Department for Business, Innovation and Skills Office: Sheffield

Nick Clegg Excerpts

Wednesday 24th February 2016 Westminster Hall

[Mr Nick Clegg (Sheffield, Hallam) (LD)]

I am grateful for the opportunity to voice my dismay at this decision. I thank the right hon. Member for Rother Valley (Kevin Barron) for securing this debate.

As the Minister knows very well, I am the last person to object automatically to decisions relating to savings in public spending. In fact, I spent half a decade defending decisions for which many hon. Members developed a political cottage industry of blaming me personally—[Interruption.] They nod as sanctimoniously now as they condemned me then. That’s history, as we say, but that gives me a certain credibility when I claim that I look at this decision with a degree of objectivity. The political subjectivity, of course, comes from the fact that a number of my constituents in south-west Sheffield have been directly affected by it.

All of this stems from the BIS departmental settlement with the Treasury in the spending review in late November 2015. That is the origin of the decision. I want to dwell on why the decision was made in the way that it was, why the Treasury delivered cuts to BIS on such a scale, and why they cascaded down to have such a disastrous effect on Sheffield and the many dozens of BIS employees in the Sheffield office.

I thought to myself, “Perhaps it is because the new Government decided to protect more non-BIS Departments in Whitehall.” In other words, perhaps the knock-on effect—the budgetary pressure—on BIS is more remorseless than it was during the five years in which I was Deputy Prime Minister. During that time, we fought to defend a number of BIS programmes, notwithstanding a number of very controversial BIS financial savings. Actually, on closer scrutiny, I found that, far from there being additional protections, some of the protections have been relaxed. For instance, under the coalition Government, and at my personal insistence, schools spending was protected in real terms. It is now not protected in real terms under this Government. There is no wider Whitehall reason why the knock-on effect on the BIS budget should be so much greater than it was in the past.

Then I thought to myself, “Perhaps, to be very fair, this difficult decision can be justified if savings are made”—although I very much tend to agree with what was said earlier. I find it difficult to see any significant material savings from this decision, but let us give the Government the benefit of the doubt. If there are savings, perhaps they are being channelled elsewhere to protect some of the other important BIS initiatives and projects. But no, I discovered that it is part of a much wider cull. In the wider context of the other things that have been scrapped—the Business Growth Service, the Manufacturing Advice Service and the growth accelerator programme—it is more, rather than less, inexplicable. In other words, the savings in that area of the BIS budget are not being recycled to protect other areas.

I looked at the figures, which are, as ever—now that I no longer have the excellent help of legions of civil servants—quite difficult to get hold of. The figures that I was able to get hold of from the Institute for Fiscal Studies and the House of Commons Library show something very revealing indeed. Under the Government of 2010 to 2015, the reductions in the BIS budget, when compared with other Whitehall Departments, put it about mid-table. Some Departments had more generous settlements and roughly the same number had more reductions. The reduction, which was very significant and led, for instance, to some of those agonising decisions on higher education spending, was just over 18%, according to the Institute for Fiscal Studies. In cash terms it was well below a £4 billion saving.

In the latest league table showing where, in the Whitehall jungle, money has been saved in the greatest amounts following the Chancellor’s announcement in late November, BIS leaps from mid-table to the position of having the second-largest cut. The cut of 18% under the previous Government has shot up to 26%, well over £4 billion. My central assertion is that that is a choice—not an inescapable guillotine. Perhaps I may say gently but firmly to the hon. Member for Sheffield Central (Paul Blomfield), who has done a great job of highlighting the injustice of the decision, that he was very unfair to point the finger at the permanent secretary. The decision was a political choice by the Secretary of State for Business, Innovation and Skills, who was keen to be top of the class in the Chancellor’s Whitehall fan club by delivering the earliest and biggest savings—in my view, excessive savings—to the Treasury when, as I found out over five years, Whitehall Departments are asked, as in a game of pass-the-parcel, to make savings.

That is why I ask the Minister to confirm that the genesis of what is happening was a political decision—not by him but by the Secretary of State—to do more than his duty to the Chancellor, and to deliver such big cuts from BIS that it shot from the middle to second from top of the Whitehall table. The decision was unnecessary and did great damage to a number of other important BIS programmes. It is now doing considerable damage to the livelihoods, families and fortunes of hundreds of people in Sheffield and South Yorkshire.

--- Later in debate ---

[Joseph Johnson]

I will make a bit of progress, if I may.

We are certain that that footprint, and our BIS local capability in particular, will ensure that BIS will maintain a nationwide perspective on policy issues. The hon. Gentleman who just tried to intervene—I am responding to his earlier intervention—was concerned about our ability to maintain policy capability in the light of the expertise that resides in Sheffield. As I said, there will be opportunities for people from Sheffield to move to London and other places, and we are confident that we will be able to maintain the high quality of work in the higher education and other policy directorates.

As the Minister for Universities and Science, since last May I have been working closely with higher education officials in Sheffield, and I am very happy with the work that they have done. They have consistently provided excellent support, and I want to thank them very much for their work. I reiterate that the Department’s decision was not taken lightly, but I am confident that our higher education policy making capability will remain as strong as ever.

In response to the points made by the hon. Member for Sheffield, Heeley (Louise Haigh) on the northern powerhouse, the Government are completely committed to Sheffield and its surrounding area as part of the northern powerhouse. The Department for Business, Innovation and Skills, along with the Department for Communities and Local Government, has been working closely with the local council and the local enterprise partnership to produce an enhanced, landmark devolution deal, which will see a Sheffield city region mayor elected for the first time next year by voters across South Yorkshire. The mayor will have transport budgets, franchised bus services and strategic planning, plus additional devolved powers for the area’s combined authority. The mayor will also get control of an investment fund worth £30 million a year for 30 years.

[Mr Clegg]

I have a really friendly suggestion for how the Minister can honour the stirring rhetoric about the Government’s commitment to the northern powerhouse and to the long-term vibrancy of the Sheffield economy in particular. Will he undertake to all of us here now that he will personally make representations to the Secretary of State for Transport, the Chancellor and, if necessary, the Prime Minister to locate the high-speed railway station due to be located in South Yorkshire in—

[Kevin Barron]

Meadowhall.

[Mr Clegg]

—no, not in Meadowhall, but in Sheffield city centre? The northern powerhouse is built around the vibrancy of city centres. Ignore the cacophony of different voices from the Labour party in South Yorkshire and locate the station there and, not all, but quite a lot will be forgiven.

[Joseph Johnson]

I am grateful to the right hon. Gentleman for raising an important point about the new transport connections that will improve the competitiveness of businesses in the north of England and the northern powerhouse area. That highlights the important point that, first of all, the northern powerhouse is about stimulating private sector growth, jobs and economic activity. It is not about preserving in aspic exactly the way things are across the whole of the state and the public sector—that is not what the northern powerhouse is about as an idea. It is about building better transport links, for instance through the creation of the Transport for the North body, and investing in things such as our science base, which we are now able to do thanks to the great science settlement we got in the spending review, which will help great institutions such as the Sir Henry Royce Institute, the Institute for Ageing in Newcastle and the National Graphene Institute in Manchester, which have all been able to come into existence in the north and help to drive productivity up in the area.