Thames Valley, Berkshire

Michael Fallon Excerpts

Thursday 1st May 2014 Commons Chamber

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I congratulate my hon. Friend the Member for Reading West (Alok Sharma) on securing this debate. This is an opportune time to talk about what the Government are doing to support local growth. In the UK economy as a whole, the Thames valley, Berkshire area is an economic powerhouse. It has a gross value added of some £30 billion, approximately 2% of the UK total. It is a place where small businesses are thriving. Business start-up rates are high—the 5,010 new enterprises formed in 2012 now represent 12% of the area’s businesses—and survival rates are higher in the Thames valley than those for England as a whole.

It is not just about small businesses: major companies also know that this is an efficient, connected place to be doing business. The area has the most advanced sub-regional knowledge economy in the UK outside inner London, and the highest proportion of foreign-owned businesses across all the local enterprise partnership areas. It enjoys a higher employment rate than the south-east and England overall, and the number of people claiming jobseeker’s allowance is low. So this is a place that is working now, and creating more new opportunities every day. Just because the area is doing well, it does not mean this Government do not want it to do better. That is why the area is benefiting and will benefit from the full range of this Government’s local growth policies: a city deal, the Growing Places fund and, soon I hope, the area’s growth deal, to which my hon. Friend referred.

The area’s city deal, signed in October 2013, centres around giving Berkshire’s young people the skills they need to access local job opportunities and helping local businesses to get the work force they need to support their growth. Some £2.4 million from the Youth Contract is being invested to boost youth employment, and that will support 4,500 young people over the next three years by providing a single access point to employment and skills opportunities for all 16 to 24-year-olds across the Thames Valley, Berkshire area, tailored to what they need to find a job. In practical terms that means addressing the skills gap and working with businesses to increase the range of opportunities available, and a key part of that is developing better pathways into work through agencies working better and more collaboratively. That will be underpinned by an innovative new mobile web platform—Elevate Me—funded by O2 and developed with young people themselves. On the business support side of the deal, Thames Valley, Berkshire recently secured £1.23 million of business growth fund money to support the development of its business growth hub. The hub will provide support and advice to small and medium-sized enterprises right across the area, providing a one-stop shop of business services to drive growth.

Overall, the city deal aims to deliver a 50% reduction in youth unemployment within three years. That is already heading in the right direction, with the number of 16 to 24-year-olds claiming jobseeker’s allowance down from 3,305 in May 2010 to 1,700 now, but of course there is still more to do. Trialling new, innovative approaches to find local solutions to local problems such as youth unemployment is exactly what city deals are about. Everybody will feel the benefits, from young people playing their full part in a prosperous economy to businesses looking to expand.

Let me deal with the transport issue and the Growing Places fund. The area has received £14 million from that fund. The local enterprise partnership has allocated £7.3 million of that to a new SME escalator fund, specifically responding to the concerns of local small businesses about access to finance by investing in SMEs that have varying investment needs and those that have the potential to deliver substantial growth across the area. SMEs are the linchpin of the area’s economy, and this is exactly what the Government want to see: local partners identifying a need and seeking to address it with targeted support.

The connectivity of the area is vital to growth, and the Government’s investment in transport infrastructure reflects that, too. Public investment of more than £800 million will double passenger capacity at Reading station by 2015—that includes some £425 million of Government funding for station and platform remodelling, as my hon. Friend recognised. There is £375 million of Network Rail funding to deliver track and signalling works, and of course some £4.3 billion has been allocated for electrification of the Great Western line as far as Newbury, Didcot and Oxford by 2016, and then on to Wales by 2017. That money will also fund the introduction of 100 new electric trains and bi-mode inter-city trains.

Continued investment in local infrastructure is crucial to the long-term success of Thames Valley, Berkshire. I recall the hon. Member for Slough (Fiona Mactaggart) impressing on me the importance of the airport link when I visited the Mars facility in one of my earliest days as a business Minister. I also know that the area has strong views about the importance of Heathrow expansion. I was pleased to see the interim report published in December, which is a significant step forward in the commission’s work in assessing options for meeting the international aviation needs of our country, and we will respond to the report by June. In the meantime, I note what my hon. Friend and the hon. Lady have said, and what has been said earlier about the need for a third runway and, indeed, a fourth runway. I will of course be contributing to that response later in the summer.

Let me end by looking briefly to the future and the potential of the local growth fund, about which my hon. Friend has asked me some detailed questions. We have committed to giving local enterprise partnerships, including Thames Valley, Berkshire, both the funding and the freedoms that they need to deliver growth, putting power into the hands of those who know what the area really needs. We have already challenged them to set local strategies for spending the £5.3 billion European structural and investment funding between 2014 and 2020. That is a challenge they have already met, and now we are going further, by negotiating a growth deal for 2015-16 with every area in England.

That deal will give Thames Valley, Berkshire a share of the total £2 billion annual local growth fund to spend on local projects that it has prioritised, such as transport infrastructure and further education capital projects. Like others, Thames Valley, Berkshire is also negotiating with Government for the wider freedoms and flexibilities that it needs to encourage growth.

As far as the specific plan submitted is concerned, Thames Valley, Berkshire submitted its six-year strategic economic plan to the Government in March. That plan places a strong and welcome emphasis on international competitiveness and the need to keep pace with major international competitors. It also highlights, quite rightly, the area’s high-tech sector strengths, referring to the locality as “tech valley”, and the science, technology, engineering and maths skills that are needed to maintain that position. In this context the overarching priority of the LEP is to secure better access for its businesses to talented people and bright ideas, and to use both human and intellectual capital more effectively. The LEP anticipates that its plan will deliver higher economic output, amounting to around £700 million by 2020.

Those are worthy, well set out and important aims. I cannot predict the outcome of the negotiations that are now under way. As my hon. Friend will know, the process is highly competitive. The fund that is available is approximately three to four times over-subscribed by the 39 local enterprise partnerships. What I can say is that the most successful partnerships—those that will earn a greater share of the local growth fund—are those that will have strong, deliverable strategic economic plans that are evidenced by strong partnership working, robust arrangements for accountability, and effective collaboration across local enterprise partnership geography.

My hon. Friend the Member for Reading West quite reasonably asked me four specific questions, so let me now try to answer them. He asked about the timetable. Following negotiations, we hope to get every local enterprise partnership in the best possible position for the deal. The final decision will then be taken by Ministers and the partnerships will be informed about the allocation. I expect that we will be in a position to make those announcements in early July. That deals with his two questions on the timetable.

My hon. Friend asked whether the decisions will be made on a value-for-money metric. The allocations will be made on an assessment of each strategic economic plan and based overall on the criteria we have published in our growth deal guidance. Those criteria include value for money but they also include the ambition and rationale of the plan and the deliverability and degree of risk that lie behind it. Value for money is certainly one of the key criteria but it is not the only criterion on which the plans will be judged.

Finally, my hon. Friend asked me whether local enterprise partnerships will be required to provide further information before the final decision. We are seeking clarification from a number of the local enterprise partnerships as part of the negotiating process and I do not think that he should read anything sinister or benevolent into that. This is a negotiation. It is a deal between the Government and the local enterprise partnerships and there are a number of aspects on which we are requiring further information from individual local enterprise partnerships. As I have said, the growth deal for Thames Valley, Berkshire will be announced before the summer recess and the focus will then move to gearing up for delivery.

In conclusion, we attach great importance to the Thames Valley, Berkshire economy. It is a key part of the UK economy and its wealth creation. We are committed to giving areas such as Thames Valley, Berkshire the funding and the freedom they need to maintain their leading position in the UK economy and I hope that my hon. Friend will welcome the announcement that we are due to make in July.

Question put and agreed to.