Elected Mayors and Local Government

Debate between Liam Byrne and Julian Knight

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.