Older Industrial Areas: Economic Disparities

Toby Perkins Excerpts

Thursday 25th June 2015 Westminster Hall

[Toby Perkins (Chesterfield) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Rosindell, for what I think is the first time. I congratulate my hon. Friend the Member for Easington (Grahame M. Morris) on securing the debate and on his extensive and incredibly important contribution. As we have heard in the other contributions in what has been a one-sided debate, the issues that he raises about his community are felt in many other communities in older industrial areas.

My hon. Friend quoted extensively from the Industrial Communities Alliance report. That is an important piece of work by a very important organisation that ensures that these issues are brought before the Government and that the Government are forced to consider the legacy that exists in our older industrial areas and cannot close their eyes to the poverty and deprivation that have resulted particularly from the collapse of the mining industry, but also from post-industrialisation—the attack on the manufacturing sector that happened, as others have said, under the Conservative Governments of 1979 to 1997. Therefore, the work of the Industrial Communities Alliance is incredibly important, and my hon. Friend reflected its report very well.

My hon. Friend spoke many times about the northern powerhouse and whether that was a real thing or simply a chimera—an illusion—or possibly just a press release. I think that he is on to something there. We have all seen in the past few months the Chancellor of the Exchequer suddenly discovering the north after many years of policies that have made life in northern communities much more difficult. I am talking about huge cuts to local government in the north and the huge increase in inequality that we saw under the previous Government. Suddenly, he arrived in his hard hat and high-visibility vest and announced that we had a northern powerhouse or, if not, he was going to create one.

[Grahame M. Morris]

This is a very important issue, worthy of the Government’s full attention, not just a photo opportunity with a brightly coloured jacket pre- election. As my hon. Friends have said, many of the problems faced by coal closure areas, such as mine, are multifaceted. The legacy is not just joblessness, but an environment impact, derelict land, substandard former colliery housing, despoliation and ill health. It requires the Government to take a co-ordinated approach, beginning with a recognition of the particular problems of not just coalmining areas, but steel areas, textile areas and, indeed, many of the old industrial areas that face similar problems.

[Toby Perkins]

I could not agree more. My hon. Friend’s contribution was speaking to many of the partnership approaches that were taken under the last Government. These problems are complex. He is absolutely right to talk about the combination of poverty, historical benefit dependency and ill health that results from what people have put their bodies through while working in heavy industry and from the link, which other hon. Members referred to, between poverty and ill health more generally.

A co-ordinated approach and a Government who take the situation seriously are required. The Government must prioritise the regeneration of our industrial areas and recognise that the situation is not easily resolved. The situation cannot be resolved with a press release or a photo opportunity; substantial partnership and cross-agency work between all organisations—central Government, local government, the business community, the voluntary sector and health authorities—over a considerable period is required to alleviate the situation.

My hon. Friend will be aware that my constituency of Chesterfield features in the Industrial Communities Alliance report. The area had a significant history of coalmining and manufacturing, much of which has now gone. Chesterfield was once a town in which five or six employers employed 3,000 or 4,000 people each; and now it is a town in which 3,000 or 4,000 employers employ five or six people each. The changing face of our economy poses significant challenges, including inequality.

[Grahame M. Morris]

I take issue with my hon. Friend’s suggestion that we have had a long-term dependence on benefits. Historically, Easington had a long tradition of almost full employment when the pits were working. We are in our current predicament because of the difficulty of attracting inward investment due to the complexity of the problems, which are compounded by various aspects of Government policy, including this week’s announcement of a £200 million cut in public health funding. Indeed, £3.5 million will be cut from Durham County Council’s budgets. That funding is used to address the long-term issues of ill health and poor diet in some of the poorest communities. The Government need to end their short-term approach and take the long-term, co-ordinated approach needed to address the problems in Chesterfield, Easington, Neath, Sheffield, Glasgow and all older industrial areas.

[Toby Perkins]

I agree with my hon. Friend. I am referring to what happened in such areas, particularly after the closure of the coalmines and manufacturing sector. The irony of the Government’s approach to welfare—they suggest that there is a group of people who want to live on welfare—is that that was precisely Mrs Thatcher’s approach when she shut all the pits. She went to all these people, shut down entire communities and threw them out of work. She put huge numbers of people on incapacity benefit and parked them there for a long time. Inasmuch as there was a history of welfare dependency, it was Mrs Thatcher who caused it, and my hon. Friend is right to clarify that point.

My hon. Friend also spoke about local enterprise partnerships, and I will speak in more detail about their role and the previous role of regional development agencies and how the Government’s decisions prevented them from being as effective as they could have been, particularly when their help was really needed. He raised a couple of issues that I want to explore. He talked about the insecurity that goes with the increase in self-employment. I was self-employed for six years before first coming to Parliament, and I know that self-employment is an insecure line of work, but we should be encouraging self-employment, which is a great thing. Simultaneously, we must recognise that some people set up their own businesses because there are no other options. Self-employment is sometimes a sign of a local economy’s weakness; and at other times self-employment should be welcomed. It is important to recognise such insecurity in the workplace. He may also have been referring to bogus self-employment. Some people who appear to the majority of us to be self-employed are actually in insecure employment.

[Grahame M. Morris]

My hon. Friend is being generous in giving way. It is important to challenge the accepted logic that an increase in self-employment is necessarily a good thing. We need to consider where it is happening. The Union of Construction, Allied Trades and Technicians and other trade unions that organise in the construction sector are concerned about the increase in casualisation and the use of umbrella companies by unscrupulous employers to decrease job security and drive down terms, wages and conditions on building sites, and there are other such examples. A number of people who were directly employed in the offshore industry are now classed as self-employed not by choice but because they have been forced down that route. Self-employment is not necessarily a positive thing for local economies. I accept that we want to encourage small businesses to grow and to take on employees, but that does not necessarily translate in the figures that have been quoted on the growth in self-employment in areas such as mine.

[Toby Perkins]

This is a multifaceted issue. I feel like I have been responding to my hon. Friend’s speech for longer than it took him to deliver it, so I will move on. [Interruption.] He rightly says that we have a bit of time.

There were other important contributions. The hon. Member for Glasgow Central (Alison Thewliss) reflected on the extent to which industrial jobs have gone from her constituency. Like my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), she represents a city that has seen huge regeneration and positive change, but there is still the legacy of industrial decline in such older industrial communities. When listening to the hon. Member for Glasgow Central, I was struck by the similarity between the experiences of her constituents and the experiences described by other hon. Members. After hearing Glasgow and Sheffield Members reflecting on the challenges in their cities and hearing my hon. Friends the Members for Easington and for Neath (Christina Rees) talk about the impact on former mining communities like mine in Chesterfield, I am struck that there is a lot more that links us than divides us in the industrial areas of England, Scotland and Wales. We should consider that as we think more broadly about the direction in which our country is going. A huge number of issues affect us all. We have shared experiences and new opportunities, but we have also endured and shared painful legacies.

My hon. Friend the Member for Sheffield, Heeley said that the legacy of Mrs Thatcher has cast a dark shadow over older industrial areas, and she reflected on the importance of rebalancing our economy. My hon. Friend the Member for Neath said that the scar of mine closures is still felt today, and she spoke powerfully about the impact of ill health and its link with poverty. She also made an important point about the impact of spending cuts on local government and the knock-on impact on the voluntary sector. We all know that, over many years, the voluntary sector was incredibly powerful and important in the Labour Government’s approach to regeneration. Ironically, a Conservative Government who came to power promising us a big society and a revolution in the voluntary sector have achieved the absolute opposite: a weakened voluntary sector that is unable to pick up the pieces in many of the ways that it did previously.

Many issues raised in the report, complex and long-standing as they are, were being addressed under the Labour Government. We saw huge regeneration of our great cities. On the motorway in my area we have the new junction 29A, which is still known as “Skinner’s junction” after the campaigning of my hon. Friend the Member for Bolsover (Mr Skinner), and next to it is a huge new industrial estate. The Industrial Communities Alliance report says that there are 4,900 extra jobs in Bolsover, which is one of the most successful older industrial areas in terms of employment growth precisely because the Labour Government made the decision to invest in such communities. So we can get results if we invest. The Coalfields Regeneration Trust did so much work and was strongly supported by the Labour Government.

The Labour Government made huge investments in health promotion, which my hon. Friend the Member for Easington mentioned, and recognised the massive challenges that face older industrial communities. We recently saw the announcement of a £200 million cut in health promotion, which will have a significant impact. The powerful contributions to today’s debate have expressed the importance of this issue.

In terms of earned income, the United Kingdom is the fourth most unequal of the 30 countries in the OECD; only the USA, Israel and Mexico are more unequal than we are. My right hon. Friend the Member for Doncaster North (Edward Miliband) was absolutely right to say that inequality is one of the huge challenges facing our country, although not only our country. The Labour party will give considerable thought to it over the next five years as we attempt to put together a programme that can again win the support of the British people.

Income is spread unequally across the UK’s regions and nations. The average household income in London is massively higher than in the north-east. In addition to income, overall wealth is unevenly spread across the UK—the average household in the south-east has almost twice as much wealth as an average household in Scotland—and different regions of the country have a different percentage share of UK gross disposable household income: London and the south-east have 32%, and the north-east has just 3.5%. Those disparities exist. It is important to recognise that poverty is not the preserve of the north. Areas throughout our country face substantial challenges: for example, Cornwall, which we might have expected to be represented here. None the less, a specific challenge faces the older industrial areas, and it is important to reflect that.

Many Members have discussed why we are in this position. There are three or four key reasons. The first is the failure to invest in retraining and vocational skills for the forgotten 50%, leaving people in the older industrial areas vulnerable to falling into a life of low pay. Far too many people in the UK today do a hard day’s work and still live in poverty and visit the food bank on the way home. The Prime Minister continually tells us that a job is the route out of poverty, but increasingly, people in poverty are also in work. Under this Government, work alone no longer pays enough to allow people the dignity of being able to feed their family.

More than 5 million people are now in low-paid jobs, and more than 250,000 are estimated to earn less than the national minimum wage. The problem of low pay has got significantly worse under this Government. Not only has the national minimum wage fallen in real terms since 2010; the official figures show that without action to tackle low wages, spending on tax credits for people in work is set to rise by an estimated £2.5 billion over the course of this Parliament. Only this Government could think that the response to that environment of low pay, and to all those people who work hard all week and still do not have enough money at the end of it to put food on their table for their kids, is to cut tax credits.

What an appalling legacy this Government will leave in terms of that increase in child poverty. We already hear that this Government are thinking of repealing the Child Poverty Act 2010, so that they will no longer be held to account for that increase in child poverty, but in communities throughout our country, people sitting around the kitchen table know the reality of life under this Government.

There has been a huge increase in the productivity gap. Professor Van Reenen, head of the Centre for Economic Performance at the London School of Economics, has said:

“By Thursday lunchtime the other”

major countries in Europe

“have produced as much as it takes us to produce by Friday afternoon… So basically, we could take every Friday off if we could be as productive as those other countries and earn the same amount of money.”

The productivity challenge is partly linked to the lack of investment and the short-termism that other colleagues have mentioned. For too long, the British economy has taken a short-term approach to matters of research and development. There are far fewer people involved in R and D in this country than in many of our European competitors. Likewise, although we have waited an age for a final decision on a new runway for London, Charles de Gaulle airport outside Paris has had four runways for years. There are many reasons why the endemic challenges in the older industrial areas have not been addressed.

The Government are exacerbating problems. The policies of a truly one nation Government would help overcome regional disparities, but as my hon. Friend the Member for Easington discussed, spending on infrastructure increases such disparities. Spending per head on London is 24 times higher than on the north-east of England. He quoted statistics that bear repeating; I also have them. The amount spent on Crossrail alone is nine times more than the amount earmarked for rail projects in the whole of Yorkshire, the north-east and the north-west.

There is a substantial gap in the ability of businesses in older industrial areas to access finance. The access to finance market is much less competitive there, so the amount of money lent by the banking sector to our businesses is substantially different depending on location: £2,647 per head of population was lent to businesses in London, but less than half that was lent to businesses in the north-east and the east midlands. Entrepreneurs in areas with huge growth potential are crying out for support but finding that, unless they live in an area that is already coping better than most with the post-crash world, the Government’s door is shut to them.

My hon. Friend the Member for Easington referred to the closure of One North East and the local enterprise partnership’s ineffectiveness in his case. Many local enterprise partnerships are working hard to make a contribution, but it was a strange decision at a time when the economy was desperate for growth—we should remember that we already had growth then, in 2010 at the end of the last Government, but we still needed a great deal more—for the Government to shut the regional development agencies and set up those fledgling agencies with limited resources and an unclear role. They have all attempted to the best of their ability to find a role, but they have been inconsistent in their ability to do so. Only now, five years after they were desperately needed, are some of them starting to come to fruition. That is another Government measure that has had a negative impact.

Strengthening local enterprise partnerships so they can provide greater capacity and stronger services is an important part of the solution, as is strengthening local authorities. We welcome steps to strengthen the combined authority in Greater Manchester, but we want more combined authorities to tackle the chronic problems of poor skills, infrastructure and economic development. We need reform of our business rate system, which has worked against business development in older industrial areas. If we had had the business rate re-evaluation counselled by the last Government, business rate bills for people in my hon. Friend’s constituency would be hundreds if not thousands of pounds lower and business rate bills in central London would be higher. That would have made a big impact on our local communities.

We believe that local areas and local authorities should be supported where they are succeeding in attracting and supporting businesses by retaining more of the business rate revenue generated by growth to invest in building further success. We also need greater decentralisation of Government infrastructure, so that more Government money is spent in the older industrial areas.

We support a Government with a commitment to a high-wage, high-skill workforce; devolution to English city and county regions that puts local councils at the heart of building up the older industrial areas; dealing with the huge increase in the productivity fall under this Government; an access to finance system in which money goes to businesses in our older industrial areas; expanding the capacity and strength of the local enterprise partnerships; fair funding for local authorities in the poorest areas; and a reform of business rates that supports small businesses in our communities. That is the kind of programme that will start to support and improve our older industrial areas.

This debate has been important in putting the issues before the Government, but we need them to stop the rhetoric and start the action; if they did, our communities might get the support that they deserve.

--- Later in debate ---

[Anna Soubry]

Of course, I am going to deal in detail with the situation in the hon. Gentleman’s constituency and in the constituencies of all those who have spoken, with the exception of the hon. Member for Chesterfield (Toby Perkins). I am more than happy to write to him to tell him about the advances that have been made in the past five years in Chesterfield. I want to put this matter into context. I, too, have had to sit listening not only to a lecture, but to a rewriting of history that even the most red historians would struggle to produce.

I want to talk about the industrial communities in the alliance’s report. Since the beginning of the 1970s, UK cities have experienced an ongoing historical shift in economic orientation, driven on the one hand by a process of sustained de-industrialisation, as we have heard, and on the other by a progressive rise in service and tertiary activity. The report focuses on old industrial centres that have been slower to replace declining industries. Former industrial centres that have moved on, such as London—we often forget that London used to be a heavily industrial city, but it moved on—do not appear in the list. Therein lies an important point: there is nothing pre-ordained about past or current trends continuing into the future.

Over the past three decades, some cities have experienced positive shifts of direction, or positive turnarounds, in their differential growth paths. Oxford is an example, as are Brighton, Ipswich and London. I recognise—I am an east midlands MP, as is the hon. Member for Chesterfield—that those cities are in the south of England, and much will depend on how different older industrial centres are able to attract and develop the growth sectors of the future.

[Toby Perkins]

Will the right hon. Lady give way?

[Anna Soubry]

In a moment. I want to turn to the economy in Easington, because the hon. Member for Easington is a champion for his constituency. We have all witnessed tremendous technological change in our lifetimes. I am certainly old enough to say that, given that I come from Worksop in north Nottinghamshire where there was a coalmine. The whole town depended on the success or otherwise of the Manton colliery and surrounding collieries, so I am familiar with pits.

Industries that did not exist 20 years ago are now the most productive in the world. In the constituency of the hon. Member for Easington, this change has been more apparent than most. Since the closure of the dominant coalmine in 1993, the area has undergone a tremendous change. The legacy of coalmining is still being dealt with, but great progress has been made in remediating the industrial pollution, for example. The Durham coast, as the hon. Gentleman has told us, is now home to one of the most stunning coastal walks in the United Kingdom, with the Durham heritage coast highlighting the great natural, historical and geological interest of the area with dramatic views along the coastline and out across the North sea, framed by magnesian limestone cliffs. I have not been to the area, but I would love to go to the hon. Gentleman’s constituency, and I hope to arrange a visit.

A former slag heap is now the site of one of the country’s most dynamic retail centres, with more expansion about to start at Dalton Park.

My officials have provided me with a note about the regional growth fund’s investment in Easington. We might think from the hon. Gentleman’s speech that there had been no investment in his constituency. On the contrary, eight projects in Easington have been awarded a total of £13.4 million. They are contracted to lever in a further £81.6 million of private sector investment and to create or safeguard 1,189 jobs. I hope the hon. Gentleman will welcome such great investment of taxpayers’ money.

--- Later in debate ---

[Anna Soubry]

May I correct the hon. Lady? She said that investment has been scrapped and that the electrification of the midland main line had been abandoned, but she is absolutely wrong. [Interruption.] The hon. Lady is shaking her head, but I was in the Chamber when the Secretary of State for Transport made his announcement—I do not know whether the hon. Lady was there—and I heard exactly what he said. The process has been put on hold because of problems and failings in Network Rail. It has not been scrapped or abandoned. I remind the hon. Lady that in the 13 years of her party’s Government, 10 miles of rail were electrified in this country. We have not turned our back on investment; the £40 billion in railway improvements will continue.

Like the hon. Lady, I travel on the midland main line. Beeston station, in my constituency, lies on it. I assure her that the improvements that will be made to it mean that six more trains per hour will leave St Pancras. I am afraid that the hon. Lady is misleading people and her constituents when she says that the investment has been abandoned or scrapped.

[Toby Perkins]

I am grateful to the Minister for giving way on the subject of misleading constituents. She is a representative of a marginal east midlands town, and up until the election a few weeks ago all her constituents believed the Government were going to deliver electrification of the midland main line. The truth is that, as soon as the election was over, the Government said, “Actually, we are not going ahead with it.” It may be a pause, or it may never happen. The Minister ought to be careful when she accuses other people of misleading their constituents.

[Anna Soubry]

This is not the debate we are meant to be having. I sat in the Chamber and heard what the Transport Secretary said. He made it very clear that it has not been abandoned or scrapped. He deliberately used the word “pause”.

[Toby Perkins]

Why did he not say that before the election?

[Anna Soubry]

There is no point heckling from a sedentary position. It does not advance the debate, and it does not address the complaints of the hon. Member for Easington or his constituents’ concerns. The Transport Secretary said it had been paused because of the failings of Network Rail. The improvements to the rest of the line will certainly continue.

Let me return to the constituency of the hon. Member for Easington and the fact that a new economy is beginning to grow in the wider north-east. In Peterlee alone, Caterpillar employs 1,000 people in a global centre for research and development that produces Caterpillar’s articulated truck range. Caterpillar is one of the United Kingdom’s largest heavy equipment manufacturers, with annual exports worth more than £1.5 billion. Some 85% of the United Kingdom’s production of construction equipment is for export. That is something to be championed in this place by the hon. Gentleman.

Nissan’s Sunderland plant secured £250 million of investment to manufacture the Infiniti Q30, creating up to 1,000 new jobs, 300 of which are being recruited now. It is the first new volume manufactured brand in the United Kingdom for more than 20 years. Production starts later this year. I am often reminded that more cars are now being produced in Sunderland than in the whole of Italy. The Sunderland plant currently employs just under 7,000 people on two lines, and it produced just over half a million cars in 2014—the equivalent of one in three of all cars made in the United Kingdom. The northern powerhouse regions—the north-east, the north-west, Yorkshire and the Humber—account for 25% of the UK’s automotive sector, and the work of the newly created North East Automotive Alliance should build on that strength.

Science and innovation also play a considerable part. NETPark in Sedgefield is an outstanding example of how world-class science and innovation can be partnered with great facilities and business support to continue their significant growth. It is now a significant employment site, with plans to expand and to employ more than 3,000 people in the next 10 years. Last week, NETPark announced that it has nearly 160 active collaborations with universities, illustrating its existing global position and helping to translate first-class research into products that have a real social impact and create jobs and prosperity.

The Government recognise the continuing historical challenges facing the local economy in Easington. Similar challenges face many former industrial communities across England, but the solutions to the challenges are not the same. A one-size-fits-all solution from Whitehall will not work. For Britain to prosper, every part of the country needs to fulfil its potential. That is why the Government are so committed to devolving power not only to the northern powerhouse but to great cities such as Sheffield, where the number of people in jobs has risen by some 700, and where there are two outstanding universities and £11 million-worth of technical incubators. Those are just some of the great things that are happening in Sheffield, where £23.8 million of funding is going into skills and 4,000 apprenticeships to be created by 2016. None of those things were mentioned by the hon. Member for Sheffield, Heeley (Louise Haigh).

I have some details about the city deal in Glasgow, in reply to the hon. Member for Glasgow Central (Alison Thewliss). I will write to the hon. Member for Neath (Christina Rees) about the investment that the Government are making in her constituency and in her part of Wales.

I will be brief, because I think I have to finish at 3 pm.