Regional Growth Fund

Marcus Jones Excerpts

Tuesday 1st November 2011 Westminster Hall

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I am mightily relieved that the topic is not Libya, Mr Gray, because my notes do not refer to it in the least. I am pleased to have secured this debate on the regional growth fund. I want to start by putting the fund in the context of the economy as a whole. There is no doubt that the British economy is in trouble. We have a growth crisis. Year-on-year growth has all but vanished, with this morning’s Office for National Statistics growth forecast for quarter 3 at 0.5%, and with construction already in negative territory. Unemployment is at levels not seen since Margaret Thatcher was Prime Minister, and is rising at an alarming rate. Worse still, the young are paying the heaviest price, with youth unemployment at almost 1 million.

Worryingly, unemployment is rising at a much faster rate in the regions than in London or the south-east, as Government cuts bite more heavily into the regions. Already, the unemployment rate in Yorkshire and the Humber is almost twice that in the south-east, according to ONS figures. Inflation is running at more than twice the Bank of England’s target rate of 2.5%, while average incomes are rising at half that rate. That means, as the Governor of the Bank of England said recently, that families are experiencing the biggest squeeze on their incomes in living memory.

The Minister, in his response to the debate, will undoubtedly claim that our growth problem is due to the eurozone crisis. No. The blame must lie at the doors of No. 11 and No. 10 Downing street. Our economic growth has faltered thanks to a reckless slashing of investment by this out-of-touch Government. Yes, in 2008 the global economy did go through the worst financial crisis, and subsequently the deepest recession, since the 1930s, and yes, the British economy was badly affected by the irresponsibility of banks over-lending, but since the Government came to power, the UK economy has stagnated, as I have pointed out. Since last autumn, only earthquake-hit Japan has grown more slowly than the UK in the G7. There is no doubt that the Government’s policies are hurting, but they are certainly not working. Today, I want to spell out that it is not just that the Government are not doing enough to help our economy grow; what they are doing, they are doing badly.

The previous Government’s key tools for regional economic development were the nine regional development agencies covering the country. Those tools for investment enjoyed significant Government support both politically and financially, with a budget of approximately £2 billion a year. I think that in the last year of the Labour Government, the budget was £1.7 billion. The Conservatives made no secret of their desire to abolish the RDAs if they won the general election—they did not win it, but they are in power thanks to the Liberal Democrats—but they were very light on what they thought should replace them.

[Mr Marcus Jones (Nuneaton) (Con)]

The hon. Lady seems to be extolling the virtues of regional development agencies. Would she not acknowledge that in the west midlands private sector employment actually fell under the RDAs?

[Angela Smith]

This debate is not about the RDAs. The point that I will make, as the hon. Gentleman will see, relates to the level of investment made by RDAs, as compared to the regional growth fund. We now know what the Government’s alternative is—the regional growth fund. On the evidence to date, the fund represents chaos and confusion, with too little being awarded too late to make any significant contribution to promoting economic growth.

There are three aspects to the Government’s approach to regional investment. The first is local enterprise partnerships, which are unfunded apart from a small start-up fund, and have no clout. The second is enterprise zones, which are a tired blast from the past with a mixed track record when it comes to delivering jobs and growth. The third prong of the Government’s regional growth strategy is, of course, the regional growth fund, and yesterday the outcome of the second round of bids was announced.

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[Angela Smith]

I am sure that hon. Members have come here today to congratulate the companies that were promised money in yesterday’s announcement. Any investment is welcome, but I remind the hon. Lady that the Government cancelled a significant investment in the nuclear industry supply chain 18 months ago. That is what the Forgemasters loan was about, and that is why the Government are seriously damaging the economy. We are talking about a major supply chain that would have ensured that the UK and its manufacturing base were at the forefront of the building of the next generation of nuclear power stations.

How businesses access the fund is a problem, as the Minister admitted in an article in The Times:

“There have also been problems where, given the financial uncertainty from June onwards, it has proven very slow to unlock that private capital.”

So where are we with the Government’s regional growth strategy? It is quite obvious that the Government’s thinking is muddled to say the least. They have dismantled the Labour Government’s regeneration framework and replaced it with a rickety framework, fed with inadequate resources spread very thinly. Worse still, this comes at a time when help is most required by many of the regions because of the Government’s desire to cut too far and too fast.

So what should we be doing to jump-start growth? Labour’s plan to repeat the bank bonus tax, and to use the funds to build 25,000 desperately needed homes and secure jobs for 100,000 young people, would help, as would bringing forward long-term infrastructure projects. We got a start on this yesterday, but we need more. For the medium term, I agree with the Leader of the Opposition when he says that we need to change the very nature of our economy. We need to go back to making things, to give manufacturing a much bigger role in our economy, and we need an economy that looks at the long-term, and not just to short-term profits.

[Mr Marcus Jones]

I thank the hon. Lady for giving way; she is being generous in taking interventions. She tells us how important manufacturing is to rebalance our economy, yet in 13 years of Labour Government, on her party’s watch, we lost 1.7 million manufacturing jobs.

[Angela Smith]

I think the hon. Gentleman overlooks the fact that the Labour Government were prepared to show what is called industrial activism. They worked hard for a long period to ensure that due diligence was in place, and that we invested in key sectors of our manufacturing economy. The hon. Gentleman’s comment is a bit rich, given that the production industries have gone into negative growth in the last quarter. Mining and quarrying took the productive part of the economy into negative growth in the last quarter, so I do not think that we need any comments from Government Members on manufacturing and support for manufacturing.

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[David Tredinnick]

I understand that the hon. Gentleman speaks on behalf of his motor manufacturing constituency. Obviously, there is demand for more regional growth fund support. Where we are now with the RGF is very helpful, and it is successful for reasons that I will develop.

[Mr Marcus Jones]

I am proud to have worked with my hon. Friend the Member for Bosworth (David Tredinnick) in promoting the MIRA enterprise zone and RGF bids. Does he agree that it shows the importance of cross-boundary working, with his constituency in the east midlands and my constituency just over the width of the A5 in the west midlands? The fact that the local enterprise partnership for Coventry and Warwickshire has strongly backed the MIRA development shows how the new system is starting to work and bear fruit.

[David Tredinnick]

I absolutely agree with my hon. Friend, who has worked tirelessly for this project. I sat with him in his council chamber—in his former chair, I think—in Nuneaton not long ago and considered these issues. We can talk about the boundaries—parish, borough, county and regional—in the areas that we represent, but the point is that the footprint of the MIRA park is enormous. It covers a very large area of the east and the west midlands—areas that desperately need help.

I will return to the subject of the debate, Mr Gray, before you call me to order. I would not want to fall foul of the Chair. There were many concerns earlier this year when MIRA did not succeed in round one of the RGF because the technology park really could not succeed without that support. We are talking about not an add-on, or bells and whistles on a machine, but part of the gearbox without which the project could not go ahead. There has been huge investment on this former bomber aerodrome site.

[Mr Jones]

I assure my hon. Friend that I will not take much more of his valuable time, but does he agree that in addition to the growth and jobs that the MIRA development will create, RGF funding will also change the physical complexion of the A5? It will therefore benefit not only the MIRA development, but the east and the west midlands, which rely heavily on the A5 corridor.

[David Tredinnick]

My hon. Friend is right. I do not want to detain the House for long as many colleagues wish to speak, but I shall refer him to correspondence that I have received from worried constituents and former councillors on transport issues such as not improving the roads, traffic flows that, when measured seem to be too great for the existing roads, and problems on the A444/A5 Red Gate junction, which he will know well. There are also other local issues such as Higham lane roundabout—all concerns about the national highway. With the second round of applications to the regional growth fund, we will solve those problems and all those roundabouts and junctions will be improved. Indeed, the roads must be improved because otherwise heavy vehicles cannot get in safely. As MIRA said, subsequent to the RGF2 bid submission, those improvements will go ahead.

MIRA technology park will receive £20 million from the regional growth fund. I spoke to MIRA’s chief executive yesterday and looked at other aspects of the scheme, and I understand from the Minister’s Department that one or two issues concerning the impact on traffic and traffic changes need to be resolved. I thought that the Department had already dealt with such matters, but I have received reassurances that such problems will not obstruct the bid. I hope that the Minister will address that concern in his response.

The huge knock-on effect of the bid will not be confined to businesses but will have a massive impact on education and apprenticeships. Another leap forward that the Government have made is to improve, invigorate and release more people into the apprenticeship structure. Astonishingly, the Labour Government never really cracked that issue over 13 years. They were always out of kilter; there were never enough plumbers or enough this or that. It was a command economy approach that did not work. We are now freeing up the economy and giving people more responsibility. [Interruption.] I love heckling, Mr Gray, and if we had the time, I could not get enough of it. Seriously, however, we are talking about important issues.

Last night representatives from further education colleges visited the House, including Marion Plant from North Warwickshire and Hinckley college. We talked about the importance of developments such as the new Hinckley campus and the studio school that will come on stream in September 2012 with design apprenticeship training, and courses in advanced engineering and health and social care. She told me that there had been 500 applications for nine places. The demand exists, and we are heading in the right direction.

Last Friday I was contacted by Radio Leicester which asked me to do an interview about the increase in the number of apprenticeships in my constituency. I have received one or two other requests in the past, and I accepted that one immediately. There has been a phenomenal increase in apprenticeships in my constituency, which embraces Hinckley and lies adjacent to Nuneaton.

In summary, for all the complaints made by the hon. Member for Penistone and Stocksbridge—and I am sure there will be many other complaints from Opposition Members—something is stirring in the heart of England. Under this Government, there are more apprenticeships, and we are allowing institutions such as North Warwickshire and Hinckley college more say about how they run their affairs. There is less top-down government. I have just come from the Health Committee. We will not go into that issue now, but the Government are trying to give more power to doctors, which I welcome. The Government are succeeding in what they are doing, and the regional growth fund is an important part of that. I congratulate the Minister and his colleagues.