Oral Answers to Questions

Pat McFadden Excerpts

Thursday 31st March 2011 Commons Chamber

[Mr Prisk]

Solar power is important and I am well aware that it is of paramount importance in Cornwall. We are working with our ministerial colleagues, but I would welcome any contribution from my hon. Friend.

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

We are about to enter a new financial year, so will the Minister take the opportunity to reconsider the Government’s denial of the loan to Sheffield Forgemasters that the Labour Government planned to boost our position in civil nuclear trade? More broadly, will he confirm that the Government are still committed to a new generation of nuclear power stations, given the awful unfolding tragedy in Japan and the comments made by the Deputy Prime Minister to journalists?

[Mr Prisk]

Our commitment is clear and the right hon. Gentleman knows exactly where the Government stand. We have debated the question of affordability and Sheffield Forgemasters before, but I would say to the right hon. Gentleman and to Labour Members that we have the regional growth fund and we have worked with a range of businesses, including the business to which he refers, and we are happy to ensure that they have the chance to bid for that money as that part of the fund develops.

Oral Answers to Questions

Pat McFadden Excerpts

Thursday 17th February 2011 Commons Chamber

[Mr Hayes]

We are committing substantial funds to apprenticeships and, indeed, those funds will be targeted at the firms that most need support to take on apprentices and build their skills. My hon. Friend is right to say that these are tough times, but we are always open to proposals made by this House and representative bodies of the kind that he describes.

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

I am sure that the House will welcome the emphasis on apprenticeships, which shows the Government carrying on the work that we did. However, does the Minister not think it is shocking that, in figures given to me this morning by his colleague the Secretary of State, the Government have confirmed the true picture that there will be 529,000 fewer adult learners being funded by the Government in two years’ time? Does not that show that the emphasis on apprenticeships is being paid for by cutting opportunity elsewhere? How does that prepare people for today’s labour market?

[Mr Hayes]

The right hon. Gentleman speaks of opportunity, but it was Baroness Thatcher who said that if your only opportunity is to be equal, you have no opportunity. What he and his colleagues left us with was a dull, egalitarian mediocrity. We are going to drive up standards and skills, and drive growth and prosperity.

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.

Oral Answers to Questions

Pat McFadden Excerpts

Thursday 13th January 2011 Commons Chamber

[Vince Cable]

My hon. Friend is absolutely right. That is a massive sector of the UK economy and it makes a major positive contribution. It is unfortunate, in a way, that its reputation has been so damaged by activities in a handful of banks.

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

The Secretary of State has been right to say that as long as the taxpayer acts as a guarantor of the banking industry, the Government have a legitimate interest in remuneration, specifically in banks in which the state has a large stake. Will he therefore tell the House what he and the Chancellor mean when they say that no option will be taken off the table if the bonus round is not agreed to the Government’s satisfaction? In other words, what specific actions will the Government take if they are not satisfied with the outcome of the bonus round?

[Vince Cable]

The right hon. Gentleman poses the problem absolutely correctly. The reason why bonuses are an issue—they are not one to anything like the same degree in other industries—is that some banks are publicly owned and others are guaranteed. The remedy lies in the work of the Independent Commission on Banking, which reported last year on issues such as generating competition and the possible break-up of particular institutions.

Financial Support (Students)

Pat McFadden Excerpts

Wednesday 15th December 2010 Westminster Hall

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

My hon. Friend is right to say that the Government have based their whole case for withdrawing EMA on the research that she mentioned. The Minister will base his case on that research, saying that only a minority of students say that they would not have pursued any course at all if they had not received EMA, but that is not the sole point, is it? Surely the point is the level of sacrifice that families will have to make so that their young people can pursue education.

Does the Minister accept that if he withdraws EMA, even from those students who say that they would proceed with a course, the sacrifice that families have to make will be increased, particularly among those who need the help most—students with learning disabilities, teen parents and those from the poorest families? Does he really want to pursue that policy?

[Katy Clark (in the Chair)]

Order. Can I remind hon. Members that interventions should be short?

Oral Answers to Questions

Pat McFadden Excerpts

Thursday 18th November 2010 Commons Chamber

[Mr Prisk]

I entirely agree with my hon. Friend about the need to avoid a hiatus. That is why we are already actively engaged in enabling LEPs to begin their work long before the RDAs finally close in 2012.

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

As the Minister said, 24 bids were approved, but bids for many areas of the country, including for the black country, were not approved. Local enterprise partnerships will not have the same resources as the RDAs, which are currently spending about £1.5 billion a year in England. How are local enterprise partnerships supposed to help to rebalance the economy if they do not have the resources? Surely setting up these organisations and asking business to lead them is letting those business people down if the Government do not play their part and give them the resources they need to do the job.

[Mr Prisk]

We are in negotiations with the black country, and I hope that there will be a positive outcome, but the point of the partnerships is to remove the local barriers to growth and ensure that planning in local areas is addressed, that red tape is tackled and that local transport projects are dealt with jointly by business and civic leaders. That is what LEPs can do. It is not all about subsidies; it is about real action on the ground.

Funding and Schools Reform

Pat McFadden Excerpts

Wednesday 17th November 2010 Commons Chamber

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

My right hon. Friend mentioned the record of higher standards under the Labour Government. Like me, I am sure that he welcomes the fact that young people from the poorest areas are 30% more likely to go on to higher education than they were five years ago. Does he agree that not only higher standards but education maintenance allowances played a significant role in encouraging people to stay on at school, perhaps for the first time in a family? What will be the effect of the Government’s plans to abolish education maintenance allowances?

[Andy Burnham]

I am glad that my right hon. Friend raises that issue. I will spend a moment on EMAs. As we heard at education questions on Monday, the EMA is the subject of huge concern among Labour Members. It is feared that it will be pared back or, worse, taken away.

The Secretary of State is good with words and is good at making big commitments, but I want to see some follow-through—I want him to stand by what he says. Young people will look to what he or I say, so that they can have trust in politics and in this place. In an interview in The Guardian on 2 March—just before the election—he said:

“Ed Balls keeps saying that we are committed to scrapping the EMA. I have never said this. We won't.”

--- Later in debate ---

[Michael Gove]

Later.

The right hon. Member for Leigh (Andy Burnham) asked whether I played poker. I have to confess that when I was growing up and learning card games, poker was somewhat frowned upon at the Kirk socials that I attended, although we did play the odd game of knockout whist. One of the things that I learned in card games is that one has to play the hand that one is dealt. What was the hand that we were dealt by the right hon. Gentleman and his colleagues? Credit agencies ready to downgrade our debt; a £150 billion deficit; and a letter, left by the former Chief Secretary to the Treasury, saying that there is no money left. I know that that is painful for Opposition Members to hear, but it is even more painful for the people in our school system who have been let down by the profligacy, arrogance and extravagance of a party that still does not have the humility to say sorry for debauching our finances.

[Mr McFadden]

The Secretary of State mentioned the academy programme. I am a supporter of the academy programme that the Labour Government introduced. It gave hope and higher standards to children who had not been given the opportunities that they deserved under what went before. Earlier this year, he issued his list, which said that the Building Schools for the Future programme in the city that I represent would be unaffected by the changes, and that programme includes two city academies, one of which is in my constituency. However, they are now being told that there will be a cut in that programme of up to 40%. How can he say that the programme is unaffected and that that will not have an impact on opportunity for those children who need it most?

[Michael Gove]

I am grateful to the right hon. Gentleman, for whom I have a great deal of respect. He was a very good Minister, and it is a pity that he is not on the Opposition Front Bench now. I absolutely share his commitment to improving academy provision, not just in the west midlands, but across the country. I can reassure him that all those schools that were recorded as being unaffected will have their building work backed. The money will be there, but we have a duty, to both the taxpayer and those schools, to ensure that when we negotiate with the contractors—with the private sector—we get the best possible value for money. The more money we can save in our negotiations with contractors, the more we can invest in education elsewhere to ensure that the many, many school buildings that are in a state of dilapidation and extreme need receive additional support. I know that the right hon. Gentleman—when he was a Minister, he always sought to secure value for money for taxpayers—will appreciate that that tough negotiation on behalf of the public is exactly what a responsible Government should do.

Hon. Members know that education standards should not just be measured against the past. Countries across the globe are improving relative to the past. We need to measure ourselves against the best in the world. As my hon. Friend the Member for Hexham (Guy Opperman) said, the grim truth is that the statistics produced by the OECD show that over the past 10 years, educational standards in this country, relative to other nations, have fallen. We have moved from being fourth in the world for the quality of our science education to 14th, from seventh in the world for the quality of literacy to 17th, and from eighth in the world for the quality of mathematics to 24th. Those are facts that we cannot deny. At the same time as we have fallen behind other countries, the gap between rich and poor, as my hon. Friend the Member for Brigg and Goole (Andrew Percy) said, has grown wider.

In the last year for which we have figures, the number of children who were eligible for free school meals, bearing in mind that every year 600,000 children attend state schools, was 80,000, of whom just 45 made it to Oxbridge—[Interruption.]. It is absolutely the measure. The right hon. Member for Leigh might not like to hear it, but on his and his Government’s, watch the poorest children were denied opportunity. He made it to Cambridge; why should not more children from poor homes make it to Cambridge and Oxford? Why do children from Westminster, St Paul’s, Eton and such bastions of privilege make it to Oxford and Cambridge but not our poorest children in state schools? This Government—the Conservative party and the Liberal Democrats united together—are at last investing in social justice, and I hope that the right hon. Gentleman will acknowledge that that figure is a scandal and that at last the investment is going in to secure reform.

Oral Answers to Questions

Pat McFadden Excerpts

Thursday 8th July 2010 Commons Chamber

[Mr Prisk]

Indeed we are, and our plans include the changes to corporation tax that mean that manufacturing industry is better off by £250 million, the reduction of the burden of red tape and the removal of many regulators, and the £150 million that has been set aside to fund up to 50,000 more apprentices. The Government’s stronger long-term approach contrasts with the pick ‘n’ mix tactics and the tinkering and meddling that we had from the last Labour Government.

I remind the House that manufacturing investment declined in 10 of the last 11 years. That is the record of the Labour Government, and Labour Members should be ashamed of it.

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

I want to return to the issue of capital allowances. The Minister and the Secretary of State have said that they want to rebalance the economy, but the Budget proceeded with plans to cut £3.1 billion from capital allowances and the investment allowance by 2013. The IFS has said that

“cutting capital allowances is not a good way to raise money because they are an efficient way to promote investment”.

In addition, the Engineering Employers Federation has said that the cuts

“make the investment needed to rebalance the economy more expensive”.

Labour’s Budget in March doubled the investment allowance for manufacturers, but this Government have cut that by 75%. We are all saying that we want to rebalance the economy, so how can the Minister justify these cuts of £3 billion a year in our support for manufacturers?

[Mr Prisk]

As I told the hon. Member for Glasgow North East (Mr Bain) earlier, the net balance is that manufacturing will be £250 million better off. That is the point. The right hon. Gentleman refers to the annual investment allowances but, even after these reforms take effect, the vast majority of businesses—over 90%—will still have all their investment costs covered by the Association of International Accountants. The key point is that the record of the Labour party is one in which manufacturing investment declined in 10 years of 11. We are changing that environment by taking the long-term approach. Is the hon. Gentleman proud of his record of investment down and jobs cut? Is he proud of that?

--- Later in debate ---

[Vince Cable]

I do share my hon. Friend’s concerns. As she knows, the decision originated last June with the Payments Council, which is an independent body. The decision was based on the fact that there had been a dramatic fall in cheque use, from 11 million a day in 1990 to 3.5 million. However, the Government recognise that there are large numbers of individuals, small companies and charities for whom the cheque is an extremely important way of making transactions. The Payments Council is an independent body, but we are trying to ensure that it has alternatives in place, so that people are not greatly disadvantaged by the change.

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

May I ask the Secretary of State about an important area for consumers and businesses—the future of mobile broadband internet? As he will know, it is growing exponentially, and is hugely important for consumers and businesses. Will the Government therefore put an end to the uncertainty on the issue that has been created since the election, and proceed with the statutory instrument on the planned future spectrum option, which can make the sector grow in the UK? That measure, which was put together by the Labour Government, would have ensured fair competition through caps on the amount of spectrum that could be bought by a single operator. There has been great uncertainty on the issue since the election. Do the Government accept that it would be wrong to have that option in place in a way that squeezed out competition, and will they therefore set out their plans?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Vaizey)]

We are looking carefully at this issue, holding regular discussions with the mobile phone operators and involving other Departments and regulators. The right hon. Gentleman is quite right. Getting the issue sorted is an absolute priority for us, and we hope to make an announcement before the end of the summer recess.

--- Later in debate ---

[Mr Hayes]

I can see that I will be busy travelling the whole country. Of course I will—WorldSkills matters and celebrates success; there was cross-party agreement about that. I will support the event in his constituency and WorldSkills more generally.

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

On a point of order, Mr Speaker.

[Mr Speaker]

Order. The answer to the right hon. Gentleman is that points of order follow statements. [Interruption.] Order. Somebody chuntered from a sedentary position that there was a point of order earlier. The hon. Member for Rhondda (Chris Bryant) is a considerable authority on these matters and knows perfectly well—it is helpful for me to explain this to the House—that one circumstance in which a point of order can come before a statement is when, in respect of a particular question, a Member is so dissatisfied with the answer that he or she signals an intention to raise the matter on the Adjournment. I explain that both for the benefit of the House and for those outside who are unaware of such matters.

Building a High-Skilled Economy

Pat McFadden Excerpts

Thursday 17th June 2010 Commons Chamber

[Mr Davey]

Of course that is true of many modern economies, but I think it ill behoves the Labour party to criticise this Government in their early days, given that its own approach to manufacturing industry was not to turn the tide and go against the trend.

Although we have a huge amount in common, when Labour Members talk about the skills agenda they sometimes forget some of the record of which they should be less proud. I am thinking particularly of the quangocracy that grew up around the skills agenda. There is currently a patchwork quilt of quangos involved in that agenda. Members may be interested to learn how the position has changed. In government, the Labour party did not just create the existing quangos, but created quangos, abolished them and created new ones, all within 13 years. The fact that that instability and reinvention happened time after time shows that the Labour Government never really had a true vision. They constantly spent large amounts on new quangos while failing to get some of that money to the grass roots—to our communities. A lot of money was wasted then.

When the last Government set up the Learning and Skills Council, I was sent strategy after strategy by that august body. At first I thought that I had a real duty to read every single page, but when I visited the LSC and talked to its representatives, I realised that most of those strategies would never come to anything. I am afraid that that happened time and again. Huge amounts were spent on quangos, reports and consultancy, but less money went to the companies and learners who needed it. We believe that the need to rationalise the quangocracy in learning and skills is a key issue, and we will deal with it. We will do so while also having to look at the spending issues in this area, and there will be huge challenges. I do not think there is anyone in this House or involved in FE, HE or the education system in general who does not realise that we face difficult choices in this area, but we are absolutely clear that we will do our best with the money that we have got into apprenticeships and into the capital programme for FE to ensure that the priorities get the funding they deserve.

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

As the hon. Gentleman has mentioned apprenticeships again, can he tell the House whether, in the 12 months he is talking about, if we take together what he and his colleagues are proposing on Train to Gain and apprenticeships, more learners will be funded by the Government or fewer?

[Mr Davey]

That is interesting. We have to compare that with what the previous Government were planning. When we looked at the funding issues facing us, and the very difficult choices, we saw that the previous Government were planning £340 million of cuts in adult further education and skills this year. That is actually happening this year, and I hope the colleges and students—and the employers—who are having to deal with the financial situation imposed by the cuts realise that the people who are to blame for that are sitting on the Opposition Benches.

Industry (Government Support)

Pat McFadden Excerpts

Wednesday 16th June 2010 Commons Chamber

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

I beg to move,

That this House notes the need for a clear deficit reduction plan, and that such a plan must have at its heart measures to foster growth and create the conditions for a strong business-led recovery; believes Government has a crucial role to play in fostering economic growth and in creating a better-balanced economy; supports strategic decisions to back key sectors such as digital, life sciences, low carbon manufacturing and civil nuclear power; congratulates the previous Government for supporting businesses through the downturn and laying the foundations for the UK to be globally competitive as the country makes the transition to a low carbon economy; expresses serious concern that the Government’s decisions risk removing key support for business and industry at a critical moment in the economic cycle; further believes that cutting investment allowances will pull away vital support for manufacturers seeking to invest and grow; further notes that the Government’s scaling back of the regional development agencies at a time when recovery is fragile will impact on investment vital for regional economies; and regrets the coalition Government’s decision to place a question mark over a number of vital industrial support decisions taken by the previous Government.

Let me make it clear at the beginning of the debate what I said during our initial exchanges at oral questions a couple of weeks ago—deficit reduction is important and I do not say that every decision to reduce expenditure is wrong. The Secretary of State and I both fought the recent election on policies to reduce the deficit. But the Opposition believe that this must be done in a way that supports economic growth, and not in a way that undermines it. It is critical to our future that fiscal consolidation is done in a way that supports rather than undermines growth.

On the timing of deficit reduction, I am still saying what the Secretary of State and I were both saying back at the time of the election, but he is now saying something very different. Just a week before polling day he said that

“it would be foolish to rush into significant cuts now which take the economy down even further, which lead to an even bigger deficit problem”.

Yet just days later, the Secretary of State was signing up to his part of £6 billion of cuts in this financial year—cuts that mean 10,000 fewer students going to university than under the published plans, and £300 million being taken out of the regional development agencies this year.

[Robert Flello (Stoke-on-Trent South) (Lab)]

Such cuts will hit my constituency and those of my hon. Friends the Members for Stoke-on-Trent North (Joan Walley) and for Stoke-on-Trent Central (Tristram Hunt). The cuts will hit places such as Stoke-on-Trent particularly hard—areas that have struggled to come forward from the 1980s. The impact will be devastating.

--- Later in debate ---

[Mr McFadden]

My hon. Friend makes an important point. Before the election we were told that £6 billion could be taken out in efficiencies, but the announcement proved that that was not the case, and that the cuts will have a real effect on constituencies such as his, mine and many others around the country.

What could be the reason for the volte-face on the timing of deficit reduction? There may be cynics on the Opposition Benches who might think it had something to do with the election result or with the fact that the Liberal Democrats were in coalition talks with the Conservatives, but the Secretary of State leads us to believe that that was not the case at all. He said it was all about events in euroland, but to paraphrase Frankie Valli, “Greece” was the word, although I have a feeling that in the present coalition the Secretary of State does not go into work in the morning singing, “We can be who we are”.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my right hon. Friend agree that the uncertainty about the future of Advantage West Midlands, for example, is creating problems for small businesses locally? Does he also agree that if the Government set up a green investment bank—the sooner, the better—that could go a long way to helping industry in the west midlands?

[Mr McFadden]

That policy was in our manifesto, and we believe it would make an important contribution to economic growth.

Our argument today is that if we want a successful economy in the future and if we want to rebalance our economy and support strong manufacturing and powerful regions, a focus on deficit reduction alone is not enough. It is not enough just to have a plan for the deficit. The Government also need a plan for growth; and for that to work, we have to understand that they have an important role to play in supporting industry and creating the right environment for success.

[Mr David Hanson (Delyn) (Lab)]

Does my right hon. Friend agree that a potential blight is being put on companies such as Airbus and Vauxhall near my constituency, where grants signed by the previous Government to help to support the growth of manufacturing industry are now being reviewed by this Government? That is damaging the long-term potential for growth, and decisions should be reached urgently so that we end that blight and get a move on in creating jobs.

[Mr McFadden]

The review of industrial support decisions has indeed created damaging uncertainty that should be brought to an end in a positive way as soon as possible.

The Labour Government knew that we had to play our part if rhetoric about rebalancing the economy and making the most of the shift to low carbon was to lead to new industries and new jobs. That was not, as some Government Members have sought to portray it, some kind of irresponsible bail-out plan concentrated on failing companies. It was a strategy about supporting key national capabilities in the industries and jobs of the future, ensuring that we had strong regional economies, and having the right tax measures in place to foster investment in new plant and machinery and to support research and development here in the UK.

[Jim McGovern (Dundee West) (Lab)]

I am sure that my right hon. Friend is aware of how crucial the computer games industry is in my constituency, not only for the number of people the industry employs but for the students who study at the university of Abertay. The previous Government made a commitment to tax breaks for the computer games industry; does he agree that that commitment should be honoured?

[Mr McFadden]

The creative industries, including those that my hon. Friend mentions, are absolutely critical for our future economy. As with other areas, I believe that Government have a role in play in ensuring that the creativity of those industries flourishes here in the UK.

Of course, our future economy will be market-driven, and success depends on motivated individuals, great ideas, and enterprising and thriving companies. Our point, however, is that there is a critical role for Government when market gaps occur—a job to do in supporting investment that can pay dividends many times over in future. Let us remember that this is something that many Governments around the world are doing. Do we really believe that if the new Government elected here turn their back on this approach, other Governments who are also trying to attract new industries and new jobs will do the same? I do not think so.

[Alex Cunningham (Stockton North) (Lab)]

This week, One NorthEast, the regional development agency in the north-east of England, confirmed a grant of £7.3 million to INEOS Bio to construct Europe’s first advanced bioethanol—ethanol from waste—plant in my constituency. That will create 350 construction jobs and 40 permanent skilled jobs, and I am sure that my right hon. Friend agrees that that is another fine example of why One NorthEast should continue its good work with the level of funding that has given it the power to help the north-east’s economy to diversify so successfully.

[Mr McFadden]

I absolutely agree. That sounds like exactly the kind of project where Government, through the RDA, and business can come together for the benefit of the local area.

Our concern is that the new Government do not understand the role of Government in fostering new industries or may even be ideologically opposed to it, believing, as the Secretary of State has said, that

“one of the most important jobs of Government...is actually to get out of the way”.

Getting out of the way would have done us little good when we were trying to get Nissan to build its battery plant and LEAF electric car in the north-east. It would not have helped us when were extending a loan guarantee to Ford to make the next generation of low-carbon diesel engines here in the UK. It would not have helped us when we were trying to support world-class aerospace at Airbus and Rolls-Royce. It would not have assisted in our ambition for the UK to move into the world premier league in the nuclear supply chain through the loan for Sheffield Forgemasters. Nor would it have done any good when we were trying to attract manufacturers of the next generation of off-shore wind turbines to make their products here in Britain.

[Mark Tami (Alyn and Deeside) (Lab)]

Is not Airbus a perfect example not only of how hundreds of millions of pounds have secured and created thousands of jobs, but of the fact that that money is repayable, and has been repaid, and that royalties are paid on every aircraft sold, which means that this is also a very sound investment for the Government?

[Mr McFadden]

My hon. Friend makes a good point. A lot of industrial support is in the form of loans or loan guarantees. The depiction that the new Government have attempted to create of the indiscriminate giving of grants that were not in the public interest is absolutely not true.

[Richard Graham (Gloucester) (Con)]

Is the right hon. Gentleman aware of last week’s Centre for Cities report, which highlighted the growth, or lack of growth, in the private and public sectors over the past 10 years? Some 69% of the 1.2 million jobs added to city economies over the past 10 years were public sector positions. In my constituency, the growth rate in the private sector fell by 10% over that period, which meant the loss of 4,600 jobs from the private sector while the public sector grew by 7,600 jobs. My city was the fourth worst in the country; the city of Stoke, represented by the hon. Member for Stoke-on-Trent South (Robert Flello), was the worst. May I put it to the right hon. Gentleman that if that is the result of 10 years of massive spending in the public sector, it is simply unsustainable to carry on losing that number of private sector jobs, and that our job is to re-stimulate the economy and the framework for growth in the business sector?

[Mr McFadden]

The answer will be shorter than the question. I am aware of that report. However, my point is that if we want to stimulate private sector investment through some of the companies that I have mentioned, Government have a role to play. Simply walking away will lead to fewer, not more, private sector jobs.

[Robert Flello]

Returning to the subject of RDAs, a firm in my constituency wishes to bring the manufacture of ceramic products back into Stoke-on-Trent from abroad, but it is unlikely to be able to pursue that ambition because Advantage West Midlands is now unable to confirm its support. The ceramics industry is trying to bring jobs back into Stoke-on-Trent, and it is quite capable of doing so, but not without a little extra support.

[Mr McFadden]

My hon. Friend makes a good point. Sometimes a bit of investment from the public sector can lever in significant extra investment from the private sector.

I want to turn to the criticisms of the approach that I have set out that have been made by the Secretary of State and the Prime Minister in recent weeks. They have made specific accusations, saying that the projects were agreed in a hurry and were politically motivated. Indeed, the Prime Minister repeated that allegation a short time ago at Prime Minister’s questions, when he spoke of fiddled grants for political reasons. Last week, he alleged that we had spent tens of billions of pounds on industrial support. I have to say that it is no wonder that he is sharpening his public spending axe if that is his grasp of the amount of money that we were spending on industrial support.

Let me deal head-on with the accusation about rushed and politically motivated largesse. These projects were not agreed in a hurry. We negotiated for months with the car companies, with the wind turbine suppliers and with Sheffield Forgemasters. All those projects were subject to careful scrutiny by officials and to the usual value-for-money criteria used in decisions of this kind. In the last Parliament, time after time, I stood at the Dispatch Box opposite and was criticised by some of those who are now Ministers sitting in front of me—not for going too quickly on industrial aid or for being rash about it, but for dragging my feet.

In a report published as long ago as July 2009, the Business, Innovation and Skills Committee, which was chaired at the time by the hon. Member for Mid Worcestershire (Peter Luff), who is now an Under-Secretary of State for Defence and a ministerial colleague of the Business Secretary, said that it was

“profoundly disappointed that to date not one single penny has been advanced through the scheme”—

the automotive assistance scheme—and added:

“We hope that this will change rapidly.”

That is the same scheme that has funded Ford and General Motors, so let us have fewer accusations that there was a huge rush in the run-up to the election to spend money profligately.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

My right hon. Friend quoted what I intended to say. I was a member of the Committee that produced that report, and when I represented it in a debate on local radio, I repeated the accusations that appeared in our report.

[Mr McFadden]

I am pleased to hear from my hon. Friend and I wish him well in his new role as the new Chairman of that Committee.

[Gordon Birtwistle (Burnley) (LD)]

May I welcome the former Minister’s conversion to a balanced economy? In that past 13 years, the previous Government virtually destroyed manufacturing industry and hung their coats on the financial industry, so this country went down. My constituency has lost hundreds of jobs in manufacturing industry because of the economic policies of the previous Government.

[Mr McFadden]

rose—

[Mr Speaker]

Order. So that I do not interrupt the flow of the right hon. Gentleman, I should say now that there have been a number of interventions whose eloquence—this is the fairest that can be said of them—has been matched only by their length. Interventions do need to be a bit shorter.

[Mr McFadden]

The hon. Gentleman sums up the problem with the attitude of the Liberal Democrats. They are determined to say that we are no longer a strong manufacturing country, but I have news for him: we are the sixth biggest manufacturing economy in the world.

[Matthew Hancock (West Suffolk) (Con)]

Will the right hon. Gentleman give way?

--- Later in debate ---

[Mr McFadden]

I am going to make some progress but I will give way later.

I was speaking about the timing of the previous Government’s decisions, but I also want to address the accusation that the political representation of this or that area was a motivation for our decisions. Not only is that complete and utter nonsense, but the fact that the new Government see it that way speaks volumes about how they see the Government’s role in supporting industry. Our country was faced with a choice of Rolls-Royce manufacturing here or in Singapore, Nissan could have gone to Portugal, and nuclear components could have been made in Japan or Korea. Are the Government really saying that when faced with those alternatives, their first reaction would be not to ask how to secure the investment and the jobs for Britain, but to reach for the electoral map to see who the local MP is? What a dismal view of the Government’s role in supporting UK industry.

[Mr Denis MacShane (Rotherham) (Lab)]

I am grateful for my right hon. Friend’s robust point. The Prime Minister said that all that money was sent to Labour marginals, but that did not work, did it? If we want a strong manufacturing sector, will the three and a half pro-Europeans in the DBIS ministerial team—the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage (Mr Vaizey) is the half—keep British manufacturing ahead of that of France? That is their responsibility.

[Mr McFadden]

My right hon. Friend makes a strong point, but I want to make progress.

The previous Government’s decisions were neither rushed nor politically motivated, and our manufacturing industries deserve a better future. The Government say that they are reviewing the projects to which I referred. We have already had a welcome confirmation of the Nissan decision, and I pay tribute to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) for pressing the Government so effectively on that, but damaging uncertainty still exists, so let me ask the Secretary of State some specific questions.

What is the position on the loan guarantees to GM and Ford? What is the position on the loan to Sheffield Forgemasters? The director general of the CBI visited that plant the other day and said:

“It is hugely exciting to see such impressive technology and innovation being developed on this scale, here in the UK. The size and quality of the products being developed at Forgemasters is outstanding and this expansion programme builds on that by making a real investment for the future.”

That was the verdict of the CBI. The previous Government decided to back the expansion of Sheffield Forgemasters not because we wanted to give aid to one company, but because we wanted a greater national capability in the nuclear supply chain, which is critical for Britain when many countries are building more nuclear power stations.

The Secretary of State must confirm the Government’s position on that, because I must tell him that there are a lot of rumours going around about their attitude and response, and that if the loan does not go ahead, it will mean he is behaving exactly like the banks that he criticises for not supporting industry. We said that we would support industry, and it is time that the Government’s position on that loan is cleared up.

[Matthew Hancock]

The right hon. Gentleman has talked a lot about growth and the need for a growth strategy. Is it still the Labour party’s position to put a tax on jobs in the middle of the recovery?

[Mr McFadden]

The proposals we made on the tax to which the hon. Gentleman refers would have kicked in next year. If I were him, I would not be so cocky about tax just a week before his Chancellor comes to the Dispatch Box to tell us his tax proposals.

To return to my specific questions, will the new Government go ahead with the port development competition that was so pivotal in attracting offshore wind suppliers to the United Kingdom? Will the new Government stand by the support to Airbus and Rolls-Royce, which was mentioned by my hon. Friends? The Government have already caused damaging uncertainty by placing a question mark over those projects. If they abandon them, all their words about manufacturing and rebalancing the economy will rightly be seen as worthless.

[Mark Tami]

Will my right hon. Friend give way?

[Mr McFadden]

No—I have already given way to my hon. Friend and I want to make progress.

Support for industry is not just about specific interventions, but about having the right measures in place to foster investment and innovation, and I want to ask the Secretary of State where we stand on some of the key measures in that area, such as capital allowances, which the Government provide to encourage investment in new plant and machinery. The allowances are vital to manufacturing companies, particularly when we want them to be moving to lower carbon production. For those reasons, we doubled investment allowances in our last Budget, which meant that the new allowance—of £100,000—covers some 99% of capital investments made by companies every year.

The new Government, however, are pledged to cut those allowances to pay for their planned cut in corporation tax, a move described by the Engineering Employers Federation as “a disaster”. It has said that if those plans went ahead:

“Any business would have to think twice about investing in the UK.”

Before the election, the Chancellor said that that plan would involve the removal of allowances amounting to £3.5 billion, which would otherwise support manufacturing. Can the Secretary of State confirm that it remains the Government’s policy to cut investment allowances for manufacturing industry?

Another issue is supporting research and development. We are all agreed that we want research and development, and the manufacturing associated with it, to take place here in the UK. For that reason, the previous Government introduced the idea of a patent box—a corporation tax rate of just 10% on future profits made from patents. When we announced that policy, Andrew Witty, chief executive of GlaxoSmithKline said:

“The patent box is exactly the sort of active, long-term and creative support that we need from the government to ensure that the UK remains an attractive place for highly skilled sectors such as pharmaceuticals.”

When the Secretary of State was asked about that a couple of weeks ago, he did not answer, but I want to give him another chance to do so today. If the new Government believe so much in a lower rate of corporation tax, will he now tell the House whether they support that proposal for an extra-low corporation tax rate for that part of the economy engaged in research and development here in the UK?

On innovation, can the Secretary of State tell us where we stand on the Hauser report and Labour’s plans for innovation centres to help the crossover of ideas between academia and industry?

Let me say a word about the regional development agencies. These were introduced by the Labour Government a decade ago because we had seen the success of the Scottish and Welsh development agencies. They have, for the most part, performed well, with independent evaluation showing that for every £1 spent, regional economies benefited on average by £4.50. I know that the Secretary of State agrees that every part of the country should share in future economic growth. Before the election, he said that

“efficiency has become the new politically correct word for sacking people and cutting services”.

But one of his first acts, together with other Departments, was to take £300 million out of the RDAs, so I know that he will not claim that that was about efficiency. Will he admit that that will have a real impact, with business support cut, projects cancelled and delayed, and—as my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) said, less private investment levered in to those projects?

[Tony Baldry (Banbury) (Con)]

Earlier, the right hon. Gentleman accepted the need to control the budget deficit. Is there any area in which he thinks public spending should be reduced? Can he share just one such area with the House?

[Mr McFadden]

The previous Government set out many proposals, including some £900 million over the next few years in the expenditure of the Department in which I was a Minister. We also said that we would save billions more than that on public sector pay and pensions, and we set out many other proposals. I do not stand here as someone who says that there should never be cuts. My point today is that cuts must be made in a way that supports a strategy for growth, not in a way that militates against it. That is why I raised the issue of industrial support and regional development.

Apart from the Budget, what about the future of the RDAs themselves? Government policy on this is in a total mess. We have had statements that they will be abolished, that they will be replaced, and that their replacements will both be different and look the same. Can the Secretary of State tell the House today exactly what the position is and how he is going to make a judgment on this? He talks of business and local authorities deciding in particular regions. How will that be done? Will it be one vote per council or one vote per business? Will it need a 55% majority? If it will be up to the region, how will he make the judgment on this important issue?

[Lorely Burt (Solihull) (LD)]

RDAs are important, but does the right hon. Gentleman concede that the performance of some RDAs has been patchy—to put it kindly? Does he agree that we can still deliver support for business in a cost-effective way, but more flexibly using local enterprise partnerships? One size does not fit all in all areas of the UK.

[Mr McFadden]

I know that the hon. Lady cares about these issues, but I have to disagree with that point. Until the situation is clarified, businesses in various regions do not know with whom they will be working, and a damaging lack of confidence is emerging about how projects that cross local authority boundaries are to be managed in the future.

[David Simpson (Upper Bann) (DUP)]

The right hon. Gentleman has mentioned research and development, but one of the pressing issues in industry today is apprenticeships. We have been promised 50,000 new apprenticeships, but does he agree that they must lead to relevant qualifications at the end of them, so that apprentices are not just going through the process for the sake of it? They need to be relevant to the industry and to the companies involved.

[Mr McFadden]

When we were in government we brought apprenticeships back from the near-death state that they were in and made them once more a mainstream part of the labour market. They are valuable, and we increased the number available many times in our time in government. I agree that they are very important in providing opportunities for young people.

We sought this debate because we believe that while it is right to cut the deficit, it is not possible to go forward, as we come out of the recession, on the basis of tax and spending plans alone. Since the election, the Government have been determined to paint a picture of unremitting doom and gloom about the next few years in an effort to manage public expectations about the cuts that they are planning. Of course the situation we face is challenging—I do not deny that—but we do not believe that Britain is broken. We believe that we can have a strong industrial future if we have a clear plan for growth alongside the plan for deficit reduction.

Austerity alone will not shape our economic future. The Government should see their role as being ambitious for Britain, as well as one of managing public expectation about the cuts with which they have seemed to be obsessed in recent weeks. The Government should be ambitious to make the most of the transition to low carbon; to make the most of our excellence in creative industries and the information economy; and to build on what we have done in education and science and ensure that our economy benefits from it. As an MP who represents a manufacturing constituency, I also think that we should be ambitious to ensure that Britain makes things as well as provides excellent services. The Government are fond of talking about manufacturing in terms of decline. The truth is that the output and value of manufacturing have remained constant over the last decade up to the period of the recession, which is a tremendous achievement for our manufacturers as it was achieved in the face of the greatest wave of globalisation that the world economy has ever seen. We are in a stronger position than the Government make out.

The new Government have shown much about how they see things by making inaccurate statements about the amount of money that we spent on support for business, the speed at which the decisions were taken and the political motivation behind them—as I say, it had nothing to do with who represents the constituencies in which our manufacturing is located. The country and the economy deserve better than that. We are clear about the Government’s role in shaping the economy of the future. We have an opportunity before us, because we stand on the brink of a second industrial revolution as we move from a high-carbon economy to a low-carbon economy. We should be ambitious about seizing the opportunities that that represents, and that requires an active role for Government and a proper plan for growth. That is why we have tabled this motion today and that is why we raise these issues today. I commend this motion to the House.

--- Later in debate ---

[Vince Cable]

I have taken a lot of interventions. I am always generous, but may I come back to the hon. Gentleman?

I want to pursue the issue of cuts. I have dealt with the issue of immediate cuts; however, the question is where they were going to lead. I know that we have gone quite far in the modernisation of the House, but we have not got as far as PowerPoint projections, so I am a bit limited in what I can show. However, the right hon. Member for Wolverhampton South East will be familiar with the work that the IFS did before the election showing where cuts were going to appear in different Departments, had the Labour party been returned to power. I have here one of its charts, which shows what would have happened to the Department that I now lead. It shows a projection of cuts in the order of £4.4 billion, or 20%. That is what the right hon. Gentleman and his colleagues were planning.

[Mr McFadden]

indicated dissent.

[Hon. Members]

You were.

--- Later in debate ---

[Phil Wilson]

rose—

[Mr McFadden]

rose—

[Vince Cable]

Let me finish my point. The north-east councils and local businesses might prefer a structure like the one they already have—it is for them to decide—and there will be a process by which any proposals can be evaluated. In other parts of the country, a different route will be chosen. As I have said, the Minister of State will set out in due course how that transition will be managed.

[Mr McFadden]

I genuinely seek clarification because I am confused by what the Secretary of State is saying. A few minutes ago, he said that the RDAs would be replaced, yet in response to my hon. Friend the Member for Sedgefield (Phil Wilson), he seemed to say that it was a kind of maybe rather than a certainty. This is a really important issue to get clear. Is it true that all RDAs will be replaced, or could that be affected by the consultation that the right hon. Gentleman talks about? To take the example of One NorthEast, if it were the view of business and local authorities—I would like to hear how that will be determined—to retain that RDA, would the Government accept that? It is important to clarify this matter.

[Vince Cable]

For the avoidance of all doubt, they will be replaced, but the structures that emerge could have a regional scope if that is what local people want. That is the answer. The process will be set out in due course. All that needs to be said for the moment in clarifying our position is that the RDAs will be replaced. They did not give consistently good value for money. We need another approach, another structure, and partnerships of local business and councils. That is what this Government will now put in place.

--- Later in debate ---

[Andrew Miller]

No, I will not for the moment.

The Secretary of State and I had a short exchange about Vauxhall Motors earlier, and there have been developments during the course of the afternoon. The Government eventually agreed that the loan guarantee approved by Lord Mandelson had been approved correctly and was in order—contrary to earlier suggestions—but despite that and because of what has happened in Germany and the UK, the company finds itself having to drive things forward itself. In a statement issued this afternoon, the company says:

“We cannot afford to have uncertain funding plans and new time-consuming complex negotiations at this time when we need to keep investing in new products and technologies. With these new products and the impact of restructuring, we expect to return to profitability shortly”.

The parent company is going to support the necessary changes. It is a pity that the Government were not part of the solution, but I welcome the fact that the mischief that had been created over the inappropriateness of the grant has at last been dealt with.

[Mr McFadden]

Does not my hon. Friend agree, however, that the delay involved in this case should serve as a warning of the damage that can be caused by needlessly calling a halt to important industrial projects? It is little use the Government coming along today and saying that they have approved the loan guarantee, on the very day that the company in question has run out of patience.

[Andrew Miller]

I could not agree more—