The Economy

James Morris Excerpts

Wednesday 22nd June 2011 Commons Chamber

[James Morris (Halesowen and Rowley Regis) (Con)]

I shall focus my remarks on the challenges faced by the black country economy and the west midlands to illustrate some of the challenges that the Government face over the next period.

As the Chancellor pointed out, one of the most extraordinary statistics in the west midlands economy is that even in the boom years we saw a 6% decline in private sector jobs in the west midlands, compared with 3.4% growth in private sector jobs nationally. Worse still, after 13 years of Labour, not only was unemployment higher in the west midlands, but productivity was down, the skills gap was widening, the rate of innovation in the west midlands was poor compared with other regions, the rate of new business formation was weak, and the imbalance between the west midlands region and the rest of the country was growing. There was a lack of support for manufacturing businesses and a considerable decline in private sector jobs.

When the coalition Government took over one year ago, that was the picture that we faced in relation to the dynamics of the west midlands economy. It would have been madness to continue to pursue the policies that had comprehensively failed the west midlands region. Recently, I held a manufacturing summit in Cradley Heath with the Sandwell chamber of commerce. Companies such as Westley Plastics reported that they were enjoying strong growth in their order book and seeing considerable growth in export opportunities. Whatever the Opposition say, it is manufacturing that is leading the recovery in the west midlands and in the entire country.

In the west midlands and the black country we still have a vibrant manufacturing and industrial base. Companies in my constituency such as Somers Forge and Thompson Friction Welding are innovative, dynamic and capable of creating the high-quality jobs that we desperately need in the west midlands, but we must do more.

[Owen Smith]

May I point the hon. Gentleman to unemployment figures for the west midlands? We have heard a lot about those 520,000 net private sector jobs. As the hon. Gentleman no doubt knows, the west midlands has not seen any of those jobs. In fact, the last figures showed that minus 6,000 jobs, public and private, had been created in the west midlands.

[James Morris]

As I said, one year in, following the policies being implemented by the coalition Government, we are beginning to see clear signs that private sector jobs are coming back into the west midlands after 13 years in which, despite quarter after quarter of economic growth, we saw substantial declines in private—

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

rose—

[James Morris]

I will not give way. I will make progress.

The Government faced a considerable challenge when they came to power. With the growth plan that they have begun to implement, in addition to the important steps that they are taking on deficit reduction, we are moving in the right direction. In the west midlands and the broader black country economy, skills is the No. 1 issue that we need to tackle. It is holding business back. We are investing considerably more in high-quality apprenticeships, involving the voluntary sector and other parts of the economy in making sure that we build a proper skill base in the black country and the wider west midlands economy. We are beginning to build better relationships between small and medium-sized enterprises and institutions of further education, such as Halesowen college and Sandwell college. We are beginning the job that the previous Government did not address, and making sure that we match appropriate supply of skills with demand in the local economy.

As “The Plan for Growth” recognises, we also need a more local approach to stimulating economic development. That is why I have been a strong advocate for the black country local enterprise zone. I have been working with its representatives to define the best way to drive economic growth in the black country, and on how to maximise the potential of the Chancellor’s Budget announcement on enterprise zones to stimulate new investment and new jobs and ensure that the local enterprise partnership is able to drive economic development.

[Mr Love]

There is a lot of evidence from the 1980s about employment zones, and it shows that the cost of the jobs created was very high compared with alternative models, and that all that employment zones did was shift employment around the borders of the LEP. What leads the hon. Gentleman to believe we will be more successful this time?

[James Morris]

There is huge potential to stimulate growth in the black country. Especially now when public spending is limited, we need to find creative ways to stimulate economic growth in the various areas of the black country, and we might do so by starting with one enterprise zone, which then develops into more of them so that we seed the black country economy and drive real economic growth. That is what we need to achieve, and I believe that the LEPs have a better chance than many other possible methods of tackling some of the deep-seated economic problems we face in the west midlands.

As many Members have pointed out, bank lending is still an issue; getting credit to the right places in order to stimulate the economy is still a problem, and it may hold back the recovery. There are organisations in the broader black country, such as the Black Country Reinvestment Society, that are developing innovative models to get microfinance to small and medium-sized enterprises, but we need to do more to fill the credit gap. I welcome the Chancellor’s Project Merlin announcement, particularly its emphasis on encouraging the banks to invest in the regional economy, because they have a moral obligation to do so. As the Chancellor recognises, the banks have a critical role to play in developing the regional economy, but if there continue to be problems with the availability of credit we might need to consider measures such as counter-cyclical regulation, encouraging the banks not to hoard capital but to get it to the small and medium-sized enterprises in areas such as the black country.

The key decisions that the Government have taken over the past year to tackle the deficit, to restore confidence in Britain’s financial institutions and to build a platform for growth have been crucial in getting the country back on an even keel, but we need to build on what the Government have achieved so far. We must continue to drive innovation. That is particularly important in areas such as the black country. We must address how we can sustain innovation and build on the capabilities that are in place in advanced manufacturing. We also need to continue to support and develop our manufacturing base in the west midlands, so that technologies and vital jobs do not get shipped abroad. Labour market productivity in the black country is increasingly globally competitive, and we need to ensure that businesses continue to invest in domestic manufacturing. The Government must also identify emerging technologies that we can capitalise on and where we have the skills to exploit and commercialise them.

However, the most important signal this Government have sent to the world is that the country is open for business, and in particular that the black country is open for business.