Regional Growth Fund

Mark Prisk Excerpts

Tuesday 1st November 2011 Westminster Hall

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this debate. She will not be surprised to hear that I accept neither her analysis nor her arguments. One of the points that has come from the many excellent contributions, to which I will respond if I can in my reply, is the issue of confidence. The official Opposition will want to raise issues because good scrutiny is part of Parliament, but they should remember that confidence is important for business. Labour needs to be careful not to talk down the economy. I absolutely agree with balanced scrutiny, but point-scoring does not help our constituents, and we should bear that in mind.

The Government believe that if we are to have a sustained recovery, we need a resilient economy—an economy that is balanced between public and private, and between industries. My hon. Friend the Member for Nuneaton (Mr Jones) made a good point when he mentioned the significant drop in employment in manufacturing during the 13 years of Labour Government.

We are also well aware that we need an economy that is balanced across the whole country, which is why we have set out a comprehensive approach to local growth to replace the old RDA system. My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) was absolutely spot on: whatever individual cases may be made about specific projects, the sad reality is that after £16 billion and 10 years of an RDA system that was expressly established to close the gap between north and south, the gap got bigger. A responsible Government cannot ignore that simple fact.

Our strategy incorporates a range of elements, including the regional growth fund. It includes the local enterprise partnerships. The 38 in place cover 99% of the English economy. Local business and civic leaders set what they believe are the right priorities for their local area. We also have 24 enterprise zones, which will accelerate growth in key areas. In Yorkshire and Humber, the area of which the hon. Member for Penistone and Stocksbridge is a part, we see three specific enterprise zones—one in the Sheffield city region, one in the Leeds city region and one in the Hull and Humber area. With those programmes, we have ensured that where we are able to, given the difficult circumstances that we have inherited, we have put money into key infrastructure. For example, we have pressed on with the controversial high-speed rail investment, which is very important for the midlands and Birmingham and the whole north-east.

[Tom Blenkinsop]

rose—

[Mr Prisk]

If the hon. Gentleman will allow me to get on to the regional growth fund, I will let him come in at that stage.

The regional growth fund complements our other growth policies. Worth up to £1.4 billion of public money, it has two crucial objectives: to unlock the private sector investment to enable key projects to proceed, and to support areas that are especially dependent on the public sector, to enable them to have more balanced and resilient economies in the future.

We have had two popular bidding rounds, and the results of the second were announced yesterday. I am sorry that the Labour party is upset that not everyone won. Well, that is life. The reality is that it is a competitive fund, and it seems peculiar that Labour does not understand that rather obvious principle.

Let us look at round 1, which was the subject of Labour’s criticisms. We invited bids up to 21 January this year. We received 464 bids, the total value of which would have been something like £2.78 billion. In April, we were able to confirm the 50 conditional allocations, totalling in the region of £450 million of public money. Importantly, that £450 million of taxpayers’ money was offered up in the knowledge that having looked at those schemes, we could lever in investment from the private sector of £2.5 billion—a balance of five to one. I am pleased to confirm to the Chamber that more than half of the successful projects that we identified in April are already under way. When complete, the schemes in round 1 are expected to create or safeguard 27,000 direct jobs, or a further 100,000 indirect jobs. There are very good quotes from General Motors about how it that is already under way with the Vivaro van project in Luton. We have also heard about Bridon in Tyneside and Bentley in the north-west. My hon. Friend the Member for Wirral West (Esther McVey) mentioned Stobart, and up in Teesside, the restart project is under way.

What worries me about this debate—Opposition Members seem or choose not to understand this—is that the whole point about the programme is that the regional growth fund is designed to unlock private sector investment and lever it into schemes, and as anyone who has been in business knows, that means that payments made by Government will often come in the latter stages of development.

[Tom Blenkinsop]

Labour Members fully understand that public-led investment attracts private-led investment. Will the Minister confirm how many RGF projects have European regional development fund match funding, and whether the Treasury is retaining those ERDF funds from the regions?

[Mr Prisk]

There is a very small proportion of funds related to ERDF in round 1, and even fewer in round 2. My point, which the Opposition do not want to accept, is that when the public sector seeks to invest money, it is doing so to unlock the private sector investment. If we do not get that private sector investment, there will be a problem. The Opposition seem to believe that everything that we do should be measured solely and entirely by how much Government spend. Have they not learned from 13 years that it is how we spend the money that is important?

[Angela Smith]

There is the other issue of the assets that belonged to the RDAs, which could be used to help unlock private sector investment. What will the Government do with those assets? Are we going to have a fire sale, or will we use those assets to invest in infrastructure and private sector growth?

[Mr Prisk]

It is self-evidently the latter, which is why we established the local stewardship model. It is why in July we offered Members of this House the opportunity to meet Ministers, and why we are repeating that exercise on Thursday. We are determined to ensure that the assets are used for the benefit of the local economy. I hope that the hon. Lady will come to that meeting so that she can understand that.

[Richard Burden]

The Minister has talked about confidence and about unlocking and levering in investment from the private sector. Does he not accept that the performance of the RGF is important in maintaining confidence? Let me give him an example. As far as Longbridge is concerned, it is difficult to get the confidence from the private sector to unlock investment when the Government are not clear about what is going on. We can only point for so long to the investment that the previous Labour Government made by way of a new college and a new innovation centre. The private sector wants to know whether this Government back the Longbridge project as well. It really needs answers pretty soon.

[Mr Prisk]

After the dithering by the Labour party over Longbridge and that site, the hon. Gentleman should be a little careful about what he says. We made the situation crystal clear to the owners, the local enterprise partnership and the city council. Those discussions are in hand, and I am confident that they will be concluded successfully.

[Jason McCartney]

I thank the Minister for coming to the royal armouries in Leeds just a few weeks ago to speak to the Leeds city region LEP. Some 600 energetic, enthusiastic and positive business leaders are really moving forward with this. I take on board his point about business confidence. Camira Fabrics, Thornton & Ross Pharmaceuticals, Newsholme Food Group and Equi-Trek horse boxes in my patch are all going out there and making it happen. Does the Minister not agree that the regional growth fund is just part of the package for growth? We also have the enterprise zones, the LEPs and 450,000 apprenticeships; that is up 50%. Yesterday, a young entrepreneur got in contact with me about the enterprise allowance. The regional growth fund is just part of our package, while the Opposition only have an unfunded cut in VAT.

[Mr Prisk]

I could not have put it better myself.

[Mr Marsden]

Oh, yes, you could.

--- Later in debate ---

[Mr Prisk]

I am grateful to the hon. Gentleman for that flattering remark. May I return to the issue of due diligence? The Opposition tell us that the situation is disgraceful and has been going on for months and months. The reality is that the average time for due diligence is three to six weeks. That contrasts sharply with the performance of the Labour party when in government. It established the automotive assistance programme. It took 15 months for that to deliver a single penny. Why will the Opposition not accept their own failings?

Take the trade credit insurance scheme, which was launched as a £5 billion package. Thousands of people were supposed to benefit from it. In the end, one company benefited, at a cost of £81,500. When the Opposition talk about due diligence, they need to be a little careful about how they make their arguments. In particular, they should be careful about the reference to allegations in newspapers concerning individuals. The hon. Member for Rochdale (Simon Danczuk) referred to allegations about one of the panel members, Mr Moulton. Let me make it clear that Mr Moulton took no part in decisions on any areas in which he had an interest, and that includes in the decision on Redx.

Let me turn to the second round. That round has improved in leverage on the first round. It is not £5 of private money to £1, but £6 to £1. When we look at the scheme as a whole, we will see that a third of a million jobs are being safeguarded, and £8.5 billion is being levered in from the private sector to help many of the jobs and businesses to which many hon. Members have referred. I hope that the Labour party can look, just for once, at the facts rather than engaging in cheap point-scoring. This is an important debate. We all want jobs to be created; I hope that Labour will share in that debate.