Business Support (Lancaster and Fleetwood)

Iain Stewart Excerpts

Thursday 12th May 2011 Commons Chamber

[Eric Ollerenshaw]

I raised the issue of a direct rail link in a Westminster Hall debate a couple of weeks ago, and the only other transport link is a single-lane road, the A585, from the motorway. The overriding story, as everyone in Fleetwood will say, is that the town has suffered significantly in recent years, largely as the use of the port has declined.

Lancaster, at the other extreme of the constituency, is also an old port city, and it has a great heritage. Its medieval castle includes the only example left in England of anything that was built by John of Gaunt, and its tourist potential is strong. Lancaster university is ranked in the top 10 by The Times, it has a large campus and its research is driving many business developments in the area. What Lancaster lacks is a large modern department store, meaning that its retail business pales in comparison with places such as Preston, which is increasingly taking business away. I hope that a proposed development, known as Centros, will resolve that in the next few years, so long as English Heritage can overcome some points of detail which have held up the project.

We also have a large rural area, with small hill farms and various other businesses established around the city boundaries, but again there is a problem with a lack of rural broadband, particularly in the hills surrounding Lancaster, so the question is: how do we help business and the private sector in Lancaster and Fleetwood to grow?

Much of what is needed is the same as what businesses need all over the country, and I will start with the generic, throw in some local examples and then move on to some more constituency concerns. The outcome of Project Merlin, to get the banks to lend more—an extra £11 billion this year compared with 2010—is obviously welcome, but perhaps one of the biggest complaints that I still receive, from small businesses especially, is that they continue to struggle to secure finance from the banks, whether new capital or just an overdraft extension. In many cases there is simply a lack of good customer service, with bank managers and decision makers not being available.

For example, Mr lain Bailey, a small businessman based in Lancaster, says that he still struggles to engage productively with his bank when he needs to; that

“many businesses feel banks have left us all adrift”;

and that it is simply

“up to the businesses themselves to sort things out!”

My local chamber of commerce, Lancaster chamber of commerce, in its most recent members survey on finance and banking, received a number of disconcerting comments. Here are just a few examples from individual businesses in Lancaster. One said:

“Our bank is very unhelpful at the moment and have no leeway and appear to be too inflexible.”

Another business person said:

“I was refused a formal overdraft increase but allowed excess at punitive cost.”

A further business noted:

“Even though we had a business account with our bank for over 25 years they refused to even give us an answer when we applied for a loan.”

And finally, one more business explained:

“I asked to increase my overdraft to help ease cash flow but our bank forced us to reduce it by £10,000 instead!"

It is clear that in some cases the banks are still not living up to their end of the bargain, so perhaps the Minister will let me know where we are on bank lending, and whether there is any mechanism that will allow businesses, or perhaps MPs acting on their behalf, to report ongoing problems for his Department to follow up.

I welcome the end of the Northwest Regional Development Agency, and the new local enterprise partnership structure should lead to more targeted, specific and relevant assistance for places such as Lancaster and Fleetwood. One problem with the Northwest Regional Development Agency involved the fact that, for many of us in the region, the view rapidly developed that the north-west began and ended in Manchester and on Merseyside. Sadly, I will have to return to that theme later, but if I do nothing else today I hope to make it clear to the Minister that that is definitely not the case.

I also think that the new local enterprise partnership—LEP—structures can lead to more direct input from local businesses, and that can only be good for ensuring that schemes are of real practical value. In Lancashire we have taken slightly longer than some other places to get our LEP agreed, but I thank the Minister’s Department for its help in finally enabling us to bring the various parts of Lancashire together. I put on record my personal thanks to the right hon. Member for Blackburn (Mr Straw) for his efforts in trying to ensure that Lancashire finally got a Lancashire-wide LEP.

However, in the interim period local businesses are very uncertain about how the new regime will work. The Lancaster chamber of commerce—and it is not alone—says that it needs more clarification on what support there will be, who will deliver it, and how to access it. Once Business Link regional services close, people wonder what vehicle will be used to keep businesses informed of what support is available. They need to know more about the mechanisms that will be available to support and encourage new businesses, to assist potential high-growth businesses and to encourage business development in areas of deprivation, and about how the interrelations between the various councils, regenerations and Government bodies is to develop. There is still work to be done, especially as our LEP has only just started to be set up. I urge the Minister to ensure that there is as much communication as possible with local businesses, and particularly local chambers of commerce, over the next few months so that the various communities can begin to plan properly for the future.

According to the Library, 42.2% of the population of Lancaster and Fleetwood is employed in the public sector—the 37th highest proportion in the UK. As cuts are made to public spending, the Government’s agenda for growth in the private sector will be disproportionately important in constituencies such as mine, and I want to ensure that we get our fair share of resources and that all that can be done to encourage private sector growth in my area is done.

The regional growth fund is a big opportunity for businesses, an opportunity for individual companies, and a help in regenerating the whole area. In the north-west we have welcomed the Government’s recognition of the distinction between the south-east and the east and the rest of the country, and the fact that the regional growth fund’s priority is our kind of area. The first round of successful regional growth fund bids lists an impressive number of jobs that the supported first round schemes will help to create or maintain in the wider north-west.

However, my concern about the first round process is that a lot of the criteria are determined by European subsidy rules, which in effect means that support for large companies can be offered only to particularly low-employment or deprived parts of the country. Assisted areas in the north-west include Liverpool, St Helens and parts of Manchester. The other parts of the north-west are missing. For example, a major manufacturer based in Lancaster that employs 150 people wanted to expand, and was looking into the possibility of bidding for regional growth fund money to do so. It was determined that it could provide 50% more jobs through its expansion. However, its turnover was above the threshold for assistance outside the special assisted areas, and it was effectively hamstrung in terms of accessing regional growth fund money. I remind the Minister that this is about the possibility of new jobs.

Those rules have thus resulted in most of the resources of the first round regional growth fund bids going to big city areas such as Manchester and Liverpool—precisely the situation that I had hoped the break up of the RDAs was going to help to avoid. We accept that this will help my constituents, many of whom either already commute to Manchester each day or would be prepared to do so. However, I hope that phase 2 of the bidding process will include more support for north-west companies outside Manchester and Liverpool—companies that can show that they can provide the extra jobs and growth that I understood were this Government’s priority.

Perhaps that would be more likely to happen if more bids were accepted from small and medium-sized enterprises, but the return on investment required for a successful regional growth fund bid has in some ways limited applications from that sector. SMEs often do not have the resources to compile the data required for entering into the bidding process—at least not on their own—and so we come back to support for businesses in terms of information and guidance to help them through the bidding process.

That brings me on to the related subject of enterprise zones. I broadly welcome the Government’s creation of enterprise zones. They have the potential to bring much-needed investment into areas that need jobs and regeneration. They also have a key role to play in closing the north-south divide and rebalancing the economy, which is a major aim of the Government. Of the 11 zones that have been announced, the two in the north-west are in—you’ve guessed it—Manchester and Liverpool. Although I welcome those zones because they will drag business northwards and create hubs of industry that neighbouring areas can feed off, I am concerned that, yet again, it is the big cities of the north-west that will get the immediate benefit. I hope that more original locations will emerge when the remaining 10 enterprise zones are allocated, possibly helping areas further north than Manchester. An enterprise zone on the Fylde coast, for example, would be welcome, because it would help to provide jobs not only for my constituents in Fleetwood, but in the wider areas of Blackpool and Fylde, as well as providing new business orders for local businesses.

Transport infrastructure is also necessary for businesses to thrive. The coalition has done well in that area so far. After years of underinvestment in our transport network under Labour, in just one year there has been a lot of good news for the north-west, and for my constituents in particular. The renewal of the west coast franchise offers extra capacity for the overcrowded rail services on that route. In the longer term, High Speed 2 offers more capacity, speed and choice for journeys to London and, ultimately, Scotland. It might also open a direct link to Heathrow and the channel tunnel.

[Iain Stewart (Milton Keynes South) (Con)]

As usual, my hon. Friend is making a passionate case for his business community. He makes an important point about high-speed rail. Is he aware that evidence from other countries shows that the success of a high-speed line often depends on the degree of connectivity to the termini of those lines from areas such as his? We should do all we can to encourage businesses to make their voices heard in the current high-speed rail consultation.

[Eric Ollerenshaw]

My hon. Friend makes a significant point. High Speed 2 is critical to the north-west and to Yorkshire. We should talk about it as a line that will go from London to Manchester and from London to Leeds, and eventually from London to Glasgow and from London to Edinburgh. As hon. Members may know, I have said in other places that I do not see why we do not start building south from Glasgow and Edinburgh now, while the areas around London argue about where their terminus will be. The point is clear: High Speed 2 is vital in the long term for business in my area, and in my constituency in particular.

The other helpful development is the proposed northern hub, which will allow faster and more frequent services between the cities of the north and bring an estimated £4 billion of benefits to the region. That will be good for business and for job creation. In particular, the electrification of the line from Preston to Blackpool will be a major help to the growth of business in my area.

I am also pleased that the Department for Transport has finally agreed that the M6 to Heysham link road should go ahead. It has been on the drawing board for 50-odd years. When it is finally built, it should lead to better communication to the port of Heysham, which will help businesses and attract new businesses on both the Morecambe and Lancaster sides of the River Lune, and along the M6 corridor.