine.

[Dan Jarvis]

I absolutely agree, and I always try to choose my words very carefully. Not for one moment will Labour try to pit the north against the south, or different parts of the country against each other. I absolutely accept that there are different needs in the remoter regions of our United Kingdom. The hon. Gentleman is absolutely right to make the point that there are areas of deprivation in the south, south-west and south-east, and indeed in London, just as there are in the north. That is why it is so important that we take this opportunity to get the design of this fund right, so that every corner of the country will be best placed to benefit from it.

I was about to make the point that in 1960 the UK had the highest levels of productivity in Europe. Now, though, a French worker produces, on average, more by the end of Thursday than a worker in the UK does by the end of the week. In the UK, the gap between the richest and poorest regions is around 150%, which is almost twice as large as in France and three quarters larger than in Germany. Such gaps in wealth distribution and productivity are neither normal nor inevitable, but for some of our most deprived regions they are increasing. The consequences of public policies and investment decisions entrench the economic and social divide. If we fix that, the prize will be huge.

Looking at the north of England, Transport for the North’s “Northern Powerhouse Independent Economic Review” suggests that we could add £97 billion to our economy by 2025, which is over and above business-as-usual levels. Over the same period, we could add 850,000 jobs, which is also over and above business-as-usual levels. We can do that by focusing on what we are good at. In South Yorkshire, the same qualities that fired the world’s first industrial revolution now power our 21st-century advanced manufacturing and engineering story. Companies such as Rolls-Royce, Boeing and McLaren have chosen our region because we are in the vanguard of developing new materials and solutions to real-life manufacturing and engineering problems. This must be the start of our economic transformation, not the end. To go further, we must have the tools and resources.

[Anne Marie Morris]

Many valuable points have been made, but the points the hon. Gentleman is now making refer to prosperity. One of his colleagues asked earlier whether we are looking at meeting need or at driving prosperity and productivity—those two things almost conflict. My concern is about how much of this fund will be delivered through local enterprise partnerships, which will be looking competitively at growth, and how much will be delivered through local government, which will effectively be looking much more at need. Is the hon. Gentleman also concerned about ensuring that both issues are addressed? This concerns not just the areas where we will drive productivity; we need to get other areas up to at least a basic level, so that the need is at least average.

[Dan Jarvis]

The hon. Lady asks the right questions, and the point of the debate is precisely to flush out these kinds of question. That is precisely why we need to have this consultation, so that collectively we can have that debate and put in place an arrangement—a formula or criteria—that serves our country in the way that I hope we would all want it to be served.

I was making some observations about the challenges that specifically relate to poor connectivity, issues regarding skills, and productivity. Owing to devolution, and hopefully to the design of this fund, I am hugely positive about our ability at a regional and local level to address some of these challenges. Change is afoot, and there is growing recognition that the answers to these issues do not lie just in Whitehall or Westminster. The recent election of the North of Tyne Mayor—I know the Minister is quite enthusiastic about that recent election—means there are nine metro Mayors across England. They represent 20.7 million people, which is 37% of the population of England.

We are adding our voice to that of our friends and colleagues in devolved Administrations in Scotland, Northern Ireland and Wales in calling for greater freedoms and resources to help us do our jobs. This is a powerful voice and one that, to be fair, I believe the Government listen to. The Government have made place central to their industrial strategy, recognising that no one size fits all, that each and every part of the UK has a different set of opportunities, and that different approaches are required to develop them.

Over the coming months, many of us will be working with the Government to develop our local industrial strategies—joint agreements that set out how central Government and local government will work together to grow our economy. With the creation of powerful sub-national transport bodies such as Transport for the North, we increasingly have the capacity, capability and voice to effect real change. Taken together, these new models of governance, the growing recognition of the importance of place, and an acceptance that the status quo cannot be allowed to persist suggest a brighter future.

That brings me back to the shared prosperity fund, which has to be part of the solution. With some frustration, I say that despite many interventions in the House— through written questions and correspondence with the Department—and despite many promises that consultation would take place, we do not yet have clarity on how much funding will be available, what activities will be eligible for support or who will take the decisions about how the money is spent. We know that the new fund will be a central pillar of the Chancellor’s spending review, and that Departments will be working on the development of the fund. On that basis, we have not been sitting idly by, waiting to be asked. Indeed, I commend the work of the all-party parliamentary group on post-Brexit funding, and the analysis and contributions of colleagues in local and regional government who have been addressing these issues.

I have set out my four guiding principles on which I think the fund should be developed, which are as follows. First, the annual budget for the UK’s shared prosperity fund should be no less in real terms than both the EU and local growth funding streams it replaces. It must guarantee that regions will not be worse off because of Brexit, in the funding available for regional development beyond 2020. Moreover, that should be a baseline rather than a cap.

Secondly, there should be no competitive bidding element. Instead, an open and transparent process must be put in place that strikes a balance between targeting areas of need and rebalancing our economy, and supporting economies that have the greatest potential to grow.

Thirdly, the fund must be fully devolved to those areas that have in place robust, democratically accountable governance models, including devolved Administrations, combined authorities and mayoralties. It must be up to local areas how best to invest this money, be it on skills, helping the most vulnerable and disadvantaged, infrastructure investment, employment or support and education. Fourthly, the funding must be stretched over multiple years, beyond the vagaries of spending reviews and parliamentary cycles.

I want to take this opportunity to implore the Government to untie the hands of our local areas—to trust that we know our communities and can develop, appraise and deliver projects on time, on budget and in line with local need and opportunity. The year-by-year drip-feed of central Government funding for local economic growth has to end. The imposition of priorities and projects has to end. The competing against, rather than collaborating with, our partners for funding has to end.

The shared prosperity fund will be a litmus test for this Government on their commitment to devolution; it will be the proof of the pudding. The central question is whether we all have the courage and the conviction to let go of powers and resources that for too long have sat in Westminster and Whitehall. If we want to tackle the scourge of regional inequalities and create a country that works for all, let us be bold. Let us ensure that the shared prosperity fund does what it says on the tin: enable all our communities to share in this country’s economic growth, and prosper.

[Several hon. Members rose—]

--- Later in debate ---

[Dan Jarvis]

I am grateful for the opportunity to debate this important issue, and I thank everyone who contributed; we heard from people representing every corner of the United Kingdom. The debate teased out some big and important, but in some cases still unanswered, questions. There is an urgent requirement for clarity about the design of the fund—how it will work and how it will be administered. There is also a need to guarantee that, at the very least, our communities will not be worse off. That is the right thing to do, not least because, at this very difficult time for our country, if we want it to be both successful and united, we need to ensure that we get rid of the systemic inequalities between our regions and our nations. If we are serious about doing that, the shared prosperity fund will have a very important role to play. Let us get on with it and work out how we are going to do it.

Question put and agreed to.

Resolved,

That this House has considered the UK shared prosperity fund.