Vince Cable
Main Page: Vince Cable (Liberal Democrat - Twickenham)
The Secretary of State for Business, Innovation and Skills (Vince Cable)
This Government's economic ambition is to build a more balanced economy, driven by private sector growth. Today I am announcing the publication of the Government's local growth White Paper, which sets out what that means for locally driven growth, job creation and the Government's role in supporting that.
The previous Government's policy sought to close the gap between the greater south-east and the rest of England through centrally led, unaccountable development agencies whose boundaries often bore no relation to the real economic geography. Ten years, and £19 billion later, the economy is still as regionally unbalanced as before, if not more so.
It is clear that that policy failed. Our new approach to sub-national growth therefore focuses on three key themes. The first is shifting power to local communities and businesses. Local communities and businesses are in the best position to understand the opportunities and needs of their own economies. Therefore, the Secretary of State for Communities and Local Government and I have asked business and civic leaders to come together with other partners, such as universities and the social and voluntary sectors, to form local enterprise partnerships which reflect natural economic areas.
We received 62 proposals and I am pleased to say that today we are asking 24 partnerships to progress and set up their boards. The list of those partnerships is in annex A of the White Paper, which will be laid in the House today. Together, those 24 partnerships represent more than 60% of the economy of England outside London and cover almost all our major cities. Many of the remaining proposals are well developed and we will welcome further proposals when they are ready. We are undertaking separate discussions with the Mayor and London boroughs on local enterprise partnerships in London.
The White Paper sets out a diverse range of roles which LEPs could take on, such as working with Government to set out key investment priorities, including transport infrastructure and supporting or co-ordinating project delivery; co-ordinating proposals or bidding directly for the regional growth fund; supporting high-growth business, for example through bringing together and supporting consortiums to run new growth hubs; and making representations on the development of national planning policy and ensuring that business is involved in the development and consideration of strategic planning applications.
We will reinforce that at national level by transforming the national Business Link website and establishing a national contact centre. We will provide support to businesses with high growth potential through a network of growth hubs and bring together venture capital and loan funds at the national level. We will support key industry sectors and innovation at national level, including through a network of technology and innovation centres.
UK Trade & Investment will have responsibility for promoting the UK overseas and helping exporters. LEPs will want to help investors to find sites and provide other support such as planning, infrastructure and support for skills.
We are committed to an orderly transition from the regional development agencies to the new delivery arrangements, and we will aim to ensure that all staff are treated fairly. RDA assets and liabilities will be transferred to other bodies through a clear and transparent process that is aimed at ensuring the best possible outcomes for regions and is consistent with achieving value for the public purse. Assets will be transferred with associated liabilities wherever possible. We expect the RDAs to manage down existing financial commitments within the funding envelope agreed in the spending review.
The second key theme is focused intervention. Today we are launching the regional growth fund, which will achieve strong growth and create sustainable private sector jobs. The first bidding round is now open to bids from private bodies and public private partnerships, and first-round bids will be submitted by 21 January 2011.
Some £1.4 billion is being made available over the next three years to encourage private sector investment across England by providing support for projects with significant potential for private sector-led economic growth and sustainable employment. Support will be provided in particular for bids from those English communities that currently are dependent on the public sector to help them to make the transition to sustainable, private sector-led growth. The advisory panel, chaired by Lord Heseltine, will provide an independent strategic view to Ministers on how the fund should be deployed to achieve its objectives. As with all major business investments undertaken under industrial development legislation, interventions will be subject to advice from the Industrial Development Advisory Board. That will ensure the highest possible level of commercial challenge through the process. Final decisions will be made jointly by a ministerial group under the chairmanship of the Deputy Prime Minister. The White Paper sets all this out in detail.
Thirdly, there has to be confidence to invest. An efficient and effective planning system is crucial in enabling growth. My right hon. Friend the Secretary of State for Communities and Local Government will soon bring forward policy and legislation to deliver that. In them, the Government will introduce a new duty to co-operate on local authorities, statutory undertakers and infrastructure providers, to ensure that the right people and groups share information and work together to make the best possible decisions for their area.
We will reform the planning system so that it is driven by communities and introduce a presumption in favour of sustainable economic development. We will fundamentally reform and simplify planning policy and guidance, presenting to Parliament a simple national planning framework that will cover all forms of development. This framework will establish economic growth as a Government priority for planning, and will lift many of the complex bureaucratic burdens that have slowed down decision making. The review of framework will be carried out in parallel with the localism Bill.
The Government are also committed to introduce a framework of effective incentives through the local government finance system to help to drive economic and housing growth at the local level. The Government’s new homes bonus will be the cornerstone of the new framework for incentivising growth in housing supply, creating a simple, transparent and permanent incentive that will be more effective than the failed top-down regional targets.
We have also looked at the incentives for business growth and decided that more can be done to give a strong and predictable incentive. We have considered ways of enabling councils to retain locally raised business rates. That means many local councils will be set free from dependency on central funding and it will represent a radical departure from the way in which the existing local government finance system operates. In considering this option, the Government are clear that businesses should not be subject to locally imposed increases in the burden of taxation that they do not support. We have already made it clear that businesses would have the right to hold a binding vote on any local authority proposals to introduce a local supplement on business rates. That is a principle to which we remain firmly committed. Equally, we will ensure that all councils have adequate resources to meet the needs of their local community. Rewarding growth is also about fairness in the local government finance system. Local business rate retention will be considered within the local government resource review, which the Government intend to launch in January after a period of consultation on the proposals in the White Paper.
To support renewable energy, we will be introducing a renewable energy bonus, which will mean that local authorities can keep the business rates from renewable energy projects. Finally, we will bring forward proposals for tax increment financing to allow local authorities to borrow against future increases in business rate revenues to pay for upfront infrastructure and development costs.
The measures set out in the White Paper complement the other measures the Government are taking to support growth and job creation through infrastructure investment; support for education and skills; improvements in competition; and support for research and innovation. This needs to be joined up with locally led action to improve the environment for business, and we are today putting in place the tools for this to happen.
Mr John Denham (Southampton, Itchen) (Lab)
I thank the Secretary of State for his statement, and of course I look forward to reading the White Paper when it is made available to the House.
Growth and jobs are of critical importance to every family and every region of the country. They are the best way to cut the deficit and the best way to offer hope to young people. The coalition Government will slash 500,000 public jobs and put 500,000 private sector workers out of work through their reckless cuts, but they claim they will create 2.5 million new private sector jobs over the next four years. There is no sign today that they can live up to that claim.
I do not suppose that the Business Secretary has ever used hair-restoring lotion, but if he had he would have discovered that just because it says “Promotes Growth” on the bottle it does not mean that growth will happen. It is very much the same with his Department and this White Paper. He calls it the Department for growth, but the comprehensive spending review led to its funding being cut by more than that of almost any other Department. Is it not true that just when growth is most important and business needs to be able to invest with certainty and confidence, this statement confirms deep cuts in growth funding, a shambles of local development organisations that will last for years, broken promises to the English regions, a planning system that will not work and delays in key investments?
This statement cuts the resources for regional development by at least two thirds. RDAs will receive about £1.4 billion this year, but the regional growth fund will have £1.4 billion over three years. Will the Business Secretary admit that the tiny regional growth fund will now have to pay for many activities that RDAs did not have to fund? The Minister for Housing and Local Government says it must pay for housing renewal. The Transport Secretary says it must pay for transport. It will invite national applications as well as those from local and regional schemes. Will the Business Secretary confirm that he expects the money to run out after one round of bids?
The Chancellor of the Exchequer once accused Lord Mandelson of writing cheques before the election, but what happened when the coalition set out to cancel them? They found that the investments made by Labour ensured that Nissan would develop electric vehicles, Ford would produce new engines and Vauxhall would maintain car production, and enabled Airbus to design and develop the A350, secured the next generation of offshore wind blades and supported the video games industry and start-up biotech companies. I am pleased Labour’s investments finally went ahead, but is not the truth that the coalition has now completely hamstrung itself in respect of making such investments in the future?
The regional growth fund is a pathetic fig leaf to cover absence of any growth strategy. It is not regional—all the decisions will be taken by two semi-retired politicians in London—and it is not much of a growth fund. As Sir Ian Wrigglesworth, deputy chair of the growth fund, said:
“One billion pounds over two years is not a lot of money and the amount you can do with it is limited.”
Will the Business Secretary admit that the Government’s reckless cuts mean that growth will be underfunded? Will he admit that if the coalition had adopted the responsible and measured approach to deficit reduction set out by the shadow Chancellor, public spending would have been cut by £30 billion less, allowing us to focus on growth?
Support for growth is not just about the level of public spending; it is about creating business confidence and certainty. What happened to the Business Secretary’s promise to the Yorkshire Post:
“What we have said is where RDAs are doing a good job and where the partners recognise they are doing a good job, they can continue in a similar form to what they have at the moment”?
Where is the evidence that business wants what he has announced today? Is not the director general of the CBI right to say that local economic partnerships
“have got off to a pretty ropy start. So far it’s been a bit of a shambles”?
Is not the Institute of Directors right to say that if local economic partnerships do not have money
“they’ll be little more than a toothless talking shop”?
Will the Business Secretary confirm that the local economic partnerships will have no start-up funding, no core funding, no guaranteed access to the regional growth fund, no new legal powers and no promises of money—for example, from the Department for Work and Pensions—to replace the future jobs fund? Will he confirm press reports that key areas such as the south-west and Lancashire will be left without a local economic partnership? Will he confirm that of places such as Hull, which is 11th in the deprivation index, Blackpool, which is 12th, Blackburn, which is 14th, and Burnley, which is 24th, none will have even a feeble local economic partnership, which other areas will enjoy? Will he confirm that RDA redundancy payments will cost nearly £500 million? Will he confirm that for the next two years, when growth is crucial, most businesses will have no coherent local development agency to talk to about key investments, key infrastructure decisions and major planning decisions? Is it not true that Wales and Scotland will enjoy coherent and focused business support and England will not?
The world outside cares little about the petty power battles between the Business Secretary and the Communities Secretary, but they, together, owed it to business and to the country to provide certainty, clarity, confidence and coherence for the future, and between them they have failed. Will the Business Secretary confirm that in so many other areas the coalition is failing to produce the conditions for growth? There is no plan for growth. How will cutting hundreds of thousands of training opportunities for adults help employers with the skills they need? What has happened to Labour’s plans to transfer responsibility for skills to employer-led organisations? At a time when every other OECD country apart from Romania is increasing higher education funding, how will cutting such funding produce the graduates we need?
More than 70 councils have started to withdraw or delay planning applications since regional strategies were scrapped. How does that give the construction industry the certainty it needs? The scheme for retaining business rates seems to build on Labour’s business rate supplement, but how much does the Business Secretary expect it to raise? Will it compensate for the 30% cut in local government funding? Does he believe that all councils will benefit equally, or will those facing the greatest challenges get less money from his new policy? Why are green industries laying off workers because of uncertainty about renewable energy policy? When the Government announced eight nuclear power stations, why did they not make the loan to Sheffield Forgemasters which would have made sure that specialist steel was made in Britain, not in Korea or Japan? The Government have turned off the tap on the drivers of growth and jobs. There is no plan for growth. They have given up on growth.
Vince Cable
Many of the specific questions about policy, the role of the local enterprise partnerships, the numbers, those that have been approved and the process of approval are dealt with in the White Paper, which is available at the Vote Office.
The whole premise of the right hon. Gentleman’s central arguments is that Government performance is measured by how much money is put in, not by what we get out of it. I will come to the performance of the regional development agencies in a moment. He repeats the argument, which he has done on several occasions, of how much money we should be spending on higher education, further education and regional development, and I have thrown the same question back at him in all our exchanges. We know that the outgoing Government were planning to cut the budget of this Department by 20 to 25%, but he has never explained where the money was going to come from. Was it from HE, FE, regional development or science? We have never had an answer and until we have one we cannot engage in a serious debate on priorities.
The RDAs were the focus of much of the right hon. Gentleman’s response. As I say, the issue is not how much the Government spend, but what they get out of it. The RDAs absorbed £19 billion over a decade, but what did they achieve? Their objective was to achieve a narrowing of the gap in growth between the north and the west midlands, on the one hand, and the south-east, on the other. If one studies the figures, one finds that in fact a widening divergence took place during the decade. The role of the RDAs in stemming that process was utterly ineffective. As the right hon. Gentleman said, the RDAs did, of course, have teeth, but they also had an enormous appetite and they consumed an enormous amount of resource with very little output. What the LEPs will have is the word “partnership”; the partnership will be between local communities and business, and this will be instead of the top-down Government-dictated approach to development.
The right hon. Gentleman asked about planning and the planning system. Let me review some of the legacy. The level of approvals for office, retail and industrial development, in a decade of relatively high growth, actually declined, while the rate of refusals increased. We have a system where every year £750 million is spent on consultancy fees and legal fees by people trying to get through the planning process. It is no wonder that very little happens. The system of planning guidance and advice that we inherited involves 7,000 pages of Government documentation; it is almost as complicated as the tax system that we inherited and it is equally dysfunctional.
The right hon. Gentleman mentioned, in passing, the key issue of housing, which is crucial not only to our population, but to local development on the ground. What is remarkable is that even in the highest boom year of 2008, fewer houses were built in Britain than at the depths of the recession of the early 1990s. In 2009, there were 118,000 housing completions, which can be set against an estimated growth in the number of households of 250,000. The system of planning and the support that the previous Government put in place failed utterly in this central task of development.
My final point is that we inherited a system of local government finance and decision making that was the most centralised in Europe. The only country in Europe that has a higher percentage of central Government funding for local government is Malta. We believe that the previous Government wanted to organise fact-finding missions to Malta to find out how they could improve by having that extra bit of centralised decision making. Our Government are trying to move to more decentralised decision making, based on local communities and a genuine partnership with business, and that is what will produce local growth.
Margot James (Stourbridge) (Con)
I congratulate my right hon. Friend the Secretary of State on bringing the private sector into the driving seat of the economic renewal that is very much required locally. The sector will be in partnership for the first time with local authorities, so that private business will have a seat at the table discussing infrastructure and planning matters at last. He has mentioned—indeed, we now have the White Paper—the 24 LEPs that he has approved. Will he say a little about the next steps for future LEP approvals? May I also commend my area’s LEP, the Black Country LEP, for which local business leaders have great enthusiasm?
Vince Cable
In terms of private sector participation, the LEPs will have boards that are split 50:50 between business and the local communities and will be chaired by business representatives. They will be driven by business, which has a direct interest in ensuring that growth takes place. It will be a change from a begging-bowl relationship to a partnership; that is the essence of this approach. The Black Country LEP is not on the first list. The assessment made was that there was not a sufficient business input into the proposal, but we hope it will proceed very quickly.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I endorse the comment made by my fellow black country MP, the hon. Member for Stourbridge (Margot James), about the quality of the black country LEP bid, and I hope that it will be favourably considered in future. May I focus for a moment on the Secretary of State’s comment about particularly welcoming bids from areas that are highly dependent on public sector employment? Such areas are often dependent on public sector employment because of the weakness of the private sector. Given that the public sector is under extreme financial pressures, can he explain how such areas will be able to put together the expertise, and have the people, time and resources, to make a bid to the regional growth fund that would be capable of balancing or rebalancing their regional economy?
Vince Cable
In terms of the process for dealing with the LEPs, we had what my colleagues call a traffic light system. Very good, imaginative proposals with a strong business input that meet the needs of economic geography were put through to the first group. Quite a lot of the proposals were yellow rather than green, and they are being processed. I hope that soon we will have a list. Some had no ambition and no private sector input, and we have simply told them that they need to think again.
It is easy, I think, to fall lazily into stereotypes about growth in areas dominated by public sector employment. I recently looked at the figures produced by my Department on the rate of growth of new company formation in different towns and cities in Britain. The best performance in the UK was in Sunderland, followed by Rotherham. They are not archetypal south-east of England growth areas. There is a lot of entrepreneurial potential across this country, and we want to encourage and develop it.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Why have Ministers not yet agreed a local economic partnership to cover Northumberland and Tyneside? Will whatever body is created have access to the assets that have been built up for the purposes of redevelopment and the income stream that those assets can give for continuing redevelopment work?
Vince Cable
As far as the north-east—in particular the Northumberland and Tyneside area—is concerned, we were disappointed that we got a very fragmented set of proposals. What has been agreed is that Teesside will go ahead; it is in the first list. Those behind four other LEP proposals that cover almost the whole region have now agreed to work together on a north-east basis. We think that that has great promise. We said that it needed a small additional amount of work and then it would get the go-ahead, and the kind of structure that my right hon. Friend wants will proceed.
As far as the assets are concerned, my Department has set up a working group that will help to manage the RDA asset disposal issue. As I said, we will try to manage this in a careful way, with assets and liabilities together. Some will be transferred, where appropriate, to local communities, councils or the LEP, but the criterion will be getting good value for money for the taxpayer. After all, this is taxpayers’ money and that is our primary requirement. There will not be gifts to local communities, but, in terms of maintaining the coherence and integrity of those developments, we will endeavour to keep them together.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
What the Secretary of State has announced today is very wrong. One NorthEast did a good job for the north-east of England. How can he justify some form of new localism when he is centralising every major decision in his Department and has been completely unable to answer the question of what will happen with residual assets and residual liabilities? Will he be far more specific on that point than he has been in answer to the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith)?
Vince Cable
The process is necessarily complex and we are trying to balance a series of considerations—making order and keeping continuity, as well as getting value for money—and the White Paper explains that. As far as the north-east is concerned, I am disappointed that, faced with the challenge, there was a fragmented response. We are hoping to come to a satisfactory conclusion that will have a north-eastern group together with one for Teesside.
Sarah Newton (Truro and Falmouth) (Con)
I want warmly to congratulate the team of Ministers on the presentation of these very positive proposals. I am confident that they will promote growth and help Cornwall realise its economic potential. Will the Secretary of State reassure businesses in my constituency, especially those involved in the port of Falmouth master plan, that financial support from the regional growth fund will be targeted at enabling new jobs in private enterprise?
Vince Cable
Yes, it is designed to do exactly that. I can confirm that Cornwall and Isles of Scilly is one of the LEPs that is going ahead in the first wave.
Angela Smith (Penistone and Stocksbridge) (Lab)
Given that the £80 million loan to Sheffield Forgemasters was all about providing strategic investment to the advanced manufacturing sector to promote private sector growth, may I take it from the Secretary of State’s statement about focused intervention that his early disastrous decision to cancel the loan will be reversed, or will he continue to dig his heels in in the hope that the issue will go away? I can assure him that it will not.
Vince Cable
We have discussed this extensively in the House and in the Select Committee, and we have explained that the situation we were confronted with was that that project was not affordable. If new projects come up from there or elsewhere, they can be considered by the regional growth fund on their merits.
Mr Don Foster (Bath) (LD)
May I thank the Secretary of State for allowing the west of England LEP to go ahead and advise him to educate the shadow Secretary of State on what those initials stand for? On the issue of the creative industries, does he agree that the creative industries could be one of the key drivers for growth in this country? Will he therefore assure us that the transformation of Business Link and the planned technology and innovation centres will be specifically directed to help them?
Vince Cable
My colleague is absolutely right that the contribution of the creative industries sector has been consistently ignored in the past. In terms of employment and value-added, it has at least as much growth as the financial services sector. I propose to work with my colleague in the Department for Culture, Media and Sport to bring the industry together to see what we can do to overcome the obstacles to its growth.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Given that the Secretary of State was too frit to face concerned students today, I guess we should be grateful that he has had the courage to come to the House at all. Given that he is here, can he explain to an area such as mine, which has greater levels of deprivation and is further away from the natural engines of growth in the economy, how exactly he will guarantee that businesses will get the support they need, given the enormous and significant cuts in funding and the fact that there is no certainty at all in the current arrangements?
Vince Cable
I think I answered that in my statement. In areas that really matter to business, such as the availability of trained manpower, there will be, as the hon. Gentleman will remember from the outcome of the comprehensive spending review, an increased number of apprenticeships and increased commitment to innovation centres, for example. Those are the things that really matter.
Richard Fuller (Bedford) (Con)
My right hon. Friend will be aware of the enthusiasm in Bedfordshire for the proposed south-east midlands local enterprise partnership and the hard work of the Liberal Democrat mayor of Bedford for that initiative. Does my right hon. Friend agree that the response to the cry of “No funding” from Opposition Members is that the real cry here is, “No more central diktat on local growth and local funding”?
Vince Cable
My hon. Friend makes exactly the right point. This was a good example of cross-party working and it is about decentralisation and local decision making, rather than centrally driven decisions.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Will the Secretary of State explain how these arrangements could replace the vital work done by the Northwest Regional Development Agency in setting up the Daresbury science and innovation campus, which is now a national centre of scientific excellence, supporting biomedical centres across the north-west, including in Liverpool, and making Liverpool’s year as European capital of culture the tremendous success it was?
Vince Cable
I would certainly be interested in finding out more about the science and innovation centre. It might well prove to be a key component of the innovation centre programme that we want to roll out across the country and would probably receive rather more support from that than it has to date. We clearly need to do this in a planned and orderly way, and I look forward to hearing more about it.
Duncan Hames (Chippenham) (LD)
Businesses and business groups are more interested in the work and agenda of local enterprise partnerships than they are in their constitutions. Does my right hon. Friend share my concern that bids to establish the partnerships might as a result more closely reflect local political rivalries than the reality of business and labour market geographies?
Vince Cable
That was one of the dangers to which we were alerted. For example, when bids were simply a vehicle for local councils that wanted to create a local talking shop without proper involvement from business, they did not proceed. The bids that have been approved are businesslike, focused and well organised, and they will succeed.
Rosie Cooper (West Lancashire) (Lab)
The north-west feels that it was badly misled by the Government on the future of the Northwest Regional Development Agency. As we have not had sight of the Secretary of State’s decisions today on the successful 24 LEPs, will he tell us the status of the multiple bids made by Lancashire? What observations might he wish to offer Lancashire if they are not, as I suspect, one of the successful 24?
Vince Cable
Several of the best bids came from the north-west, including Greater Manchester and Liverpool city region. There is a problem with Lancashire as there are overlapping bids, fiercely competitive and different, and we are in the process of evaluating which are strongest on the criteria that we have set.
Brandon Lewis (Great Yarmouth) (Con)
I congratulate the Department. I know that businesses in Norfolk that have been working to put together an LEP bid are excited, despite what the shadow Secretary of State said, about the opportunities offered by an LEP. I know they will be disappointed to be part of the gap and not to have been approved at present. Can the Secretary of State please give advice to colleagues in Norfolk and in Suffolk about what they can do to put a successful bid together?
Vince Cable
The hon. Gentleman is right. Norfolk is not on the first list. We are hoping it will be successful. The advice that I would offer is for the different councils to work together collaboratively, to involve the local business community more actively than it has been, and to be ambitious in their aims.
Jack Dromey (Birmingham, Erdington) (Lab)
Advantage West Midlands was the most successful regional development agency, generating £8.14 in the private sector for every £1 of public money invested. Does the Secretary of State share the clear concern expressed by the business community in the west midlands that the combination of, on the one hand, LEPs with no resource, one third of the funding previously available to them, and facing a land grab by the Treasury, and on the other hand, no strategic structure to promote and protect the vital automotive industry in the west midlands, will hit hard the midlands region, which faces 100,000 job losses as a result of last week’s spending review?
Vince Cable
I do not share the hon. Gentleman’s concern, because several of the strongest bids were from the west midlands, as he knows—Birmingham, Solihull, Coventry and Warwickshire, among others. The strategic oversight and the help that we need to give to the automobile industry—he is right to continue to emphasise that and to pursue me about it—will be pursued through the Automotive Council, which is one of our most successful sectoral bodies.
Pauline Latham (Mid Derbyshire) (Con)
In his letter to me of 10 September, the Secretary of State said that he would bear in mind a visit to Mid Derbyshire, where I have two companies that are losing all their jobs or greatly reducing them, and one great success story, a hosiery company called Pretty Polly and Aristoc. Will he come and explain to them the measures that he is putting in place, which I welcome and which I am sure they will welcome, so that he can tell them first-hand what we as a Government are doing?
Vince Cable
My colleague has been assiduous in pursuing me about that, and she is right to do so. That is what good constituency MPs do. There is an LEP for Derby and Derbyshire. It is one of the strongest, and I am happy to meet her to talk about the future or her specific concerns locally.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
At present, £1.9 billion of England’s European regional development fund pot is still there to be spent, but in order to be drawn down, ERDF cash must be matched by other public or private sector funding, which was co-ordinated through the RDAs. I have been looking through the Minister’s booklet today and there is no clarification of the new structure. It states:
“The new delivery structure will be announced at Budget 2011.”
As the coalition has placed a freeze on RDA spending beyond March 2011, including match funding, can the Minister please clarify how we are to draw down crucial ERDF funds for places such as Teesside?
Vince Cable
The hon. Gentleman is right: we need to take maximum advantage of the regional funding available from the European Union. RDAs have a residual role in that, but the process of collating our bids and making sure that we get maximum value will be led by my right hon. Friend the Secretary of State for Communities and Local Government.
Andrew Stephenson (Pendle) (Con)
Businesses in Pendle and I are keen that the Pennine Lancashire bid, for which we have recently submitted additional information, will be approved soon. Will the Secretary of State reassure me that the remaining decisions on LEPs will be taken speedily?
Vince Cable
Yes, I can give that assurance. My colleague in the other place, Lord Greaves, has been bending my ear on that proposal, and it seems a good one, but we need to rationalise it.
Valerie Vaz (Walsall South) (Lab)
Will the Secretary of State state his intentions for the highly skilled and independent Planning Inspectorate?
Vince Cable
The development of the planning system and what that means for policy and operationally will be set out by my right hon. Friend the Secretary of State for Communities and Local Government. He is bringing forward very soon proposals on planning reform, and I am sure he will address that issue.
Jeremy Lefroy (Stafford) (Con)
I welcome the statement by my right hon. Friend and also the fact that the LEP for Stoke and Staffordshire has been approved. Given the importance of manufacturing in both my constituency, Stafford, and Staffordshire and Stoke-on-Trent as a whole, can he give us some news on the Manufacturing Advisory Service?
Vince Cable
The Manufacturing Advisory Service provides one of the best industrial support activities, and we intend to continue it and continue to fund it. With reference to the hon. Gentleman’s area, I recently met representatives from several parties on the future of Stoke and the ceramics industry. Although it is a small industry, we want to continue to give support wherever we can.
Emma Reynolds (Wolverhampton North East) (Lab)
Advantage West Midlands invested significantly in the i54 business site on the edge of my constituency and is maintaining and creating jobs for the local area. Will the Business Secretary reassure me that in the absence of Advantage West Midlands and a regional growth strategy, this significant asset will continue to be maintained by the Government or the local authority to ensure that it continues to bring vital jobs to the area?
Vince Cable
That is another question along the lines of the original question from my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) about the management of RDA assets. They will be managed carefully and, where it is appropriate and sensible, they will be passed over to local organisations, but in a way that realises value for money.
Anne Marie Morris (Newton Abbot) (Con)
I warmly welcome the proposals set out this morning. I am delighted. They will make a real difference in the long term in the south-west. However, looking at the approved list, I am sad that the south-west is rather bereft of LEPs, and Devon, which I represent, is not on it. Will the Secretary of State meet me to talk about the Devon proposals so that we can see what can be put right?
Vince Cable
I am sure that I or the Ministers of State in both Departments would be happy to talk about that, but the key problem, as I understand it, is that there was a dispute between several local authorities, which were not able to get their act together. They must take responsibility for that, but we want to help them through the process.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Despite all the coalition’s talk of localism, I am concerned to learn today that assets currently owned by RDAs are not guaranteed to remain in local ownership. Will the Secretary of State confirm that none of the assets currently owned by the RDA, such as the Wavertree technology park in my constituency, will not be sold off by his Department?
Vince Cable
I cannot give guarantees on the treatment of specific assets. As I said, they will be managed carefully and in a way that produces value for money for the taxpayer, who originally invested in them. That will be done in a way that reinforces local development.
Bob Blackman (Harrow East) (Con)
The announcements made this morning will be warmly welcomed by all progressive local authorities across the country. In keeping with the incentives to build houses for people to live in, will my right hon. Friend elucidate further the incentives that will be given to local authorities to encourage the growth of private sector businesses in their areas?
Vince Cable
It is revealing, in a way, that half an hour into questions that is the first question we have had about the key development, which is creating incentives for local authorities to grow. Those did not exist before. We have the new homes bonus. We are talking about the repatriation of business rates and a series of incentives that local authorities will in future have to grow and develop, which currently do not exist.
Mr Ben Bradshaw (Exeter) (Lab)
Is not the CBI right to describe the whole process as a shambles? That is certainly what it has been in the south-west, which has fallen back into the worst parochialism and petty rivalry that bedevilled the system before RDAs. Why does not the Secretary of State think again before it is too late and he does untold damage to the economy of the south-west?
Vince Cable
My Department has been talking to the CBI, which is pleased with the outcome, as it made clear. On petty parochialism, that is a strange way for the right hon. Gentleman to describe his own local community. We have tried to ensure that the process is driven from the bottom up and is not centrally imposed. Good local authorities, working with local businesses, are producing very creative, positive ways forward. What is wrong with that?
James Morris (Halesowen and Rowley Regis) (Con)
I welcome the Secretary of State’s statement, particularly the emphasis on private sector jobs and skills. Can he be more specific about the time scale and process for the Black Country LEP, given the importance of private sector jobs and skills development to the black country?
Vince Cable
As I think I told one of the hon. Gentleman’s colleagues earlier, there was a problem with the black country submission, which did not have a sufficiently substantial business input. We hope that those problems will be resolved within weeks rather than months, and it is important that they are, because the deadline for the first bidding round in the regional growth fund is in January, so the relevant bodies will need to progress quickly if they are to participate.
Helen Goodman (Bishop Auckland) (Lab)
The Secretary of State has railed against centralisation this lunchtime, but the truth is that we in the north-east had a consensus on the value of our RDA. Only this morning, James Ramsbotham, the head of the North East chamber of commerce, complained about the pulling back of inward investment to Victoria street. When will the Secretary of State think again?
Vince Cable
I thought that there was a consensus in the north-east, but it manifested itself in a whole series of fragmented bids, and that is rather sad. Fortunately, the situation has been retrieved. Council leaders are now working and talking together, and they have produced a much better proposal, which I think will succeed. On foreign investment, it is absolutely absurd for regional development agencies throughout the country to have separate, competing ambassadors in overseas countries. Such work really has to be done much more sensibly, and the LEPs will have a role in helping foreign investors once they have committed themselves to a particular location.
Julian Smith (Skipton and Ripon) (Con)
Will my right hon. Friend pay tribute to Barry Dodd and those behind the Yorkshire Enterprise Partnership, a community interest company that will work with LEPs in Yorkshire to promote inward investment and to co-ordinate opportunities throughout the county? Is that not a great example of bottom-up, rather than top-down?
Vince Cable
It is, and it also addresses the issue that Opposition Members have raised: the assumption that only if the Government provide a large budget can such organisations function. A community enterprise partnership of the kind that the hon. Gentleman describes is exactly the way to make LEPs operational and effective.
Grahame M. Morris (Easington) (Lab)
Business Link, which is located on the Spectrum industrial park in my constituency, recently announced 150 job losses as a result of in-year cuts to the budget of One NorthEast. Given the announcement that we have just heard, will the Business Secretary clarify where the national Business Link contact centre is going to be based?
Vince Cable
Obviously I regret any redundancies that result from either that decision or others. Clearly, none of us relishes that prospect, but Business Link was widely criticised by the businesses for which it was designed. It was not an effective system, nor was it cost-effective for the taxpayer, so the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), is developing a new model, based essentially on website advice, but more generally, and he will unveil it shortly.
Stephen Mosley (City of Chester) (Con)
May I welcome today’s announcement of a Cheshire and Warrington LEP and the proposals in the White Paper for a new duty to co-operate on planning matters? Will that new duty apply across national boundaries? I represent the city of Chester, which has a Welsh border within half a mile of the city centre, and it is crucial not only that west Cheshire and Chester have a duty to co-operate with Wrexham and Flintshire in north Wales, but that Wrexham and Flintshire have a duty to co-operate with Chester.
Vince Cable
The answer is yes. We have to respect devolved powers in Wales, but the simple answer is yes: there will be an obligation to co-operate.
Nic Dakin (Scunthorpe) (Lab)
How will areas such as the Humber, which has not been awarded an LEP, gain access to regional growth funds and other funds, such as the European regional development fund?
Vince Cable
They will gain access if they are able to bring forward quickly a proposal that meets the key requirements. There was a strong division of opinion, of which the hon. Gentleman will be well aware, about whether the activity should centre on Hull or on the wider Humber region. There were arguments for both, but the relevant bodies really do have to come to a decision quickly if they are to participate in this bidding round.
Iain Stewart (Milton Keynes South) (Con)
I warmly welcome the go-ahead for the south-east midlands LEP. Does my right hon. Friend agree that it makes much more sense for an area such as Milton Keynes, which sits at the junction of three regions, to be grouped with its natural economic partners, rather than with an artificial area such as south-east England?
Vince Cable
The hon. Gentleman highlights briefly and eloquently why the RDA structure just did not work. As I recall, it was designed during the war to allow for the division of aerodromes; it had absolutely nothing to do with simple economic geography. The structure that he describes is a vast improvement.
Mr Clive Betts (Sheffield South East) (Lab)
I have real concerns about the Secretary of State’s over-simplistic comments on housing and planning. It might surprise him to hear, however, that by page 8 of his statement I found something with which I might be able to agree. He said that local business rate retention will be considered, but will he confirm that that involves the consideration not merely of local authorities being able to keep marginal increases in business rates, but of the complete localisation of business rates, so that once again local authorities are able to control the majority of their resources? If he is prepared to confirm that, and subject to how it is done, he might find some cross-party support on that particular issue.
Vince Cable
I am glad that I have, because that is indeed exactly what we are considering, albeit with appropriate protections for business.
Mr Andrew Love (Edmonton) (Lab/Co-op)
I regret, but perhaps more importantly I suspect that the Secretary of State will come to regret, the abolition of the regional development agencies. I note from his statement, however, that further discussions will take place between the Mayor of London and the London boroughs. Will the right hon. Gentleman take into account in those further discussions the sub-regional business hubs throughout London, and the growth corridors between London and areas outside London? In my area, the M11 is such a corridor. Will he take all those factors into account before making a decision?
Vince Cable
Yes, we will. In fact, one of the most imaginative and interesting LEPs is what we call the coast-to-capital LEP, uniting the south coast towns with southern London. That is exactly the kind of geographically based, common-sense approach that we want to encourage. It will link London with those parts outside the capital with which it has a natural economic affinity.
Richard Burden (Birmingham, Northfield) (Lab)
In his opening remarks, the Secretary of State said that the thing that local enterprise partnerships will have is partnership. May I press him a little more on whether they will actually have any money to chase such things as the regional growth fund? Will any money be allocated for running costs, or will the money for LEPs come from children’s services, emptying the bins and other local authority spending on front-line services?
Vince Cable
The Government are not providing the LEPs with a budget, but that is not to say that the partners, which include local authorities and businesses, cannot contribute to something that is in their self-interest.
Austin Mitchell (Great Grimsby) (Lab)
The Secretary of State’s words about localism will ring rather hollow on Humberside, where we have just had to face the postponement of improvements to the A160 in order to ease the bottlenecks building up around Immingham, Britain’s busiest port. Will he follow up on what he said to my hon. Friend the Member for Scunthorpe (Nic Dakin) about the Humberside economic partnership? Business and the chamber of commerce want a pan-Humber economic partnership, but the local authorities do not seem able to agree. Which side is the Secretary of State going to be on?
Vince Cable
We will look at the quality of the proposals. An LEP is going forward for Lincolnshire, and it is a pity that the partnership did not include the unitary authorities to which the hon. Gentleman refers, but it is really for communities to get their act together. Those that have will succeed; those that do not will fall behind.