Local Government Finance

Debate between Gordon Birtwistle and Graham P Jones

Monday 29th October 2012 Commons Chamber

[Graham Jones (Hyndburn) (Lab)]

I wish to raise the issue of 12 district councils that face substantial reductions in the overall funding they receive as a consequence of the proposed reforms to local government finance. The councils affected are Great Yarmouth, Bolsover, Barrow-in-Furness, Hastings, Pendle, Preston, Chesterfield, Copeland, Thanet, Breckland, my own constituency of Hyndburn, and that of my neighbour, the hon. Member for Burnley (Gordon Birtwistle).

I welcome the Minister to his place and congratulate him on his promotion; I hope it is successful. However, its great irony in the context of this debate is that he is now the Minister responsible for making the decision on funding. To add to the irony, his council is the one most affected, with a reduction of £3.167 million—equivalent to a 29.3% reduction in core spending. Another irony is that because my researcher took ill last week, I have had the assistance of a researcher who works for my hon. Friend the Member for Luton South (Gavin Shuker), Lara Norris, who is hoping to be Labour’s prospective parliamentary candidate in the Minister’s seat, Great Yarmouth. I thank her for her out-of-hours commitment.

The nub of the issue is that most of these 12 councils face a reduction in Government support of over 22% despite the Chancellor’s suggestion in the autumn statement of 2010 that no authority will suffer cuts greater than 8.8%. In 2012-13, the transition grant was provided to authorities whose spending power would have decreased by that figure. All 12 authorities are shire districts, and 10 of them are among the most deprived districts in England, according to the English indices of deprivation. Tonight’s debate is intended to make the case that the Government’s proposals on creating a new funding baseline should include the historical amounts that councils have previously received but apparently may now lose.

Local government finance is an area of deep complexity that central Government have struggled with for decades. Numerous weighty tomes have been produced on suggested reforms. This Government and the previous Government have taken steps to try to ensure that the system is fair and flexible, and, most importantly, meets the needs of the vast majority of the citizens of the UK. Over many years, the basis of Government funding to local authorities has been a national needs assessment that attempts to determine how much central funding should go to each local council.

[Gordon Birtwistle (Burnley) (LD)]

The hon. Gentleman is making a very strong case on behalf of the 12 district councils. Without the funding, our cuts in Burnley will be 28.7%. This situation arises from a history of make-up money that the previous Administration gave us over a few years and that has now been rolled up and is needed by the authorities. Does the hon. Gentleman agree that the authorities have done everything they can to balance their books and make themselves more efficient, but they would never be able to manage without that money?

Pennine Lancashire Local Enterprise Partnership

Debate between Gordon Birtwistle and Graham P Jones

Wednesday 24th November 2010 Westminster Hall

[Graham Jones (Hyndburn) (Lab)]

This is a matter of importance in supporting growth in Pennine Lancashire and the north-west of England. I intend to discuss three main points. First, Pennine Lancashire’s skills base and great heritage make it perfectly placed to pursue a local enterprise partnership. Secondly, a pan-Lancashire LEP is not an appropriate solution for either east or west Lancashire and will not work in the region. Thirdly, the Government must recognise the unique differences between those two local economies and the need for two LEPs for the region, and move toward a solution involving a Pennine Lancashire LEP.

When the Government invited local authorities and business leaders to submit proposals to form LEPs, we in east Lancashire saw it as a perfect opportunity to build on years of existing partnership work. In his letter of 29 June, the Secretary of State makes three clear points:

“some local and regional boundaries do not reflect functional economic areas. We wish to enable partnerships to better reflect the natural economic geography of the areas they serve and hence cover real, functional economic and travel to work areas.”

There is no doubt that Pennine Lancashire functions as a natural economy and fits the three points mentioned by the Secretary of State.

Economic, skills, housing and transport strategies are already developed and implemented along the lines of that footprint, and they have been for many years. With a population of more than 500,000 people, the area is greater in size than many major UK cities and is similar in size or greater than some of the LEPs already approved. The area is characterised by a strong manufacturing base and entrepreneurial people. More than 21% of employment in the area is in the manufacturing sector, compared with 10% in the UK as a whole. Self-employment rates are significantly higher than regional and national levels. Despite not having a dominant city centre, the area collectively contributes more than £6 billion gross value added to the economy each year.

Export-led growth will drive economic recovery and Pennine Lancashire is well placed to capitalise on that, with more than 700 businesses involved in significant export activity this year. It is vital that we recognise what makes up east Lancashire. A key point is that there is a high degree of connectivity and interdependence between the Pennine towns. More than 10,000 jobs are provided by Blackburn employers and the same figure is provided by Burnley employers for residents of the area. In terms of Pennine Lancashire districts, my constituency provides 9,000 jobs. Some 84% of resident employees work in the area and only 16% work outside of it. Of those people who do not access employment outside the sub-region, almost three times as many commute to Manchester as do to Preston. We are talking about a very small connection to Preston. Independent analysis shows that more than 200 high-growth businesses have achieved at least three years continuous growth, despite difficult economic conditions. We are working hard as an east Lancashire region. Hundreds more businesses have the potential to grow and provide new jobs for the area.

I shall turn to why a pan-Lancashire solution is not suitable. The Pennine Lancashire LEP proposal is private sector led. The existing business leaders’ forum works alongside the east Lancashire chamber of commerce and other support organisations, such as the Federation of Small Businesses and the Asian Business Federation. The forum comprises prominent business leaders from each of the six district councils and a cross-section of representatives from local high-growth companies. It is chaired by a well-respected business leader and includes the chamber of commerce president and chief executive, college principals and the Lancashire Business Environment Association. The forum will act as a shadow LEP board. It is important that the Minister recognise the work already achieved in east Lancashire. There are already 150 business men and women involved in partnership activity within Pennine Lancashire.

[Gordon Birtwistle (Burnley) (LD)]

Does the hon. Gentleman agree that the fact that the business community is starting up two specific chambers of commerce—one for Pennine Lancashire and one for Preston and west Lancashire—proves that the business community wants two specific LEPs? The business community will work on that basis and will give such a proposal its full support.

[Graham Jones]

I accept that and I will come to that point.

The chamber of commerce in east Lancashire has a proven record of partnership development and business support delivery, not only locally but beyond its boundaries. However, its west Lancashire cousin hardly ever meets and does not function. The east Lancashire chamber has 800 members and covers 60,000 employees. One in four of the working population is covered by that chamber of commerce’s businesses. It has led a programme of consultation during the development of the LEP proposal and has circulated information to 8,000 businesses. The chamber’s elected board of directors fully endorse the Pennine proposal. Last week, the shadow east Lancashire private sector LEP board met to finalise governance arrangements and to give input into the development of a regional growth fund bid.

East Lancashire’s business leaders are getting on with the job in hand, so why are we having this debate today? Despite Pennine Lancashire fulfilling every criteria set out by the Government, the bid has yet to be approved—not because of the quality of the proposal or the private sector backing, but because of the conflicting bids from the county, particularly the county council. It is worth highlighting that the county council’s proposal does not cover the historic area of Lancashire and that it excludes Blackburn and Blackpool. They do not wish to participate. That is why I describe it as a Swiss cheese proposal—it leaves two great big holes in Lancashire and does not provide a pan-Lancashire solution. The proposal does not even command the support of the majority of district councils in Lancashire. On the other hand, east Lancashire local authority leaders are united and have been working on a cross-boundary and cross-party basis to promote economic growth in Pennine Lancashire for many years. In particular, Regenerate Pennine Lancashire is an exemplary example of economic co-operation.

East Lancashire welcomed the assurance given by the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark) in his letter to the district councils’ network on 25 August. The letter reiterated what has been said before:

“we are not expecting County Councils to act as sole ‘building blocks.’ We want to see economic geographies reflected in proposals, not administrative ones”.

Experience has shown that pan-Lancashire structures put in place to deal with economic issues are ineffectual and that local arrangements reflecting local economic footprints work better. If we are not careful, we will have the unnecessary duplication of bureaucracy of region and locality. Indeed, only this year, Lancashire partners agreed that the existing pan-Lancashire economic partnership was no longer fit for purpose and that the attempt to create a Lancashire-wide skills board has failed. However, the private sector-led Pennine Lancashire Employment and Skills Board goes from strength to strength.

There are also two British Chambers of Commerce accredited chambers of commerce in Lancashire. This point relates to the comments made by the hon. Member for Burnley (Gordon Birtwistle). One chamber of commerce is in the east and one is in the west. They both reflect the unique differences of the economies they serve. A two-LEP Lancashire solution is staring us in the face. A recent poll suggested that almost 70% of businesses in west Lancashire would back a two-LEP solution.

[Graham Jones]

I appreciate my hon. Friend’s comments, but I do not accept any of them. I do not accept that there is a pan-Lancashire solution because Blackburn refused such proposals and had the common sense to look south to Manchester. Blackpool is hesitant on the matter. I shall come on to some of the conflicts that exist. We do not have a pan-Lancashire solution; we have a proposal based on three separate areas. The problem is that three proposals are being labelled as one proposal. We will all lose out. There is no pan-Lancashire solution—there never has been and there never will be. There is Lancashire county council, Blackburn borough council and Blackpool borough council.

[Gordon Birtwistle]

The hon. Gentleman may remember that when he was, I think, a member of Hyndburn council and I was a member of Burnley council, we put forward multi-area agreements—the right hon. Member for Blackburn (Mr Straw) will remember those. Pennine Lancashire put forward its MAA and I had the pleasure of coming to No. 10 Downing street to sign it off with the previous Prime Minister. I do not think that the west Lancashire MAA was ever done. Why are we, in Pennine Lancashire, being held back while we wait for the rest of Lancashire to come up with some sort of solution to what they need?

[Graham Jones]

The hon. Gentleman makes a fantastic point. East Lancashire has an MAA and now west Lancashire has decided to have one because east Lancashire has one. That reinforces the point that there are two economic models and two different regions divided by the M6 motorway. He also makes the point that the direction of travel to work is to Manchester or inwards; there is none to the west.

Following that recent poll, which I think is striking, a strong Government recommendation to that end would quickly resolve the situation and leave Lancashire settled with a two-LEP solution.

The two areas are distinct, encompassing both Blackburn and Blackpool. I remind the Minister that we have recently seen a costly legal battle between the two areas over Tithebarn, a retail development intended to revamp Preston city centre. Lancashire county council backed Preston city council against Blackburn with Darwen borough council over the Tithebarn project, and £1.5 million of taxpayers’ money has been wasted in that legal battle. That is what will continue if we try to mix oil and water, and Tithebarn will not go away in the next decade. Trying to merge the two areas will result in a terrible situation. That battle in the courts was about not civic leaders but retail, and it was between businesses and, primarily, Blackburn council.

I am concerned by the fallout from Tithebarn. I do not see how Lancashire county council has a mandate for that proposal, and I do not know why it is bringing that forward. I have never seen an executive report on the issue from the county council, and nor have I ever seen the matter go to full council. I have never seen it brought forward. It is undemocratic, and I would like to see how much the county council is spending on it, as it does not even have a mandate from its members in the council chamber. It is a ridiculous bid and should be thrown out. It is a cynical attempt to undermine the established Pennine Lancashire LEP bid, and to use issues such as Tithebarn to impose a west-of-Lancashire solution. It goes against the spirit of local economic partnerships and the Government’s wider localism agenda. Lancashire county council should not be allowed to disrupt and jeopardise the economic prosperity of an area it is meant to serve in a misguided attempt to reassert control over the existing county boundaries on issues such as Tithebarn and others.

In summary, Pennine Lancashire LEP is based on evidence and understanding and has the support of the private sector, district authorities and all local MPs from the three main political parties. Business and civic leaders in east Lancashire all recognise what works locally and have a sense of common purpose about what needs to be done, one that transcends political differences. The economic capital should not be discarded, as years of work have gone on in east Lancashire involving all the authorities—of different colours—to try to drive growth in the area, which we have done.

It is clear that Pennine Lancashire has had a business-led and focused partnership that has developed over years. There is nothing comparable to the west. To send everyone back to square one to suit the county council’s agenda would be a gross waste of taxpayers’ money and would hit growth in the region. I urge the Minister to resolve the situation, approve a Pennine Lancashire proposal as a matter of urgency and allow us to get on with creating the private sector jobs and growth that the area so desperately needs.

Military Aviation Industry

Debate between Gordon Birtwistle and Graham P Jones

Wednesday 15th September 2010 Commons Chamber

[Gordon Birtwistle (Burnley) (LD)]

I congratulate the hon. Member for Fylde (Mark Menzies) on managing to get this important issue on the agenda this evening. I have worked in the aerospace industry for more than 40 years, and I can remember working on the old Phantom engine at Lucas Aerospace many, many years ago. Amazingly, some of those engines are still being used in jet fighters in underdeveloped countries.

It is important to remember that this country can no longer afford to develop new military aerospace equipment, because it is far too expensive for a single country to do that. The European countries of Germany and Spain—the ones involved in the Eurofighter contracts—have appreciated that. One thing that concerns me a little is that although the Eurofighter is being built at the moment, we should be developing the next stage of military aircraft now. A new aircraft does not just happen tomorrow—it takes years and years to develop. I hope that the European Union, in collaboration with all the aerospace companies, is starting to consider the next combat plane that will have to be developed after Eurofighter finishes.

Eurofighter is being built at Samlesbury, near Preston, but the biggest contract for Preston would be one that has already been mentioned: the F-35. Our requirements for the F-35 are negligible compared with what the USA wants. I understand that it is considering somewhere in the region of 3,000 of these aeroplanes. Quite a large number of them will be built in Lancashire at Samlesbury and Warton. I hope that the Minister can press the USA to take final decisions on engine design and engine contracts, because I know that Rolls-Royce at Barnoldswick is urgently awaiting the contract.

[Graham Jones]

The hon. Gentleman makes some excellent points and I agree with him. I am concerned about our capacity at Warton if we are solely reliant on the F-35 and the Eurofighter is cancelled or reduced. The F-35 is assembled not in the UK but in the USA, so we will not need the runway at Warton and we will lose our capacity. There are ongoing issues when we rely totally on the F-35. We should not be doing that; we should be trying to keep our European bases, which is the point that he is making.

[Gordon Birtwistle]

All military aircraft go out of fashion. By the time the Eurofighter was developed, the countries that would potentially be our enemies were already developing systems to combat it. We have to accept that, as it has gone on for ever. I remember the TSR2—not many people in this Chamber will remember that—which got almost to the point of taking off when the then Labour Government cancelled it. This has nothing to do with politics, really—it has to do with collaboration between countries across the world in developing the fighters.

One thing that I want quickly to mention is the link between military aircraft and commercial aircraft. Modern aeroplanes, such as the Airbus, are built around the technology that has been developed over many years in military aircraft. The fly-by-wire in the Airbus was initially developed in the early stages of the English Electric Lightning aircraft and was developed further for commercial aircraft. Military aircraft sales in this country are very high—I accept that—but they pale into insignificance when they are linked to the sales of commercial airliners.

Rolls-Royce is one of the manufacturers, and much is built in Burnley—the thrust reversers are built at Aircelle. The contracts for the Trent engine and the Airbus wings all involve products that have been developed from old military technology.

--- Later in debate ---

[Graham Jones (Hyndburn) (Lab)]

The hon. Member for Burnley (Gordon Birtwistle) made a good point about cross-subsidy. We can look at BAE Systems and start from there. It spends £101,000 for every £1 million—10% of its revenue—on research and development, and it is the third-highest of 850 UK firms when it comes to R and D. He made the tremendous point that any reduction in our military or industrial base will affect commercial opportunities and other businesses in the north-west and the UK.

This is not a two-sided argument, as some Government Members have characterised it. It is not about deficit reduction or increased national debt, and I am very concerned that the Treasury is leading on this issue rather than the Ministry of Defence. The arguments between the Chancellor and the MOD do not serve the country or the aviation industry well, and statements such as that by the Secretary of State for Defence that we will buy “off the shelf” are very unhelpful.

The hon. Member for Blackpool North and Cleveleys (Paul Maynard) talked about scaremongering. When workers hear those kinds of comments and see job losses, they are naturally concerned. As my hon. Friend the Member for Barrow and Furness (John Woodcock) said, they have every right to approach their Member of Parliament and expect them to stand up on their behalf and for their jobs and families. They also have sense in that they understand that the sector is part of the UK’s industrial base, especially in Lancashire and the north-west.

I think we are all aware of the UK’s industrial base. I want to read out three points from the plethora that have been raised with me. First, the UK is the world leader in the manufacture of aircraft wings and engines, as the hon. Member for Burnley pointed out, and has a 35% market share in the sale of engines, which is worth more than £5.1 billion a year. Secondly, defence exports are generally worth £5 billion a year to the UK economy and support 65,000 jobs. Thirdly, according to the Government’s 2009 value added scoreboard, the aerospace and defence sector added £12 billion in value to the economy. The average value added per employee in the industry was very high, as the hon. Member for Pendle (Andrew Stephenson) pointed out, at £116,000, whereas for general manufacturing the figure is £15,500 per employee in Lancashire. The £116,000 figure also compares well with those for other industries. The sector is one of Britain’s success stories, as has been pointed out.

This is not about scaremongering. The hon. Gentleman is right that it is important that these issues are raised in this place and discussed thoroughly. The citizens who elect us are the important people, not us. We are simply advocates on their behalf. They are the ones who will face redundancy and repossession when they are unable to pay the mortgage. Britain will suffer from the economic impact—and there will be an economic impact. This is not a case of pushing one domino over and perhaps two or three others falling. In the case of the defence industry, if one domino is pushed over, it is likely that the whole lot will go down, and Britain’s industrial capacity in one of our best exporting sectors will then be torn away.

The north-west has a great export and manufacturing story. However, as the hon. Member for Burnley said, that has come on the back of military spending and Government contracts. The old private sector and state industries are long gone, and the heartbeat of the north-west economy is kept ticking by, if not the public service, defence and nuclear.

The Chancellor’s priorities for the coalition Government are a return to manufacturing, and a focus on the private sector and on manufacturing companies that are able to export to get Britain out of the so-called deficit. The north-west’s defence industry ticks all those boxes. We should look at the domino principle of how everything collapses if the industrial and skills bases are taken away. If things are turned off today, they will not come back on in five years’ time. Given that the industry ticks all the boxes that the coalition has put forward, I do not understand why it would cancel any of the defence contracts.

[Gordon Birtwistle]

Does the hon. Gentleman agree that the age profile of a lot of the work force in the British aerospace industry, particularly in Lancashire, and the engineering industry is getting very high and that when those members of staff move, the companies should seriously consider replacing them with a major influx of new apprentices? We heard earlier that BAE Systems takes on a derisory number of apprentices compared with the number of people whom it employs.

[Graham Jones]

The hon. Gentleman makes the good point that a lot of skilled people in the sector developed their skills in the 1960s and 1970s. We paid the price for the great manufacturing recession of the 1980s with the loss of capacity and skills. Those in my generation are missing from the skilled group, and such unskilled people should have become skilled so that they could work in places such as Warton and Samlesbury. The history lesson from the 1980s shows that when manufacturing is hit, it does not come back, and we should take that lesson on board when we consider defence spending.

The hon. Gentleman is right to talk about apprenticeships. BAE Systems has some 200 apprentices. It spends £1 million at the university of Central Lancashire and is heavily involved in trying to bring young people through so that they get skills. On job prospects, I have heard someone—it might have been my right hon. Friend the Member for Doncaster North (Edward Miliband)—talking about Govan shipyard or Asda, and one could almost say for us that it is a supermarket or BAE. That is not quite true, but it is a lot of people’s perception of job prospects. A job at British Aerospace, as it was formerly known, was something to behold because someone employed there was working for a first-class company that was one of the best in the region.

The Minister has heard a lot of evidence during the debate—all of it true—to show that we cannot afford to cancel defence contracts now.