Department for Business, Innovation and Skills (Performance)

Jack Dromey Excerpts

Wednesday 2nd February 2011 Commons Chamber

[Jack Dromey (Birmingham, Erdington) (Lab)]

When times are tough, it is all the more important for the Government to have a strategy for growth. That is why the Labour Government, at a time of global crisis, invested in the economy to get it moving, with enormous benefits for our manufacturing base. The car scrappage scheme was warmly welcomed by the Society of Motor Manufacturers and Traders because 400,000 cars were built. The stimulus package in the construction industry was warmly welcomed by everyone from the National House-Building Council to the Home Builders Federation. Some 110,000 homes were built, and 70,000 jobs and 3,000 apprentices were created or saved.

The Government inherited a growing economy when they took power, but they have slammed on the brakes, and the economy has gone into reverse. Let me give three examples. First, 10% of our gross domestic product growth comes from construction. The construction industry was growing in the first half of 2010 as a consequence of the steps that Labour took in government, but in the last quarter of 2010, it fell by 3.3%. The construction industry and house builders are increasingly concerned about the consequences of the Government’s actions in respect of everything from cuts in capital investment to the scrapping of regional spatial strategies. Two hundred thousand planned homes will not now be built, which is why the Federation of Master Builders, which represents SMEs in the building industry, predicts 11,000 job losses, and why the Construction Products Association predicts a 2% fall this year.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Is my hon. Friend aware that one of the major concerns of the construction industry is skills training and whether it will have a skilled work force for the future? Labour worked to increase the number of apprenticeships vastly, and it is welcome that the Government have made a similar commitment. However, it will not be sufficient to meet the future demand of the construction industry, especially in a low-carbon economy.

[Jack Dromey]

I agree with my hon. Friend. Representatives of the construction industry who have come to see me have said with one voice that the danger in what is now happening is that capacity is going and vitally needed skills are being dispersed and, in the event of recovery, they would no longer be available.

My second example comes from local government, which has had 27% cuts, frontloaded by the Secretary of State. The impact will be enormous, and it is already clear from the Local Government Association that 140,000 jobs will go in local government. But as PricewaterhouseCoopers has said, for every job that goes in local government, a job will go in the private sector. Local government’s procurement budget is £38 billion. Some £20 billion goes to SMEs, so the impact of these savage, deep and frontloaded cuts will be catastrophic for SMEs that depend on local government throughout Britain.

[Anne Marie Morris]

Is the hon. Gentleman aware that the Reed job index went up nine points in January, and that the growth is in engineering and construction?

[Jack Dromey]

With the greatest respect, I am not sure what planet the hon. Lady lives on. The figures on the economy are clear: the Government inherited a growing economy, but it has now stalled and gone into reverse.

My third example relates to the abolition of the regional development agencies. Thirty years ago, the midlands used to be one of the two strongest economies in the country, but it is now one of the two weakest. We had the most successful RDA, Advantage West Midlands, of anywhere in Britain. For every £1 of public money invested, £8.14 was produced in wealth in the private sector. Crucially and in addition, Advantage West Midlands managed shocks to the motor industry, such as the closure of Rover, and promoted the motor manufacturing cluster in the midlands. The cluster is 150,000 strong, from the prime companies through the components companies, the machine tool companies and the logistics companies, all the way down to the games companies with which Jaguar Land Rover is working right now on the next generation of in-car entertainment systems. That cluster, galvanised by Advantage West Midlands, was one of the key reasons why Jaguar Land Rover last year decided to commit to Britain as its global hub and to invest £5 billion over 10 years, creating thousands of jobs and bringing wealth to our economy.

[Mr Marcus Jones]

The hon. Gentleman praises the RDA Advantage West Midlands. How does he square that praise with the fact that private sector employment in the west midlands fell rather than increased during the time that this RDA was in place?

[Jack Dromey]

I believe in the real world of work and in listening to the voice of the business community. There has been widespread concern and criticism from across the business community in the midlands about the abolition of Advantage West Midlands. Indeed, Business Voice WM, on behalf of the business community in the midlands, has put forward a proposal that stresses the importance of maintaining a regional strategic structure if the success of that motor manufacturing cluster is to continue.

[Lorely Burt]

The hon. Gentleman’s experience of the business community in the west midlands is not mine. I have found that the business community has been excited about the prospect of taking its destiny in its own hands, together with elected representatives from the local authority, and creating a forward-thinking local enterprise partnership.

[Jack Dromey]

Again, with the greatest respect, I am not sure which business community the hon. Lady is talking about. All five of the organisations that represent the business community in the midlands have told me that they are determined to try to make the best of a bad job, following the abolition of Advantage West Midlands, and make the LEPs work, but they are dealing with confused and competing voices. The LEPs have no statutory basis and no funding at a time of major local government cuts. Those organisations are increasingly despairing, because they have lost what worked in favour of something that, at the moment, looks like it will not work.

I listened with amazement to the arguments which in effect said that the Government should get out of the economy and industry. Anyone who has ever had anything to do with the real world of work, here in Britain and in France or Germany, knows the simple truth that the role of good government is key to a successful economy. Time and again over the years I have worked with the private sector and engaged with the Government to try to get them to do the right thing—such as the scrappage scheme and the stimulus scheme that kept our house building industry from collapse.

In the next stages, I hope that Ministers will recognise the value of partnership and industrial activism, and will make the right decisions. Jaguar Land Rover is making applications, under the regional growth fund, on both the lightweight platform and the small engine. Investment in those will create tens of thousands of jobs in Britain. Warwick university’s proposal to become a technology and innovation centre would make it the global hub for automotive research and development worldwide and is strongly supported by Jaguar. Investment in that would greatly strengthen the motor manufacturing cluster in the midlands.

Let us not repeat the mistakes of history. It was a tragic error of judgment not to agree the Forgemasters application. If we are to see a renaissance of the nuclear industry in Britain, with British manufacturing benefiting as a consequence, we should back Forgemasters.