West Midlands

Richard Burden Excerpts

Tuesday 7th September 2010 Westminster Hall

[Richard Burden (Birmingham, Northfield) (Lab)]

I welcome you to the Chair, Mr Hollobone, and express my gratitude for being able to debate Government policy on the west midlands. I am pleased to be joined this morning by a number of colleagues from the region.

I have represented Birmingham, Northfield for the past 18 years. During the last Parliament, I chaired the West Midlands Regional Committee. The Committee was a genuine attempt by Parliament to provide a focus for addressing matters of concern to the people in the region. The Committee’s agenda was set not by the Government or by Ministers but by MPs from the region. I am pleased to be joined today by two members of that Committee—my hon. Friends the Member for West Bromwich West (Mr Bailey) and for Stoke-on-Trent North (Joan Walley).

The Committee, however, was scrapped by the diktat of the new Government; but in its short life at the height of the recession we were able to give voice to regional concerns about the impact of the economic downturn on communities across the region, on west midlands businesses and on the options for the future of housing and planning in the region. I hope that the Committee was also able to contribute to the accountability of regional institutions, the most obvious one being Advantage West Midlands—the regional development agency. It was also able to contribute to the operation of government in the region. Indeed, I welcome to the debate the former Minister for the West Midlands, my hon. Friend the Member for Dudley North (Ian Austin), and thank him for his approach to dealing with our Committee. It was one of engagement with MPs for the region. We did not always agree, but we agreed on a number of things. The key point, however, was that the Government and the Minister engaged.

The west midlands is a diverse and vibrant region. Its heritage as the workshop of the world means that innovation is in our blood. However, the region is in transition. Massive upheavals were already taking place in the economic base of the west midlands—from Staffordshire in the north and east to the traditional industrial heartlands of Birmingham, Coventry and the black country—and dramatic changes took place in the late 20th century in the economies of areas such as Warwickshire, Shropshire, Herefordshire and Worcestershire.

The region was hit hard by the economic downturn. For while, it had the worst unemployment rate in the country. However, action by people in the region, backed by the previous Government, helped to turn things around, and unemployment is down by 2.4% on last year. Nevertheless, the recovery is fragile. The danger of a double-dip recession is real for our region. I was at a breakfast meeting this morning organised by the Society of Motor Manufacturers and Traders, just across the road. The message from those in the automotive industry and from a number of academics was clear: that Britain still needs to address persistent under-investment in research and development.

The Department for Business, Innovation and Skills has a target for 2.5% of GDP to be invested in research and development. Projections that I heard earlier today suggest that the likely shortfall will be between £9.6 billion and £12.1 billion. Given that the automotive industry accounts for about 8% of our country’s research and development, and that the industry is key to the future of the west midlands regional economy, we can see why the west midlands is worried indeed about the consequences of precipitate and untargeted tightening, as it will affect the development of our industrial base and its recovery.

We know that the Government’s policies are leading to a downgrading of growth forecasts and are likely to result in higher unemployment, so the implications for our region are serious. As I said, they are serious not only for the economic base of the region but for our people. The Institute for Fiscal Studies confirmed only a few weeks ago that the coalition Government’s Budget will hit the poorest households hardest. Despite claims that the rich will bear most of the pain, it is those on the lowest incomes who will gain least from the increase in the income tax personal allowance and suffer most from cuts in public spending. That will be the case also for pensioners, who will be hit by the rise in VAT. It will be families, particularly those on low incomes, who will be hit by cuts in the value of support for families. From next year, it is estimated that more than 80,000 people in the west midlands could lose an average of £520 a year through cuts in housing benefit.

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

I thank my hon. Friend for giving way. I apologise, but I shall have to leave fairly shortly as I have to chair my Select Committee at 10 o’clock.

In the context of what my hon. Friend said about the motor industry, does he agree that the latest figures for new car registrations—they showed a dip last month following a dip in the previous month—underline the fragility of the west midlands economy, and that that will have a particular impact on the Birmingham and black country region?

[Richard Burden]

My hon. Friend is right. I fully accept his apology. Indeed, I congratulate him, a fellow west midlands MP, on being elected as Chair of the Select Committee on Business, Innovation and Skills. I also welcome my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who is a member of that Select Committee, and my right hon. Friend the Member for Warley (Mr Spellar), who takes a keen interest in automotive affairs.

My hon. Friend the Member for West Bromwich West is absolutely right: if one industry sums up the fragility of the recovery, it has to be the automotive industry. It was one of the hardest-hit sectors, but it came through strongly. However, that did not happen by accident, but because people in the industry—whether the management or the work force—willed it to happen and because the Government were prepared to stand behind them. I do not say that the car scrappage scheme turned the automotive industry around, but it was part of the jigsaw of things that allowed that to happen. I do not say that the creation of a taskforce in the west midlands allowed the industry to come through, but it was part of that jigsaw.

[Jack Dromey (Birmingham, Erdington) (Lab)]

I give the same apology, Mr Hollobone, as that given earlier. As a member of the Select Committee I have to be at its 10 am sitting.

Advantage West Midlands has evidence that for every £1 of public money invested, £8.14 is generated in wealth for the local economy. It was rated by the National Audit Office as the top-performing regional development agency, and it was praised for its management of the shock of what happened to Rover between 2000 and 2005, and for consolidating an automotive cluster that employs 150,000 people in the midlands and which is vital to the regional economy. Does my hon. Friend agree with the clear voice of business in the west midlands, which supports Advantage West Midlands and argues for the retention of a strong regional economic structure?

[Richard Burden]

My hon. Friend makes a good point, and I will shortly say a little more about Advantage West Midlands and the haziness that seems to surround some of the present Government’s proposals for change. The responses from businesses and from people outside the political sphere are clear. Sometimes, one gets the impression that the future of effective regional co-ordination—I am talking about the type of co-ordination that Advantage West Midlands has been involved with—has been a matter for debate just among politicians, but it has not. It is an issue for the people affected by the decisions of organisations such as AWM, and for every business that has applied for and may have received assistance from the Advantage Transition Bridge Fund. It is a matter of economic health for many businesses in our region, and an issue of importance for the third sector in the region that engages with AWM.

The Regional Committee had a seminar in the west midlands that brought together different organisations, institutions and players to assess the future of governance in the region. Again, the message was clear that what we need is strong regional co-ordination and a strong regional tier that is accountable. It is easy to come up with the slogan, “Scrap the quangos”, and then look for a quango in the west midlands and say, “There’s AWM, let’s get rid of it.” People know that that is the easy bit; the difficult bit is to get away from the headlines and work out and put into effect the policies that will enable our region to win through. My hon. Friend the Member for Birmingham, Erdington was absolutely right about the matter.

I have referred to businesses, but often the impact of Government policy in the west midlands is felt not just by them but by the people whom we represent. The National Housing Federation recently highlighted that Birmingham is one of the places likely to be most badly hit. Its chief executive, David Orr, said:

“The changes could see hundreds of thousands of vulnerable people fall into debt, forced out of their homes and neighbourhoods and crammed into overcrowded ghettos. Many others will simply become homeless.”

He was referring to the coming changes to housing benefit. All this comes at a time when Birmingham city council itself is proposing to cut no less—and it could be more—than £7 million that was allocated by the previous Government to tackle worklessness through the working neighbourhoods fund. It is not going to reallocate or redistribute that money to enable it to be spent more effectively; it is just cutting it and removing that level of support in tackling worklessness. As my hon. Friends know, the council is proposing to cut back on community day nurseries for some of the most vulnerable people in our city, even though such a proposal runs counter to the idea of stimulating and taking forward the principles of early intervention to which every single political party in this place signs up.

I turn to Longbridge in my constituency. I welcome the fact that, in Shanghai Automotive, there is still an important car presence there. There are plans to introduce new models for the coming year and it is the major technical centre for the whole of Europe, which is good news. However, Longbridge can never again be simply a car plant, no matter how important that plant is. Regeneration and the creation of a diverse economy in Longbridge and the surrounding areas are vital to the future. It is important for the regeneration not just of my constituency but of the south of Birmingham and the regional economy as a whole.

A bulletin produced in August by Birmingham city council, Bromsgrove district council and Worcestershire county council, all of which are either Conservative or coalition led councils, said:

“The new government’s intended changes to planning policy and significant budget cuts continue to have a detrimental consequence on the development programme for Longbridge. Certainty of funding for the MyPlace programme, Regional Infrastructure Fund and the future of HCA funding continues to be at risk”

I am pleased that around £4 million of the Homes and Communities Agency’s money, which was earmarked by the previous Government for Longbridge, has now been confirmed by the present Government, but the message of that update remains a chilling one for many of us. The report on housing and economic development in the west midlands by the former regional Committee said:

“Substantial public funding will remain necessary to increase the supply of affordable housing in the region to the extent required.”

That conclusion was not just dreamt up; it was based on the evidence that we received. It is difficult to relate it to the cuts that are now taking place in housing: cuts of £100 million from the National Affordable Housing Programme, of £50 million from the Kickstart programme and of £50 million from the Housing Market Renewal scheme. I have described the likely impact of that on regeneration programmes such as Longbridge. No doubt other hon. Members can give examples from their own constituencies.

Such cuts affect real people in real communities in our region. For example they feel the impact of the scrapping of 64 school rebuilding projects that had been in the pipeline under the Building Schools for the Future programme, not to mention the scores of other schools, including all but one in my constituency, that never even got to the starting grid of the programme.

Hon. Members, particularly those on the Government Benches, may say that difficult decisions have to be made and they are right. They may say that capital spending would have been squeezed by whoever won the general election and there is force in that argument. Difficult decisions were going to have to be made, but difficult decisions are about making choices. It is a question not just of what choices to make but who makes those choices, who one listens to and what one takes into account when making such choices. That is why it is so important in this climate to listen to the people who are most likely to be affected by the decisions. If they are to have their voices heard, they must have institutions through which they can speak. In Birmingham, in my own home town, we now hear that the city council is proposing radically to scale back the very mechanisms through which local people can have a say in council decisions. So much for all the talk about a big society in Birmingham.

What about the voice for our region? The final report of the West Midlands Regional Select Committee before the general election looked at how institutions can engage more effectively with the public and how that engagement can be used to help the region to become more responsive to the needs of the people who live there. We also recognised that Westminster needs to look at regional issues in a more coherent way. Normally when Select Committee reports are published, the convention is that the Government respond not only within a reasonable time scale but in a considered way. The Government will produce a report that will be discussed by the Select Committee. The Select Committee will consider whether the Government have tackled the issues that were proposed in its report and it will be its decision whether to publish the Government’s response. Occasionally, when there are some holes in the response, the Select Committee has the right to send it back to the Government and say, “Have another think about it before we publish this.” In that way, we can ensure that Parliament can consider properly not only what the Select Committee has said but the Government’s response. My hon. Friend the Member for Dudley North, who is a former Minister, will know that that is precisely what happened over the last year. We produced reports, and they were responded to. There was one instance—I am sure he will not think that I am breaking any confidences here—when we felt that the initial Government response was not good enough. We sent it back and the Government had a rethink and came forward with another response, which was then published. It was done in a considered way that respected the region and the issues that it was raising.

The report, “Making the Voice of the West Midlands Heard”, came out before the general election, but it was dismissed by the current Government in just two sentences in a written statement. Our report on housing and planning in the west midlands, which also came out just before the general election, was dismissed in just four paragraphs in the same written statement. Now Ministers are proposing to scrap the regional development agency, Advantage West Midlands. That is despite the fact that, as my hon. Friend the Member for Birmingham, Erdington said earlier, a National Audit Office report judged the RDA’s performance as “strong” and gave it the maximum possible rating across most areas of the assessment, repeating the findings of the NAO’s report of 2007. As my hon. Friend also said, the most recent independent evaluation suggested that for every £1 invested by Advantage West Midlands, a return of £8.14 is generated for the west midlands region.

Advantage West Midlands is not perfect. My Committee—the West Midlands Regional Committee—suggested changes, including changes to the accountability arrangements for AWM. However, the evidence that was given to us was that AWM’s role in co-ordinating effort among regional players, in securing investment and in putting that investment—hard cash—to use in the areas where it was needed was and is absolutely vital. So, when the Government talk about cutting quangos and then relate that talk to AWM, they are not just talking about cutting institutions; they are talking about jeopardising the programmes and the real investment on which our region depends. And it is really not good enough to say that the new bodies that the Government are talking about—the so-called “local economic partnerships”—will pick up where the RDAs are just leaving off.

Partners around the west midlands, including in my own sub-region of Birmingham and Solihull, want to be as constructive as possible and they are putting ideas together about how they could put in place a local economic partnership. However, I ask the Minister today to be as clear as he can be in the information that he gives and if he cannot give information today I ask him to set out some key points in written form for hon. Members from the region.

In my opening remarks, I talked about the importance of research and development for the west midlands and about the importance of having the mechanisms for stimulating R and D in businesses up and down the region. If AWM is going to be scrapped and if local economic partnerships, which are undefined as yet, are going to replace AWM, it is important that we know which programmes will continue and which will not. Furthermore, of those programmes that are going to continue, it is important that we know which ones will be administered entirely centrally by Government and which will be controlled and administered by local economic partnerships in the future.

I ask the Minister to say clearly what actually is the difference between the budget that will be made available in the west midlands to do the type of things that I have been referring to in my speech and the budget for AWM, because I think that people in the region deserve to know what the difference is. If we are talking about AWM, we are talking about a budget of about £1.5 billion a year. However, when we look at the budget that is likely to be available for local economic partnerships, we are talking about £1 billion, which is not per year but spread over two years.

If I am right about that budget difference—the Minister represents the Government, so he will know the figures better than I do—what is it that will go? What is it that is going to be cut? Perhaps he will say, “Well, it will just be the bureaucracy that is going to go. That is what is going to be the difference—just the bureaucracy. The programmes will be maintained.” However, if that is the case, I must ask, “Who is going to pick up and administer those things? Who will do the work?” Is it the Government’s view that local authorities will simply pick up the slack? Is it the Government’s view that local authority and local authority staff will do that work?

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

I am grateful to my hon. Friend for giving way. He is making an extremely good and impassioned speech, which I am listening to with great interest.

I think that we are already seeing some evidence of where these cuts will fall. In my own constituency, I was approached by a company that wanted to establish a brand new mug-making business, which is something that we have not seen in the Potteries area for far too long. That company was promised a grant of £250,000 from AWM, but that grant has now been cut. The whole project is now in jeopardy; the nine-month order book that the company had already managed to accumulate is now in jeopardy, as are the 50-plus jobs that were planned. I think that we are already seeing the evidence of the cuts.

[Richard Burden]

I welcome my hon. Friend to today’s debate. He makes a very important point. I think that the point that he is making is twofold, and both aspects are important.

The first aspect is the type of thing that I was talking about earlier. All the indications are that there are going to be cuts, which will be real and substantial. Those cuts will not simply be in services but in the very things that will be able to generate the wealth that will keep unemployment down, create jobs and enable regional recovery. So there will be substantive cuts.

However, the second and more insidious thing that is going on at the moment is that because of the policies that the Government have come out with and because they have said that AWM will go, to be replaced by these local economic partnerships that are as yet undefined but will take up the strain, the Government have bred uncertainty and unpredictability at the very time that we need certainty and predictability in order to invest and innovate for the future. That is the story that my hon. Friend is talking about in his area and I think that it applies elsewhere.

[Karen Lumley (Redditch) (Con)]

Obviously, AWM has done some good work. However, I visited many companies in Redditch before the election and I have obviously visited a lot since the election. So let me just say to the hon. Gentleman that AWM does not benefit the companies in Redditch, because they do not fall within the category of companies that AWM helps. There is a lot of deprivation in Redditch; it has actually got the highest unemployment in Worcestershire. So a lot of the companies in Redditch are actually looking forward to the local economic partnerships and hopefully Worcestershire will get its own partnership, so that we can see some of the money for those schemes coming into Redditch.

[Richard Burden]

I applaud the hon. Lady’s optimism and I am very happy to sit down if she would like to intervene again. However, what is the budget that she is anticipating for her local economic partnership?

[Karen Lumley]

I am looking forward very much to hearing the Minister’s response to the debate and I am also looking forward to seeing what we get. Actually, for those of us in Redditch something is better than nothing.

[Richard Burden]

I am also looking forward to the Minister’s response. I simply say to the hon. Lady what I said before, that AWM was not perfect and that choices had to be made, as choices always have to be made. However, to make the choice, there must be the institution that people can debate with; to make the choice, there must be the engagement, and to make the choice we need to have the discussion. That is the point. At the moment, it is unclear what the institution will be in the future, what its budget will be and who will have a say.

[Robert Flello]

I am very grateful to my hon. Friend for giving way; he is being very generous in allowing interventions. If I may respond to his point about the perfectness or otherwise of AWM, I will say that I have been one of its critics in the past. Historically, however, the problem lay very much with Stoke-on-Trent city council not being able to use the resources, the funding and the talents that were being provided. So I think that quite often AWM got the criticism, when it really should have been levelled more locally.

[Richard Burden]

My hon. Friend makes an important point. I just have an inkling that, perhaps a little later on, my hon. Friend the Member for Stoke-on-Trent North may well have some particular things to say, not only about Stoke-on-Trent itself but about north Staffordshire. Earlier I said that our region is one that is in transition and that is diverse. However, the particular problems affecting north Staffordshire are very large and very acute, and targeted help, support and attention are required to tackle them.

Talking about north Staffordshire raises another point. If regional institutions such as AWM are going to be scrapped and if there are going to be these local economic partnerships springing up all over the place, it is understandable—absolutely understandable—that different local economic partnerships in different areas are likely to come up with different priorities and different solutions that affect their own particular area. It is absolutely understandable that they will reflect local aspirations and local circumstances. However, the question will arise in the future—who will be the arbiter of those competing aspirations? In the future, will it actually be the case that, for all the talk about decentralisation, central Government will be the arbiter of those competing priorities, rather than partnership bodies in the region itself? Those regional bodies were too unaccountable, but it is not a case of making them more accountable. It is actually a case of taking that power from the region altogether and giving it to central Government.

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Gentleman on securing this important debate. He says that the fact that we have lost our regional development agency will make Government more accountable. The whole purpose of the local enterprise partnerships is to prevent Government from dictating the programmes for each region. The region’s businesses and its elected representatives will make the decisions that affect them directly. I believe that the situation is the opposite of what he is suggesting.

[Richard Burden]

I very much hope that the hon. Lady is right, but I do not see the evidence for it. Perhaps the Minister will enlighten us about whether she is right.

If different local economic partnerships come up with different priorities and aspirations, who will decide who gets what? Central Government. If I am wrong about that, what body will decide? If another body is created—perhaps it will bring together regional stakeholders and players from the different sub-regions—it will need a staff and some presence in the region if it is to work, will it not? It will need the ability and the reach to work out what needs to happen in the region. I guess that we could give a body like that a name, could we not? Because it would be involved in developing the region, we could call it a regional development agency.

The RDAs were not wrong; the problem was that they were not sufficiently accountable. However, my difference with the present Government—I look forward to the Minister’s speech, because I may have this wrong—is that they appear not to be improving accountability. All the accountability mechanisms are as vague as ever—arguably more so. The Government are undermining the institutions that need to be held accountable, their budgets, their reach and their strategic relevance to the region. That is the problem.

These matters are not of academic importance; they involve how the west midlands can address the big challenges that it faces in the coming months and years. Inevitably, there will be and are political differences in this place about what economic strategies we think are right for the country or for our region. Understandably, views will differ about the scale, pace and timing of deficit reduction. We will differ politically about when, in order to prevent double-dip decisions and secure recovery, we may need to maintain spending and, in some cases, even expand it. Those differences are absolutely understandable.

However, the point of this debate is not just to touch on those issues; it is to return to the issue of choice. Who will decide? Who will be the voice of people, businesses, the third sector and communities in the west midlands? Will it be local councils? As I said, Birmingham city council is scaling back devolution internally. Will regional players make strategic decisions for different businesses and industries? Who will decide, and by what mechanisms?

It is time for the Government to come clean, not because I as a Labour MP from the west midlands say so, not because I have taken umbrage because they scrapped the Select Committee that I chaired but because this is the voice of the west midlands. They should look at what business organisations and the third sector in the west midlands are saying, and what local authorities themselves are saying in their more reflective moments, and act on it. We need more clarity so that we can meet the challenges in the west midlands and secure for our people the recovery and the future that the region deserves.

--- Later in debate ---

[Robert Neill]

If the hon. Gentleman is going to make a bad point, he should at least make an accurate bad point. The fact is that that is not happening. First, the power is being given for the London Development Agency to be merged into the Greater London Authority, so it does not exist as an RDA. Secondly, it has democratic accountability to a directly elected Mayor of London, which is not the case elsewhere. We are, of course, extending to major cities such as Birmingham and Coventry the ability to have a democratically elected mayor. If the hon. Gentleman will forgive me for saying so, I will not take any lectures from him on that issue.

[Richard Burden]

I realise that the Minister is short of time. If he is not able to cover my points now, will he please write to hon. Members present? First, will he confirm the figures that I gave on the budgets for the RDAs compared with those for the LEPs? Secondly, do the budgets for LEPs include staffing or are local authorities meant to compete for a staffing budget in respect of other front-line services? Thirdly, will he list the programmes run by the RDA and say what will happen to them, whether decisions on them will be made by central Government and LEPs and whether they will be scrapped?

[Robert Neill]

I will do my best. A number of those matters, as the hon. Gentleman will appreciate, are under review in the spending round. Once we are in a position to do so, I will ensure that that information is made available.

It is important to stress that this Government are committed to assisting areas such as the west midlands, where private sector employment and growth declined seriously, with the regional growth fund. We have made a clear commitment to proceeding with Birmingham New Street station, which is a key piece of transport infrastructure, and we have made the key commitment to High Speed 2. Those major investments will make a real difference to the economy of that area. Local authorities and airport operators are discussing funding arrangements in relation to the extension of Birmingham airport. Those positive commitments to infrastructure are likely to have a far greater long-term effect on the people of the west midlands than a plethora of institutional initiatives. That is important.

I am conscious of the need for local authorities to work together constructively, because their co-operating is important. We will consider that matter when evaluating the various bids together. The key thing is that there should be a bottom-up process based on local knowledge and incentives, rather than the other way round.

The city of Birmingham was represented in the past by Joseph Chamberlain. He would be sad that there is not greater faith—at least, not in the Opposition Front-Bench spokesman—in the ability of the people of Birmingham and its neighbours to come together and find a way forward to deal with their own challenges and to find their own solutions. We have faith in the people of the west midlands. Joseph Chamberlain would have thoroughly approved of the stance and the philosophy underpinning the Government’s approach.

Given that time is short, I will deal with the specifics that hon. Members have raised in correspondence, as is increasingly the normal practice in such time-limited debates.