Economic Development (Barnsley)

Norman Lamb Excerpts

Tuesday 7th February 2012 Westminster Hall

[Katy Clark (in the Chair)]

Has the Minister had notification that another hon. Member wishes to speak?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)]

No, but that is fine.

[Katy Clark (in the Chair)]

The normal convention would be for both the Minister and me to be informed, but that is not a problem in this case. I call Andrew Bingham.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)]

This is the second time in two days that I have served under your chairmanship, Ms Clark—too much of a good thing. I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing the debate. She spoke passionately about the area that she represents. She is right to say that it is stunningly beautiful. The image is often entirely inaccurate—the proud town that she talked about, and the surrounding area, has so much to commend it. Everyone, nationally and locally, should talk up the various regions of our country, particularly the region that she has spoken about today.

The hon. Lady spoke, rightly, about the challenges facing an area that has gone through a dramatic change with the loss of coal mining. As that industry was based in a rural area, it is difficult to rebuild the local economy. Governments of all complexions have faced those challenges. It is important for there to be room to debate how we should respond to those challenges, so I was delighted that the hon. Lady secured this debate.

Let me begin by dealing with the macro-economic context. The Government aim to achieve sustainable long-term economic growth to ensure that we rebalance the economy both geographically and in terms of business sectors. First, that means keeping interest rates low for longer and tackling the public sector deficit, which will be a continuing drag on capacity for growth unless we sort it out. Secondly, we need to invest in emerging technologies—the hon. Lady talked about the importance of renewable energy as a developing, emerging sector—but not rely on consumption to rebuild growth. We should be promoting innovation throughout the country, not just in the south-east, and also focusing—she mentioned UK Trade & Investment—on export potential and looking at what the regions that she and others who have spoken today represent can do to develop that potential.

Barnsley has a proud industrial heritage. Today, there are a number of key businesses in the borough, including the online fashion retailer ASOS and Fosters Bakery, to which the hon. Lady referred. Barnsley is making real progress in its transition from traditional coal mining and glass making to developing opportunities in new industries such as low-carbon, creative and the digital sectors. There are working environments for companies of all shapes and sizes, including the Digital Media Centre for creative and digital businesses; the Barnsley Business and Innovation Centre, which is spread over two sites and caters for a wide range of businesses; and a number of business centres and a broad range of industrial sites. Areas of Barnsley are also part of the enterprise zone within the Sheffield city region—I understand that it does not cover the town centre, but it does cover part of the council area.

The Enterprising Barnsley programme has helped to create more than 600 jobs and has protected almost 400 jobs since it was set up in 2009. By providing coaching support to companies it has supported 575 companies, which employ approximately 6,000 employees—nearly 10% of the borough’s total work force. Zebra Steel Fabrications, which makes architectural metalwork, has won several contracts in London close to the Olympic village site. AVQ Water Solutions has won contracts with South West Water that have enabled it to expand into new premises. Turnover is expected to increase threefold this year—a real local success story, which we should celebrate.

The “I Know I Can Barnsley Big Challenge 2011-12” competition is a borough-wide initiative that encourages young people between the ages of 11 and 19 to set up their own business in a supported environment, with the chance of receiving an initial £25 loan from a local entrepreneur, plus ongoing support, to help them develop their business idea to make money and to compete with other businesses for top honours. We should be encouraging those youngsters to become the entrepreneurs of the future. The hon. Lady was right to talk about the need to develop, in places such as Barnsley, a vibrant, diverse local economy—I think she used those words—and that depends on entrepreneurs coming through in future. Schemes such as that one should be applauded.

Barnsley market is important locally. I understand that negotiations are under way for the council to acquire the site so that regeneration can take place. It is important that that matter is concluded.

In terms of local growth, as a Government we recognise the need to enable areas like Barnsley to grow by providing the right framework, based on real, local economic areas. That is why we invited local businesses and civic leaders to establish their own local enterprise partnerships to help remove the barriers to local growth. The hon. Lady mentioned the importance of Government driving growth in places such as Barnsley, but there has to be a partnership. The Government have a critical role to play in setting the framework, but in a sense this Government’s approach is to enable and give the capacity to local areas to rebuild their economies themselves, with support from government. That is the right approach to take. This model is designed to give back to local communities a much greater say in their economic future, not least by bringing business and civic leaders together in a shared partnership.

The LEPs are leading the development of the 24 new enterprise zones, which will not only accelerate the creation of new business opportunities and jobs. The additional business rate revenue generated by enterprise zones will be retained locally to be spent across the whole area of an LEP, as it sees fit. We are working with LEPs that have a zone on additional options to suit local circumstances. We have agreed enhanced capital allowances for plant and machinery where there is a strong local focus on manufacturing, in areas such as Barnsley, for example, including for sites within the Sheffield city region enterprise zone. We are also working on tax-increment finance to boost the long-term viability of the area, as well as on support from UKTI for inward investment or trade opportunities. Even Barnsley town centre, which is not part of the enterprise zone, can share in the wider benefits from the nearby enterprise zone that I mentioned.

Barnsley is especially well placed to benefit from our approach, because we recognise its location and have agreed that it should be a full member of both the Leeds and Sheffield city region LEPs. Sheffield city region is, for example, focusing on growth in advanced manufacturing and technology. The hon. Lady will be aware that the Advanced Manufacturing Research Centre at the university of Sheffield was announced as one of seven partners in the Government’s first technology and innovation centres. This will focus on high-value manufacturing and includes partners of the calibre of Boeing and Rolls Royce. Sheffield city region is also looking to exploit the potential of creative, digital and low-carbon industries, which the hon. Lady mentioned, where there are real opportunities in Barnsley, such as the emerging eco-vision for the Dearne valley, which I understand is within the Sheffield enterprise zone.

The hon. Lady mentioned the feed-in tariffs court action that is under way. A genuine problem with the original design of the FIT scheme had to be resolved, but it is important that we do everything we can to promote the emergence of new technologies. The Government are already planning the green investment bank, which will help investment in renewable energies. There is, of course, also the green deal.

[Angela Smith]

I appreciate that the Government are establishing the green investment bank, which could be located in South Yorkshire if they were to really think about helping our local economy. The fundamental underlying point is that we still need demand in the economy if the local enterprise partnership is to deliver the success that the Minister is outlining as possible with these new arrangements.

What will the Government do to stimulate the demand that will feed the development and growth of new businesses in Barnsley?

[Norman Lamb]

In particular, export-led growth. There are enormous opportunities for companies in Barnsley and elsewhere to benefit from opportunities that have not, in the past, been properly exploited.

The hon. Lady mentioned funding opportunities. The Government’s approach to local economic development also includes several new funding streams in addition to the enterprise zone programme, including the regional growth fund and the growing places fund.

The regional growth fund is focused on creating private sector jobs—the sort of jobs that the hon. Lady mentioned in her introduction—which are so important for the future of Barnsley, which has in part, following the loss of the coal mining jobs, been over-reliant on public sector jobs. The first two rounds of the fund are well under way, with two thirds of projects from round one started, and a third of all projects are under way.

I challenge the hon. Lady’s view about the extent to which the RGF is leveraging private money. With roughly £6 of private money being unlocked for every £1 of public money spent, the regional growth fund is now starting to have a real impact and is expected to generate 325,000 jobs. That is an incredibly important contribution to rebuilding the economy. A sum of £1 million has been conditionally offered to a bid from Fosters Bakery to enable it to expand on to a site that will also house food innovation and an incubation centre, aiding wider growth. Road Tankers Northern, based in Barnsley, is set to benefit from the Leeds city region advanced manufacturing regional growth fund package. Things are happening in Barnsley as a result of the regional growth fund.

In the autumn statement we announced an additional £l billion for the regional growth fund for England, extending it into 2014-15 to provide ongoing support to grow the private sector. Details of the third round of the scheme will be announced shortly. Last year we announced the £500 million growing places fund investment to unblock stalled local infrastructure projects and stimulate further private sector investment.

I am pleased that local enterprise partnership allocations have now been confirmed. Sheffield city region will receive £12.5 million under this fund and Leeds city region will receive £24.5 million, and Barnsley will have access to both funds. That is important if we are going to unlock the potential for growth in the area.

Local areas are also making decisions on how to use their allocation, including by matching with other funding to create larger investment pots. I understand that initial expressions of interest have been submitted in Sheffield city region, with decisions on which projects to support in March. In Leeds city region a fund prospectus will be launched in the next weeks and the first successful projects will be confirmed in May or June. These are important developments to help in the Barnsley area.

The hon. Lady mentioned access to finance. There have been real problems for small businesses accessing the funding that they need. Project Merlin has led to increased lending to SMEs in this financial year compared with the last financial year, which is important. The British Banking Association has introduced a system that allows small businesses to appeal against decisions to turn down loan applications. Quite a significant percentage of those appeals are succeeding. I encourage small businesses, if they are turned down, to use the appeal system to challenge the decision that has been taken.

The Government are also doing what they can, through the enterprise finance guarantee, to facilitate additional bank lending to viable small and medium-sized businesses that lacked the security to secure a normal commercial loan. To date the fund has helped 14,700 businesses, underwriting more than £1.4 billion-worth of loans. But more needs to be done. The hon. Lady is right. The Independent Commission on Banking committee set out in its report last year:

“Local banks can provide a better quality of service to customers and hence our push for new entrants to the sector.”

That is an important initiative. This approach is proving successful, with Metro, Virgin and Silicon Valley banks all having recently entered the sector. There needs to be more competition in banking.

The Government share the hon. Lady’s desire to see Barnsley flourish, along with the rest of the country, which is why we are going all-out to create a business environment that will give companies the confidence to invest and grow. Local communities are being freed from central control so that they can help determine their own economic future.