Local Government Finance

Debate between Jonathan Ashworth and Chris Williamson

Tuesday 10th February 2015 Commons Chamber

[Jonathan Ashworth]

The unemployment rate increased quite significantly under this Government, and it has now begun to come down, but in my constituency it is still above average. Is that okay for the hon. Gentleman? I concede that unemployment has come down, but in Leicester it is too high and we need to get it down further.

[Chris Williamson]

Would it not be true to point out also that many of my hon. Friend’s constituents are on zero-hours contracts, in part-time work and in low-paid occupations? As the Prime Minister himself has said, Britain needs a pay rise. We also need to get rid of those exploitative zero-hours contracts, which the Labour party is committed to doing.

[Jonathan Ashworth]

In his contribution a few moments ago, my hon. Friend spoke eloquently about the need for Britain to have a pay rise and poked fun at the Prime Minister’s late conversion to the need to deal with the fact that wages have been squeezed considerably under this Government. Indeed, by the end of this Parliament people will be worse off than they were at the start of the Parliament, which is unusual by historical standards.

I want to concentrate on Leicester where, like other cities, we are seeing increasing demands on our children’s services. Luckily, our local authority has managed to keep our Sure Start centres open, but some services have had to be cut. We are seeing growing demand on adult social care, like other cities, yet we are trying to cope with deep cuts. We are a city with a proud, vibrant voluntary sector. Perhaps it could be argued that the big society was invented in Leicester, yet all voluntary sector organisations are seeing their grants cut and they are struggling to provide the level of services to the community that they have been able to provide for the past few years. The Government’s rhetoric on the big society rather sticks in the throat when we see what is happening on the ground.

As to how the Government present the figures, my right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Sheffield South East did extremely well in exposing the fact that when the Government talk about spending power calculations, they are trying to disguise the cuts facing councils. The hon. Member for Southport (John Pugh), who is not in his place, made a brutal contribution referring to that as sophistry. The Government tell us that, on their spending power calculations, Leicester sees a 5.4% reduction. However, as many have pointed out, these figures are distorted by including the totality of the better care fund, a significant proportion of which is not available for local authorities to spend.

With that element removed, the year-on-year reduction in spending power for Leicester is 9.4%, so what we need is not sophistry, in the words of the hon. Member for Southport, but a fairer funding settlement for cities such as Leicester. We need a funding settlement that truly recognises the deprivation in cities such as Leicester. In Leicester—which, by the way, did what the Government want; we have a directly elected mayor—what the city mayor and the local authority need is a funding settlement that allows them to budget for the longer term. We need the devolution of genuine powers to our cities, because a city such as Leicester, with its vibrant, dynamic population, can take full advantage of those powers and make a real difference.

Manufacturing (East Midlands)

Debate between Jonathan Ashworth and Chris Williamson

Tuesday 12th February 2013 Westminster Hall

[Jonathan Ashworth]

I thank my hon. Friend for a point he puts well. However, we in Leicester have fought off York and will certainly fight off his constituency when it comes to Richard III.

On balance, the lack of a major dominant conurbation is a strength for our region and its development opportunities, even if it does sometimes mean that we tend to lack a regional identity. That brings us one or two disadvantages that I will touch on in a few moments.

Although the debate has been conducted in a good cross-party spirit, there are problems in our economy, in the cities and former coalfield areas. Unemployment rates remain too high, and are much higher than they were at the 2010 election, even if they have come down a little in recent months. Youth unemployment rates are still too high. Let us be clear: we are seeing a huge squeeze on incomes and many changes to benefits, such as the bedroom tax and the council tax benefit changes. Regardless of the rights and wrongs of that debate, that will suck money out of the local economies of the east midlands. Household consumption will be depressed again.

In the past, Ministers have talked about wanting to rebalance the economy, and we would all agree with that. However, we would like more details about what that rebalancing means. I know that Ministers want to move away from an economy that is solely dependent on public investment and household consumption, towards one that is more in favour of export-led recovery.

[Chris Williamson]

Does my hon. Friend share my disappointment that, although the Prime Minister came with his whole Cabinet to Derby in March 2011 to make the point about the importance of rebalancing the economy towards manufacturing, three months later a decision was taken to appoint Siemens as a preferred bidder for the Thameslink rolling stock programme? Will he join me in calling on the Government and the Minister, even at this late stage, to think again about that decision? If they cannot reverse it, can they at least ensure that, whenever Government contracts are concerned, notwithstanding EU procurement rules and so on, they take appropriate steps to ensure that British manufacturing has a fair chance of winning them?

[Jonathan Ashworth]

I thank my hon. Friend; he is absolutely right. I want to pay tribute to the work that he has done on Bombardier. The Bombardier decision was tragic not only for Derby and Derbyshire, but for manufacturing in the east midlands. The whole supply chain was affected by it.

I agree that trade and increasing exports are an important part of the rebalancing of the economy that we want to see, and supporting our manufacturing base is vital to our exports. The regional growth fund is supposed to be part of driving that rebalancing, as my hon. Friend the Member for Nottingham South (Lilian Greenwood) mentioned, yet, consistently and sadly, the east midlands has lost out. In round 1, £450 million was allocated. The east midlands made up 13% of the bids and won just 4% of the successful awards. In round 2, £950 million was allocated. The east midlands made up 11% of the bids and was given just 8% of the awards. In round 3, over £1 billion was allocated to private sector projects. East midlands was allocated just £14 million, or 2%.

Frankly, that is not good enough. Given that manufacturing is so important to the east midlands region, and that it is the leading region in manufacturing, why are we not getting a fair deal on the regional growth fund bids? I would be grateful if the Minister said a word or two about that. It has been suggested in the media that the quality of our bids was not good enough. I do not accept that, given the strength of our manufacturing base. To be honest, it is a bit of an insult to our manufacturers.

Will the Minister outline some of the criteria by which those bids are judged? He will no doubt be aware of the National Audit Office report that has cast doubt on the objectivity of the criteria. The NAO argued that,

“a significant number of projects in the first two rounds performed relatively poorly on criteria such as the amount of additional employment supported and the ratio of economic benefits to public costs”.

Will the Minister shed some light on why the east midlands has done so badly? Some have suggested that the reason is that a lot of the bids have focused on the cities. The Department for Communities and Local Government has been keen to focus growth through the core cities initiative. For example, 47% of round 2 of the regional growth fund money went to core cities. Leicester, of course, went along with the great vision of the Secretary of State for Communities and Local Government and the Prime Minister. We went for the directly elected mayor model; not many places did. Although we are now in discussions about a core city deal, we were left out in the first round, although parts of Nottinghamshire and Derbyshire have been covered by a city deal. That has meant that the majority of the east midlands region has been left out. Perhaps that is another reason why we have not done so well at getting our fair share of regional growth fund money.

We no longer have a regional development agency, and I do not think that my party is arguing for its return. There may be such an argument, but everyone accepts that the development agencies have gone, and it is not our policy to argue for their return. Given that the east midlands region has 36 local authority districts, five county councils and four unitary authorities, that fragmentation leads to a lack of a consistent voice on such matters. I do not necessarily know the solution, but we should all be banging the drum as a group of east midlands MPs. We must think about what more we can do collectively to ensure that our region gets its fair share of bids.

I am conscious that I am taking a lot of time. I want to say a couple of things quickly about Leicester. It is a city with a strong manufacturing base and deep links, as everyone will know, with India, Bangladesh, east Africa and Pakistan. In Leicester, we have manufacturers exporting to those parts of the world. Asian food made in Leicester is exported to the middle east, Europe and India. When I meet exporters, they tell me of the difficulties of accessing export finance, especially for smaller volume exporters. When people raise UKTI issues with me, they talk about the fees involved in the overseas market introduction service. One matter is always being raised with me: given that cities such as Leicester have communities with deep cultural ties to parts of the world where we now want to export more, should the Department for Business, Innovation and Skills not be doing more to work with organisations such as Leicester’s Indo-British trade council and other groups to leverage the expertise of those communities?

Finally, I want to mention our higher education sector. De Montfort and Leicester universities do great work linking with local manufacturers. There are lots of great examples of how they are adding value to many firms and supporting our manufacturing base. Most of those projects, however, do not lead to any financial benefits to the universities. Given the importance of such projects to our economic future, will the Minister think about financial incentives to support the HE sector to link up more with manufacturers? I know that De Montfort university, having done a lot of projects in the past, is now thinking of scaling back, as such work is not in its financial interests.

Given that the HE sector is so important to our economy and exports—worth £15 billion nationally—will the Minister, who was brought in with great fanfare and was going to shake things up, deal with the crazy policy of the immigration cap on student numbers, which is doing huge damage to our economy? We need to support our HE sector at the moment.