North-West Economy

Hazel Blears Excerpts

Tuesday 20th July 2010 Westminster Hall

[Hazel Blears (Salford and Eccles) (Lab)]

I am delighted to have secured a debate on the future of the new economy in the north-west and to be joined by so many colleagues from both sides of the House. We will no doubt have a lively and interesting debate on an issue that is incredibly important for us and for our constituents, as well as for businesses, employers and employees in our areas.

We all know in our hearts that the new economy will be very different from the economy that we have seen over the past 20 or 30 years; it will certainly not be built simply on financial services or run in the south-east, with the engine of growth located in one particular part of the country. If it is to be successful, it will have to be driven by the regions, which have tremendous skill, expertise, depth of knowledge and creativity, as well as the ability to expand into new areas in which this country will have to be competitive if we are to continue to ensure that our people have the opportunities and skills that they desperately need. Nowhere is that truer than in the north-west, where we already have a fantastic base on which to build.

I want to concentrate on a number of issues, including digital media and the creative industries, about which my region has a great story to tell and which have a great future; the importance of green jobs, in particular some of the advanced manufacturing jobs; the emerging areas in the biosciences and the importance of research and development in building on innovation in our universities; and, finally, the construction industry, which is not always seen as a new industry, but is increasingly adapting to new innovations and construction techniques, which will give the north-west a significant competitive edge.

The creative industries are inevitably closest to my heart because of the establishment in Salford of MediaCityUK, which has emerged like a phoenix from the ground over the past couple of years. Anybody who visits Salford Quays cannot fail to be impressed by not only the buildings but the whole sense that a new city—a new metropolis—is being created in what was the Salford docks. It is difficult to believe that we now employ more people on Salford Quays than we did at the height of the docks’ success in the 1940s and 1950s. This is a tremendous success story, and when the current phase of development is completed, we should have 15,500 new jobs and £500 million of investment. That includes £450 million of private sector investment, which will have been levered as a result of the excellent work done by all the agencies involved. The current private-to-public investment ratio is about 4.5:1 so this is a big success story, and it is down to the work of the urban regeneration company, the city council and—I will say something about this later—the Northwest Regional Development Agency, whose work in recent years all of us have great cause to be thankful for.

In Manchester, we also have the Sharp project, which works with cutting-edge digital and creative media and provides jobs particularly for young people in the emerging industries around video games. I was disappointed that the Government decided in the Budget to take away the allowances and incentives for the video games industry. Just a few months ago, Salford received £1 million to pump-prime development of some of the tremendous emerging technology involved in video games, and it is a retrograde step to take that allowance away.

Digital and creative media currently account for 7.3% of GDP in the north-west. I absolutely believe that they are a growing sector and one in which we need to continue to invest. I make no apology for saying that I will bang on about MediaCityUK to every Minister I can because, in this instance, I do not really care where the investment comes from, as long as it keeps coming into Salford and helps my community.

The second area we need to concentrate on is advanced manufacturing, and I have no doubt that many of my colleagues will talk more about it. We are incredibly proud of the aerospace industry in the north-west, and we jeopardise at our peril the extensive high-level skills that have been developed in the industry over many years. The industry accounts for 12.9% of our GDP, giving the lie to the claim that manufacturing no longer really exists in this country.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I am grateful to my right hon. Friend for securing the debate and I am glad that she specifically mentioned manufacturing, which is still of huge importance to constituencies such as mine. Does she agree that one of the biggest concerns among manufacturers—certainly those I speak to—is what they perceive to be the Government’s lack of understanding about the relationship between the public and private sectors? Manufacturers in my constituency have clients across the world, but a key part of their business is supplying the public sector. The Government are ruthlessly cutting public sector procurement in the Budget, and manufacturers will be unable to drive the country out of recession and back into growth if they do not have the necessary support and stimulus from the Government.

[Hazel Blears]

My hon. Friend makes an extremely important point. The Government’s choice to take an extra £40 billion out of the economy—over and above what the Labour Government would have taken out to reduce the deficit—runs the severe danger of tipping us back into recession. All the independent forecasters say that the north-west is recovering, but that that recovery is tentative, and they do not expect to see full growth until 2013.

Advanced manufacturing jobs are also essential to the green agenda, but I am increasingly worried that, although we talk the talk about new green jobs to draw in investment, some of the action that is taken is almost in opposition to the need to invest in green jobs. At the end of last week, a report published by Innovas and commissioned by the Manchester Commission for the New Economy looked specifically at growth in green sectors. It said:

“Greater Manchester is a leader in the UK in carbon capture and storage technology, additional energy sources such as biofuels and contaminated land remediation. It is also strong in alternative fuels…and above average in wind energy, low carbon building technologies and energy management…Greater Manchester has the potential to be a world leader in low carbon building technologies”.

However, we have heard only this week of massive cuts in the funding to the green investment bank and in the proposed seedcorn funding to make sure that new jobs can be developed, particularly in manufacturing.

The final area that I want to mention is the biosciences. They are not new to Greater Manchester, but the rate of growth in the numbers of people working in research and development and in exploiting some of the technology that is increasingly coming from our universities is very encouraging, and I have no doubt that colleagues with more experience than me will make a contribution on the issue.

To attract all that investment and to keep doing so well, the north-west must have the right climate, and I emphasise to the Minister and other colleagues the importance of the city region. A consultation has been going on for the past couple of months—indeed, I think that it closed on Friday—about whether to confirm the statutory nature of the country’s first city region, which comprises the 10 local authorities in Greater Manchester. That is not just about moving governance around or about process; at its best, it should be about the devolution of planning skills, housing and transport from Whitehall to the city regions so that they can provide the right climate to draw in investment. There is no point addressing the skills gap if we do not have a decent housing offer, and there is no point trying to draw in investment if the planning system cannot get that investment on the ground and working as quickly as possible.

Despite their different political persuasions, the authorities in Greater Manchester have sat down and been very mature about agreeing—the Government will perhaps not like this phrase—to pool their sovereignty and work for the interests of the people of Greater Manchester, which is vital. On transport, for example, the chamber of commerce says that connectivity with the northern rail hub, the super-port at Liverpool and Manchester airport, which my colleagues will no doubt talk about, is key to our future prosperity.

[Derek Twigg (Halton) (Lab)]

I congratulate my right hon. Friend on securing this important debate. She will be aware of the importance of the proposed new Mersey Gateway, which the Labour Government committed themselves to before the election, but which the current Conservative Government have postponed, pending a review. How crucial is that to the north-west region, both as an important link for Cheshire and Merseyside, and more widely? That needs to be considered along with the rail links that my right hon. Friend mentioned. All the innovations and new industries will come about only if the infrastructure is established.

[Hazel Blears]

My hon. Friend is right and has championed those ideas for a long time. The proposals are important because, without the infrastructure it will not be possible to draw in the investment that will provide jobs and prosperity, enabling Merseyside, Greater Manchester, Cheshire and the northern part of the region to prosper, and giving them proper connections. That is fundamental to what we are trying to achieve. If we can get support for the city region, it could be a model for other city regions in the future. I urge the Government to proceed with that.

Even when there is devolution of housing, transport and planning, the issue of skills continues to be a challenge, as it has been for many years. There is a big skills gap between young people’s qualifications and abilities and some of the new jobs on offer. Unless we close the gap there will continue to be generations of people without work. The north-west has the highest percentage of neighbourhoods—more than 20%—in the most deprived 10% in the country. We have more out-of-work benefit claimants than any other region: nearly 700,000 people are out of work and in receipt of Department for Work and Pensions benefits. That is about one in six of England’s workless population. We have 375,000 people who have been claiming out-of-work benefits for two years or more, with 308,000 of them claiming for incapacity. In addition, 9.3% of our working age population is in receipt of incapacity-related benefit. That is not just a waste for the economy but a waste of lives—of opportunities and life chances for many people.

One thing that we should do to ensure that the economy prospers is tackle the deep generational structural worklessness in some communities. I commend the pilots that are happening in Greater Manchester on connecting people to opportunity. They are a new way of doing business and have been designed and championed by Chris Marsh, who works for the urban regeneration company in Salford. He has been commissioned on behalf of all 10 authorities to consider how to drill down into the families where there is generational worklessness. The early results are extremely encouraging. He has adopted a system called Total Place in which all the agencies—health, police, regeneration, education and employment services—are brought together. Budgets are pooled, the same targets are agreed and there is the same evaluation. That means more efficiency; things are not done 10 times. Everyone is targeting the families with the most problems. It makes absolute common sense. The total public sector budget in Greater Manchester, across all the agencies, is £22 billion. No one can tell me that we cannot get some efficiencies and savings, but also better results, by bringing together such public sector resources under the Total Place scheme. The pilots, which are getting people back to work because every agency is involved in targeting the relevant families, are a huge success.

I want to ask some pointed questions about how we are to work in the future. The Northwest Regional Development Agency has been a success story by anyone’s measure. It is probably second to none in the way it has levered investment into the region. There has been great confusion about where the new Government want to go in relation to RDAs. The Business Secretary appeared to change his mind three times in the space of just one speech. I think that we now know that the Government intend to abolish RDAs, and many of us are very concerned about that, but we are not sure what is likely to take their place. Local authorities have been asked to consider setting up local employment partnerships with business. We are not sure at what level that will be, or how many clusters of local authorities will be involved. Will they follow the economic footprint, which is a matter of practical common sense, or will they be artificial structures that will not, in my view, work?

[Alison McGovern (Wirral South) (Lab)]

I wonder whether my right hon. Friend agrees with me that one of the most worrying things about the present situation in relation to the Northwest Regional Development Agency is the effect on the many relationships that have been built up around it. I have been going around my constituency talking to representatives of big business and smaller business—I was at Unilever yesterday. Local economic partnerships may be two years down the line, and that leaves a hiatus. Those relationships and the work that was being done are falling by the wayside.

[Hazel Blears]

My hon. Friend is right. In her relatively short time in the House she has made a tremendous contribution to highlighting those issues. She understands that in many cases business works on the basis of relationships, and that some long-established relationships are in danger of fracturing and disappearing in the interim. We need to get on with whatever is going to be done, and make sure that it is properly established.

It is important, too, as we proceed with the local economic partnerships, that when investment is drawn in local people should have the opportunity to get the jobs that are on offer. I urge the Minister to talk to his colleagues in the Department for Education. For those of us who were lucky enough to get Building Schools for the Future programmes in our constituencies—many of us did not, and are rightly angry about it—I want the contracts for those major public building projects to include apprenticeships and construction job opportunities for local people. My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) is right to say that 40 per cent. of the construction sector’s business depends on public sector projects. Many BSF programmes would have employed bricklayers, joiners and plasterers and those jobs are now lost to our economy.

[Yasmin Qureshi (Bolton South East) (Lab)]

I congratulate my right hon. Friend on the fact that her constituency has BSF programme funding. My constituency, of course, has missed the opportunity. We are talking about job creation. Does my right hon. Friend agree that it would have been an excellent opportunity for apprenticeships? In my constituency 25,000 weeks of apprenticeship would have been created, and many jobs, on which we are now missing out.

[Hazel Blears]

My hon. Friend is right. The decision has completely wasted an opportunity to create for her constituency’s young people access to high-quality training, proper qualifications, and work experience on the job in a building environment. This country needs those skills, so the decision is particularly short-sighted.

[Bill Esterson (Sefton Central) (Lab)]

I congratulate my right hon. Friend on securing this important debate. Two schools in my constituency were in line for BSF wave 1, starting this year. Sefton council spent more than £1 million in preparation for BSF, and that will now be wasted.

I am also concerned about the review of other major projects in the north-west, besides BSF, such as transport and infrastructure projects—and the effect on the construction industry and the trades that depend on it for work. At a time of fragile recovery, as my right hon. Friend mentioned, that is very important. I would encourage the Government, and hope that she would too, to make the relevant decisions quickly so that further damage is not done to firms that have no other work and will end up unable to take up the slack if projects are approved.

[Hazel Blears]

My hon. Friend makes an important point about certainty. Hon. Members will all know that uncertainty is often more damaging to businesses than knowing what is to happen, which at least means they can plan. I disagree with the Government’s decision to take an extra £40 billion out of the economy at such a time. That decision was a matter of choice. The implications that my hon. Friend has outlined are very important.

[Graham Evans (Weaver Vale) (Con)]

May we have a bit of balance in this? Labour Members are talking of their areas, and I wish to talk about my constituency of Weaver Vale, which is a Cheshire constituency. The previous Government cancelled Mid Cheshire college’s new campus, an investment of £30 million. The college invested a considerable amount of money in the project, including £2 million in architects’ and consultants’ fees, and all the other stuff that has to go with such jobs, but the right hon. Lady’s Government cancelled it 18 months ago.

My children go to a state comprehensive school, but it has 30-year-old portakabins where the windows do not shut and the doors do not close. That, however, is in Cheshire, not Greater Manchester, Merseyside or the other conurbations that have been invested in over the past 13 years. Some areas of the north-west are regarded as prosperous and leafy, but they received no money from the Labour Government during the past 13 years.

[Hazel Blears]

The hon. Gentleman needs to have a word with his predecessor, who was a tremendous champion for his area.

[Graham Evans]

My predecessor did not stop that cancellation.

[Mr Christopher Chope (in the Chair)]

Order.

[Hazel Blears]

I think, Mr Chope, that we conduct ourselves slightly differently in Westminster Hall. The hon. Gentleman needs to speak to his predecessor. It is clearly important that all children and young people have the opportunity to learn in a good environment with state-of-the art information technology, and many of my colleagues here today were looking forward to their children having that possibility. The Tory Government have denied that opportunity to many thousands of children across the region.

I have some specific questions for the Minister and then I shall sit down as I know that many other Members wish to speak and I do not want to dominate the debate. The first is about the local economic partnerships. What are they, and what is their legal status? If they are to channel investment, particularly European funds and the new regional growth fund, they will need some status rather than being a loose amalgam of people who come together on an occasional basis.

Will the partnerships be funded? I understand that £300 million has already been cut from RDAs nationally this year. The original RDA budgets were £2.2 billion a year over the next two years, a total of £4.4 billion. The regional growth fund announced by the coalition Government is only £1 billion over two years. That is a massive cut in the funding available to support inward investment. This year, the Northwest Regional Development Agency has suffered a cut of £52 million, which leaves it a budget this year of £235 million, a cut of almost 20%.

At what level will the local economic partnerships operate? It may be at a city region level, or an economic travel-to-work area. However, as my hon. Friend the Member for Wirral South (Alison McGovern) said, many of the relationships are at a north-west level. What will be the mechanism for ensuring that, without the RDA, we have something that has a north-west oversight of the economy?

How can we deal with issues that cross local boundaries? In business, many do, including supply chains for manufacturing, which affect businesses across the region. Who will be responsible for innovation, business support, inward investment and access to finance such as venture capital funds? I doubt whether the local economic partnerships will be responsible for that. Will it be national organisations or perhaps the Department for Business, Innovation and Skills? How can we ensure that the key job of supporting innovation and the new jobs in the economy is carried out? At the moment, business, universities and even politicians operate at the north-west level, and we need information about how things are to go forward.

The north-west economy has been doing well, despite the difficulties and the worldwide global recession of the past couple of years. We have been narrowing the employment gap with the rest of the country faster than anywhere else. Business survival rates are better than those for the greater south-east and better than for London. Export growth is 12.2%, which is higher than the average for England.

The north-west economy is a success story. However, the independent forecasting panel has said that the recovery is fragile and that, although we have tentatively emerged from the recession, recovery will remain weak until 2013. At this moment, it is essential that our region receives the support that it deserves. There is a huge amount at stake for our constituencies and our communities.

We are pretty confident in the north-west that we can continue to thrive, but we need a Government committed to supporting that investment and growth. I do not believe that we have that kind of Government. I genuinely believe that the big decisions made in the last couple of months will put us back rather than take us forward. The public-sector cuts coming in the autumn, with a predicted 600,000 job losses, will have a devastating effect not only on our communities and our families but on our economy.

I believe that the cuts that we face are too deep and too fast, and that they will do a great deal of long-term damage. I hope that we in the north-west are strong enough to weather the storm, that we do not suffer the problems that concern me, and that we do not live to regret those decisions made now that will affect us in the long term.

--- Later in debate ---

[Mr Prisk]

I am only 60 seconds into my speech, so I shall do my best in the remaining eight minutes to get to the part of the region about which the hon. Gentleman is concerned.

We understand the need to rebalance the economy away from an over-reliance on financial services and one part of the United Kingdom. Therefore, instead of the approach we have seen in the last dozen years or so, we need to support the renewal of the industrial base and to encourage investment and innovation, about which several hon. Members rightly spoke. Some of those sectors have been talked about: advanced manufacturing, which the north-west is well supplied with, such as plastic electronics and robotics; the digital and creative sectors, to which the right hon. Member for Salford and Eccles referred; and, as several hon. Members mentioned, green technology, which needs to be developed.

[Hazel Blears]

If the green industries are so important, which I believe they are, why are the Government abandoning the green investment bank?

[Mr Prisk]

The right hon. Lady is wrong. We believe passionately in ensuring that we have an investment bank with financial expertise that can deal with green technologies. We will set that out in our papers on growth and finance, in which we will examine access to credit, which is crucial to small businesses that use conventional technologies, as well to those that use the new technologies. I know the right hon. Lady is keen to get answers, but if she can wait a few more days she will get the answers to her questions.

The north-west is well placed to benefit from our approach, involving long-term investment, a proper fiscal environment and, as several hon. Members have said, a reduction in the burden of regulation on small and medium-sized enterprises. The hon. Member for Ellesmere Port and Neston (Andrew Miller) was absolutely right to highlight the role of Daresbury and of excellent centres of innovation such as Ellesmere Port. I wish the media would look at industry with clearer eyes. They tend to see it as some sort of smoke-stacked centre, but it has moved on a long way, and Ellesmere Port is an excellent example of how we can progress our industrial base.

In the time I have left, I turn to the heart of our debate: the shape of our local and regional economies. As several hon. Members have pointed out, for many years there has been an evident gap between the greater south-east and the rest of the country, which has rightly generated discussion among politicians, economists and business men and women.