Shared Prosperity Fund

Jim McMahon Excerpts

Tuesday 14th May 2019 Westminster Hall

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Barnsley Central (Dan Jarvis) on securing this important and timely debate.

We heard from the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), who expressed real frustration at the lack of a consultation. We expected that before Christmas but it is still not here. We heard from my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), who restated a position that I firmly believe in: we should use this opportunity to reset and recast how that fund can be used. He spoke about the importance of town centres and how people feel about the future direction of their town, and the ability to include people in a more active way on decisions that affect their lives.

My hon. Friend the Member for Leigh (Jo Platt) said that far too often power is held away from local people. With the best will in the world, decisions made about what is right for local areas are for nothing if local people are not involved and feel that they have no agency or control over the future direction of the place where they live. My hon. Friend the Member for Ogmore (Chris Elmore) talked about the importance of targeting the fund on the basis of need, and the importance of respecting our devolved nations. They cannot be bypassed—they have to be front and centre in whatever new settlement comes forward. My hon. Friend the Member for Sheffield Central (Paul Blomfield) said how much regional inequalities have increased since 2010 because of successive decisions made by the current Government.

Finally, my hon. Friend the Member for Aberavon (Stephen Kinnock) spoke about the perception that this is not just about money, but is a power grab by Government to retain as much power as they can centrally and not distribute it anywhere. I congratulate him on his work on this issue in the all-party parliamentary group for post-Brexit funding for nations, regions and local areas, which holds the Government to account and works in partnership to try to create a new way forward that provides an alternative.

The importance of EU structural funds has been set out in the debate, but it is worth highlighting again the importance of the £17.2 billion of investment directed at some of the most significant regions that have not shared the capital’s booming fortunes. The EU regional development fund has focused £655 million on supporting small and medium-sized enterprises. It has supported research and innovation with £342 million and invested £197 million towards a low-carbon economy. The EU social fund tackles head-on the barriers preventing people in towns such as mine from accessing the labour market and decent, well-paid and secure jobs. Almost £1 billion has been spent on developing an inclusive labour market, with more than £333 million further to develop new skills that are vital for accessing jobs and vital for the future of our economy.

There are very real concerns about the Government’s intent in this agenda. We have heard not just concerns about the places that people represent, but a significant amount of distrust in the background motives of the Government. There is little wonder why: we have seen nearly a decade of austerity targeted at the most deprived communities, where vital public services have been taken away from areas that could least afford it and that have seen the biggest cuts. The evidence tells us that the Government are not in the game of sticking up for the most deprived communities—the very people we represent in this place. Left to their own devices, what would the Government do with the opportunity to recast the fund, and what might that mean for the communities we represent?

The same is true of education funding, skills funding and further education funding, all of which are under chronic pressure. The same continues to be true of UK capital investment spend, where our regions are held back by a failure to invest in growth. We have seen that on transport investment and housing investment; across almost every line of central Government, capital investment favours the capital of the UK. What about our regions? If we want the UK to be the best that it can be, every one of our regions must be the best that it can be—not just the cities and city regions, but our towns.

There is real fear that what might follow is a competitive process that pitches one area against the next, with rules dictated by a centralising Government who do not want to give power away and have always neglected our towns and our most deprived communities. We might see that the rules are doubly stacked up against getting the money to the very communities and people who ought to be beneficiaries.

Today, the Minister can put some meat on the bones. He can explain why there has been a significant delay in the consultation. He can outline what a future fund might look like: how will local people have agency and be involved? How will we make sure that our towns benefit as much as our cities do? How can we make sure that this is not a pot of money in isolation, but a wholly different approach to how Government spend their money—not just favouring the capital and doing it the easiest way possible, but making sure that every part of the UK gets the money that it needs?

Why has this taken so long? We are nearly three years in from the EU referendum. Had we left on 29 March, we would have been six weeks out of the European Union, but there is not even a programme in place for spending the money that should go to our regions post Brexit. The Government might have been saved by a temporary relief, but at some point they will have to put pen to paper and set out exactly what they have in mind, and make sure that local people are included. I hope that the Minister takes from this debate the fact that there is a great deal of interest, and that the MPs who have spoken are not going away. They will come back if answers do not come forward.

--- Later in debate ---

[Jake Berry]

If Members give me the opportunity to say when, I may try to provide an answer. One of the points we heard was that we must respect the devolution settlement across our United Kingdom. For me, as the Minister with responsibility for the northern powerhouse and devolution, that means respecting the devolution settlements that this Government have brought forward, by which I mean mayoral devolution in England, which now covers 48% of the north of England.

[Jim McMahon]

I understand why the Minister does not want to go down the cul-de-sac of the Barnett formula, but can he confirm that no region will be worse off than it is under the current programme?

[Jake Berry]

As the hon. Gentleman knows and I was just about to say, the quantum of the UK shared prosperity fund will be determined as part of the comprehensive spending review. That is the appropriate time for the Government to make commitments of the sort he seeks. However, he and the hon. Member for Aberavon (Stephen Kinnock) are correct that the Government must come forward with their consultation—I am clear that this must happen—before the comprehensive spending review to enable areas to contribute to that consultation.

We have not been sitting on our hands, as people who have listened to the debate may think. We have already engaged with more than 500 stakeholders. We have had 25 official-level engagements across the country, including with our counterparts in the devolved Administrations. In addition, in my role as Minister for the northern powerhouse, I have engaged with mayors. I have talked to them specifically about how we can work together to provide evidence to the consultation that demonstrates that, as so many people have said, the impetus for investment of the UK shared prosperity fund should come from our regions rather than being directed out of Whitehall.

Having listened to contributions to the debate, I think everyone believes that it would be nice if that happened. The point is that by working with our metro Mayors, our local enterprise partnerships and authorities across England—that is certainly my role as English Minister for local growth—to create the evidence base, we can move beyond thinking that it would be nice to proving that it is how we will get the biggest return on investment. There is work ongoing in my Department, in advance of the consultation, to ensure that that hugely important argument is made, and won, when my dear chums in the Treasury are making decisions about how the money should be distributed following the consultation. I hope that answers some of the questions that Members asked. My response to the main question is that the consultation will start very shortly.

Let me move on to some of the specific points that were made. On public transport investment, Members may not have seen the most up-to-date figures, which are available on the Treasury website. They show that transport capital expenditure is higher per capita in the north of England than in London. People often talk about total capital expenditure across the north of England versus London. There are some parts of the north of England where very few people live, so it is much more realistic to talk about capital expenditure per capita, and it is higher per capita in the north of England.

Many colleagues talked about the weakness of Green Book calculations for making investment decisions, which I think is acknowledged across the House. That is why the Government came forward with a rebalancing formula in the industrial strategy. That formula looks at areas that are less developed, depending on how we define that, and at factoring future growth into Green Book calculations. Changes have been made recently to ensure that community benefit is also included in such calculations.

My hon. Friend the Member for Newton Abbot (Anne Marie Morris) commented on the ring-fencing of coastal money. By the end of the current spending period, the Government will have invested £200 million directly in coastal communities through our coastal communities fund, which is about driving prosperity on our coasts. The UK shared prosperity fund must not be viewed on its own as the only support the Government give to drive regional growth. We have contributed £53 million to part of the exciting growth deal in the highlands and islands, which has resulted in things such as the north coast 500 route, which I hope to visit this summer, prospering.