Industry (Government Support)

Harriett Baldwin Excerpts

Wednesday 16th June 2010 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to take part in this Opposition day debate on Government support for industry. It was a great pleasure to hear the maiden speech of my hon. Friend the Member for Bracknell (Dr Lee). I also heard the maiden speeches of the hon. Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery). I apologise for having to leave the Chamber, as I had been invited to tea by Mr Speaker, and that is why I sadly missed the maiden speeches of the hon. Members for Barnsley East (Michael Dugher), for North West Durham (Pat Glass) and for Middlesbrough South and East Cleveland (Tom Blenkinsop), but I look forward to reading them in Hansard. It has been delightful to hear so much about the north-east in today’s debate. In 2005, I fought Stockton North, and, as they say, Stockton North fought back. However, I do know what a delightful part of the world the north-east is.

I speak as someone who has worked in the private sector for the past two decades—my whole career thus far has been in the private sector. In those two decades, I have survived both boom and bust and all types of economic cycle. I have been through the cycle in which one hires additional people, the cycle in which, sadly, one has to let people go, the cycle in which one invests heavily in training, research and development, and the cycle in which one markets and exports products overseas, so one travels to explore overseas markets. I learned in those two decades that businesses have to be adaptable to thrive and survive. I also learned that Governments do not create wealth. Governments do not invent new products or start new businesses and cannot tell which businesses will survive or thrive. However, I strongly agree with the Secretary of State’s comments at the beginning of the debate that the Government have an important role to play.

There are signs that the Labour party is beginning to understand that Governments do not create wealth. Last week, the former Labour City Minister, Lord Myners, said:

“There was flawed thinking about job creation in the past. I found it very frustrating to sit in meetings with some of my fellow Ministers talking about creating jobs in the green economy and biotechnology. The Government cannot create jobs.”—[Official Report, House of Lords, 8 June 2010; Vol. 719, c. 625.]

Lord Myners is right. Across the world, and throughout history, economic recoveries are almost invariably led by small business creation and by the jobs created by those small businesses as they grow and become successful.

Against that background, I would like to consider Advantage West Midlands, the regional development agency that covers both my constituency and that of the shadow Secretary of State, the right hon. Member for Wolverhampton South East (Mr McFadden). I have been surveying my local businesses recently about how they perceive Advantage West Midlands. Their reactions are mixed. Some of the bigger businesses have had a very positive experience of working with the regional development agency. However, some of the smaller businesses, which the Federation of Small Businesses represents, have found it difficult to negotiate a way into the large regional organisation that is the regional development agency. As it is the small businesses that create the large part of the jobs that bring us out of recessions, it is vital that we get better at signposting that help to small businesses.

According to the annual report of Advantage West Midlands for 2008-09, which covers the worst period of the recession, its budget peaked at £330 million, which I think we would all agree is substantial. With that budget, it was able to create or safeguard 16,997 jobs. I worked that out to be approximately £20,000 per job—quite a high level of subsidy. The Labour Government cut this year’s budget of Advantage West Midlands to, I think, £270 million, and so far it has created about 4,000 jobs, but let us assume that that annualises out to about 8,000 jobs—a cost of well over £30,000 per job.

In 2008-09, the key inward investment achievement was the expansion of Deutsche Bank into Birmingham, which created 300 jobs. Perhaps my hon. Friend the Member for Bromsgrove (Sajid Javid), who is not unfamiliar with that organisation, will be able to find out whether Advantage West Midlands was the deciding variable in Deutsche Bank’s decision, or whether the expansion might have happened anyway.

Management costs and the implementation of the myriad different initiatives and programmes used a considerable proportion of Advantage West Midlands’ annual budget. The salaries of the chief executive, the director of resources, the director of operations, the director of strategy and communications, the director of economic development and the director of economic regeneration are all similar to, or higher than, that of the Prime Minister. If that management structure is replicated in all eight regional development agencies and the London Development Agency, it is likely that many of the front-line funds destined to play their role in helping business and industry are being rather diluted by the high cost of implementation.

The Government have an important role to play in helping business and industry. I believe that they should focus on the creation of excellent infrastructure, on keeping the Government’s own borrowing costs down so that interest rates remain low, and on an attractive taxation environment for both start-ups and inward investment. That is how we can compete with countries such as Singapore and Portugal, which were mentioned earlier.

[Ian Mearns]

I welcomed the hon. Lady’s comment about the number of Members from the north-east of England who had spoken today. Obviously, when it comes to our region and our regional development agency, our perspective is very different from that of many Conservative Members. As was pointed out earlier, geography is an important factor.

In the north-east, one of the magnificent benefits of the RDA has been its fantastic “Passionate People, Passionate Places” tourism regime, which has received national and international acclaim and has massively boosted the tourism industry in our region. That is vital to us, given that the nearest capital city to Tyneside, for instance, is Edinburgh, 100 miles to the north. The amount spent on tourism per head of population by the Scottish Government is significantly greater than the amount spent in the north-east of England. That is the market in which we have to compete. We are peripheral to the English economy. I welcome what the hon. Lady has said about strategy and infrastructure, because it is vital to the integrity of the regional economy.

[Harriett Baldwin]

I love visiting the north-east. I wish that the weather were a bit better for the beaches, but it is a gorgeous part of the world.

[Amber Rudd (Hastings and Rye) (Con)]

Delightful though it always is to hear about the north-east, may I add that we have a town in the south east, Hastings, which is heavily deprived? Members may not be aware that, although it has received a good deal of investment, in the past 13 years the average wage has fallen from £30 to £100 a week below the United Kingdom average. We need the private sector investment that the Government are talking about.

[Harriett Baldwin]

I thank my hon. Friend for that intervention.

I was outlining some of the other ways in which Government could help small businesses. We all agree on certain points, and I hope we can agree that the Government should concentrate on keeping regulation to a minimum. They should also concentrate on reducing the gold-plating of European legislation and confining such legislation to acceptable levels. I think we can all agree that they should spend money on education and skills. The more flexible, well trained and mobile the work force are, the more they will be able to thrive and adapt to the changing environment that we will inevitably experience in the future.

Direct spending on business and industry should happen at as local a level as possible. The regions sometimes make natural geographic sense. Sometimes they do not, so I welcome the opportunity to look at local partnerships. Local communities should be encouraged to reap the reward of businesses’ expansion as much as possible and be allowed to keep some of the increase in taxation revenues locally. I welcome some of the points that have been made along those lines in respect of the Government’s programme.

We have had to learn all over again that Labour Governments run out of money. As we rebuild Britain’s industrial and business base, we need to acknowledge the limits of Government support for industry but at the same time focus on unleashing the potential of the private sector to help us to grow our way once again to prosperity.

--- Later in debate ---

[Rachel Reeves]

I shall give way once I have finished citing these examples. Some £3.2 million that would have supported the roll-out of broadband and £2.5 million that would have helped people at risk of redundancy to get back to work are to be cut. I could continue on this, but I shall give way.

[Harriett Baldwin]

I seek clarification, because cuts were announced by the previous Government and I want to find out whether the cuts that the hon. Lady is describing were announced by them.

[Rachel Reeves]

The hon. Lady makes an important intervention, because cuts were already proposed. The hon. Member for West Suffolk asked whether Labour had any plans to reduce Government spending. I can tell him that it had, and this is one example of them. But this is in response to the—