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I was giving examples of car companies that have flourished and coped with the recession without coming for Government support. Before I went to visit Bentley, I went to another factory, Cosworth-one of several Formula 1 manufacturers in this country, using very
high technology. It was flourishing, providing highly skilled manufacturing employment and was not dependent on Government support, like many others. It is not just the specialist producers either, as mass producers-Honda, for example-are also relevant. Honda took a big hit during the recession and the work force accepted part-time working and cuts in pay in order to keep the company together. They did so, and the company did not come forward asking for specific Government assistance. That will now be the pattern.
We have made it very clear-I made it clear in a speech-that we are willing to do what we can to support growth in the British economy, and we will do it by helping build up competences, skills, research and development and so forth, but we are not in the business of handing out money to individual companies. Quite apart from the merits of the proposal, there is an issue of affordability in the financial climate in which we now operate.
Let me start to conclude by clarifying some things that we want to do. We believe, like the right hon. Member for Wolverhampton South East, that the Government have a role. I do not believe in laissez-faire. The Government have a role; there are many market failures; there is, of course, an important role for Government in this field. It has to be cost-effective, however, and it has to be affordable. Let me summarise some of the things we are starting to do, having been in office for only a month.
The first element is skills. One of the first decisions made by the Government when they came into power was to fund 50,000 apprenticeships. That compares with the 200,000 built up under the last Government over 10 years.
Mr David Lammy (Tottenham) (Lab): It was 250,000.
Vince Cable: I am sorry, 250,000. We introduced 50,000 within three weeks. There is a very strong commitment- [Interruption.] We have introduced the funding to support those apprenticeships, which is now being taken up through the National Apprenticeship Service.
Mr Lammy: Will the right hon. Gentleman give way?
Vince Cable: Let me finish the point. A very rapid move was taken to introduce high-quality apprenticeships -exactly the kind of thing that manufacturing industry requires-from a low base, which we have inherited.
Mr Lammy: Will the right hon. Gentleman acknowledge that there is a big difference between suggesting that we need 50,000 apprenticeships and actually finding the businesses to come forward and offer them?
Vince Cable:
The money has been made available; that is the key point. We know from the National Apprenticeship Service that there is a great deal of interest in this programme and those places will be taken. It is a big advance on the level we inherited. Let me emphasise that, unlike the previous Government, we do not believe that we can fund these things out of thin air. We have funded it by changing our priorities. We
have made a decision to cut back on the Train to Gain programme in order to fund these additional apprenticeships. That was based on priorities and on a critical review by the National Audit Office of how the Train to Gain programme operated under the last Government. We discovered that a quarter of all training places would have been funded by the companies anyway, that the programme was paying for the accreditation of skills where those skills already existed and that it was paying for expensive middlemen rather than establishing direct links between businesses and colleges. We now have not just more apprenticeships, but a better mechanism.
Secondly, we want to support further education colleges, which are the basis for post-16 education and training among those who do not go to university. One of the Government's initial steps was to create a £50 million capital fund, more details of which will be announced tomorrow by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes). It is worth remembering the Labour Government's record in respect of FE capital-
Kevin Brennan (Cardiff West) (Lab): Huge investment.
Vince Cable: The hon. Gentleman says huge investment. I do not know what Department he served in, but the responsible Minister had to make a profound apology to the House for the complete catastrophe created by the Learning and Skills Council when it invited colleges to come forward with capital works projects. Bids were put in and then approvals followed for 10 times the value of the money available, so that many of those projects had to be cancelled. Colleges across the country are now living with the legacy costs of that. We are now putting in place a firm programme, properly costed, which will deliver serious capital investment to the FE sector.
I was asked what would happen to the regional development agencies. It is very clear from the coalition agreement that RDAs will be replaced by local enterprise partnerships. The right hon. Member for Wolverhampton South East asked perfectly valid questions about how that transition will be managed and how the enterprises and local councils will work together. My colleague, the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), will come forward in due course with proposals explaining how that will happen.
Lest we fall into the idea of believing that all RDAs made a remarkable contribution to the British economy, it is worth reflecting on some of the comments made by the Public Accounts Committee and then the National Audit Office. What we learned from that analysis is that the RDAs absorbed something like £10.6 billion in their lifetime. They did create some employment, that is for sure-at £60,000 per job. That was the cost-much more than twice the average wage, and at a time when there was a labour shortage in the economy and people were coming in from overseas. I repeat that £60,000 was being paid through the RDAs into creating employment. I do not deny that many of their activities were useful, but equally many were not. At Prime Minister's Questions, the Prime Minister detailed some of the more absurd excesses, and I could have added a few more-the £50,000 party for the South West of England RDA in
Center Parcs, champagne receptions in Cannes and many others. Some serious work was done, but it was very costly, raising very serious questions of cost-effectiveness. We now want to create a structure that reflects the real interest of enterprise and local councils.
Phil Wilson (Sedgefield) (Lab): For clarification, the right hon. Gentleman is saying that the regional development agencies are going, so does that mean One NorthEast will be abolished?
Vince Cable: Well, it will certainly change. We are leaving it to local people to decide. This is a very original concept for Labour Members, who are used to everything being centrally driven. We believe that very often the best initiatives come from the bottom rather than the top-I know the hon. Gentleman may distrust that, but we do not know what is going to come out of the north-east consultation. It may be-
Vince Cable: Let me finish my point. The north-east councils and local businesses might prefer a structure like the one they already have-it is for them to decide-and there will be a process by which any proposals can be evaluated. In other parts of the country, a different route will be chosen. As I have said, the Minister of State will set out in due course how that transition will be managed.
Mr McFadden: I genuinely seek clarification because I am confused by what the Secretary of State is saying. A few minutes ago, he said that the RDAs would be replaced, yet in response to my hon. Friend the Member for Sedgefield (Phil Wilson), he seemed to say that it was a kind of maybe rather than a certainty. This is a really important issue to get clear. Is it true that all RDAs will be replaced, or could that be affected by the consultation that the right hon. Gentleman talks about? To take the example of One NorthEast, if it were the view of business and local authorities-I would like to hear how that will be determined-to retain that RDA, would the Government accept that? It is important to clarify this matter.
Vince Cable: For the avoidance of all doubt, they will be replaced, but the structures that emerge could have a regional scope if that is what local people want. That is the answer. The process will be set out in due course. All that needs to be said for the moment in clarifying our position is that the RDAs will be replaced. They did not give consistently good value for money. We need another approach, another structure, and partnerships of local business and councils. That is what this Government will now put in place.
Vince Cable: I will move on. [ Interruption. ] The hon. Gentleman appears to be grumbling from a sedentary position. If he feels passionately about the particular structure that operates in his area, there will be plenty of opportunity for him to talk to his local councils and his local businesses. This has to be enterprise-led, not bureaucrat-led or politician-led; it is an enterprise-led initiative. He has to get together with those people and come up with constructive initiatives for his own area.
Andrew Percy (Brigg and Goole) (Con): As someone who represents a constituency in Yorkshire and Humber, may I welcome the moves to abolish the RDAs, which in my area have been driven by the interests of West Yorkshire at the expense of East Yorkshire and north Lincolnshire? As we move towards whatever replaces them, will the Secretary of State confirm that local, sub-regional identities and economies will be respected, and that local people will have a real input?
Vince Cable: That is exactly the point. In parts of the country, the sub-regional approach may be more sensible, and we want to create a framework in which that will happen.
Vince Cable: I will take one more intervention, from the right hon. Member for Tottenham (Mr Lammy), and then conclude.
Mr Lammy: This is sounding a bit like an episode of Bird and Fortune. Will the Secretary of State confirm that the RDAs will be replaced, but local people can determine to replace them with what they had before?
Vince Cable: The right hon. Gentleman misunderstands completely. [Hon. Members: "Oh."] He is confusing two different things: one is function, and the other is geography. They are different things. The RDAs will not continue, under any definition of our policy as it emerges through consultation-they will not perform the same range of functions as they do currently. If local people wish it, they might have a regional form, and that will emerge in due course. I think that enough has been said about the matter. I know that the right hon. Gentleman has struggled to take it in, but I think that where we are heading is abundantly clear.
John Hemming (Birmingham, Yardley) (LD): To explain the point to the Opposition, geography varies around the country. The west midlands has a number of city regions, and it would be positive development if each had a local enterprise partnership. We do not know whether Coventry is in or out of greater Birmingham, but we want a city regional basis. The north-east, however, might like a regional approach. My right hon. Friend will agree that the Opposition do not understand the concept of geography and boundaries, and believe in enforcing the same rules across the country, rather than leaving such matters to local people.
Vince Cable: That is absolutely right. The basic problem-and the reason that it is taking some time to explain the matter to the Opposition-is that the Opposition believe that the status quo must be protected because they invented it. There will, however, be fundamental changes.
Catherine McKinnell (Newcastle upon Tyne North) (Lab): Will the Secretary of State give way?
Vince Cable: I have taken enough interventions.
To conclude as I started, we need private sector-led growth to offset the very difficult cuts that will have to be made in the public sector to restore financial sanity. Some initiatives will require direct Government intervention,
but many will not. For example, we are committed to removing the burden of regulation, which mushroomed to alarming proportions. One key step that must happen, and that failed miserably under the previous Government, is to ensure an adequate supply of credit for small and medium-sized businesses. We must have a tax system that is friendly to business, that encourages companies to come here and that is simple. Most fundamentally, however, business wants the Government to clear up the mess in the public finances, as all the business associations make absolutely clear. I do not know how many of the business associations the right hon. Member for Tottenham has talked to, but, with regard to his comments about a business recovery, the business associations make it absolutely clear that they cannot develop business in Britain unless the mess in the public finances is sorted out. They need confidence, certainty and an assurance that the cost of capital will not escalate because of the crisis in finance. That is the priority, that is what we are working on, and that is how the recovery will take place.
Madam Deputy Speaker (Dawn Primarolo): Order. I remind hon. Members that Mr Speaker has put an eight-minute limit on contributions to this afternoon's debate. A very large number of Members want to take part in the debate, so it would help them all to get in if hon. Members were able to make their contributions in less than eight minutes.
2.24 pm
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): I welcome the right hon. Gentleman to his new post. I know that he is committed to industry and manufacturing, even if that did not come out fully in his presentation today. I also thank him for his kind note on my election as Chair of the Business, Innovation and Skills Committee, and I look forward to his coming to our Committee and to talking to him about his future plans for industry and manufacturing.
As a long-standing member of the Business, Innovation and Skills Committee, and as a Member of Parliament representing a constituency with an economy that is heavily manufacturing-based, and which is adjacent to the constituency of the now shadow spokesperson, my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), I had many discussions with local manufacturers in the depths of the recession. Yes, they wanted our public finances cleared up, but the Secretary of State did not mention two other things that came through loud and clear: first, they wanted the level of demand in the economy to be sustained, as they depended on that to sell their products; and secondly, they wanted a range of individual schemes designed and tailored to support weaknesses within the industry, to preserve their future.
Mark Tami: Does my hon. Friend agree that a lot of those manufacturers, and especially the smaller ones, feared a double dip more than anything else? They just about survived this recession, but if it happened again, tens of thousands of businesses would go bust?
Mr Bailey: I agree completely. Many companies made the point vigorously that if they went down now, future tax revenues would be lost, and the prospect of us going into a deeper and further recession would be much greater. The previous Government's short-term measures to sustain local manufacturing were therefore essential.
I looked at what the coalition document says about the coalition Government's commitment to manufacturing. I was disappointed to find that the only reference to manufacturing was in the section on business:
"Our aim is to create the most competitive corporate tax regime in the G20, while protecting manufacturing industries."
Although that is laudable and welcome, it is hardly the most robust commitment to sustaining our manufacturing industries. The previous Government's measures to sustain demand and provide selective support, such as the car scrappage scheme, contributed to the current deficit, which, we are told, it is essential to eliminate if our manufacturing industry is to survive. However, the fact is that without incurring that debt our manufacturing industry would not have survived and would be in a far weaker position.
The title of the debate on the Order Paper is "Government Support for Industry". The first thing the Secretary of State could do to support industry would be to say to the Chancellor of the Exchequer and the Prime Minister, "Stop making apocalyptic utterances about the state of our public finances." I am happy to say that the report of the Office for Budget Responsibility on Monday demonstrated that our public finances were very much as reported by the former Chancellor of the Exchequer, and in no way conform to the current Chancellor of the Exchequer's scaremongering portrayals. That is a serious matter, as it not only has implications for investment in industry and the public services, but for the public climate, which might be very damaging to our industries. Literally millions of public sector workers feel that they could be affected by decisions about investment in our public services. As a result, they are likely to decide to save rather than spend, which will reduce demand and potentially precipitate that double-dip recession.
Dr Thérèse Coffey (Suffolk Coastal) (Con): I understand the passion felt by the hon. Gentleman on behalf of public sector workers in particular, and I think that it is shared across the House. Does he not recognise, however, that the debt interest payments that we shall soon be making will affect every worker, and every non-worker, in the country?
Mr Bailey: I am committed to public sector workers, but I am equally committed to those in the private sector. My point is that unless we sustain our private sector in manufacturing industry, it will be far more difficult to pay off our debt in the long term. We need to sustain our base. That, I think, is a better strategic position, and it is the position taken by the last Government.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): On Monday I visited a firm in my constituency which employs 25 people and has a turnover of about £1 million. It largely contracts its work from the public sector. Does the hon. Gentleman agree that the cuts agenda will affect not only the public sector, but the private sector as well?
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