Industry (Government Support)

Toby Perkins Excerpts

Wednesday 16th June 2010 Commons Chamber

[Vince Cable]

I was in Birmingham last week, and people affected by that problem have approached me—indeed, the city council also raised the matter with me—and I have asked for it to be investigated. It is a complex legal problem, but clearly it needs looking at.

I shall proceed to the second statement in the motion with which we agree. The Labour spokesman was explicit, forthcoming and realistic about cuts. The motion reads:

“That this House notes the need for a clear deficit reduction plan”.

It is now going to get one, because on Monday we launched the Office for Budget Responsibility. We now have believable and independent growth numbers on which to construct a budget strategy, and next week the Budget will spell that out in more detail.

[Toby Perkins (Chesterfield) (Lab)]

The Secretary of State will know that he is viewed, in his own party at least, as an economic Nostradamus. Does he seriously expect us to believe that the Office for Budget Responsibility report told him something of which, even with that huge brain of his, he was previously unaware? Most serious financial journalists are saying that the report showed that the previous Government’s forecasts were accurate, so is he seriously telling the House that it led him to a policy so totally different from the one he had been campaigning on for all those months?

[Vince Cable]

That was starting to morph from an intervention into a speech. It did not require a great genius to see the fallacies in the bubble economy that was being created, and I was one of many people who saw the problem. However, the hon. Gentleman is getting to the issue of my position, which was also raised from the Opposition Front Bench, so let me deal with the question of cuts, the timing and what the sensible response is. The motion refers to a

“critical moment in the…cycle,”

and talks about recovery being fragile, and it is fragile. There are risks in both directions. If there are rapid cuts in public spending, they of course run the risk of having an impact on growth; we all understand that, but there is the risk on the other side that if we did nothing or delayed taking action, there would be a serious crisis of confidence in the economy because of the sovereign risk crisis that is rolling around Europe.

I was specifically challenged to say why I had changed my mind on the subject, and I will tell the hon. Gentleman when I changed my mind. Before I entered this Government, I spoke at some length to some of the key decision makers in the UK, including the head of the Treasury, and we also had advice from the Governor of the Bank of England. Their advice was unequivocal: in the circumstances that we entered, we had absolutely no alternative but to act decisively and quickly. I always made it clear in opposition that we had to act rationally. We had to take account of growth on the one hand and sovereign risk on the other. Those factors had to be balanced. We have balanced them, and we came to the decision that early action was essential in the light of the circumstances that exist. That was objectively based on the evidence in the economy.

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[Toby Perkins (Chesterfield) (Lab)]

Thank you, Mr. Deputy Speaker. It is a great pleasure to speak for the first time in a debate chaired by you.

I am sorry to see that the hon. Member for Devizes (Claire Perry) is leaving us.

[Claire Perry]

Will the hon. Gentleman give way?

[Toby Perkins]

That was a brave attempt. Before the hon. Lady spoke, I thought we had already been patronised more than we could stand, but she raised the bar considerably.

[Claire Perry]

Will the hon. Gentleman give way?

[Toby Perkins]

No, I should like to make progress. Other Members wish to speak.

My background as a small business owner and now as an MP in the east midlands, in a coalfield and manufacturing area, gives me a broad perspective on the debate. That broad perspective is one of the things lacking in the arguments that we hear from the Government Benches. People seem to fail to understand that the private sector and the public sector do not live in two entirely opposite worlds that never have anything to do with each other. As a business man, I rely on people buying products from my firm. Some of those people might be doctors, some might be teachers, some might work in private industry. What all of us who run a business need more than anything else is a strong economy and a strong environment in which to do business.

Of course, everyone running a business and everyone in society wants to pay less tax. More important than a small cut in corporation tax is an economy supported by Government to run successfully. Hon. Members should remember that corporation tax is 5 per cent. lower now for big firms than it was in 1996-97. All the parties are talking about manufacturing, yet only Labour has put in place the financial means to support manufacturing and to boost industry, which is what should be happening.

I was pleased to hear the contribution by the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who I think might be joining the proud tradition of Tory rebels over the years in his call for more support for industry. He said that the British Government should support our manufacturing firms in the way that the American Government support theirs. I hope that he will continue to stick to that line after he has spoken to his Whips.

In our area, the East Midlands Development Agency is not, of course, the whole solution, but it is an important contributor. In Chesterfield, there is an organisation called CPP that employs 270 staff. When I went to visit it before the election, people there told me that they were able to carry out the initial set-up only because of the support of the development agency, which put in £1.7 million.

The east midlands engages in more manufacturing than any other area. The Secretary of State has said that he wants his Department to be the Department for growth, but cutting investment allowances will not speed the growth that we need in our economy. I was horrified to hear the hon. Member for Loughborough (Nicky Morgan), who is not with us at the moment, say that she keeps speaking to people who tell her that the East Midlands Development Agency is not contributing and is not doing a good job, and they want to get rid of it. In fact, for every £1 the development agency puts into the local economy, we get £9 of benefit coming back. I do not know who the hon. Lady can have been speaking to, because local businesses and business organisations are queuing up to support it.

[Chris Heaton-Harris]

Will the hon. Gentleman give way?

[Toby Perkins]

Yes, if the hon. Gentleman promises to be brief.

[Chris Heaton-Harris]

As a fellow east midlands MP and a former east midlands Member of the European Parliament, I thank the hon. Gentleman for giving way. Will he at least acknowledge that lots of the money that is invested by the East Midlands Development Agency goes to the so-called golden triangle, which his constituency falls within, and that areas in Northamptonshire and Lincolnshire have suffered because they have not been getting the inward investment that they might well have got had there been a local enterprise partnership?

[Toby Perkins]

I am sure that the hon. Gentleman knows his local area better than I do. I do know, however, that Derbyshire and Nottinghamshire chamber of commerce has spoken out strongly in saying that it would like the East Midlands Development Agency to be left in place. It is up to Members in other areas to ensure that they get schemes before the agency and try to work with it in a positive way. The current lack of certainty from the Government will not lead any organisations to think that they should be talking to the development agency, as they cannot be sure that it will even be there in a few months’ time.

Pat Zadora, the chair of the east midlands business forum, has said:

“We can’t speak for other areas of the country, but there can be no doubt that”

the East Midlands Development Agency

“has been extremely effective. The all-important private sector has forged a strong and helpful relationship with the agency and we believe it has made a positive contribution to the regional economy. There are a number of instances where we believe Emda’s intervention has been crucial in resolving key issues and unlocking opportunities to develop strategically important sites.”

The hon. Member for Mid Worcestershire (Peter Luff), when he was Chair of the BIS Committee, said that every business organisation that he had spoken to, from the Federation of Small Businesses to the CBI, said that development agencies help the economy, and that abolition would send completely the wrong message. We absolutely support his comments. The manufacturers’ organisation, the EEF, argues against a more local approach, saying:

“Local authorities lack the critical mass, the funds and the ability to step outside local politics to identify the priorities for their region, to set out how best meet them and to make it happen.”

What we need now is consistency from the Government. We need to see that there is support for our industries. Business wants Government to take a proactive role, but it also wants support to be there through measures such as investment allowances and the excellent car scrappage scheme that the Labour Government put in place—an example of Government investment supporting private industry. The Secretary of State is saying that he wants to send a clear and decisive message, but in fact he is painting a confused picture. His approach is not supported by manufacturing companies, which want to see Government driving growth, or by local businesses and business organisations in the east midlands, which are saying that we need investment in allowances, in development agencies, and in our manufacturing sector. They need a strong and unequivocal message from the Secretary of State, and in that regard he is failing them.

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[Mr Willetts]

I hope that all hon. Members heard that intervention.

We also had a maiden speech from the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). That was particularly touching for those of us who were here in the last Parliament, because he referred to the sad loss of Ashok Kumar, who was held in high regard on both sides of the House.

As I was listening to those maiden speeches, I recalled a maiden speech delivered in a previous Parliament by a newly elected loyal Blairite Back Bencher who had previously been a London taxi driver. Many of us regretted that, in his new role, he would no longer be able to share his political opinions with us. However, we now have new Members who are certainly going to share their opinions with us in a most vigorous and effective way. Indeed, some newly elected Members are so vigorous and dynamic that they have already made their second speeches, which must be some kind of record. Among my intake in 1992, we had a competition to see which of us would first be referred to in the press as a senior Back Bencher, and I think that we have heard from several candidates for that title here today.

There was a paradox, however, in that many of these new Members, who are changing the character of our House, and rejuvenating and refreshing it by coming from all sides to bring fresh angles to the issues of the day, defined their political loyalties by historic disputes, especially disputes about the performance of our economy. I should like to set the record straight, especially for those Labour Members who have given such a caricature account of this country’s economic history.

In 1979—a year that clearly rankles with some Labour Members—manufacturing industry comprised 25.8% of the British economy. In 1990, when Baroness Thatcher lost office, as a result of the economic policies that Labour Members have been criticising today, manufacturing was down to 22.5 % of gross domestic product. In 1997, when we last lost office, it was 20.3% of GDP; and in 2009, it was 11.8% of GDP. So next time we have any sermons from Labour Members about what has happened to manufacturing industry, I hope that they will come to this House and be willing to accept the simple evidence from those statistics.

Perhaps I can give the House a second set of statistics on another important measure of the performance of our economy—business investment. In 1979, business investment was 13% of GDP. Business investment goes up and down, but there was a trend, and I regret to say that by 1997 that figure had fallen to 11.7% of GDP. In 2009, the last full year in which Labour was in office, business investment was 8.8% of GDP. When it comes to investing in the future of our economy and when it comes to manufacturing and the significance of the manufacturing sector, I hope that Labour Members will recognise the comprehensive failure of their years in office.

[Toby Perkins]

rose—

[Mr Willetts]

I have very little time.

Many Labour Members referred particularly to regional issues, and I have to say to them that of course we understand the concern about regional imbalances in our economy. In fact, another measure that deteriorated over the past 10 years has been the gap in GDP between different regions of our economy. If we are to tackle the problem of regional imbalances, we have to look objectively at the performance of regional development agencies. The report from the National Audit Office, published in March this year, made it clear that the NAO was

“unable to conclude that the regional wealth benefits actually generated”

by RDAs

“were as much as they could and should have been, and are therefore value for money.”

The report went on to refer to “weaknesses”, which

“in many cases, undermined the RDAs’ ability to make decisions and set priorities to maximise regional economic wealth”.

It concluded that RDAs were simply not doing the job they were supposed to do. That is why Government Members believe that RDA boundaries do not reflect functional economic areas; we wish to enable local enterprise partnerships to reflect better the natural economic geography of the areas that they serve. We are committed to replacing RDAs with local enterprise partnerships and we will invite local groups of councils and business leaders to come together to consider how they wish to form local enterprise partnerships.