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7.59 pm

Mr. Ian Pearson (Dudley, South): The establishment of regional development agencies in England is long overdue. As a former chief executive of a regional economic development company and a current non-executive director of Greater London Enterprise, I warmly welcome the Bill, which commands widespread support among economic development professionals. In the west midlands it has the full and enthusiastic backing of local authorities, the CBI, chambers of commerce, the TUC, further and higher education institutions and the voluntary sector.

There is a growing realisation that regions throughout Europe are competing against each other not just to attract inward investment, but to increase the capability of the business base and expand its capacity. Large towns and cities are increasingly becoming magnets for industries and industrial sectors and are developing strategies that focus on developing industrial and service sector clusters and increasing specialisation.

In the 21st century, the ability to innovate, the quality of the skills base and the quality and capacity of the infrastructure that links them will be the keys to economic success locally, regionally and nationally. It is vital for RDAs to be an effective tool to make sure that our regions are capable of competing throughout Europe and further afield. It is important for them to take a leading role in developing visions for their regions and formulating effective regional economic development strategies that set out a viable framework for economic development and regeneration. The RDAs must address such issues as the rivalry between towns and cities within regions and should recognise the need to balance economic development and rural and urban priorities.

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We are starting from behind. We are late in developing regional development agencies, and the figures that have been given about income per head of population show that we are lagging behind. The west midlands competes head to head with Baden-Wurttemberg in Germany and Emilia Romagna in Italy, especially in the automotive sector. In the European prosperity league, Baden-Wurttemburg is ninth and Emilia Romagna is 11th, but the west midlands is a lowly 56th.

My home town of Dudley is twinned with Bremen in Germany; there are good reasons for that. They share similar characteristics, not the least of which is an excellent brewing industry--Becks in Germany and Batham's in my constituency. However, Dudley's living standard is 75 per cent. below that of Bremen. That shows how far we have to go to ensure that the fruits of economic prosperity do not just trickle down but are seen to benefit people in Dudley and the west midlands as a whole.

We have a great deal to learn from regional development agencies in Europe. The GOMs in Belgium; centres such as Storstroms business centre in Denmark; the Spanish development agencies; and not just the German model but some of the Italian experiences should be considered. They have been at the game for longer than us and have been effective in arguing with the European Commission for resources. They seem to be able to get European programmes that many of us in the west midlands and further afield would like to have.

The west midlands, like the areas of many hon. Members who have spoken, would have preferred a single vote of resources and to have training and enterprise council budgets and regional selective assistance within the direct ambit of the RDAs. We in the west midlands certainly intend that the West Midlands development agency, which is one of the existing regional development agencies that are funded by the Department of Trade and Industry, should be folded into the new RDA. The Bill does not make provision for such regional development organisations, but I trust that there will be flexibility so that if regions decide that that is an effective way to proceed, they will be allowed to go ahead.

I have two brief points about the Bill's detail. Encouragingly, the White Paper refers to the RDAs taking the lead in developing regional strategies. However, that is not in the Bill. RDAs have a responsibility to develop strategies to meet the purpose for which they were set up, but the Bill does not give them a clear leadership role. It would be useful for the Bill to do that.

Secondly, clause 5 places restrictions on the operations of RDA powers and states that the Secretary of State's approval is required if an RDA wants to provide financial assistance to companies or to dispose of land at anything other than best value. It also places a restriction on the provision of housing. It is not difficult to imagine circumstances in which it might be entirely sensible and appropriate within the new state aid rules to provide financial assistance to companies. By the same token, disposing of land at less than best value could play an important part in an economic development package. Similarly, there are many mixed urban regeneration projects in which, as part of the package, it might make sense for RDAs to become involved in building new houses.

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I do not know why the restrictions are needed in the Bill and we should consider taking account of these matters in clause 31, which provides for guidance and directions by the Secretary of State. We are needlessly restricting the powers of regional development agencies.

I welcome the fact that the single regeneration budget challenge fund will be part of the responsibilities of RDAs. I hope that there will be permission to take an axe to the labyrinthine bureaucracy that surrounds the programme. That is vital, and I am sure that RDAs can get better value for money out of the SRB than can be had at the moment.

The capability and calibre of the people who will be attracted to the RDA boards and those who will staff and run them will be crucial to their success. I want a strong, agile and effective regional development agency and it is essential to secure high quality board involvement. We are at risk of not attracting people of sufficient calibre. I do not want RDAs to be seen as relatively weak and therefore capable of attracting only second-rate managers from business to their boards. I am encouraged by the prospect of RDAs because they can provide enormous benefits and it is important to recruit the most able people. It is proposed that staff will be transferred from offices in the regions and from English Partnerships to the RDAs. I have many friends who work for English Partnerships and who work in Government offices. However, there will need to be an injection of new blood into the running of regional development agencies if they are to have the sort of culture and ambition necessary effectively to fulfil their remit.

RDAs have a tremendous potential. They can play an absolutely crucial role in increasing economic prosperity and promoting social cohesion in the west midlands and across the United Kingdom.

8.10 pm

Mr. Tim Collins (Westmorland and Lonsdale): Almost the first line of the explanatory and financial memorandum to the Bill reads:

Has there ever been a more grim and solemn line in a Bill? That is the effect and, to some extent, the purpose of the Bill.

If the new Welsh and Scottish institutions need to be balanced with the rest of the United Kingdom, the way to do so is to balance them with English institutions, not to split England into nine artificial regions. England is a nation with at least as much history and culture as Wales and Scotland. It should not be belittled and split asunder in ways that Labour Members would not have permitted in Wales or Scotland.

It is also clear, as we have heard from hon. Members on both sides of the House, that the proposed regions simply do not command the loyalty, assent or even the comprehension of many of the people who are supposed to live in them. The hon. Member for North Devon (Mr. Harvey), who spoke for the Liberal Democrats, said that the south-western region was absurd. My hon. Friend the Member for Faversham and Mid-Kent (Mr. Rowe) and my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley) said that the south-east region was absurd. The right hon. Member for Bishop Auckland (Mr. Foster) said that he was not in favour of the present

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borders of the northern region and argued that Cumbria should be absorbed into the Newcastle-dominated area. As he is not a Cumbrian Member of Parliament, whereas I am, I can assure him that a large number of people in Cumbria do not wish to be run from Tyneside for any purposes whatsoever. However, he demonstrated--yet again--as hon. Members on both sides of the House have, that the proposed regions do not command widespread public consent.

My hon. Friend the Member for Meriden (Mrs. Spelman) gave another reason why splitting England into regions is dangerous and absurd. She said that the agenda behind the Bill is to split England--otherwise one of the strongest inherent nation states in Europe--into bite-sized chunks, each less able to resist the impulse of a centralising Brussels bureaucracy. It is precisely because the United Kingdom has been a strong, united, unitary state that we have been able to survive all the challenges of the 20th century, not least external challenges from Nazi Germany and Soviet Russia. We should be very careful before we split up the United Kingdom and, within that, split up England.

Yet another reason why the Bill is so absurd is that it harks back to the 1960s and 1970s. We heard from Labour Members about the importance of economic development and economic growth. Who would argue with that? However, they sound like old 1960s and 1970s politicians when they say, "How do we get economic growth? We will set up a committee, establish a new set of bureaucracies and produce a new strategy, and in that way we will generate wealth." Old Labour used to believe that the man in Whitehall knew best; new Labour believes that the bureaucrat in Newcastle or Manchester knows best. Most people recognise that no bureaucrat knows best and that the most successful and dynamic economies are not those with huge swathes of bureaucracy and extra tiers of government, but those that minimise them.

The White Paper contains an extremely misleading map at the front, which attempts to show that the UK is an exceedingly unsuccessful economy compared with the rest of Europe. The Labour party is schizophrenic. The Prime Minister lectures Europe that the UK is cool Britannia. He lectures Europe that it should learn from us on a whole range of issues, not least the need for labour market flexibility. He lectures that the United Kingdom represents the future for Europe because we have overcome many of the economic challenges that the rest of Europe still needs to overcome. Yet time and again in the debate we have heard Labour Members saying that the UK is the worst performing economy on a whole range of measures. That is patently absurd.

The hon. Member for Huddersfield (Mr. Sheerman), who has left his place, said that my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) was clutching at straws when he referred to inward investment--that, somehow, inward investment did not matter much. I had thought that that was the primary purpose of the Prime Minister's trip to Tokyo. The hon. Gentleman ignored the fact that of the 20 top companies in Europe, more than half are in the UK. He also ignored the fact that comparative employment rates, based on the map in the front of the White Paper, show that the UK is performing a great deal better than almost anywhere else on that map. That is a further demonstration of the flaw in the economic strategy behind the Government's approach--the idea that by setting up a new committee,

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bringing together some more bureaucrats, creating a new agency and putting up taxes to pay for it all will create wealth.

Who are the dynamic wealth creators who will transform the performance of our regional economies? The Bill tells us who they are--representatives from local government, from education and from trades unions. Only socialists could believe that a collection of some shop stewards, some National Union of Teachers members and some clapped-out councillors will suddenly produce a dynamic new economy. If the idea were not so sad, it would be hilarious.

We also heard from hon. Members on both sides of the House about the importance of rural areas. The Minister, who is chuntering away to himself, has dismissed the arguments on rural areas, but I ask him to pass on two concerns to the Minister who is to reply to the debate. Can we have an assurance that those who are appointed to the RDA governing boards as rural representatives will be genuinely rural people with their roots in rural areas? We are not interested in people who happen to have a holiday home in a rural area, where they spend a little time. We want people who were born and brought up on farms or who spend a large proportion of their lives in rural areas and villages. [Laughter.] Labour Members are laughing, but we need rural representatives who have genuine rural roots.

I hope that the Minister will take seriously the point that I made, when I intervened in his speech, about the symbolic importance, if nothing else, of ensuring that at least one RDA has its headquarters in a rural area. Frankly, out of sight is out of mind. If every RDA is headquartered in an urban area, urban areas will be first and foremost on their agenda.

We have heard a great deal from Labour Members and, to some extent, from Liberal Democrats, about their wish for training and enterprise councils to be brought under the operation of RDAs. I very strongly counsel the Minister against that. I hope that he will say firmly and clearly that the undertaking given in the last Parliament by the Labour Opposition, that they would not tamper with the structure, independence, financial autonomy or role of TECs, will be upheld.

My right hon. Friend the Member for Sutton Coldfield was instrumental in creating TECs. In fact, to a large extent they were his idea and I pay tribute to him for that. I had the great honour of serving as a special adviser to my right hon. Friend's successor, the present shadow Foreign Secretary--my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard)--and it was during his time at the Employment Department that most of the TECs were established.

The House will know that the essence of the success of TECs has been that the whole of their governing boards have been chief executives of businesses. Time and again, chief executives of businesses have said that they would take part in the operation of TECs only if they did not have to deal with all those people who, in the past, have stopped them achieving all that they have wanted to achieve for the local economies--in particular, local councillors, teachers and others, who are precisely those who will be put above them in the RDAs that will represent the absurd regions.

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