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Westminster Hall

Wednesday 20 January 2010

[Mr Mike Hancock in the Chair]

Leeds (UK Economy)

Motion made, and Question proposed, That the sitting be now adjourned-(Lyn Brown.)

9.30 am

Mr. Mike Hancock (in the Chair): We now have a debate on the success of Leeds football club defeating Manchester United, or is it on the economy of Leeds?

John Battle (Leeds, West) (Lab): It is no bad thing to mention Leeds and Man United at the present time, and it was in that spirit that I chose to debate the Leeds contribution the UK economy. I welcome my colleagues, and our regional Minister, who serves our region brilliantly. I thank her for her work, and for attending today.

I aim to spell out the huge contribution that Leeds makes not only to Leeds city and the regional economy, but to the UK economy as a whole, as that does not receive enough emphasis. I am known in the House and elsewhere for emphasising the poverty that still mars our city, and the statistics show that, sadly, Leeds is still in the top 10 of the most unequal cities in the country. It is still divided between those with the benefit of income, wealth, prosperity and property, while others-many of them in inner-city areas such as my constituency-lose out on good jobs, good housing and quality of life chances for themselves and their families. I am certainly not complacent about the needs of my neighbourhood and of people in Leeds. Every job lost means that we must work hard to obtain another to take people into the future.

My impetus for today's debate was a former colleague's comment. Boris Johnson is now the Mayor of London, and last October he was reported to have said in a keynote speech in London:

obviously he thinks that Manchester is important-

I say with no disrespect to Manchester, "No Boris, you are completely wrong. You invest in Leeds to ensure that London and the UK economy thrives." We turn it round.

Mr. Andrew Pelling (Croydon, Central) (Ind): I am pleased to intervene as a London Member, and I declare an interest, as my daughter is employed partly in Leeds, so the Leeds economy is important to me. Is it not important to London to bear in mind the fact that Leeds is the second financial centre in the UK, and that good investment, particularly in transport in, to and from Leeds is important to the UK economy as a whole?

John Battle: I thank the hon. Gentleman, who is absolutely right. Leeds's role as a financial centre is vital, and we must remain connected, and link the
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country together economically, metaphysically and through transport links. If we do not have a high-speed link to London, that will jeopardise not only the Leeds economy, but the UK economy. I am grateful to the hon. Gentleman for the spirit in which he made his intervention, particularly as I may have been interpreted as being anti-London, which I am not. However, the contribution of Leeds as a whole must be considered.

Leeds's great economic strengths lie in its economic diversity and adaptability over the years. The hard work and ingenuity of the people who live and work in Leeds blend past manufacturing and production with enterprise and commerce. That blending is unique, and I shall refer briefly to historical tradition, the story of Leeds, and the current statistics, but I also want to press the case for Leeds to continue as an economic powerhouse. We need a stronger future focus on skills and training for the 21st century and better public transport, as the hon. Member for Croydon, Central (Mr. Pelling) said-and I am sure that we all agree with his comment-to link us to the rest of Britain. Crucially, we need the high-speed rail link. Without Government intervention in those two vital infrastructure areas, Leeds's continued growth will be held back during the 21st century, as will the UK's prospects.

Some of my colleagues are historians and know the story of Leeds. They may want to slip out for a coffee break because they have regularly heard me speak about its history. Leeds has a long tradition of regenerating itself from within since the Romans crossed the ford on the River Aire, and the Venerable Bede mentioned the market town of Leeds and the little hamlet. Henry VIII's chaplain, John Leland, referred to the Leeds market on the bridge. It was a centre for trade and commerce in the region throughout the ages, and the city was built up around that bridge with various industries and trades. The root of Leeds's economy is in my constituency in the great Cistercian abbey of Kirkstall, which was built in the 12th century.

The abbey had a huge sheep farm, and a fulling mill, and employed the whole neighbourhood in wool production, from shearing to drying. It developed smelting, forging, tanning, weaving and pottery making. The template was set for a diverse economy, and over 400 years Leeds developed into the textile centre of Britain, linked to the continental cloth markets. It was recognised in places such as Florence, Italy, France, Belgium and Holland as the place for commerce and trade in the textile industry.

Colin Challen (Morley and Rothwell) (Lab): I agree with all that my right hon. Friend says, but does he agree that back in the early days, Rothwell was a more significant commercial centre than Leeds? It is now enveloped by Leeds, but that is also part of history.

John Battle: I am tempted to say that debates on diversity and multiculturalism must stretch as far as places such as Rothwell, Garforth and Pudsey-places that were independent, and some of which were named in the Domesday Book before Leeds. Elmet was certainly there first, and my hon. Friend the Member for Elmet (Colin Burgon) is here today.

The notion that Leeds can blend a collection of urban villages around itself and could build on those strengths since its organisation into a metropolitan
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district is significant, because it adds range to that diversity of industries. During the 18th and 19th centuries, Leeds moved away from wool textiles, which shifted to Bradford. It then became a centre of engineering excellence with great names, such as John Marshall, Benjamin Gott, John Barran, Matthew Murray and Blenkinsop. The rail industry, and locomotives were also important. The textile industry grew up with new manufacturing, and Armley Mills in west Leeds was the largest factory in the whole world. With that shift to become an engineering centre of excellence, Leeds produced hundreds of engines and trains that are still seen throughout the world.

In 1892, Leeds had 900 factories and workshops, and was the workshop of Britain. The names of the great industrialists and engineers are on the walls of the town hall and the civic hall in Leeds. Leeds's great tradition involved not just production, but the trade link of commerce. In the 1890s, Leeds Illustrated said that it was in trade that Leeds began to shine, and that it was a town of a hundred different trades making everything from shoes to machinery, from furniture to Yorkshire Relish.

That diversity involved not just making, but trading. As we moved towards the turn of the 20th century, Leeds became known as the city of 1,000 firms. It had moved on from wool, textiles and engineering to the great diversity of a production economy. It was characterised as one of the most diverse economies in the world. It was not dependent on a single industry, company or mine, but was involved in textiles, clothing, engineering, printing, production of chemicals and toiletries, and financial services. The hon. Member for Croydon, Central referred to financial services. Price Waterhouse was founded in Leeds in 1865, so there was a tradition of financial services even in those early days. In 1911, printing employed more than 8,000 local people.

On the diverse economic base of a self-made city, small and medium-sized firms grew up locally. Leeds became a regional centre of business, and thrived on the interaction between diverse industries and firms, which enabled Leeds to develop new ideas, to be innovative and to move forward, providing employment not only for the city, but for the whole region. As we moved into the 20th century, Leeds had a strong manufacturing and production base, and a long tradition of commercial activity. It had a thriving economy of its own, but it was the hub of a wider regional economy.

By the time I was born in 1951, Leeds was a city of 5,000 firms. Today, it is a city of 29,000 firms, many of which are small and medium-sized, but that illustrates its energy for innovation and regeneration. In the '70s, there was a shift from manufacturing to services in both the public and private sectors. The universities developed-the huge Leeds university and Leeds Metropolitan university-as did hospitals such as St. James's university teaching hospital. Local government developed with that reorganisation.

In the mid-20th century, there was a shift from manufacturing to retail and the great stores. Indeed, the whole notion of town centres, high streets and shopping was not too far removed from Leeds. The first great general store in the UK was Leeds Industrial Co-operative Society in 1893. Marks & Spencer grew from the business
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of Michael Marks who, as everybody knows, had a penny bazaar in the market. Clothing was produced by Burton and Hepworth.

When I served as a councillor in the '80s, I worked on the economy of Leeds and on economic and employment development, and I remember a very significant figure. Between 1977 and 1987, 17,500 jobs were lost in manufacturing, particularly in the traditional engineering sector. At the same time, 17,500 new jobs were created in the service sector for both public and private professional services. Banking, accountancy firms and lawyers moved into the city at that time, but there was a shift from the inventive skills of 19th-century engineers to the flair of retail and business services. Creeping through at the end of the 20th century, we find the new science, technology and creative industries of the digital age based in Leeds, as the city transforms itself, quietly, as if within a chrysalis, to move into the 21st century. Today's city of 29,000 firms is still a diverse, permanently changing economic base.

Such diversity enabled Leeds to avoid the worst of the depression of the '30s. There was economic intervention to help people in Leeds. The unemployed were asked to build the civic hall as a job project, and to invest in public buildings. Because of its diversity, Leeds survived the worst of that depression. That was also true in the '80s through the local council's intervention and focus on job generation. I will return to that issue shortly. Diversity has helped Leeds to survive, but it does not happen by accident. The city needs support, encouragement, fostering and investment.

In 1893, the Leeds chamber of commerce in its annual report recognised the

Its editorial suggested that by keeping the two activities together, Leeds would thrive. That is the city's real strength.

Today, Leeds is a city of over 775,000 people, and it is the fastest growing city in the country. It is not an ageing city; young people are moving into Leeds, and it is increasingly seen as a young city. The average age in Leeds is dropping, which is good news, because the ideas will remain. Leeds is halfway between London and Edinburgh, and is situated between Hull and Liverpool. If someone puts a dot on the map and says that they want to relocate Parliament because the River Thames is starting to flood, they could not find a better centre of Britain in which to do that than Leeds, but I shall not go down that route.

At present, Leeds employs 445,000 people in local manufacturing, commercial and public services. Every day, 100,000 people from the wider region of Bradford, Wakefield, Dewsbury, Halifax, Harrogate and York come to Leeds, and every evening, 100,000 people leave. Their work is in Leeds, which acts as a giant economic lung, breathing in the work of the people from roundabout. It is still the third largest manufacturing centre in the UK, the UK's largest provincial printing sector and the second largest financial sector. It has 90 private legal practices and 12 head offices. Five FTSE 350 companies are based in Leeds, including companies such as Northern Foods and Asda. Yesterday, Asda sent me an unsolicited note to say that its contribution to the UK economy is £13 billion per year-0.9 per cent. of gross domestic
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product. Of course, Asda's great operations are not only in Leeds, but it shows that some of the top companies are now based there.

Leeds employs 105,000 people in high-value, knowledge-based intensive industries of the future, which is good news. It also employs 29,000 people in the digital and media industry, which means that Leeds has that strength for the new computer age of the internet and new communications, and it is well positioned for the 21st century. Contributions to the UK economy are now measured in gross value added, rather than the old GDP. Latest estimates put the GVA figures for Leeds at £17 million, but once we add in the goods and services that the Leeds economy pulls in from the wider region, it is estimated that Leeds contributes over 1.5 per cent. of the country's GVA. It makes a larger impact economically than just that made by the local people. Bringing people into the city brings dynamism to the economy, not only for the region but for the country as a whole.

Per head of population, GVA was £22,387 in 2007, which is 112 per cent. of the UK average, and 134 per cent. of the regional average. Leeds was the only area in Britain where GVA per head was higher than the national average. In other words, Leeds really does punch above its weight. The economic impact of the city means that its economic footprint-that is the phrase-goes far beyond the administrative boundary of the Leeds district and includes Rothwell, Pudsey, Garforth and other areas of the city. That has been recognised recently by Government in the City Region project, which works on things such as the Aire valley project, and which will generate another 27,000 jobs over the next 10 to 15 years. That has been recognised by the Government and the Yorkshire development agency, but I wonder whether the economic impact is being fully backed up.

I want to stress that Leeds is in a strong position and is expected to generate 34 per cent. of the region's future employment within the next decade. That was spelled out this week in a report published by Centre for Cities, which undertook research analysis of the economic performance of 64 English towns and cities and the outlook for 2010. The report stated that in 2008, 62 per cent. of jobs in England were in cities and 39 per cent. of those were in just five cities-London, Manchester, Birmingham, Liverpool and Leeds. Of England's high-skilled workers, 62 per cent. are in those cities, which is a 40 per cent. concentration in top cities such as Leeds. In other words, the report recognised Leeds as one of the country's top economic powerhouses, well placed to thrive as the UK emerges from the recession. It will be one of the big hitters that will make a difference to whether there is a strong sustainable recovery, or whether we have a so-called double-dip recession.

I would like to quote from this week's Yorkshire Post, which mentioned the Centre for Cities report that underlined the role of Leeds as an economic driver. The chief economist of Yorkshire Forward, Patrick Bowes, stated:

I could not agree more, but I would say that Leeds is central to the UK as a whole. Interestingly, the Centre for Cities report focused on two points-the need to boost local skills and the need to improve local public
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transport links. Those are the two key areas that now need underpinning in the Leeds economy.

I will briefly touch on skills and training. As I have mentioned, Leeds has a tradition of practical intervention-what we would now call "fiscal stimulus"-to make sure that it does not sink during a recession. I mentioned the building of the civic hall; during the '80s-in the face of the recession, cuts under Mrs. Thatcher's Conservative Government, and radical reductions year on year in public investment in the local authority-we had a visionary leader, my hon. Friend the Member for Leeds, East (Mr. Mudie), who cannot be with us this morning. He understood that we needed to produce programmes for skills training to ensure that people were not left behind.

My hon. Friend the Member for Selby (Mr. Grogan) is present; he worked with the next leader of the council, my hon. Friend the Member for Hemsworth (Jon Trickett), who built up the partnership to see whether the public and private sectors in Leeds could work together. That was innovative work at the time. There was intervention to develop skills, and to build public-private partnerships, to ensure that the diverse economy of Leeds survived.

Mr. Pelling: I congratulate the right hon. Gentleman on securing this important debate. Does not what he is saying about the impact of the rate of cuts in public spending show that it is important that if public spending is cut, it is cut only at a reasonable rate? What damage would be done to the Leeds economy if there was too precipitate a cut in public expenditure in that important area?

John Battle: I am grateful but rather shocked to hear the hon. Gentleman's intervention. I warmly welcome it because he is right, but I prefer to consider the issue not in terms of the rate of cuts, but in terms of the areas that we ensure that we support, and I am suggesting support for skills training and transport.

When my hon. Friend the Member for Leeds, East, was leader of the council, he pressed for exactly the kind of fiscal stimulus that the Government are now applying nationally. We were doing it then. That was what my hon. Friend the Member for Selby backed, and I dare say that my hon. Friend the Member for Pudsey (Mr. Truswell) did so, too; he was a member of Leeds city council at the time. They understood the need for that kind of fiscal stimulus. It was not a case of letting the economy sink and seeing what happened. The hon. Member for Croydon, Central, might talk to people from his own party much more about the strategy, because we had it working in Leeds.

I heard comments on the radio the other day about education. My hon. Friend the Member for Elmet was one of the top educationalists in Leeds when he was a teacher there. I still meet people whom he taught when he worked in some of the toughest schools in Leeds. The suggestion was that education and training was the way forward. There is now discussion about that. We are not there yet. We have had some investment in primary schools and a little more in secondary schools, but we need to consider the training of older workers; we need to consider the post-16 generation.

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