Economic Growth (Waveney)

Greg Clark Excerpts

Friday 25th November 2011 Commons Chamber

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

I congratulate my hon. Friend the Member for Waveney (Peter Aldous) on securing the debate and on a commanding speech that offered a comprehensive survey of all the key challenges facing his local economy. I am also delighted to see our hon. Friend the Member for Suffolk Coastal (Dr Coffey) in her place.

My hon. Friend the Member for Waveney said that everyone should work overtime to promote growth. It was clear from his speech that no Member of the House works harder, more persistently or more effectively to promote their local economy than he does. Indeed, it is worth reflecting on the contributions he has made during his short time in the House. He has had debates and questions on the fishing industry, which I know is close to his heart; the offshore renewables sector; local transport; strategic transport, whether rail or road; the local enterprise partnership and enterprise zones; planning; and economic development. In a short period he has become a persistent and eloquent advocate for all the needs of his area. His constituents in Waveney and residents in the local area should be proud of the service he gives them, in alliance with our hon. Friend the Member for Suffolk Coastal. They are very well represented in these matters. He also takes matters to the top, having questioned the Prime Minister, the Chancellor of the Exchequer and the Business Secretary.

My hon. Friend the Member for Waveney will know that many of the issues he has raised today will be responded to in the weeks ahead. We are all looking forward to the Chancellor’s autumn statement next week. There will be statements in the weeks ahead on some of the transport matters he referred to and many of the decisions that will be taken by the local enterprise partnership will be made in the coming weeks. He is absolutely right that we have put the groundwork in, and some of the decisions in the weeks and months ahead, which will increasingly be taken locally, will determine and shape the future success of the local economy. I know that his leadership, and that of our hon. Friend the Member for Suffolk Coastal, will mean that those opportunities will be taken keenly.

Let me say something about the context. Although Waveney is the eastern-most point of England and geographically distant from our motorway network—my hon. Friend the Member for Waveney has told me before that the nearest motorway to Lowestoft is in Holland—it is very much connected with the wider global and European economy. The overall context of the economy, of course, affects Suffolk as it affects everywhere else in the country, but the most essential building block of our economic future is fiscal discipline, which he acknowledged.

We inherited a situation in which our deficit was set to overtake that of Greece. We had a lack of fiscal responsibility which needed to be sorted out urgently, so the fundamental basis of our economic reforms is to secure the fiscal discipline that we need in this country. My hon. Friend knows that businesses in Suffolk and throughout the country regard that as essential to our economic credibility.

I spent some time this week at the CBI conference, where there was not a single business representative who did not think that it was absolutely in our interest to cleave to the record of fiscal discipline that we have established in recent months—and absolutely essential to send to the rest of the world a signal that we are resolute in that. The situation affects us all.

I was struck by the comments this week of one of our leading businessmen, the managing director of the John Lewis Partnership, one of our most successful businesses, who, speaking in his capacity as the chairman of the Birmingham and Solihull local enterprise partnership, said that the Government get the idea that they must stick decisively to the deficit reduction strategy, which, in his personal view, he endorses.

That is typical of comments that the business sector generally has made, and the reason is that the strategy has an impact on interest rates, which are crucial to the investment decisions that need to be made over the months and years ahead. Despite the deficit that we inherited being of Greek-style proportions, interest rates in this country are more comparable to those enjoyed by Germany, and that is in very large part due to international investors’ confidence in the seriousness of our intentions.

Of all the contributions that the Government can make to the economy, and to making setting up and expanding businesses easier than it might be, the interest rate is crucial, because any investments are likely to involve borrowing and capital investment. It is important that we do not take for granted our environment of low interest rates; it is an important feature of our economic policy, and it is important that all our constituents and my hon. Friend’s local businesses understand that it follows from our fiscal demeanour.

There is an additional aspect, however. If we secure our fiscal discipline and have low interest rates, there is a major role for local leadership, which my hon. Friend exemplifies, because local economies, like local councils and local businesses, can be well run or badly run, and one thing that has been most impressive in Suffolk and, indeed, East Anglia over recent months is the flying start that the local enterprise partnership has made.

That LEP is particularly impressive, and it reflects the close work of some of the best businesses and the local authority leaders in the area. I know that my hon. Friends the Members for Waveney and for Suffolk Coastal and others throughout the region worked hard to bring together business leaders and councillors to ensure that the partnership was in place.

The LEP has also been particularly innovative in establishing an enterprise zone that crosses boundaries between not just districts, but counties, and the fact that the case was made so persuasively for such an unusual arrangement, linking into the great potential of that part of the world to secure investment in offshore renewables, underlines the progress that the partnership has made. I, through him, congratulate all members of the LEP on their work in recent months.

The benefits will begin to accrue very quickly. There is already the potential for investment to be made on the basis of the exemption from business rates that will be available in the area. It is estimated that by 2015, 2,000 jobs will have been created in the enterprise zone. Many of the features that will be enjoyed by the local enterprise partnership can be made available elsewhere in his district. The Localism Act 2011, which received Royal Assent only last week, allows, for the first time, business rate discounts to be allocated by local authorities in a way that they consider to be in the best interests of their businesses. For example, they may be provided for new business start-ups, for businesses in a particular sector, or for businesses that are outside the enterprise zone but in an area that needs to be regenerated. I hope that there will be great flexibility and, as my hon. Friend the Member for Waveney said, great encouragement to take up some of the new powers and freedoms that are available.

This also applies to planning powers. Of course, planning powers are vested in local authorities. Another feature of the Localism Act is to have swept away the regional spatial strategies, as well as the regional development agencies. Those strategies imposed on local people a form of administration that many had recognised as bureaucratic and did not reflect sufficient local knowledge and local interest. My hon. Friend made a comparison with Japanese knotweed regarding some of the regulation, bureaucracy and red tape that has emerged, and said that it should be uprooted. I would go further. We need to ensure that the bodies that promoted and created this red tape are finished once and for all—to cut the head off the snake to ensure that this cannot happen again. We have done that with the regional strategies and with many of the regional bodies.

The Government’s reforms make more powers available so that areas can benefit from economic growth locally. It has always struck me as ridiculous and counter-productive that if an area is led successfully by a local authority and encourages the location of businesses in that area, it shares scarcely at all in the economic benefits, which have all been spirited away to the Treasury. The reform of business rates that we are consulting on and intend to introduce very soon will provide a clear incentive and a sense of justice in that if an authority such as Waveney benefits from having success in attracting businesses, it should be able to keep some of the upside. That becomes a virtuous circle whereby knowing that some of the business rates can be retained allows investments to be made in anticipation of the economic effects, and that unlocks some of the infrastructure investment that my hon. Friend mentioned. If one adds to business rates reform the community infrastructure levy and the new homes bonus, one sees that there is a new ability for local authorities to invest proactively in, especially, infrastructure in their area.

My hon. Friend is right to say that there are challenges in the local area. One of the impressive features of the local enterprise partnership bid was that those challenges were very well addressed. He spoke eloquently about skills. His part of the world has underperformed, compared with some other parts of the country, in terms of skills at national vocational qualification level. It is absolutely right that he puts down a challenge to us in Government to ensure that his local enterprise partnership and his local authorities are given every assistance with raising the skills level in East Anglia, particularly in Lowestoft and Waveney. The new industries to which he refers are important in their demand for engineering skills. The commitment we can make to him is that they can invest for the long term.

Waveney may be the most easterly point of the United Kingdom, but this, far from being a disadvantage, can be a positive advantage given that a lot of opportunities will be available in the North sea and on the continent. We need to capitalise on those opportunities. With the very well-led local enterprise partnership and the representation of exceptional Members of Parliament, I am greatly encouraged by the prospects for Lowestoft. I know that my hon. Friend will continue to do what he has done over his first 18 months in the House—keep us constantly up to date and on our mettle to ensure that we do everything we can for a very important part of the country.

Question put and agreed to.