Public Bodies Bill [HL]

Lord Greaves Excerpts

Monday 28th February 2011 Lords Chamber

[Lord Empey]

I have always been a devolutionist and felt that there had to be a local dimension to most things. The noble Lord, Lord Judd, was asking whether people fully understood the social and other implications of what has been happening in this country over recent years. The answer for me is yes. I still have a constituency. It is largely an inner-city constituency in east Belfast. The people at my advice centres are queueing up, looking for help with DLA, housing benefit and how we can get them training, so I am very familiar with all of that. But having elaborate structures today, whether they be in Northern Ireland, in Scotland or anywhere else, is not the whole answer. There is another dimension.

The noble Lord, Lord Foulkes of Cumnock, will be well aware that we have another dimension in Northern Ireland, where we are up against the Republic, which has a very attractive corporation tax rate. At the end of the day, that was attracting more inward investment to that region than anything that any of our industrial development organisations could do.

Local government also has a role to play. There is no model that is absolutely applicable in every part of the UK. I would be very afraid to take a position on the north-east of England, about which a vast array of people seem to be extremely passionate. The noble Baroness, Lady Armstrong of Hill Top, made a powerful speech in respect of what she saw in her region and many other noble Lords, including the noble Lords, Lord Bates and Lord Greaves, spoke on it as well.

[Lord Greaves]

I actually spoke about the north-west and not the north-east, but I will back the north-east as well.

[Lord Empey]

The noble Lord was saying at one stage, if I recall, that part of his region felt that it belonged to the north-east. The point is that there is a large pool of people who feel passionately that the north-east in particular has a critical mass and should have representation. I know that the noble Lord, Lord Prescott, attempted to offer regional government to that region and it did not want it at that stage. Otherwise, I dare say, it would have, just as Scotland and London and other places have, its own economic development unit, probably with a Minister working full-time on that area.

The question for us is whether this is going to be solved simply by structures or by a combination of structures and a policy involving close linkages with higher and further education and training. I am not convinced, having established one of these bodies in the past, that the model that we need to go forward for the next 10 or 20 years is necessarily the model that we have adopted in the past. I am not saying that everything that is being proposed by the Secretary of State is the right solution. Local people in those areas would have a better grasp of that than I would have from a distance. But I no longer put my faith in the structures. When you talk to businesspeople, they are very dismissive of bureaucracy. Their real interest is not in any grants that you can offer them; it is whether you have the people on the ground who can do the job. That is the thing that matters most.

There seems to be a new dimension opening up. I do not have all the answers and it is not entirely clear that the Secretary of State for Business has them either. But things have changed dramatically in the past few years, not least because of Europe and what it is now deciding. We have signed up to that. The ability of local organisations to take strategic decisions and effectively to buy in the businesses that come to invest has diminished. We have to be aware of what is happening in the rest of Europe. We feel that people in other parts of Europe do not apply the rules as strictly and rigorously as we do. I am sure that noble Lords from Scotland and elsewhere have had that repeated to them time and again. We play by the rules while others ignore them. That is one source of considerable concern to people in the regions, who feel that we are not necessarily playing on a level pitch.

When one is next door to a region where there is 12.5 per cent corporation tax versus what we have, that is what I call real competition. It is something to which no individual organisation, whether regionally based or otherwise, has a solution on its own. I am for regional solutions but I am no longer putting my faith simply in the structures that we develop. Those structures themselves sometimes get in the way of business; they frustrate businesspeople and, of course, they are very expensive. Whether we have the balance right remains to be seen and I have no doubt that there will be further debate to establish that.

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[Lord Greaves]

I wonder whether the noble Lord—as he says, both of us know the Pennines well—will agree that when a region such as the north-west finally gets a complete set of local enterprise partnerships, or LEPs, whatever pattern it is, what will happen—and it is already being discussed—is that at regional level all the LEPs will come together to form some sort of association or confederation of LEPs to recreate a structure at a regional level. However you look at it, this will be necessary.

[Lord Hoyle]

I could not agree more with the noble Lord. Of course that is what is going to happen. Something is being tossed away needlessly by the Government in a very hasty decision, without due thought being given to either region. I certainly agree with him that these things will need to come together if the various regions throughout the country are to benefit. Unless we do that—unless we get them together—we have failed. I am so sorry that they are being split up in this way, only for them all to come together under another name, as the noble Lord, Lord Greaves, says. In view of the pleas that have been made from these Benches and from other Benches, particularly from the Benches within the coalition—they seem to sit a little bit apart at times—will the Government please think again before destroying the RDAs?

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[Lord Taylor of Holbeach]

I take a great deal of comfort from my noble friend Lord Bates, who shares my view of the ability of the north-east to develop common policies where it wishes to do so. There are individual differences between Teeside, Tyneside and Wearside. You would not want to say you were in Newcastle when you were in Washington—I remember somebody getting into terrible trouble for doing so. Locality is very specific and the north-east has different characteristics. It is not homogenous and there are methods of getting economic development in the north-east which do not depend on having a single body to deliver it. A coalition of different bodies with a common policy may well be a much more effective method for doing so.

I gave way to my noble friend when I was talking about the West Country. If I might take Bristol as an example, it is far better for the local partners to develop policies for the specific issues it faces, and for Cornwall to do likewise. I strongly believe that any economies of scale that a regional approach may have are more than outweighed by an absence of local knowledge and commitment and the consequent loss of responsiveness to local circumstances. In response to the noble Lord, Lord Whitty, who asked why the Gloucester, Swindon and Wiltshire LEP was rejected, I would say that, although there was some business support for the proposal, other businesses in the area felt that a different geographical approach was right. Ministers have gone back and asked the partners to discuss their proposals again in order to develop an approach which takes the full range of local views into account. So the matter is not concluded; it is still under debate, and the Government await evidence on which to make their decision.

[Lord Greaves]

I will give my noble friend a slight rest. Does he not accept that not only are the Government apparently out of step with what most people in the north-east think but their thinking on regionalism is completely out of step with pretty well every other country in Europe of a similar size? It really risks England becoming the most centralised country in the whole of western Europe. While what he says about LEPS and putting the emphasis at a more local level might well be a perfectly acceptable way forward, the real problem is that the LEPs are being deprived of pretty well all the resources which the RDAs and regional bodies have at the moment. Therefore, unless they are lucky enough to get some of this relatively small amount of regional development fund money, they are going to be toothless.

[Lord Taylor of Holbeach]

I should remind the noble Lord that I do not consider £1.4 billion in the regional growth fund to be insignificant. Noble Lords may well feel—and they clearly do—that it is better that the taxpayer should fund large redistributions through RDAs, but there may be other ways in which economic policy can be directed, as my noble friend Lady Harris of Richmond mentioned. She talked about tax incentives. Far be it for me, as a very lowly member of the Government, to challenge the Treasury on tax incentives, but there are different ways of doing these things other than handing out taxpayers’ largesse. I emphasise that that is the way in which this Government are thinking.

Perhaps if I talk about the north-east, I might be steering into danger. I am not too frightened of doing so because we should recognise that the north-east does not have a single monolithic economy. The region has a varied economic geography, with significant economic poles, across the Rivers Tyne and Wear and the River Tees. Each place has a different industrial heritage and different strengths, opportunities and threats. The local authorities in Tees Valley have a strong track record in working together and were quick to put forward an application to form a local enterprise partnership. This argues that they recognise the benefits of these new arrangements. A partnership has now been established, covering the authorities in the rest of the region. As Vince Cable has made clear, this is not to say that some form of co-operative arrangement across the north-east is not justified if local partners want it. I said that at Second Reading and I have just said it again. However, I strongly question whether a regional development agency, with all its attendant complexity and bureaucracy, is necessary to achieve this.

The previous Government gave RDAs the task of narrowing the gap in growth rates between the prosperous region of the greater south-east and the rest of England, and provided them with significant resources over a sustained period to help them achieve this. However, it was a target that they failed to meet. Between 1990 and 1999, the real gross value added per head in the greater south-east grew by around 1.8 per cent in each year, compared with around 1.4 per cent in the other six regions—a gap of 0.4 of a percentage point. Between 1999 and 2009, annual growth in the greater south-east fell to 1.4 per cent, compared to 0.8 per cent in the other regions—a gap of 0.6 of a percentage point. Therefore, the gap in growth rates has widened by around 0.2 of a percentage point. It is time to try a new policy, even in the north-east.

As the White Paper makes clear, we are encouraging businesses, local authorities and their partners to develop local enterprise partnerships based on real economic areas, rather than artificial administrative regions. The new partnerships are based on where people live and work. Businesses and civic leaders will work together to drive sustainable economic growth and create the conditions for private sector job growth in their communities. Partners have responded to this invitation in an enthusiastic and innovative way. So far, 31 partnerships have been asked to form boards, covering 87 per cent of England’s population and a similar proportion of businesses. We are actively engaged with partners in the remaining areas, helping them to develop proposals that will meet our broad criteria.

I reassure the noble Lord, Lord McKenzie of Luton, that five LEPs have been asked to establish their bases in areas that cover the east of England. I assure the noble Lord that there will be partnerships covering the entire region. There will be no businesses or parts of the population that are not covered by an LEP.

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[Lord Taylor of Holbeach]

The skills will be developed as part of the skills policy of the Government. My honourable friend in another place, the Minister, Mr John Hayes, has recently announced a skills strategy for the country. If we have not debated it in this House, it is because we have been very busy debating other things. However, it is a very important strategy, and it is part and parcel of the strategy for economic growth in this country.

Perhaps I may continue to describe the regional growth fund. It is intended to encourage private sector enterprise and create sustainable jobs. In particular, it is designed to help places currently reliant on the public sector to make the transition to private sector-led growth. I suspect that there is a feeling across the House that this is important. Once again we are encouraging proposals to come from the bottom up, responding to local circumstances. When the first round of bidding closed at the end of January, we had received nearly 450 proposals, showing that there is a significant appetite for an approach of this kind. My noble friend Lord Heseltine is chairing the panel which will be selecting the best of these proposals; and noble Lords have referred to my noble friend in contributions to this debate. Noble Lords will need no reminding that encouraging growth throughout the country is a cause dear to his heart.

[Lord Greaves]

I apologise for intervening again. The resources may be significant, as the Minister said, but they are considerably less than the resources available at the moment, either through RDA or through the regional housing pots and all the other resources, which are being either dramatically cut back or scrapped altogether. Is not the problem that many of these places that have put forward good, exciting schemes and want to get ahead will be denied a penny because they will not win the competition that the noble Lord, Lord Heseltine, is presiding over?

[Lord Taylor of Holbeach]

I cannot guarantee that all the 450 proposals will find funding. However, I can be sure that the ones for which funding is found will be successful and provide opportunities for the people in those areas.