Midlands Engine

Marcus Jones Excerpts

Tuesday 24th January 2017 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

I thank the hon. Member for Warwick and Leamington (Chris White) for bringing this issue to our attention so that we can tease out some important issues. I declare an interest, of sorts. West Bromwich Albion FC beat Everton FC in the FA cup final on 18 May 1968 at Wembley, by scoring three minutes into extra time. It was a traumatic experience for an 11-year-old Evertonian. However, I hold no grudges against the midlands and I deny that I was psychologically scarred by the event, so my comments today should not be taken in that context.

I was pleased that the hon. Member for Warwick and Leamington dealt with a wide range of issues, including academic research, research and development in general, energy storage, matters affecting the creative industries, and the challenge of low productivity. Of course there is also the vexed question of the airport.

My hon. Friend the Member for Nottingham South (Lilian Greenwood) talked about the midlands engine being not a brand but the people, and an engine for growth. I fully concur with her view that when the midlands do well the UK does well. She also made crucial points about HS2 helping to transform Britain’s infrastructure, other transport investments in the area, and Brexit concerns. The hon. Member for Derby North (Amanda Solloway) talked about working together and playing to the region’s strengths, and of course the hon. Member for Erewash (Maggie Throup) talked about the need to stand up for traditional industries as well as new technologies. In that respect, when I sit on my sofa I will be reminded of her.

As a former leader of a council in the Liverpool city region I have, as the saying goes, been there, to some extent. I am pretty au fait with the difficult gestation period that comes with setting up the structures and mechanisms of a city region and the wider region; but it is about time, and long overdue. The dragging hand of Westminster and Whitehall on regional policy is a danger; that approach is well past its sell-by date. In fact, the centralisation from London has clearly left the other regions in a less favourable position than the south-east and London. That is not to say that I have any criticism of those regions. Quite the opposite—good luck to them. But it is time that other regions also got more attention. I think that that point has been raised today several times. The same thing has been true of successive Governments who over the decades have to an extent had a stranglehold on local government, leaving it passive and dependent. However, that is changing, and that failed approach cannot continue.

The “Midlands Engine for Growth” prospectus of 2015 mentions that the offshore wind market is worth up to £100 billion. In fact, as you know, Mr Howarth, in Liverpool bay, off the coast of my constituency, there is a large wind turbine field, which is growing exponentially with investment from, among others, DONG, a majority state-owned Danish company, and, if I remember rightly, some input from the city of Copenhagen. It is a pity that local government and regions in this country are not in a position to do the same. I am very concerned that the Government are ideologically opposed to such ventures even if they would be in the best interests of city regions such as Liverpool working collaboratively with city regions in the midlands, or combined authorities in the midlands. I am afraid there is a danger of there being many words but little action from the Government, with that ideology hidden in the small print.

Conversely, at the same time as the former Business Secretary, the now Secretary of State for Communities and Local Government, talked in the prospectus of freeing up local government and its partners to compete in the global market, he was interfering in their day-to-day affairs with the Trade Union Act 2016—which sought to micromanage local authority labour relations—with no recognition of any irony at all. Meanwhile, one of his predecessors at the Department for Communities and Local Government wanted to tell local authorities how to run off and on-street car parking arrangements. That state of mind has to be broken out of.

The consequences of the incapacity to deal with devolution in a significant way fall on and negatively affect people in the regions, such as the midlands. I am afraid that this rather petty, Lilliputian and prosaic interference reaffirms that the Government and Whitehall simply cannot let go; it is endemic, and it has to stop. Can anybody imagine the equivalent Secretary of State in Germany, France or Italy having the time or inclination to be bothered with such trivial interferences in the affairs of local government? I raise these issues simply for context. If the dead hand of Westminster continues to stifle innovation, imagination and entrepreneurship in the regions, and in the midlands in particular, because of a pathological inability to let things go, things will not change.

The Government set out their aims for the midlands machine in February 2015, which include raising the long-term growth rate of the midlands to at least that forecast for the whole UK, creating 300,000 extra jobs in the midlands, which is enormously welcome, creating a new skills matching service for local people and increasing the number of skilled apprenticeships, which others have referred to. They also include delivering £5.2 billion of investment in new transport infrastructure in the midlands, to which my hon. Friend the Member for Dudley North (Ian Austin) referred, and backing science and innovation, including by developing an Energy Research Accelerator through local universities. The Government also aim to support new technology in the automotive sector, to support the construction of 30,000 new homes and to make improvements to local education. The Opposition’s main concerns are how the Government will meet those targets and whether they are committed to fully funding them, particularly as our economy heads into a difficult period that will be defined by high inflation, a continued weakened pound and potentially flatlining tax receipts.

More specifically, the prospectus indicated that the midlands engine partnership would develop a £180 million fund of funds, utilising the European Union’s joint European resources for micro to medium enterprises programme, which combines European regional development funds with matched funding from the European Investment Bank. Will it still? Does the Chancellor’s slush fund, as I like to think of it, account for the loss of that money, and will it be put back into the midlands engine? My hon. Friend the Member for Coventry South (Mr Cunningham), who was here earlier, referred to that.

The Government’s aim for the midlands economy is to raise its long-term growth rate to at least that forecast for the UK. That target is based on the ability of the midlands to continue to grow at the same rate as between 1997 and 2013. There are a plethora of reasons why that is unlikely and, perhaps, overly-ambitious unless the Government pull their finger out and deal with many of the issues raised by hon. Members here today. As the prospectus says, the region’s gross value added is currently £222 billion annually, which is about 14.6% of the UK’s total economic output, and has grown by 30% in the past decade. With 24% of the 11.5 million population under the age of 20, the midlands clearly has the potential to offer a long-term, sustainable workforce. That has been referred to today in terms of skills. However, although the midlands accounts for 15.7% of all employed people, the average GVA per worker is lower than the national average.

In fact, the midlands has not been able to keep up with the north and the south-east in employment, investment and job creation. A Resolution Foundation report found that, prior to the financial crisis, employment in the west midlands city region stood at 66.7%, which was 3.2% below the city region average. It also found that, while the recovery from that crisis has seen the proportion of people in work nationally rising to record levels, the west midlands is still not back to where it was, with an employment rate of just 64.5%, compared with 71.6% across other city regions. Barring Solihull, each local authority in the west midlands has an employment rate below the average across the UK’s other city regions. That is important.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

indicated dissent.

[Peter Dowd]

I am referring to Government statistics; I am happy to send them to the Minister. In the east midlands the situation is worse. I do not want to push on; I think we have to look at this in a constructive and positive fashion. If we are going to do that, the Government need to pull their finger out and get that midlands machine cranked up and going. Members across the Chamber have highlighted and indicated where that could be pushed and sustained. The hon. Member for Warwick and Leamington laid it out fairly clearly, but laying it out and practically putting it into effect are completely different things.

The reality is that the call to take back control that we heard during the referendum debate extends not only to the national level. It is not just about bringing back control—whatever that means—to the United Kingdom, it is about a demand from the regions for the Government to move aside to some degree and let them get on with wealth creation for all people, not just a chosen few. Andrew Bounds from the Financial Times made the point that so long as the Government control from the centre and focus so much attention on the south-east and London, the regions will not be able to move on.

The Government need to give the midlands—the home of the industrial revolution—its independence back, with powers to do the job that central Government are not capable of doing. Hon. Members have referred to the entrepreneurs, the businesses, the people who go to work and the families in the midlands and other regions as the people who deliver the wealth. Local people in the midlands are much more capable of doing the business, so to speak, than the Government will ever be. The Government have to free them up to do that. The sooner the Government stop paying lip service to regional devolvement, the better, because the 11.5 million people in the midlands deserve much better than they are getting from the Government. I exhort the Minister to push on with the midlands engine, not just in words but in practice.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I begin by thanking my hon. Friend the Member for Warwick and Leamington (Chris White) for calling this important debate. He brings a wealth of knowledge to the House, not only about the midlands but about manufacturing, from his role in chairing the all-party parliamentary group on manufacturing and from his experience in industry.

I am pleased to have the opportunity to set out the Government’s vision for the midlands engine. It has been a generally positive debate about the midlands, its strengths and the potential across the region. I very much like and have a great deal of time for the hon. Member for Bootle (Peter Dowd), but I was slightly disappointed by the tone of his comments. The Government are setting out on a serious path to deliver devolution across the country, and I do not recall the type of devolution happening in the midlands ever happening in any great way, shape or form under the last Labour Government. The mark of what the current Government are achieving is that 447,000 more people are in employment across the midlands now than in 2010, when the hon. Gentleman’s party left office.

As a proud midlander myself, I am passionate about the midlands and the role that it plays in our nation’s economy. The midlands’ success is vital to the UK’s economic wellbeing and to creating an economy that works for everyone. As we have heard from hon. Members, the midlands economy is built on a globally significant advanced manufacturing base. Last year, the midlands accounted for 23% of all English goods exports, with products going to more than 100 countries. Our transport manufacturing base includes international brands such as Jaguar Land Rover, Rolls-Royce, Toyota, Bombardier and JCB. In the MIRA innovation technology park, which borders my constituency, the likes of Aston Martin, Bosch, Changan and many other world-renowned companies continue to grow and innovate.

Our science and innovation capabilities speak for themselves. Warwick, Birmingham and Nottingham are all in the world’s top 150 universities. Those plus Leicester, Loughborough and Aston are in the UK’s top 50 universities. Hon. Members mentioned a number of other universities that are delivering excellence across our area.

That said, there are still challenges. Productivity is a key issue. GVA per capita in the midlands engine area is about 20% below the England average, and there is much more to be done to promote growth across the midlands. Just yesterday, we launched a Green Paper setting out our ambitions for the UK’s modern industrial strategy. Our aim is to improve living standards and economic growth by increasing productivity and ensuring that growth is spread across the whole country. This is a consultation, and we are asking people to tell us how we can best achieve our goals. Our industrial strategy will lay the foundations for a more prosperous and more equal Britain. Our focus is on improving productivity, rewarding hard-working people with higher wages and creating more opportunities for young people. Following the consultation, we intend to publish an industrial strategy White Paper in 2017. That will set out the plan for the long term.

The midlands engine is at the heart of our country and must be central to our approach. A key part of our vision is to spread growth across the UK economy, ensuring that the economy is working for everyone. Local partners have come together and formed a midlands engine partnership, which stretches from the Welsh border on one side of the country to the North sea on the other. The partnership is led by the internationally respected businessman Sir John Peace.

There has been very good progress. Under this Government, the midlands has been growing faster than the UK average, excluding London. Our support for the midlands includes the £392 million that we allocated to local enterprise partnerships in the midlands in the third round of growth deals, announced in the autumn statement. That is in addition to the first two rounds of growth deals, through which the midlands local enterprise partnerships will receive almost £1.5 billion.

The Government will publish a midlands engine strategy shortly. We are working with Departments across Government to set out the priorities for delivering the midlands engine. We will set out our plans to improve connectivity, employment, innovation and investment, which are all very important factors in improving the prosperity of people in the midlands and very important issues that have been raised by hon. Members throughout the debate.

We have of course already published a northern powerhouse strategy. The future of our economy is too important for this to be seen as a race between the northern powerhouse and the midlands engine. We are working with each area on its specific needs to ensure that all of the UK is economically strong.

Many of the Government’s existing initiatives are spreading growth and empowering local communities in the midlands. Our devolution deal for the West Midlands combined authority devolves significant powers, such as skills provision and funding. It includes a £1 billion investment fund and a £1.8 billion enterprise zone extension. My right hon. Friend the Chancellor made a commitment in the autumn statement in November that the Government will continue to work towards a second devolution deal with the West Midlands combined authority.

Our local growth fund has supported projects across the midlands. For example, the £20 million north-south rail and Coventry station scheme will improve passenger capacity and secure an increase in train service frequency between Coventry, Bedworth and my constituency of Nuneaton. There has also been support through city deals. In the Leicester and Leicestershire city deal, the advanced technology innovation centre received £2 million to create more space for high-technology jobs and businesses. That supports one of our largest science parks, where major companies include Caterpillar and E.ON.

As hon. Members have been keen to point out, many major routes and railways go through the midlands. Improving connectivity there has real benefits for the rest of our country, as well as significant benefits for local residents and businesses. Better transport connectivity allows businesses to grow and helps people to get to work. The midlands will be a major beneficiary of HS2 with various stations, but particularly at Toton in the east midlands and at Birmingham, as has been mentioned. The Government have recently committed to funding Midlands Connect to the end of this Parliament and have signalled our intent to see it established as a sub-national transport body. That will enable local partners to develop regional transport proposals for the midlands.

[Lilian Greenwood]

The Minister talks about the importance of HS2 to the region. That is important not just because of the transport connectivity and capacity improvements it will provide, but because the east midlands is the largest rail cluster in the world, and there is the obvious potential for us to benefit from it industrially. Will he say how, within the industrial strategy, he will ensure that HS2 procurement, including the £2.7 billion for new rolling stock, is used to boost our rail industry in the midlands region?

[Mr Jones]

The hon. Lady asks a very good question. We have significant capacity in the midlands region in regard to rail infrastructure and the manufacturing base around it. I am sure she has already looked at the Green Paper released yesterday, which contains a section that relates to procurement. I urge her to contribute on the Green Paper. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has made it clear that he is keen to hear from right hon. and hon. Members in relation to development of the Green Paper and the reality of the White Paper. I encourage all colleagues to get involved in that process.

To elaborate on the potential of HS2, there is a lot of debate about speed. I say to hon. Members that speed is important and, if we are delivering a brand-new rail line, why would we not use up-to-date technology? The biggest wins, however, are in developing additional capacity and reliability. My constituency is on the west coast main line. Because there is very little if any capacity left on that line, there are perpetual reliability challenges. The situation should improve once we secure HS2.

[Victoria Atkins (Louth and Horncastle) (Con)]

Does the Minister agree that the benefits of HS2 stretch out not only to the building of railway carriages, but to environmental needs, namely trees? Trees along the HS2 route will be grown in my constituency even though, sadly, HS2 is quite a way away from it. That is an example of HS2 investment having a benefit across the whole of the midlands region.

[Mr Jones]

My hon. Friend makes an extremely pertinent point. It is often said that only the places that have the hubs will benefit from HS2. It is certainly the case that there will be many related situations that we might not automatically think of—in my hon. Friend’s case that means the trees that will be grown in her constituency. As she says, that will have an important economic benefit to her constituency. I am sure there are many other examples we will be able to point to as that project moves forward.

A key component of the midlands engine is trade and investment. The Secretary of State for Communities and Local Government led the inaugural midlands engine trade mission to the US and Canada in September, and Sir John Peace led a second mission, in November, to China. The successes of those missions include £1.3 million of business secured, and a further £6.2 million of business expected over the next 12 months. To date, more than 70 companies have benefited from those missions.

Before I conclude, I want to pick up one or two more points, particularly on transport infrastructure. There was a suggestion that there was a significant lack of investment in transport infrastructure across the midlands. I reiterate that £5 billion of capital investment into new transport infrastructure is being made across the midlands. That includes upgrading sections of the M42, M5, M1 and M6 to four-lane smart motorways, and £2.7 billion for new trains on the east coast main line. In addition, a £55 billion investment is going into HS2. As hon. Members know, a significant amount of local funding is also being devolved across the region to our local enterprise partnerships.

We should not understate the importance of Birmingham Airport and East Midlands Airport to the midlands region. East Midlands Airport is at the forefront of freight and is the second busiest freight hub in the country. It is probably the biggest dedicated freight hub in the country. Birmingham Airport is now seeing significant passenger growth. As part of the regional growth fund made by the Government during the last Parliament, a significant project was undertaken to extend the runway at Birmingham Airport, including the diversion of the A45. As a subsequent benefit of that longer runway, Birmingham Airport is now able to serve longer-haul markets than it was, because it has that longer runway to support the long-range planes.

To conclude, I thank hon. Members for their thoughtful contributions. I know that all the Members who are here representing midlands seats bring a passion not only for the country, but for the midlands region. Many of the topics that have been mentioned—connectivity, enterprise, trade and investment—will be covered in our midlands engine strategy, and the midlands engine will have found the points made in this debate extremely helpful in its future work. We will continue to work with the midlands engine to respond to the challenges and opportunities set out in the industrial strategy and to develop its vision for making the midlands an important engine of growth.