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Against that background, I would like to consider Advantage West Midlands, the regional development agency that covers both my constituency and that of the shadow Secretary of State, the right hon. Member for Wolverhampton South East (Mr McFadden). I have been surveying my local businesses recently about how they perceive Advantage West Midlands. Their reactions are mixed. Some of the bigger businesses have had a very positive experience of working with the regional development agency. However, some of the smaller
businesses, which the Federation of Small Businesses represents, have found it difficult to negotiate a way into the large regional organisation that is the regional development agency. As it is the small businesses that create the large part of the jobs that bring us out of recessions, it is vital that we get better at signposting that help to small businesses.
According to the annual report of Advantage West Midlands for 2008-09, which covers the worst period of the recession, its budget peaked at £330 million, which I think we would all agree is substantial. With that budget, it was able to create or safeguard 16,997 jobs. I worked that out to be approximately £20,000 per job-quite a high level of subsidy. The Labour Government cut this year's budget of Advantage West Midlands to, I think, £270 million, and so far it has created about 4,000 jobs, but let us assume that that annualises out to about 8,000 jobs-a cost of well over £30,000 per job.
In 2008-09, the key inward investment achievement was the expansion of Deutsche Bank into Birmingham, which created 300 jobs. Perhaps my hon. Friend the Member for Bromsgrove (Sajid Javid), who is not unfamiliar with that organisation, will be able to find out whether Advantage West Midlands was the deciding variable in Deutsche Bank's decision, or whether the expansion might have happened anyway.
Management costs and the implementation of the myriad different initiatives and programmes used a considerable proportion of Advantage West Midlands' annual budget. The salaries of the chief executive, the director of resources, the director of operations, the director of strategy and communications, the director of economic development and the director of economic regeneration are all similar to, or higher than, that of the Prime Minister. If that management structure is replicated in all eight regional development agencies and the London Development Agency, it is likely that many of the front-line funds destined to play their role in helping business and industry are being rather diluted by the high cost of implementation.
The Government have an important role to play in helping business and industry. I believe that they should focus on the creation of excellent infrastructure, on keeping the Government's own borrowing costs down so that interest rates remain low, and on an attractive taxation environment for both start-ups and inward investment. That is how we can compete with countries such as Singapore and Portugal, which were mentioned earlier.
Ian Mearns: I welcomed the hon. Lady's comment about the number of Members from the north-east of England who had spoken today. Obviously, when it comes to our region and our regional development agency, our perspective is very different from that of many Conservative Members. As was pointed out earlier, geography is an important factor.
In the north-east, one of the magnificent benefits of the RDA has been its fantastic "Passionate People, Passionate Places" tourism regime, which has received national and international acclaim and has massively boosted the tourism industry in our region. That is vital to us, given that the nearest capital city to Tyneside, for instance, is Edinburgh, 100 miles to the north. The amount spent on tourism per head of population by the Scottish Government is significantly greater than the amount
spent in the north-east of England. That is the market in which we have to compete. We are peripheral to the English economy. I welcome what the hon. Lady has said about strategy and infrastructure, because it is vital to the integrity of the regional economy.
Harriett Baldwin: I love visiting the north-east. I wish that the weather were a bit better for the beaches, but it is a gorgeous part of the world.
Amber Rudd (Hastings and Rye) (Con): Delightful though it always is to hear about the north-east, may I add that we have a town in the south east, Hastings, which is heavily deprived? Members may not be aware that, although it has received a good deal of investment, in the past 13 years the average wage has fallen from £30 to £100 a week below the United Kingdom average. We need the private sector investment that the Government are talking about.
Harriett Baldwin: I thank my hon. Friend for that intervention.
I was outlining some of the other ways in which Government could help small businesses. We all agree on certain points, and I hope we can agree that the Government should concentrate on keeping regulation to a minimum. They should also concentrate on reducing the gold-plating of European legislation and confining such legislation to acceptable levels. I think we can all agree that they should spend money on education and skills. The more flexible, well trained and mobile the work force are, the more they will be able to thrive and adapt to the changing environment that we will inevitably experience in the future.
Direct spending on business and industry should happen at as local a level as possible. The regions sometimes make natural geographic sense. Sometimes they do not, so I welcome the opportunity to look at local partnerships. Local communities should be encouraged to reap the reward of businesses' expansion as much as possible and be allowed to keep some of the increase in taxation revenues locally. I welcome some of the points that have been made along those lines in respect of the Government's programme.
We have had to learn all over again that Labour Governments run out of money. As we rebuild Britain's industrial and business base, we need to acknowledge the limits of Government support for industry but at the same time focus on unleashing the potential of the private sector to help us to grow our way once again to prosperity.
Rachel Reeves (Leeds West) (Lab): I welcome you to your position in the Chair today, Mr. Deputy Speaker. It is a pleasure to speak in the debate after so many excellent speeches, not least from the hon. Member for West Suffolk (Matthew Hancock). Ten years ago, he and I started work on the same day at the Bank of England. We had many good debates there and I am sure that they will continue in the House.
It is also a pleasure to follow the maiden speeches of so many Members: the hon. Member for Bracknell (Dr Lee), and my hon. Friends the Members for Bolton West (Julie Hilling), for North West Durham (Pat Glass),
for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Wansbeck (Ian Lavery), and for Barnsley East (Michael Dugher). I know that my hon. Friend the Member for Barnsley East shares my concerns about the future of Yorkshire Forward, our RDA.
We have heard lots of stories from Members on the Government Benches about the waste of RDAs. I can only tell them what Phil Thompson, managing director of Resource Print Solutions in my constituency, says. His business, like many in all our constituencies, was hit hard by the recession, but he got through it because of a grant from Yorkshire Forward, which enabled him to buy new machinery and equipment and to keep jobs in-house that he had previously had to contract out. During the recession, he did not lay off a single worker. Because of the support from Yorkshire Forward and changes to shift patterns, he managed to keep people in work. The company is now growing again as we recover from the recession. What Phil's business needs now and what the British economy needs now is economic growth.
Mr Hayes: The hon. Lady is already a distinguished and articulate advocate of her cause-I note it from her many interventions in the debate. In an effort to be helpful on RDAs, may I recommend to her the National Audit Office report and the report that preceded it from the Public Accounts Committee, which make it absolutely clear that in many instances the RDAs are cost-ineffective and insensitive to the very local circumstances that she champions?
Rachel Reeves: I thank the hon. Gentleman for that intervention. I think that we can tell from the debate today that different Members, representing different areas of Britain, have different views about their RDAs. I plead with the Minister. Labour Members representing Yorkshire, the north-east and the west midlands have spoken with huge passion about their RDAs. They have related the stories that they hear day in, day out from businesses and the people they represent. Let us keep our RDAs and let them continue to do the work that they are doing in our regions. That is all that I ask.
Matthew Hancock: Given what the hon. Lady has just said, does she support the Government policy on RDAs, which is to allow local people to decide whether local economic partnerships should cover the region or a smaller area?
Mr Deputy Speaker (Mr Hoyle): Order. Only one Member can be on their feet at any one time. Please allow the Member to finish before rising again.
Rachel Reeves: Thank you, Mr Deputy Speaker. I am sorry for my enthusiasm.
I welcome the clarification from the hon. Member for West Suffolk that regions will be able to make their own decisions, but that was not my understanding of what the Secretary of State for Business, Innovation and Skills said earlier. [I nterruption.] If he did say that, I think that everyone on the Opposition Benches would welcome that. If our regions will be able to make the decisions about our regional development agencies and their future, I welcome that. I am grateful for that clarification, but that was not my understanding of what the Business Secretary said in his statement.
I know that Conservative Members will disagree with this, but I am sorry to say that we do not hear enough from them about growth. They cite the G20 advice about reducing deficits while consistently forgetting about or ignoring the advice in the G20 communiqué for
"credible, growth-friendly measures, to deliver fiscal sustainability".
That omission on growth is worrying from the perspective of industry and jobs-the subject of today's debate-because the greatest risk we face is that of a double-dip recession, with the job losses, business failures and higher budget deficits that that would bring.
On Monday, the Chancellor dismissed the possibility of a second recession, but businesses in my constituency are less certain that we are out of the woods. Key to the recovery and to bringing down the budget deficit-we hear a lot about that from Conservative Members-are growth and having a regionally strong and diverse economy. That will not happen by chance; it depends on a strategic Government policy supporting industry in all our regions.
Nadhim Zahawi: What does the hon. Lady think about scrapping the national insurance hike for employers? A lot of employers in my constituency will say that the really harmful thing to do to growth is to add to the cost of employing people, thus reducing the net income of a business. What does she think about that?
Rachel Reeves: I thank the hon. Gentleman for that intervention. What he describes perhaps comes up less in my constituency than in some others, because average earnings in my constituency are £16,000 a year and the national insurance increase proposed by the previous Labour Government was to apply only to wages of more than £20,000 a year. So that was less of a concern in my constituency.
Britain is the sixth largest manufacturer in the world. If one believed some of the statements made by those on the Government Benches, one would think that the UK did not have a manufacturing industry at all-that is not the case. People in Yorkshire have huge pride in our industrial past. From wool to coal and steel, and to retail and finance, our industries have enriched the region-more than that, jobs and industry in Leeds and Yorkshire have helped to power the UK economy.
The true test of this Government's strategy and their woolly words about local economic partnerships will be whether they can give local people and businesses a true sense of control over their economic future. That is what Yorkshire Forward and other RDAs have been doing; they have been promoting enterprise and driving economic growth across Britain.
We now know-I am reading what I wrote before the intervention by the hon. Member for West Suffolk-that the RDAs are to be scrapped. Or are they? That wind-down has already started in Yorkshire. The Yorkshire Evening Post today revealed that the proposed cuts to Yorkshire Forward mean that no fewer than 109 projects will see their support slashed and that that will affect 24,160 separate companies our region. Some £1 million that would have been used to help small and medium-sized enterprises to access finance is to be cut. Some £1.4 million that would have helped businesses and universities with research and development is to be cut. Some £2.4 million
that would have been spent on Tower Works in Leeds to support the digital and creative industries in my city is to be scrapped.
Rachel Reeves: I shall give way once I have finished citing these examples. Some £3.2 million that would have supported the roll-out of broadband and £2.5 million that would have helped people at risk of redundancy to get back to work are to be cut. I could continue on this, but I shall give way.
Harriett Baldwin: I seek clarification, because cuts were announced by the previous Government and I want to find out whether the cuts that the hon. Lady is describing were announced by them.
Rachel Reeves: The hon. Lady makes an important intervention, because cuts were already proposed. The hon. Member for West Suffolk asked whether Labour had any plans to reduce Government spending. I can tell him that it had, and this is one example of them. But this is in response to the-
Rachel Reeves: Sorry, as I am still on my feet-
Mr Deputy Speaker: Order. Hon. Members can, by all means, seek to intervene, but if the Member does not give way, they just have to leave it there. We cannot have two Members on their feet at the same time.
Rachel Reeves: Thank you, Mr Deputy Speaker. This Government-the party of the hon. Member for West Worcestershire (Harriett Baldwin)-have called for £293 million of cuts from the regional development agencies. Yorkshire Forward was asked to make £44 million of cuts. It was written to and asked to come back with those cuts within two weeks-it had two weeks to determine cuts that will affect 24,000 businesses in my region. These are not Labour cuts; they are Conservative cuts.
I ask the Secretary of State for Business, Innovation and Skills to give my constituents some commitment and some hope and certainty that the work that Yorkshire Forward does to support innovation, manufacturing, jobs and skills will continue. I urge the Government not to destroy the support for jobs and growth that the Labour Government put in place. Without Yorkshire Forward, we would not have brought clean coal to our region and the 1,000 jobs that that means in South Yorkshire. Without Yorkshire Forward, we would not have negotiated a deal with Siemens and GE to bring offshore wind, with thousands of much-needed jobs, to Hull, Grimsby and Scunthorpe.
Nick de Bois: What I am hearing today is that growth depends entirely on regional development agencies. We have to liberate businesses from the heavy hand of regulation and taxation that the Opposition imposed under the last Government. That is the way to growth. It is not entirely dependent on the regional development agencies to which the Opposition seem to be so wedded.
Rachel Reeves: The reason that I talk so passionately today about regional development agencies is that they are what the Government intend to cut.
The regional development agencies do not create jobs. I recognise that, and I believe that all Labour Members recognise it. Siemens and GE will bring those jobs, but they could bring the jobs to anywhere in Europe and anywhere in the world. It is the work of the regional development agencies with businesses, on skills and with people in my region that means that those jobs are coming to Yorkshire. That is why I and other Members on this side of the House speak with such passion about the work that the regional development agencies do.
Matthew Hancock: Does the hon. Lady agree that there is a short-term populism that pushes us towards more Government intervention? What we need is a thriving and effective private enterprise to lift our economies up and through to better times-not my words but those of Tony Blair.
Rachel Reeves: I thank the hon. Gentleman for that intervention. I hope that I have made it clear that I support the private sector's coming to our region and bringing jobs with it. However, that requires a Government on the side of our communities and of businesses. That means encouraging jobs to come to this country when they could go to any other country in the world. If we were in Germany or China, we would be urging jobs to come to those countries. If we want a level playing field, we need a Government who support industry.
In Yorkshire, we look to Government for support-to honour the commitments on high-speed rail and on Sheffield Forgemasters. They are key to Yorkshire's future and good for the British economy, too. Yorkshire Forward and regional development agencies have fought our corner in a way that Whitehall simply cannot. The support is critical and it is good for all of Britain. The short-term hatchet job pursued by the Government risks the recovery and will put Britain in the slow lane of the global economy, making reducing the deficit harder because there will be higher unemployment and tax revenues will be weaker. Growth is the essential ingredient that is missing from the Government's strategy.
Now is the time for some more ambition. In the wake of the recession, we can build a fairer, stronger and more diverse economy, built on skills and high-end manufacturing, if the Government put in place the policies-
Claire Perry (Devizes) (Con): Thank you, Mr Deputy Speaker, for your tutorial on how to be a good parliamentarian. I fear that many of us will let you down before we have learned to do our jobs properly.
I came into this debate to listen, not to speak, but I have found myself compelled to get up and speak on what I think is an incredibly important matter. I apologise for being in and out of the Chamber. I have had a huge visit from the 3rd Regiment Royal Military Police, who I then took for tea. They were marking the maiden speeches out of 10. I am not going to say who did well, but they were quite impressed by some speeches on both sides of the House.
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