Department for Business, Innovation and Skills (Performance)

Pat McFadden Excerpts

Wednesday 2nd February 2011 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

We should begin the debate by considering, as the motion asks us to do, the role of the Department for Business, Innovation and Skills. It has in recent years become a major spending Department, with the stewardship of universities and further education colleges. It is different from other Departments in that, uniquely, it stands on the boundary of the public and private sectors. Its job is to sell Britain abroad as a great location for doing business, and to help UK businesses to penetrate foreign markets. It is also, of course, the key location for business and employees to come to Government with business-related issues. It is, as the Secretary of State has described, the Department for growth—or it should be.

How Government achieve that growth—the role of Government in helping to foster growth—is what divides the House. There are those on the Government Benches, including the Secretary of State, who is no longer in his place, who previously called for the Department to be abolished, and who thought that there was no role for Government to play in fostering growth, apart from getting out of the way. That is not our view; we believe that there is an important and active role in fostering growth.

I take issue with one of the arguments that the Secretary of State has deployed time after time since the election—that the actions taken by the present Government would have been taken by Labour because we were committed to the same level of cuts. It is not true. The Government have launched a programme of cuts which is tens of billions of pounds more than anything that was being planned by the Labour Government, and he cannot continue to rest on that argument.

[Mr Brian Binley (Northampton South) (Con)]

I am grateful to the right hon. Gentleman for giving way. He is always very kind in these matters. If he knew the plans of the previous Government, having been a member of the previous Government, will he explain them to us in order that we can understand how the deficit would have been met?

[Mr McFadden]

If the hon. Gentleman casts his mind back a little more than a year to the pre-Budget report, he will find that cuts in spending were set out by the Department while I was a Minister there. He simply needs to read the pre-Budget report.

I admit that over time during the Labour Government our view on the Department’s role shifted. In the early days we were, perhaps, too reluctant to intervene in markets, but we got to the point where we were playing a much more active role and co-ordinating activity across Whitehall on key industrial and employment opportunities.

For example, with the Department of Energy and Climate Change, we produced the low carbon industrial strategy to achieve the most for UK industry out of the shift to low carbon power generation. On transport, we worked with the Department for Transport on an ultra-low-carbon vehicle strategy. In other words, the Department for Business, Innovation and Skills played a leading and co-ordinating role to take advantage of the industrial and employment opportunities of the future. That is what we were doing to try to foster growth and employment.

[Alison McGovern]

As my right hon. Friend knows, Vauxhall Motors is close to the southern end of my constituency. Will he comment on the previous Government’s approach in setting the ground work for electric vehicles and ensuring that high-tech manufacturing, which is employing people in my constituency, is part of this country’s future and not part of our past?

[Mr McFadden]

My hon. Friend is right. The sad fact is that whereas we wanted to support General Motors in its plans for restructuring in Europe, by the time the current Government got round to making a decision on that, Vauxhall had decided to go away and sort out its own financing.

Let me turn to some of the issues that have arisen since the election. We could trade quotes from Sir Richard Lambert all day, so let us be candid about what he said last week. He said that he agreed with the Government on the deficit reduction strategy, but he thought that there was no wider vision for the economy and there was a danger that the Department was turning into a “talking shop”. That is a fair summary of Sir Richard Lambert’s speech.

[Jim Shannon]

Will the right hon. Gentleman give way?

[Mr McFadden]

I will not give way because I want to make progress.

What business wants is for the Department to be winning battles in Whitehall. That, sadly, has not been happening. The Department and the Government talk about rebalancing the economy. By that we mean rebalancing away from an excessive dependence on financial services and from excessive dependence on certain parts of the country. How, then, can the Government justify in their first Budget cutting some £2.8 billion in investment allowances to manufacturing industry? The corporation tax cut, which has been mentioned, adds up to a benefit of £2.7 billion. In other words, what has happened is that manufacturing industry is paying for a tax cut for the rest of the economy.

The Secretary of State referred to the decline in manufacturing as a proportion of output and of employment. What he did not mention was the fact that we were going through the biggest wave of globalisation in world economic history. He takes an entirely national view, when there was profound change going on in constituencies such as mine and other black country constituencies in manufacturing during that period.

The programme of grants for business investment has been responsible in the past six years for some £400 million of grants to small and medium-sized mostly manufacturing businesses. Fewer than one in five of the grants is more than £1 million. Those grants have supported some 1,800 projects, secured almost £4 billion in investment, and helped to secure almost 80,000 jobs. How on earth does abolishing that programme fit in with rhetoric about trying to rebalance the economy?

Further, those grants are specifically geared to the assisted areas—areas that need help most, such as my own in the west midlands. We met people from the Black Country local enterprise partnership a few days ago. I pay tribute to the business people in that area who have worked so hard to pull together the Black Country LEP. I reflect a fear and a concern, which I suspect are shared elsewhere. Despite the commitment of the business people, will they get the support that they need from the regional growth fund? That fund is grossly oversubscribed. If business has put in the effort but Government do not back those bids and projects, business will rightly feel let down, and my constituents will rightly feel let down by the prospectus that has been offered.

On trade and immigration, the Minister for Universities and Science is in his place. How does he feel that the soft power that is gained from the UK as a wonderful location to study will be affected by the new proposals on restricting the right to work of people who come here to study? How does that help us to sell Britain abroad as an attractive location for investment?

The truth is that business is concerned about the difference between commentary and delivery that we see in the current Department. That is the difference between opposition and government. The Secretary of State, having lost the battles over LEPs, where the Department for Communities and Local Government appears to be running the show, and over immigration policy, has been left to bet the farm on the banking commission. It is not even fully within his control. Business will want to see less commentary and more delivery in future.