Elected Mayors and Local Government

Julian Knight Excerpts

Thursday 9th July 2015 Westminster Hall

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

It is a great privilege to serve under your chairmanship, Mr Brady.

I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing this debate so decisively and swiftly. He speaks with immense experience of both local government and the midlands, and I completely subscribe to everything that he said. Yesterday’s Budget was lamentably poor in what it offered the west midlands. Different parts of England are now being treated in very different fashions. More importantly, my hon. Friend is right to say that the notion of elected mayors was rejected very recently in my home city of Birmingham and in Coventry.

If there is to be any change in England’s devolutionary arrangements, and ideas such as metro mayors are to be brought back to the table, surely those changes can come only with an absolute game-changer of an offer to devolve power from Westminster to different parts of the country. I want to offer a perspective on what that game-changing deal might look like, informed by my time as a regional Minister—the first Minister for the West Midlands—and as the Chief Secretary who created the Total Place programme, which looked at ways to bring together different areas of public spending so that, for the first time in this country, we could have preventive investment without having an eye on where the gains would flow in due course.

Let me start with the basic question why a different kind of deal is necessary, and why it is necessary in the west midlands. The answer is very simple. The past five years have been hard on the west midlands. The Government’s decision to put the recovery in the slow lane meant that average wages were reduced by about £1,500 a year in the west midlands. Our productivity performance is still among the worst in England, and our employment rate has only just come back up to the level that it was at before the recession. It is now at about 70%. That is well below the UK average. Despite the entrepreneurial energy of the region that was the home of the industrial revolution, and although there is new hope, there is a lot more progress to make.

[Julian Knight (Solihull) (Con)]

I do not recognise the economic picture of the west midlands that the right hon. Gentleman paints. In my constituency, unemployment has fallen by 67% since 2010. Also, I am proud to say— I am sure that many hon. Members will join me—that the west midlands is the only part of the UK with a trade surplus with the European Union.

[Liam Byrne]

It is also the only region with a trade surplus with China. My point is simple: the entrepreneurial energy of people and businesses in the west midlands has been absolutely extraordinary, but it is a shame they did not get more help in prosecuting their ambitions from the Government here in Westminster.

I want to offer various ideas for how the Government can get behind the midlands. I want to challenge the Minister this afternoon on whether he is serious about devolution to the new combined authority in the west midlands. Is he prepared to countenance the game-changing powers that would make a massive difference? Is he prepared to give the new combined authority in the west midlands the wherewithal to deliver what I think could be a mighty manifesto for the midlands?

I will start where the leaders of the combined authority have started: by taking aim squarely at the productivity challenge. They were right to put that in the centre of their sights. We face a challenge in the midlands: we do not have enough high-skilled jobs. If we look at the high-skilled jobs in the knowledge-intensive industries that have been created in our economy since 2009, 85% of them have been created in London and the south-east. There has been a fall in the number of knowledge-intensive jobs in the west midlands by about 2,000. In other words, despite all the progress of the past few years, the knowledge economy in the west midlands is not getting bigger, but smaller. If we want to reverse that trend, we have to do two big things. First, we must dramatically increase the scientific research base in the region, and secondly, we must build a technical education system, as they have in our competitor economies, from Berlin to Beijing.

Our universities today have the second lowest share of research spending in the United Kingdom. Only 3.6% of our universities’ income comes from research funding. That is the lowest fraction of any university in the country. As Mike Wright, chief executive of Jaguar Land Rover, pointed out recently, as a country we are producing 40% too few engineers each year. That means we have to import skilled people from abroad because we do not train enough of them here. I am afraid to say that our region has the lowest proportion of 19-year-olds achieving five good GCSEs, including English and maths. We are an incredibly entrepreneurial region, but we have a profound productivity challenge, and we will not break out of that unless we transform the research base of our region and build a technical education system, which is eminently doable.

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this important debate.

My constituency of Solihull is at the epicentre of the debate over devolution and elected mayors, or at least it feels as though it is when I walk down the streets of my constituency. I am actually stopped in the street and asked about it. The question that often comes to mind is: why do we need to be a part of a combined authority? I can understand where the people of Solihull are coming from in that respect. Solihull is the jewel in the crown of the midlands economy. The unemployment rate is 1.6%, which, as most economists would tell us, is below frictional unemployment, so it is effectively full employment. There are currently 1,000 job vacancies in Solihull. For every 1,600 vacancies, there are 1,000 applicants within the local area, which means we are bringing people in from across the west midlands to work in our successful economy in Solihull.

Solihull jealously guards its independence. It is a small authority that was nearly abolished in the 1970s, but managed a stay of execution. It is a very well run authority. We have frozen our council tax for five years and we are recognised across the region as offering very good value for money for our taxpayers. However, when I am stopped in the street and asked about the combined authority, I say that there are things we can do together that we cannot do on our own.

I envisage devolution being slightly different from how it is sometimes portrayed in the media. There are opportunities in our economy—what I would call the economy-plus model, with skills, as the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) made clear in his speech, and apprenticeships, particularly with the new apprenticeship levy introduced by the Chancellor in the Budget, which should bring exciting opportunities for the region to harness the skills of our young people.

On transport, I agree that we are not currently as well served as we might be in the region. Solihull is lucky with its train links, but there are problems with the bus links, such as in north Solihull, where buses are infrequent—up to one an hour in certain parts of the constituency. Something similar to an Oyster card for the midlands would be a good idea, as well as being a positive step towards economic integration and in getting people to the jobs that they need.

A combined authority would also bring the ability to pitch for more European Union cash. Local enterprise partnerships are not recognised by the EU, and although we still get some money, it would be much easier for a combined authority to pitch for EU money to bring about the infrastructure and other improvements that we all wish to see within the region.

The idea is not to lose powers or, in effect, to see the well-run local council evaporate, but to gain powers to overlay existing ones—devolution from the centre. Solihull stands ready to deal with our neighbours to grasp the opportunities, although I caution against any top-down approach and I commend the Government for looking for a bottom-up approach.

When devolution comes, I genuinely believe it should come according to the culture of the area, rather than from some top-down perspective. For example, we have to recognise the fact that the body politic of the Greater Manchester area is culturally more cohesive than that of the west midlands. Therefore, the idea of allowing us to come together, however difficult that might be, and to design something attuned to our region and our populace, and to our particular economic challenges and outlook, is more sensible, although it might take longer than we would wish.

Solihull, as I say, stands ready. We want to avoid a 1970s-style from-on-high reform. Reform has to come from us all. We are all elected officials in the areas that might wish to form a combined authority. I echo the words of the right hon. Member for Birmingham, Hodge Hill, that Stratford-on-Avon would be welcome in a combined authority, although people do not want to feel that the process is in effect a takeover by the major conurbations of Birmingham and other areas. We have to understand that that is a genuine concern. It would be better to have a much wider perspective and a more inclusive combined authority that brings together many more people and opportunities for the region. Furthermore, there is the potential over time for further powers to be devolved. What we achieve now might only be a staging post. More things coming down the line might allow us to manage things even better and more locally.

I have always been sanguine about elected mayors. If substantial powers are transferred from the centre to the regions, greater local accountability is necessary—in effect, there has to be someone for the voters to sack. Obviously, they can get rid of our council leaders and of us as Members of Parliament for mistakes made, but at the end of the day it might be difficult in a large combined authority to lay the blame at the door of one council leader rather than another. It would be much better if there was a figurehead, or a body, that was directly accountable to voters, because people could take their ire there, if they so wished.

Many other Members wish to speak, so I will sum up. The opportunities before us are exciting, and I am pleased that there is at least a cross-party willingness to co-operate on such matters throughout the region. We must also understand that the approach has to be bottom-up and staged. We are not Greater Manchester—we are not a Greater Birmingham and I recognise no such construct—but we are a strong region with real challenges and real skills. I urge all hon. Members and anyone watching the debate to come together to sort out a bottom-up approach to present to Ministers. Then we can move the project forward.