Economic Regeneration (Glasgow)

Margaret Curran Excerpts

Wednesday 16th February 2011 Westminster Hall

[Margaret Curran (Glasgow East) (Lab)]

Thank you very much, Mr Gale. I am very pleased to speak here this morning. This is my first Westminster Hall debate since I was elected as a Member of Parliament at the last election, and I am pleased that the subject is my own city of Glasgow—the great city of Glasgow. I am sure that you will hear much of that this morning, Mr Gale.

Of course Glasgow is vital to the current economy of Scotland, and over the years it has also contributed a great deal to Scotland and the United Kingdom. Although Glasgow has suffered many setbacks and difficulties along the way, I argue that the city has fought to overcome them with significant success. It is important that we understand the key ingredients of that success and that we do not repeat the mistakes of the past. Instead, we must deepen and enhance the processes of regeneration, so that we can benefit from them in the future.

The second city of the empire, Glasgow inspires great pride and loyalty in its people: pride in the skills and contribution made by working people to the economy, and loyalty to a city famed for its humour and resilience. By 1870, Glasgow was producing more than half of Britain’s tonnage of shipping and a quarter of all the locomotives being built in the world. Of course, our interest in shipbuilding continues to this day, as I am sure Ministers know. In my constituency, Glasgow East, we had Parkhead forge, which was a powerhouse of the steel industry. It was one of the biggest steel employers in the world—at one point, it employed 30,000 people—and it made an enormous contribution to the war effort. The plant finally closed its doors in the 1980s.

I argue, with some regret, that that great contribution to Scotland’s economy has not been properly recognised or rewarded over the years. There is a real sense among Glaswegians that our work and contribution were used when times were good, but that we were abandoned when change was under way, and we cannot let that happen again. As a result of that abandonment, we were left with a legacy of ill health, high poverty and mass unemployment. That situation was particularly bad during the 1980s, when unemployment soared. There was a sharp decline in public services, urban decay set in and a cycle of worklessness and hopelessness became embedded in too many communities and too many families. The next generation worked hard to tackle that legacy through economic and social regeneration. As I mentioned at the beginning of my speech, there were many successes along the way. As a result of economic diversification and increased investment in infrastructure, health and education, Glasgow achieved a great deal.

More than 53,000 jobs were created in the city between 2000 and 2005, which was a growth rate of 32%. Between 1998 and 2001, the city’s financial services sector increased by 30%, and it is now one of Europe’s largest financial centres. In 2005, more than 17,000 new jobs were created. In 2006, private sector investment in the city reached £42 billion, which represented a 22% increase in such investment within a single year. That shift in Glasgow’s fortunes marked very significant progress and played a vital part in helping to change Glasgow’s image of economic decline and worklessness. In doing so, it inspired confidence in the people of Glasgow, and it inspired investors to have confidence in the city. Of course, it also demonstrated that the famous Glasgow resilience pays off.

A debate about regeneration is about not only the physical aspects of a place but its people. Glasgow has had a strong sense that the process of economic regeneration and the accompanying process of cultural renaissance that it experienced in the 1980s and 1990s should benefit all its citizens and not only those who were skilled and able to make the most of those opportunities. Too often, Glasgow was characterised as a city of two halves, and there was a real push to ensure that all the people of the city benefited from any regeneration process. Glasgow’s problems of ill health, poverty and deprivation were so deep-rooted that there needed to be a step change in how we tackled them. A vital ingredient was the regeneration of some of the most disadvantaged communities, a number of which are in the east end of Glasgow in my constituency. Long before the big society was ever heard of, Glasgow pioneered community development.

We are all aware of the mistakes that were made in the past when things were “done to” communities rather than “with them”, particularly in relation to housing. Economic regeneration is at its best when we work with people who have experienced the problems and have a vested interest in finding the solutions, rather than when we impose top-down reforms. That is best illustrated in the housing sector. Through housing stock transfer, the city has been able to bring additional major spend into housing investment. That process not only involved tenants in a completely new way but delivered a programme of sustainable housing in Glasgow. In my previous role as a Member of the Scottish Parliament, I was the Minister with responsibility for housing in different ministerial capacities, and I was substantially involved in housing stock transfer. If anyone wants to hear me talk for half an hour about housing stock transfer, I am very willing to oblige, but such talks are obviously not in great demand at the moment.

Given the challenges facing Glasgow, it is important to understand how we made progress. Glasgow city council was instrumental in building a lasting partnership with the private sector, a partnership which continues to this day. That partnership with the private sector will be the theme of my contribution to the debate, including how it is possible to get the public and private sectors to work together. My real fear is that that partnership is being jeopardised at the moment. The experience that we had in Glasgow of the partnership between public and private is relevant to the discussions of today and the priorities that we set.

In Glasgow, the private sector understood the need to invest in education and the benefits that it accrues from that investment. The private sector benefited enormously from the developments in housing and in particular from housing stock transfer. For example, the £1 billion investment by Glasgow Housing Association has seen unparalleled improvements in housing throughout the city. Perhaps the employment opportunities that arise from such housing investment are not properly understood, but in fact 4,000 people were directly employed between 2006 and 2010 as a result of the investment in housing in Glasgow. Nearly half those people were employed through community benefit clauses, which shows that public intervention works by creating sustainable employment. Of the 2,000 people who were employed through community benefit clauses, half of them were trainees or apprentices. Once again, that employment has had a real impact in the communities in which those people lived and worked.

We have experienced a bit of a jolt to the process of regeneration in Glasgow in recent years, since the Scottish National party came to power. I would argue that during that time the partnership approach to regeneration has been undermined. That is exemplified through the development of the Scottish Futures Trust. That trust was set up by the SNP Administration, and it was meant to be part of a new approach to raising private finance, allegedly for investment. However, it has failed to commission the building of a single new school, and funding for capital investment projects has fallen by £1 billion at the cost of 37,000 jobs in the construction industry.

The SNP Government have refused point blank to listen to the pleas of the business community in Glasgow, and as a result of that cut in capital investment and other cuts, the construction of school buildings has been scrapped and thousands of teachers and nurses have lost their jobs. The “Salmond slump”, as it is now termed in Scotland, has also seen the cancellation of vital capital infrastructure projects such as the Glasgow airport rail link. The cancellation of GARL has meant the loss of 1,300 jobs. For the first time in a long time, Glasgow unemployment figures have begun to fall behind those of England.

There is no doubt that the decline in investment under the SNP Administration has hit Glasgow hard. In my own constituency, the number of new or refurbished schools between 1999 and 2007 was 14, so we had 14 brand new or refurbished schools in the east end of Glasgow in that time. Since the SNP came to power, not one school in my constituency has been built or refurbished—there has been no investment at all in schools. Recently Glasgow city council has had more than its fair share of budget cuts, as the council itself will confirm. There has been a 3.6% budget cut, which is the highest cut for many years and above the national average.

Glasgow is battling on, and there are still regeneration projects that matter enormously. I want to refer to two of those projects that are of great importance—first, the Commonwealth games, and secondly the Clyde Gateway. The 2014 games will be an exciting occasion, and there was great celebration in Glasgow when we won them. It is an occasion to celebrate sport in a city famed for its sporting achievements. As the Member of Parliament for the great football team of Glasgow Celtic, I expect everyone to be aware of our great expertise on the football field, and I am sure that we will inspire interest in other sports when the Commonwealth games are held. It is, however, also an opportunity to foster economic regeneration, most particularly in areas of the city that still need rejuvenation. More than 9,000 businesses entered the bidding process for affiliated contracts and subcontracts, and it is expected that the games will create 1,000 jobs and stimulate £1 billion of infrastructure investment in Glasgow, most particularly addressing our urge to ensure that the most deprived areas benefit. In the east end of Glasgow the games are of great significance, so will the Minister, in his response, focus on the games? We could perhaps learn things from the UK’s experience with the Olympic games, and the UK Government could perhaps play a part in ensuring that the Commonwealth games are an important success.

The Clyde Gateway is another important development in the east end of Glasgow. It has been identified in the national planning framework as Scotland’s top regeneration project. It has the target of creating 21,000 jobs and 10,000 homes over two decades. It is vital to the success of Glasgow, but recently there have been some problems with its funding. The SNP Government have taken some action to address the concerns, but the role of Scottish Enterprise has, I think, been controversial in its support of the gateway. We cannot afford to let the project slip, and some of my hon. Friends will perhaps want to make more detailed reference in their contributions to the progress, or lack thereof. Hopefully, we can particularly focus on that in the coming months, as it is key to the regeneration of Glasgow. Both the Clyde Gateway and the Commonwealth games are important to regeneration, particularly as they have a focus on and locus in addressing the issue of deprived communities, as well as having a stake in Glasgow’s future.

Glasgow is, of course, facing the double whammy of a Tory-led Government—hon. Members will have expected me to move on to this topic. In debates such as this, I always want to be polite, so I will say this in the most generous personal terms, but I cannot resist making political criticisms and I hope that the Minister will take what I say in the tenor in which it is meant. We have seen some difficulties and challenges since the election of the new Government, including the cancellation of the future jobs fund, which was doing so much to tackle problems of unemployment and particularly of youth unemployment, where we were just beginning to grapple with some of the more deep-seated issues. We have seen the cuts in public expenditure, and we have heard from the Government that when cuts are made in public expenditure, the private sector will step in to fill that gap. I say assertively to the Government that that did not happen when the SNP cut expenditure. In fact, the business community put quite a different case in Glasgow, where it said that when public expenditure is used wisely, it can assist private sector development, and we have seen the details of that in Glasgow and the real success of the model.

We have also seen a raft of cuts in housing benefit, which has undermined that twin process of economic and social regeneration. I would be the first at the barricades saying that welfare reform is important, particularly because of the constituency that I represent. I was a great supporter of the welfare reforms introduced by the previous Labour Government, but how reform is done is critical. The number of people on incapacity benefit tripled under the previous Tory Government, but fell during the previous Labour one. It is concerning that this Government’s welfare reforms are perhaps undermining regeneration. A particular example is the Government’s decision to take away 10% of housing benefit from someone who has been on jobseeker’s allowance for a year. Even if that person is doing all that is required of them and is desperately looking for work, they will still lose their benefit. That not only has a harsh impact on the family but undermines housing-led regeneration, because it affects funding for housing associations in Glasgow, which would be a desperate setback for our city. In all honesty, such a punitive, nasty cut reminds Glaswegians of the bad old days. We have had the higher education cuts that have come through the block grant, and investment in education, particularly at university level, matters so much for a skilled work force, because it enables growth in key sectors such as life sciences and finance.

Centre stage in this discussion has to be unemployment. The numbers have been creeping back up in Glasgow, particularly with the real concerns about the retraction in the economy shown in the recent growth figures. In Glasgow in December, 15 claimants were chasing every vacancy—in my constituency, the figure was 25. That is deeply worrying for those individuals, families and communities, and it has an enormous impact in the city as a whole. It is all very well telling people that they must go back to work, but there are no jobs to go to, which cuts the feet from under the policy. We cannot have welfare to work if there is no work, and it is employment and the lack of it that lies at the heart of the regeneration debate.

For generation after generation, Glasgow has experienced surges in unemployment through profound economic shifts without the right action to protect its people and to get its economy back on its feet, and it looks as though we are experiencing that yet again. I have no doubt that the Government will respond by saying that it is all the fault of the previous Government, and that there is nothing else that has to be done apart from tightening our belts. That has been said to Glaswegians before, and it is has been proved very wrong indeed, many times. I argue very strongly that the people of Glasgow understand that the banking crisis was the fundamental cause of the recent economic experiences, and there is great resentment that that sector is not being made to contribute more to the solutions. Britain’s debt was among the lowest in the G7, and the Tories actually argued that we should perhaps have gone further in our plans for public expenditure. In reality, as Glasgow has shown, it is not “public sector investment bad,” as if that were somehow a drag on the economy that stifles private sector development; it is both the public and private sectors working together in partnership that is good and that matters.

I will draw my remarks to a close, and I thank hon. Members for attending the debate. One of the first demands that I had when I became a Member of Parliament came from Glasgow’s Evening Times, that other significant element of Glasgow life, which my hon. Friends know. The paper contacted me and insisted that my job here is to stand up for Glasgow and that I should make that one of my central claims, which is what I agreed to do—we always agree, I am sure, with the Evening Times. I will continue to do that, because it is our job here to highlight the city’s strength and potential.

People have many images and stereotypes of the city of Glasgow, and I never deny the problems that we face. I have hopefully done some work to try to deal with some of our city’s great difficulties, but it is also a city of great strength, promise and resource, and we have to learn from not only its problems but its great successes. I hope that the Minister will listen and will take back Glasgow’s message to the Government. That message is that they should think again about cuts in housing benefit in particular and that they should support our fight for jobs, particularly as we have seen the job crisis increase. They should recognise Glasgow’s contributions and work with us to support economic and social regeneration.

[Mr Roger Gale (in the Chair)]

Four hon. Members on the Back Benches wish to participate in the debate. The Chair chooses to give preference, when possible, to Members who have written to Mr Speaker to indicate that they wish to take part, so I propose to call Mr Greatrex next. It might be for the convenience of Members if I also indicate that I shall then call Ms Swinson, Mr Bain and Mr Sarwar, in that order. If hon. Members would be good enough to confine their remarks to 10 minutes, that will enable me to call the Opposition Front-Bench spokesperson at 10.30 am.

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[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I congratulate the hon. Member for Glasgow East (Margaret Curran) on securing the debate. She struck me as passionate about her city, its people and their prospects. I commend that, and it will serve her well in this place.

I have to disappoint the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), but I am not sure that I need much of a history or geography lesson about the city. I have visited Glasgow quite frequently, I have met businesses in Glasgow and I am going to Edinburgh next month. [Interruption.] I know there is some fraternal rivalry between the cities, but the hon. Member for Edinburgh East (Sheila Gilmore) is in her place representing Edinburgh and ensuring that the Glaswegians do not get everything their own way. I understand some of the challenges in the Scottish economy. Having been born and brought up in the north-east, I recognise from my own region some of the trends referred to by the hon. Members, such as the decline in shipbuilding, or in coal mining, as mentioned by the hon. Gentleman. I see strong parallels.

I congratulate other right hon. and hon. Members, including my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on participating in the debate and making the case for their constituencies.

Before I turn to the main text of my contribution, let me deal with four areas mentioned by a range of speakers. First, it is vital for Glasgow to use the Commonwealth games as an opportunity for economic development. I note the job creation initiatives around the games. Some lessons could be learnt from the London Olympics, not only in the regeneration provided for east London but in how the games are a focal point for businesses to promote the benefits of London as a place of inward investment. I encourage people in Glasgow to work closely with the Olympic authorities in London to understand the opportunity to attract inward investment and to raise the profile of the city.

The Clyde Gateway, as with the spending for the Commonwealth games, is a devolved matter, for prioritisation by the Scottish Government, but I am sure that Scottish Enterprise will have heard the strong messages from this morning’s debate. However, if MPs and others from Glasgow wish to see funding devoted to that project, they must place pressure on the Scottish authorities.

I will raise with my right hon. Friend the Secretary of State for Transport the issues about the completion of High Speed 2, which affects a number of areas of the country not covered by the current route, such as the northern part of England as well as Scotland. I will ensure that he is aware of the concerns expressed.

On the green investment bank, I am afraid that Glasgow will have to join the queue of bidders for the headquarters. A number of parts of the country have made representations through their Members for the site of the headquarters. Green investment is a huge opportunity for economic growth and development. Existing skills in local communities or in the universities serving those areas can be used to promote renewable energy and green industries. The issue affects all parts of the country but, at the time of the Budget, my right hon. Friend the Chancellor of the Exchequer said that at least £250 million from the green investment bank will be spent in Scotland. We have not lost sight of the important role such investment can play in stimulating economic growth.

As pointed out by the hon. Member for Glasgow East, Glasgow was at the forefront of the industrial revolution and it remains one of the most important and innovative cities in the UK. It is Scotland’s largest urban economy, generating £13 billion gross value added each year and supporting 400,000 jobs. As we heard, the jobs are enjoyed by those living not only in Glasgow but in the surrounding areas, as part of the economy of the west of Scotland.

We want to work in partnership with the Scottish Government to promote our shared objective of increasing economic prosperity for all in Scotland and Glasgow. As mentioned, economic regeneration policies are largely a matter for the Scottish Government and their local authorities and agencies, which was evidenced by the criticism made by the hon. Lady of the Scottish National party Government. I am sure she will take every opportunity over the coming weeks to remind SNP Members of that and to question their non-attendance today.

Setting out the Government’s economic strategy and its impact on Scotland—in particular, Glasgow—will be helpful. We set out three strands last year: first, to reduce the deficit inherited from the previous Government; secondly, to increase economic growth, including by rebalancing the economy throughout all the countries and regions of the UK; and, thirdly, to promote fairness for all.

As my hon. Friend the Member for East Dunbartonshire rightly pointed out, we have a deficit to tackle and we are spending £120 million on interest every day—we spend more in interest than we do on schools. Clearly, we need to resolve that issue if we are to support economic growth, keep interest rates low and protect jobs in all parts of the UK.

The reality that the right hon. Member for Delyn (Mr Hanson) keeps trying to escape from—he and I have had many debates on such issues—is that the previous Government set out cuts starting from April this year that would have been only £2 billion less than the cuts we have outlined. When he talks about front-loading, he ought to think about the previous Government’s plans and acknowledge that the cuts this year are only £2 billion more than in the plans we inherited. All parts of the UK, including Scotland, must bear their share of the deficit reduction made necessary by what we inherited from the previous Government.

Funding for the Scottish Government in the spending review reflects the Government’s commitment to invest in infrastructure and to ensure that conditions for growth are in place throughout the UK. The spending review increased capital funding in the UK by £2 billion compared with June’s Budget plans, which is more than what the previous Government had set out as their capital plans for the new Parliament. I repeat, the right hon. Gentleman must be careful what he criticises: we have been more generous in our capital settlement than his Government had intended. We are keen to ensure that capital expenditure is used to protect projects with high, long-term economic value and that spending is focused on investment promoting economic growth, including in transport, science, regional growth, digital infrastructure and supporting the low-carbon economy. Glasgow MPs need to challenge the Scottish Government on how they will prioritise their budgets to deliver those objectives. These are devolved matters, and the Scottish Government are accountable for the priorities they set and how they respond to the needs of Scotland.

[Margaret Curran]

I take the point about devolved matters, and we do pursue those. Housing benefit, however, is a reserved matter. Will the Minister confirm whether the Government are going ahead with the 10% cut in housing benefit after a year to those receiving jobseeker’s allowance?

[Mr Hoban]

I will return to the issue of housing benefit in a moment. Let us be clear: the Scottish Government have not suffered disproportionate cuts. Funding has been determined by the Barnett formula in the usual way. The percentage of Scottish Government total reduction in departmental expenditure limits for 2014-15 is below the UK average—they are getting a better spending settlement than the rest of the UK. Public spending per head in Scotland is substantially above the UK average and is expected to remain so over the spending review period. The Scottish Government have benefited from substantial increases in spending since devolution.

If we are to promote strong and sustainable economic growth that is evenly shared across the country and between industries, we need to tackle the debt and deficit that we inherited. The Government are inviting businesses to take part in a fundamental review into what each area of Government is doing to address the barriers facing industry. They have already acted to remove barriers to growth, and the growth review announced last year set in train an intensive programme of work to drive forward action on the Government’s priority areas. That relentless focus on growth will continue to form the basis of the Government’s agenda for the rest of this Parliament. We started by focusing on planning, trade and inward investment, competition, regulation, access to finance and corporate governance.

The review will look at all sectors of the economy, but we have first identified six key sectors: advanced manufacturing; digital and creative industries; business and professional services; retail; construction; and health care and life sciences. Manufacturing is a strong part of the Scottish economy, and it has seen six consecutive quarters of growth. That is a helpful sign of the rebalancing of the economy.

As the Financial Secretary to the Treasury, financial services is my specialist topic, and the importance of financial services to Glasgow has been mentioned a couple of times during the debate. In 2009, I visited National Australia Bank at the Clydesdale branch in Glasgow and spoke to management and businesses from the west of Scotland. The financial sector is one of the most significant contributors to UK GDP and employment, and although London is the heart of that industry, there are important financial centres across the country, including in Glasgow. Financial services firms in Scotland account for 9% of total UK employment in the sector.

Financial services is one of the biggest employers in Glasgow. In 2008, 95,000 people were employed in financial services firms in Scotland, and many of those jobs were based in Glasgow. Major local employers include National Australia Group, which I referred to earlier, and Lloyds Banking Group. I know that Glasgow has recognised the potential role that financial services can play in a growing economy. The £750 million joint public-private venture investment in the international financial services district could bring an extra 20,000 jobs to the city.

We often think of the strong tradition of businesses that are based in Scotland, but we should not lose sight of the fact that many international financial services that we associate with Canary Wharf and the City have significant operations outside London. Morgan Stanley is in Glasgow, as are Deutsche Bank and Citibank. Those global businesses chose to locate some of their operations to Glasgow, which shows that the benefit of having London as a global financial services centre spreads beyond the boundaries of the square mile. We are doing as much as we can to ensure that the UK remains an attractive and competitive place for financial services to do business.

As well as measures for the financial services sector, we must ensure that the UK is a good place for inward investment. In the Budget we announced plans to reduce the rate of corporation tax from 28% to 24% over the next four years. We published a corporate tax road map that set out a significant programme of corporate tax reforms designed to restore the UK’s tax competitiveness, including reform of the controlled foreign company regime. The Government are responding to business concerns about the instability and unpredictability of the UK tax system while taking action where they can to improve the UK’s competitiveness. We will work with our partners in the Scottish Government and elsewhere to ensure that Scotland is an attractive place in which to do business.

Increasing fairness is a strand of our work, and that point was touched on by a number of hon. Members. We must be clear about the important reforms to welfare set out by the Government. I recognise that there is a degree of support for those reforms from Labour party Members, but we clearly need to improve work incentives and get more people into work. Too many people must make a decision about whether they can afford to go to work, or whether the system means that they are trapped on benefits. That is why my right hon. Friend the Secretary of State for Work and Pensions is setting out plans for the universal benefit, which will be introduced from 2016. It means that for new claimants, it will always be better to be in work than on benefits. That sends a positive signal that people should take employment opportunities and will be better off if they do. That is not just economically better off—significant social benefits flow from people being in work.

The future jobs fund was mentioned by a number of hon. Members, and it is a convenient soundbite to say that the fund has been scrapped. We should all recognise, however, that many of the jobs that were funded were temporary and many were in the public sector and did not represent good value for money. That is why we are bringing forward the Work programme that will strengthen support for those seeking to get into work.

The hon. Lady mentioned housing benefit. She will recognise—as do a number of her colleagues—that the bill for housing benefit increased significantly under the previous Government. There are some anomalies in how the system works and the way that it distorts incentives. That is why it is important to restructure housing benefit and engage in reforms. We recognise the challenges that that will create, which is why additional money has been set aside to help manage the transition.

The hon. Lady also spoke about defence and shipbuilding. She will know that some of the work on the new aircraft carriers is being done on the River Clyde, just as some is being done in Portsmouth just outside my constituency in the Vosper Thornycroft yard. The Astute class submarines will also be based in Scotland and there is a great deal of support for Glasgow from central Government. However, if we are to achieve the great goals of this Government to rebalance the economy, spread wealth and prosperity, create jobs and ensure that prosperity continues across the nation, not just in London and the greater south-east, difficult decisions have to be made. We must tackle the deficit and find ways to remove some of the barriers to growth in the UK. That is why the Government are committed to the growth review and to ensuring that we do as much as possible to remove the barriers to economic growth.

Having claimed part of Merseyside and north Wales, the right hon. Member for Delyn (Mr Hanson) spoke about the importance of partnership. It is important to recognise the way that Scottish local authorities have worked with the private sector on a number of initiatives to support economic growth. We need to see more such partnerships but we must also tackle some of the underlying issues that we inherited from the previous Government, including the deficit and the national debt. Alongside tackling those things, we must lay the foundations for increased prosperity across the whole United Kingdom.