Economic Regeneration (West Midlands)

Ian C. Lucas Excerpts

Tuesday 8th February 2011 Westminster Hall

[Ian Lucas (Wrexham) (Lab)]

It is a pleasure to appear before you again, Mrs Brooke, and it has been a pleasure to listen to the debate.

I commend the hon. Member for Wolverhampton South West (Paul Uppal) for initiating this debate on behalf of his constituency and, of course, the wider region. I hope that I get all the geographical directions and references correct in my contribution. I also commend all the right hon. and hon. Members who have spoken eloquently on behalf of their constituents today. It is extremely valuable to have the opportunity in Adjournment debates to focus on particular areas. Although that is very valuable for me, it is even more valuable for the Minister, because he can focus on that particular area of the country and the particular issues relating to it not only in the contribution that he will make to today’s debate but in his preparation for it.

The contribution that debates such as this make cannot be undervalued, especially when we have had such excellent speeches today from all parts of the House. As the hon. Member for Wolverhampton South West said, it has been a non-partisan debate because all of us want Wolverhampton and the black country to succeed. Although we have different road maps to achieve that aim I am sure that all of us can make positive contributions towards achieving it.

One issue is that we are, of course, in difficult economic times. We have just come through the worst recession since 1929 and a huge banking crisis. There are difficult times at present with very difficult growth figures. In that context, finding the right policies to allow Wolverhampton and the black country to develop and prosper is extremely difficult, and there are different routes that can be taken.

Concerns have been expressed about the possible conflicts that exist in legislation such as the Localism Bill. In an area such as Wolverhampton, it seems to me—although I of course defer to the local knowledge of the area of all right hon. and hon. Members who have spoken today—that getting the balance right between the interests of business and the interests of residents will be extremely difficult. We all have planning issues that arise in our area that are difficult for us to make calls on, because there are different and conflicting ideas about them.

One of the themes that has emerged in the debate is that, as far as Wolverhampton and the black country are concerned, the focus must be on business and growth. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) referred to the fact that his constituency is in the bottom 15 in the country as far as unemployment is concerned. That is a major threat to the prosperity and the attractiveness of the area, as it would be for any area of the country.

Of course, Wolverhampton has been well established for many years as a hugely important manufacturing city and as a city that has a huge amount to offer. As we have already heard, what needs to happen is that the attractions that made Wolverhampton successful in the past—entrepreneurial drive and individuals with ideas who were able to use those ideas to create manufacturing, jobs and prosperity—need to be developed once more. Those attractions have been developed before and they need to be developed again.

At the heart of that process is the skilled work force that we have just heard my hon. Friend the Member for Dudley North (Ian Austin) talk about. He referred to the fact that, at present, there are young people who are training and trying to get on in their lives, and they are being given support through the education maintenance allowance, but that support is being withdrawn. That is pulling a ladder away from those young people and it is a very damaging policy.

I know that the Government are introducing alternatives to the EMA. However, earlier this morning I was speaking to a group of young people from my constituency of Wrexham about the EMA. For the west midlands, that Government policy will lead to a competitive disadvantage, and that also applies to tuition fees. Therefore, that educational limb of development policy is putting Wolverhampton at a disadvantage.

What is very striking about the globalised world in which we live is that it is intensely competitive. Globalisation will not go backwards. It will continue and become more intense. Consequently, if we are to compete we must devise in our own country the right policies to deal with it. That means that we need to take advantage of the skills and the established industries that we have.

In the Wolverhampton area, aerospace is a hugely important industry. We are one of the leading aerospace manufacturers on the planet. In fact, we are the number two aerospace manufacturer, behind only the United States. To ensure that we continue in that position and continue to offer work of the highest quality, an area such as Wolverhampton needs to compete. It needs to compete internationally, so it needs to have the support of Government with provisions such as the grants for business that were referred to by my right hon. Friend. The reality is that, if that Government support is not provided within the UK, it will be provided in France, Germany, Spain, China and other parts of the world. It is simply not the case that businesses and industries such as aerospace will not move. If we do not compete on a level playing field—to use that dreadful phrase—with those countries, in terms of the type of support that the Government offer, we will lose out.

[Mr McFadden]

Does my hon. Friend agree that the other important point about that state help is that it is not just the Government going around signing cheques for business, as it has sometimes been characterised, but their playing a, usually, small role in levering in significantly more private sector investment? One of the striking characteristics of the Department for Business, Innovation and Skills figures on the grants for business investment scheme is that for every £1 spent by the Government £10 more was levered in from the private sector. This is not, therefore, just about propping up failing industries or holding back the future, it is about the Government playing a small role to get the private sector to play a far bigger one.

[Ian Lucas]

My right hon. Friend is of course absolutely right, and the examples are many, the most obvious recent one being Nissan in the north-east. Its Leaf vehicle manufacturing is supported by this Government, who decided that it was a sensible investment. With one exception, the Government have looked at the investments made by the previous Government and have supported them. They do lever in private finance, and that inward investment has to come.

We have heard that Wolverhampton has a strong Indian connection. As someone from outside of the region, I beg to suggest that that connection be used strongly by the community—I am sure it is—in relation to its competitiveness within the UK. The type of connection that culturally can exist between a city with Wolverhampton’s background and the Indian community locally can create huge export opportunities, and I venture to suggest that the university of Wolverhampton will develop Indian contacts. Does the Minister believe that the student visa restrictions being considered by the Government are in the best long-term interests of UK industry? The granting of those visas brings so much inward investment and income to our universities, and I am receiving many representations about the visa restrictions, from universities both in my constituency and beyond.

[Emma Reynolds]

On that very point, I have had a representation from the vice-chancellor of the university of Wolverhampton, who is very concerned about the restriction on the number of student visas, especially when universities are seeing their teaching grant cut back significantly. The university of Wolverhampton grant is being cut by more than 80%, which is greater than the average, and the vice-chancellor is concerned that restricting student visa numbers will deprive the university of a significant income stream.

[Ian Lucas]

I thank my hon. Friend for her contribution. There is a significant diminution of the income stream at present, but the connections in the long term are also massively important. She and I visited China in the latter part of last year, and I was stunned to hear that 70% of Chinese graduates who go to university abroad take up employment abroad and do not return to China. What struck me about that was that huge cultural and business connections can be established with those students in the countries to which they have moved—it might be the United States; it might be the UK. For an export-driven economy, which I know the Minister wants to achieve, we need to have that type of connection, and that way of working with the hugely developing countries of the developing world will enable it to happen.

I would like to raise a point about local business structures and local government structures with the Minister, because I am confused about the position of the Government office for the west midlands. We all heard last year that it would be abolished as part of the restructuring of governmental agencies, and that to support localism the functions would be transferred to local government level and to centralised level—to the Department for Business, Innovation and Skills. I have read reports, including in the Financial Times, in the past week that the Secretary of State for Business, Innovation and Skills is talking about creating regional structures within certain UK geographical areas. Could the Minister indicate whether the Government office for the west midlands, among other Government offices, will have a role as far as BIS is concerned? It is important that in an area such as the west midlands there is a contribution, of some sort, at a regional level. The sense of that is far more important than the political face that might be lost by reversing the decision. Provided that the structure was right, such a body could support the type of redevelopment and regeneration that we all want to see in Wolverhampton and the black country, across the west midlands and, of course, across the rest of the UK.

I congratulate the hon. Member for Wolverhampton South West on his contribution today. He has initiated and engendered a very worthwhile debate, which I am sure will continue.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

This is the first time that I have served under your chairmanship, Mrs Brooke, and I am happy to be guided by you in ensuring that we maintain order.

I congratulate my hon. Friend the Member for Wolverhampton South West (Paul Uppal) on securing the debate. I had better get my geography right. I notice that north-west Wolverhampton is struggling here, but I am sure that the Wolverhampton Members have it all covered. This has been a really good debate, with an excellent and insightful contribution at the beginning by my hon. Friend who, like other right hon. and hon. Members, correctly pointed to the need for local collaboration, whether between Members—evidence of which we have seen today—or between different civic and business partners, looking at how the future of not just the Wolverhampton economy, but those economies that surround Wolverhampton, can flourish.

My private office will be appalled by yet another diary request, but the temptations of Dudley zoo are strong, so I shall have to see when a visit might be feasible. I am grateful to the hon. Member for Dudley North (Ian Austin) for his invitation, and I shall certainly be happy to receive a more formal one in due course.

Right hon. and hon. Members are absolutely right to start by looking back at the history of the area. I will not get into the local concerns about whether the spark was in Walsall, Dudley or Wolverhampton, because I do not think that my job is worth that. What is important is that—

[Ian Lucas]

It was in the north-east of the region.

[Mr Prisk]

No, I will not get into even that debate. What is important is that Wolverhampton and its surrounding areas—the black country—are a genuinely industrial heartland, and that context makes regeneration doubly difficult, as technology and industrial capabilities have moved on. I think that the point that the hon. Member for Dudley North made was that in more recent years, as technologies and capabilities have changed, it is difficult to regenerate an area that has a long history in contaminated land, or whatever. The renewal task, therefore, can be challenging, and highlights the importance of clear national economic policies and good local leadership. I shall come on to a number of the wide-ranging issues that have been raised today.

The Government and I feel that we need fiscal stability and clear policies to best promote future growth and jobs, which does mean supporting infrastructure, ensuring that we invest in things such as manufacturing, and setting free enterprise and that can-do spirit, to which my hon. Friend referred. That is why we have set out our £200 billion 10-year national infrastructure plan, with £14 billion going into rail and £10 billion into roads, and why we want to press ahead with High Speed 2 so that London and the midlands are conjoined more effectively and dynamically. It is why we are supporting small businesses by reducing the corporation tax rate from 21p to 20p, reversing the previously planned increase in the employers’ national insurance contributions, and increasing the limit for the 10% entrepreneurial relief rate on capital gains from £2 million to £5 million. It is important to send out a signal that taking the step of building a business will be rewarded by gains created, wealth generated and, of course, additional jobs.

That is why we seek to support sectors of the economy that have been largely ignored in recent years by what I call the commentariat. Advanced manufacturing is a strong example. Although we might have different road maps for getting there, I think that all Members share a belief that the role, importance and current capabilities of manufacturing in this country have too often been ignored, particularly by the media.

That is why we are cutting the main rate of corporation tax from 28p to 24p by 2014. To address an issue raised by various Members about skills and training, it is also why we are seeking to boost apprenticeships funding by up to £250 million by the end of this spending review, which will create up to 75,000 more places a year. To return to how apprenticeships are progressed, we are seeking to ensure that we consider higher qualification levels and strengthen the element of learning alongside experienced hands. Although the classroom has a role, my instinct is that, especially in engineering, the crucial gain for apprentices is working alongside someone whose skills they are trying to learn. That practical change will be important.