Productivity and Economic Growth: East Midlands

James Wild Excerpts

Tuesday 17th March 2026 Westminster Hall

[James Wild (North West Norfolk) (Con)]

I congratulate the hon. Member for Rushcliffe (James Naish) on securing the debate, and welcome the opportunity to speak on behalf of His Majesty’s Opposition about what is not only an important region but a great one, as he put it.

As we have heard, the east midlands is home to world-leading manufacturers, a thriving logistics sector, pioneering aerospace firms and hundreds of thousands of small and medium-sized businesses. There is huge potential, as every Member who has spoken has attested to. These businesses, workers and entrepreneurs deserve a Government who are pursuing policies to help them to realise that potential and drive growth in the area. Concerningly, however, growth has been consistently downgraded; we need only look at the spring forecasts a couple of weeks ago to see that growth has been once again downgraded for the coming year, and that is before any impact is felt from the operations happening in the middle east.

Today we have heard lots of ideas from Members across the parties on how to realise growth in the east midlands. That can be achieved, but will require the Government to change course. The region has many internationally renowned businesses. Members have rightly spoken proudly about Rolls-Royce, Toyota, Alstom and other businesses. The East Midlands Hydrogen zone is positioning the region at the forefront of clean energy transitions, and of course there is a strong university sector. It is a region with key strengths, and the last Government recognised that. Several Members referred to the East Midlands freeport, which was given the green light in 2023. The only inland freeport in England was backed by Government seed funding at the time and underpinned a projected 28,000 jobs coming to the area.

If we look at the wider picture, the current Government have talked a lot about economic growth, but sadly growth has underperformed. As the Liberal Democrat spokesman—the hon. Member for Torbay (Steve Darling)—said, we cannot ignore the impact of the higher national insurance charges. We cannot ignore the higher business rates that many companies are about to be hit with, as well as higher wage and other costs. The Bank of England has pointed out the impact that these have had.

[Michael Payne]

Does the shadow Minister also regret the fact that between 2010-11 and 2019-20 local authority spending in the east midlands dropped by 22.6%, on the previous Government’s watch?

--- Later in debate ---

[James Wild]

We can trade statistics, but the context for that was the 2009 financial crash, which led to a deficit of 12% to 15%. [Interruption.] The Government who came in were the coalition Government, including our Liberal Democrat colleagues, and it was Danny Alexander, Chief Secretary to the Treasury, who drove those savings in spending, particularly in local government but also in other areas. We had to get the books to balance. That was the context that we had to deal with. People can deny the reality, but that was the situation at the time.

The number of people who are unemployed is forecast to hit 2 million by the end of the year. I expect other Members are particularly worried, as I am, about the impact on young people. Youth unemployment has already moved above 16%, which is higher than the EU average. We are now in the bizarre position in which the Government are having to pay companies to take on young people whom the Government’s own policies have priced out of having jobs. As my right hon. Friend the Member for Melton and Syston (Edward Argar) highlighted, SMEs across—[Interruption.]

[Dr Rupa Huq (in the Chair)]

Order. Let us not have chuntering from a sedentary position.

[James Wild]

If hon. Members want to intervene, they are welcome to do so. As my right hon. Friend said, small and medium-sized businesses across the east midlands and beyond are having to cope with those costs, making it harder for them to invest and grow. The Government should listen to them.

Fundamentally, the problems that the east midlands and the UK face in relation to growth are around productivity. Investment has been too low. The UK has trailed the G7 average over the last 30 years, not just the last 14 years. Our infrastructure ambitions are often buried under red tape and excessive costs. Colleagues have spoken about energy costs. The hon. Member for Amber Valley (Linsey Farnsworth) spoke about Denby and the ceramics sector, and we hope that a solution is found for that workforce. But by linking us to the EU emissions trading scheme, the Government will be driving up costs for our industry.

The sparks of business dynamism have dimmed. Office for National Statistics data shows that firm entry and exit rates have reduced, particularly compared with the United States. That leads to a less competitive, dynamic and innovative economy. The east midlands has consistently been ranked among the least productive regions in the UK, but that is not inevitable and nor should it be, because if it stays like that, living standards will not increase.

[Steve Yemm]

Does the hon. Member recognise the fact that, in 2010, productivity in the east midlands was at 92% of the national average, but by the time the previous Government left office it was at 85%? Actually, the region went steadily backwards under the Conservative Government. Does he recognise that?

[James Wild]

I am looking at the House of Commons Library brief on the average productivity level. I cannot quite see the hon. Member’s point reflected in the chart that I am looking at, but I will look at it again afterwards, when there is more time, and see whether that is the reality.

As I said, it is not inevitable that the productivity level is lower, and it cannot be accepted if we want living standards to rise. The Productivity Institute did a study looking particularly at the region, which identified some of the challenges around skills shortages, infrastructure and under-investment in research and development. Many Members have spoken about transport spending in particular. The briefing note for the debate from East Midlands Councils talks about a period of 20 years in which there has been a lack of investment. I understand the importance of improving investment; if I was speaking in an east of England debate, I and other colleagues would be pointing out that we also do not get our fair share.

The east midlands is a region of makers, and manufacturing makes up a greater part of the economy there than in any part of the UK other than Wales. In terms of productivity, the 2023 output was 14.7% below the recent UK average. Boston Consulting Group has just published a report on productivity, which I commend to Members, that looks at the underlying factors for this national challenge. The sectors that historically have driven productivity—manufacturing, information and communication technology, and financial services—accounted for 84% of the positive increase in the pre-crisis decade, but since then, that figure has fallen to just 34%. While those are still key sectors that are important for the economy, they are performing less well than previously.

What do we do to change that? We need to look at policies that boost productivity, including focusing on incentivising R&D spending in advanced manufacturing, reducing the barriers to commercialising innovation, and building on the full expensing introduced by the last Conservative Government to boost investment. Sadly, in the Finance (No. 2) Bill, which I have just gone through in Committee, some of the incentives on capital allowances have been reduced. We also need to promote a culture of enterprise, not one that is focused on regulatory compliance. We certainly need cheaper energy in order to compete. We need to scrap some of the bureaucracy around planning, and boost competition and skills.

The east midlands is a region with assets, and it is a strong driver of national growth. It has the companies, the geographic position, the people, and the small and medium-sized businesses to make a change. By pursuing reforms—the hon. Member for Rushcliffe outlined a number of recommendations in the APPG report that seemed sensible and well worth considering—the east midlands can be helped to maximise its potential.