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24 Nov 2010 : Column 118WH—continued
3.12 pm
Anne Marie Morris (Newton Abbot) (Con): After such a bravura performance by my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), it is with some trepidation that I contribute to the debate. This is a very worthwhile topic, and I would like to contribute my view that the solution is a matter not just of what local authorities can do or what the Government can do-as has been said, many of these issues are within the hands not of the Minister, but of a number of his colleagues. The solution is also in the hands of people. In that respect, we can look at the role that the big society can play for small business, because I think it has a place.
In the south-west, we have a high number of small businesses; indeed, 91% of businesses employ fewer than five people. This debate about the small retailer is therefore crucial to us. Unlike my hon. and learned Friend, I will include the small villages in my constituency -there are 30 of them alongside the four towns-because these problems also exist in those villages. Small retailers, particularly in those small villages, are the lifeblood of their communities. They can be like the local pub, which is too often long gone. They can also be like the local post office, which is, again, too often long gone. I am therefore pleased that local residents in Stokeinteignhead have come together to found and now run a volunteer system to keep the local shop in their community. That helps elderly residents, who will come in-perhaps a little confused-to do their shopping. The shop also produces newsletters. It does all sorts of things that mean that that small retailer is at the core of the community. I reinforce the points that have been made about colour, diversity and, indeed, identity, which we need to retain not only on the high street, but in villages. That is a key issue.
The Independent Retailers Confederation has looked at the issue and come up with a number of thoughts, which I can perhaps share with the Minister. The confederation represents 100,000 small businesses, which is no small number. It has categorised its findings into five key areas. I will not spend a lot of time on each area, because hon. Members have already covered a lot of these points very well. In fact, there are six areas, and I want to explain what they are. They include planning, which we have touched on; skills training, which we have not touched on, and which I will come back to; regulation, which we have touched on in part; crime, which we have also touched on in part; and access to finance. To that list of five, I would add taxation. Business rates must, of course, be key. I will go briefly over each of those subjects.
On planning, there is clearly an issue about the power of the supermarket. There is also the issue of charity shops, which has been well rehearsed. When the Secretary of State for Communities and Local Government begins to look at the overall shape of planning, I want him to consider localism and the power that he intends to give to local communities to make proposals for plans and for what they should look like. I would encourage him to ensure that the plans consider not only housing, but businesses. We will help to shape the planning of our communities if those plans look at businesses as well as residential. If they do that, they will say, "We want one supermarket here, not two." In one town in my constituency,
Dawlish, we have an ongoing battle between Tesco and Sainsbury's, which is a waste of taxpayers' money and deeply frustrating for local residents.
I would also commend the greater use in our communities of the community land trusts. We look at them just as vehicles for residential, but they are equally appropriate in this context. I would encourage the Government to market such things better and to explain to local communities what they can already do.
On parking, which, if I may, I will envelope within planning, there are a number of very good schemes in other parts of the country-I regret that they are outside Devon-that combine the idea of a loyalty card with the idea of sharing parking. I absolutely take on board the point that local authorities will often use parking as a milch cow. However, there are schemes that allow shops, working with the local authorities, to increase the revenue and put some of it back into the local community. I commend those ideas.
Jim Shannon (Strangford) (DUP): Does the hon. Lady agree that of all the six critical factors that she is speaking about, parking is the most important, because it shapes what happens in the town? There is not a one-hat-fits-all approach, whether we are talking about out-of-town, out-of-town-centre, in-town-centre or off-town-centre parking. The chamber of trade must be involved in these issues. There is also the issue of the connection between the centre of the town and the edge of town and the issue of regeneration. There are many things to be done, and the same hat does not fit everything when it comes to planning.
Anne Marie Morris: I thank the hon. Gentleman for his contribution. I think that that is an issue, but it is not the most important one, as I will explain.
The second issue is Training Access to training for retail skills is pretty rare. I am pleased that South Devon college, which is in my constituency, has a course on retail skills, and I would like the Government to encourage more such courses.
Let me move swiftly on to the third issue, which is regulation. As I am sure many Members are aware, it is estimated that it takes the average retailer seven hours a week just to deal with regulation, and that can cost them anything from £100 to £10,000 a year. This is about not just employment regulation, which is clearly one of the most onerous issues, or health and safety, but issues such as the minimum wage and how pension schemes will change. We need to look at the perhaps unintended consequences of the new shape that regulations will take when the Government put them forward.
The fourth area is crime. This is probably a well-known statistic, but crime and theft cost the retail sector £2 billion a year nationally. Two issues have been raised by the Independent Retailers Confederation: one is antisocial behaviour, which has been covered by the hon. Member for Vale of Clwyd (Chris Ruane); the other is theft. The challenge in dealing with the problem is that a theft does not happen until the culprit leaves the premises. How many small shopkeepers wait until the individual has left the shop to apprehend them? The answer is that they do not. They keep the individual there and call the police. The result is that there is no prosecution and police time is not particularly well used. There must be
a better reporting method, and it must be possible to find a legal approach that is a better deterrent than the system we have now.
I am saddened that only two of the large banks are making significant progress with the lending guarantee scheme, and I look to the Minister to encourage more on that front. However, something that the banks suggested, which I think is very helpful, would be the introduction of a new mentoring system that would ultimately replace, in a way, much of what Business Link, which is being phased out, used to provide. That would provide excellent support for the retail sector. I suggest that such mentoring should be something we can see-the big society for small business in action. In my constituency I have considered getting local businesses together and asking them to help each other. Business surgeries are being set up, and local business men and women, as well as local banks and others, will be involved.
We are also setting up a group of individuals who will act as one-on-one mentors-not expensive, paid-for, qualified mentors, but local business men next door to other local business men. For example, the other day a business man wanted to become VAT deregistered and did not know how to go about it; a colleague had the answer. There are all sorts of things that we can do, and politicians can play a role in our communities. I am pleased to say that I have a great deal of support from my local chambers of commerce.
Rehman Chishti (Gillingham and Rainham) (Con): I am pleased to serve under your chairmanship, Mr Weir, and congratulate my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) on securing the debate. Given that banks are not lending as much as before, and small business is being starved of cash, does my hon. Friend the Member for Newton Abbot (Anne Marie Morris) agree that stricter regulation is needed in relation to corporations having to pay suppliers within a very short time? Often, smaller businesses get penalised much more for delays in paying tax and VAT. Does that need to be reviewed?
Anne Marie Morris: That is a valuable contribution on an important issue, and I am sure the Minister and his Treasury colleagues will take it into their thinking.
My hon. Friend's intervention leads me neatly on to taxation and business rates. I take on board the points that were made earlier about timing, and the fact that we have revalued at exactly the wrong time, when the market is in recession, with figures from when the market was at its peak. I am sure that the Minister and his Cabinet colleagues have taken that on board and will consider it. However, I offer congratulations to, I think, the Treasury team, on thinking about a holiday-100% relief-between October this year and next September from business rates where rateable value is less than £6,000. That is an excellent thing to do, and I commend it. I would like that to be extended, if it works well.
Hon. Members will be pleased to hear that I have now covered my six areas.
Guto Bebb (Aberconwy) (Con):
Many retailers, especially in my constituency, which is very dependent on small businesses and retailers, feel frustrated because when Governments-of all colours-decide to help them, they often do it by promising to reduce corporation tax.
However, small businesses are often sole traders and partnerships. There is great frustration because, when corporation tax is reduced to help small businesses, they face increased national insurance contributions.
Anne Marie Morris: I thank my hon. Friend for that intervention, which follows on from one I made in the House yesterday. I agree that small businesses need some help. I should like the holiday that has been extended to new businesses to be extended to what I would describe as micro-businesses-those small businesses with one or two employees that find it a significant challenge to take on a third employee. I entirely understand his point.
There is much to be done. The sector is a very valuable one. May I commend to the Minister the idea that there is such a thing as the big society for small business? He might want to consider how to promote that. Finally, micro-businesses deserve particular attention, and the retail sector provides a good example. There is a very large number of such businesses, and whether the issue is tax or regulation they need special care and consideration.
3.25 pm
Mike Weatherley (Hove) (Con): I, too, congratulate my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) on securing the debate, and on a vibrant speech.
Adam Smith, the father of modern economic theory, asserted that Britain is a nation of shopkeepers.
Chris Ruane: I thought it was Napoleon.
Mike Weatherley: The Opposition may disagree about who said it first, but I assure them it was indeed Adam Smith.
It remains widely recognised that the small and medium-sized enterprise sector today will play a pivotal role in the recovery of our economy-and rightly so. All hon. Members will be familiar with tales of the local independent retailer who goes that extra mile to take care of their community. They provide essential services and fulfil the retail needs of those who are less mobile and most vulnerable. The idea that independent retailers are the heart of communities will not come as a revelation to most hon. Members present for the debate-if it does to any of them. Despite that, in February this year the Local Data Company reported in a study that one in eight high street shops lays empty.
The economic slowdown clearly had a role to play in the shuttering up of our independent high streets, but there are far more fundamental causes, which will not reverse with the advent of economic recovery. The report cited a combination of rising business rates, soaring rents and draconian parking restrictions as being to blame, and I know from speaking to my constituents in Hove and Portslade that the study paints a pretty accurate picture. However, my constituents would all add one key issue to the list: the massive over-regulation that the sector endures. Government's role is to ensure that causes are identified and that there are market conditions that foster an independent retail sector. There is a balance to strike between deregulation
and positive and protective legislation. I believe that the Government's challenge is to sift through the deluge of regulation that we inherited.
Some hon. Members may know that I have recently been vocal about the tobacco display ban. To recap, that legislation was brought in without the benefit of a small business impact assessment. The cost to the independent retail sector of implementing it is assessed at £33 million. Independent analysis shows that in countries where the ban is implemented small shops are disproportionately affected and there is no health benefit. Indeed, it is estimated that 2,600 small shops may close as a result of that legislation alone. At the moment the Government do not have any plans to carry out an evaluation of its impact. Overturning that inherited legislation is but one example of the right and appropriate path of deregulation needed to protect our independent retailers. If we do not do so, our nation of shopkeepers will become a nation of clone towns, with local shop models of supermarkets replacing the traditional British independent offering. The Government are currently reviewing the legislation and I urge all hon. Members to speak to the Secretaries of State for Business, Innovation and Skills and for Health and to register opposition to that over-burdensome, soundbite regulation.
As late as July this year the London assembly added its voice to the many expressing concern for the sector in its report, "Cornered Shops". The report indicates that 7,000 independent shops shut in the last 10 years alone-or 13 a week. That marks a long-term decline, exacerbated by the recent economic crisis and punctuated now by a continuing lack of access to credit, which we have heard about today. We all recognise the frustration at the fact that, after the bail-out of irresponsible bankers, those bankers are not doing their bit to lend to small businesses and kick-start the economy. Something needs to be done to ensure that access to credit is made simpler for independent and viable retail offerings-and quickly.
We have seen the rise of supermarkets in the past 10 years, and there has been an aggressive expansion in the past few years into the local stores format. Our planning law needs to recognise and cauterise that practice, which is slowly bleeding out our independent high streets. Planning law needs a sustainability test, under which multiple chains would need to demonstrate that any proposed application would not adversely alter the mix of small, medium and large stores on high streets. Supermarkets account for a massive 75% of the market and 80% of independent retailers say that multiples are the single biggest threat to their livelihoods. I certainly do not advocate getting rid of supermarkets and propping up failing independent retailers for the sake of it: both have their place in a healthy and modern economic mix; they are not mutually exclusive.
Although this is by no means atypical of the operating experience of all independent retail sectors, I shall give just one example of how the scales are tipped against newsagents. The National Federation of Retail Newsagents, and newsagents in my constituency, have told me that one of their biggest problems is the lack of control that they have in the newspaper supply chain versus supermarkets' buying power. We need to protect our independent high streets, which are far more vulnerable
than the multiple retailer end of the sector. Once they are gone, they are gone for good, as are the friendly face of our local independent retailer and the heart of our community.
I recently went to the ceremony for the independent achievers awards, which celebrated best practice in the sector. The energy in the room was electric with the buzz of the best independent, innovative retailers regaling one another with stories of how they had adapted to support their local communities and build up successful businesses. That is the sense of pride and enthusiasm that we need to regain.
Our independent retailers work long hours, seven days a week, all year round, only to combat increasing costs, aggressive competition from multiple retailers, decreasing profits, increasing bureaucracy and decreasing access to credit. We need to reinvigorate the small business sector with a package of measures. Scrapping the tobacco display ban would be a good start.
3.31 pm
Lorely Burt (Solihull) (LD): I shall be brief because another hon. Member wishes to speak before the start of the winding-up speeches. I congratulate the hon. and learned Member for Torridge and West Devon (Mr Cox), who spoke with passion, knowledge and humour and is a true crusader for his cause. I particularly agree with him on rates. The Liberal Democrats would like eventually to move to a system of site value rating, but I totally agree that raising the threshold at which rates are paid would be a good start to help retailers. I believe that the Minister will confirm that automatic rate relief is in the coalition agreement and we will be implementing it soon-the sooner, the better.
The state of the country is very bad. As the hon. and learned Member for Torridge and West Devon mentioned, 12,000 independent shops closed in 2009. When people buy their consumables in the local economy, 50% to 70% of that money stays in the local economy. If they go to a large retailer, £7 of every £10 that they spend will leave the local economy. It is therefore very important that the Government give a lead on public procurement. There is a Government aspiration that 25% of procurement will come from small businesses. What is the proportion now and what steps are we taking to achieve that? I commend the Federation of Small Businesses, which has been a tireless campaigner on this matter, particularly with its "Keep Trade Local" campaign. That has been tremendous.
I want to ask the Minister a couple of other questions. Many retailers export, but when I was reading the Department for Business, Innovation and Skills business plan the other day, I could see no mention of support for retailers or small businesses seeking to export-unless of course it is arms that are being exported, which seems to be all right. Also, the hon. and learned Member for Torridge and West Devon talked about the local government role in assisting small business. It has been perceived in the past to be more of a hindrance than a help, although I am sure that that was not intentional.
Simon Danczuk:
I want to make the point about local government in relation to Rochdale. About two years ago, I suggested that Rochdale council introduce free parking across the town centre. It eventually introduced
that a few months ago, with much reluctance on the part of senior council officers-it is not so much elected members who are the issue. I have to put it on record that the credit goes to a Conservative councillor, Ashley Dearnley, who had to drive that change through the local authority. Free parking on a Saturday is not the complete solution, but it does help.
Lorely Burt: Absolutely. I could not agree more with the hon. Gentleman. The point of local government is to show good political leadership.
The hon. and learned Member for Torridge and West Devon talked about the needs test and the local interest test, which would be a tremendous help. If we had that now, we might not have the situation that we have in my constituency of Solihull, where a huge Asda is being built on 3 acres of parkland on the main shopping street of Shirley. Will that stimulate custom for small independents on the rest of the high street? I doubt it. I think that it will bleed them dry, but we shall have to wait and see.
I welcome the help that the Government are already giving. With regard to regulation, we have the one-in, one-out policy and the sunset-clause policy and all the other aspirations that we are moving strongly towards. I would like to suggest consideration of small business as an automatic part of any pre-implementation review of new regulation and of the post-implementation review. It would be very good to build that into whatever legislation we produce.
With regard to the banks, I have a constituent who has an independent retail company. She applied for some help from the banks and was told, "Sorry. You're in the wrong sector." My right hon. Friend the Secretary of State for Business, Innovation and Skills is examining that, and I hope that he has a good go at ensuring that the banks give small business, independent retailers and everyone else who needs it the help that they deserve.
Mr Mike Weir (in the Chair): I now call Justin Tomlinson, but remind him of the need to allow time for the winding-up speeches.
3.36 pm
Justin Tomlinson (North Swindon) (Con): Thank you, Mr Weir; I will be on time.
I congratulate my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) on securing this excellent debate. It has captured the interest of so many hon. Members both because of the subject and because of his engaging delivery.
I am a big fan of small shops, for a number of reasons. First, I am the vice-chair of the all-party group on small shops and I am a member of the all-party retail group. I also come from a family of small business shop owners. I have many happy memories of growing up in the back of my parents' wool shop, which was very handy in these colder days.
Chris Ruane: He didn't want for a scarf.
Justin Tomlinson:
That is right. As has been said, small shops provide diversity but also character and interest to the high street. My local authority, Swindon, is embarking on trying to secure significant town-centre
regeneration but, ever mindful that we will always be competing with Oxford, Bristol, Reading and Bath, we need something that sets us apart from those other towns as potential shoppers head down the M4 and choose which ones to go to. Through small independent retailers, we can have that unique offering.
I shall start by being positive. A recent BBC TV programme was called "Mary Queen of Shops". I am a big supporter of the idea that she put forward, which was that it is not all doom and gloom and that many retailers need to embrace changing customer expectations. I shall use just two quick examples, one of which was a struggling greengrocer's that was very quiet in the daytime. She encouraged the people at that greengrocer's to go out and get orders for delivering vegetables to people's doors. In the daytime, when they were quiet, they could pack those boxes, and that increased their income significantly. The other example came from an area in the south-west that was a tourist attraction-I forget the name of the place-where there was a struggling convenience store. She had the store redesigned so that it became more old-fashioned, to buy into the tourism aspects of the area, and encouraged it to promote local produce, which had a story, and to have events inside the store. Again, that increased business.
There is a part that retail has to play; it is not just the Government and local authorities that have to act. However, there are other challenges. Many hon. Members have mentioned the banks. I get very cross when banks say to me that they are doing their bit; they have signed up lots of customer relationship managers. In my experience, they do not have the relevant business experience and they still rely on the computer, which all too often says no.
I support the comments that many hon. Members made about rates. In other debates, I have urged us to ensure that there is some flexibility in the rates system. We have so much spare capacity with empty shops and, using the rates system, we can help to attract the next generation of small retailers. That would not only tackle ghost high streets but create new employment opportunities, and surely a small rates contribution is greater than none at all.
I agree with many of the comments on parking. I am delighted that my local authority has cut parking charges and seen footfall and income increase, although I have just one proviso before we bash all local authorities. There was a lot of emphasis by the previous Government on encouraging green travel, which, perversely, encouraged councils to make it harder for people to park in their town centres.
Finally-because I am conscious of the time-I echo the support for the Conservative small shops commission, chaired by my hon. Friend the Member for Northampton South (Mr Binley), who has now left the debate. We should embrace and deliver the thrust of that, to restore pride and life to our high streets.
3.40 pm
Ian Lucas (Wrexham) (Lab): Welcome to the Chair, Mr Weir. I congratulate the hon. and learned Member for Torridge and West Devon (Mr Cox) on securing this valuable debate. I commend all hon. Members for their brevity and their comradely manner in allowing everybody to contribute, which has made the debate all the better.
This is an important issue for all hon. Members, whether they represent towns, cities, villages or a combination of all those elements. Independent retailers are important in all communities, as is clear from the debate. We all recognise that we are in a difficult economic situation that has hit independent retailers hard over the past couple of years. However, there has been a decline in independent retailers in our communities over many years because of supermarkets, the increased use of private transport, differing demands and changing consumer habits. We must recognise that it is not only Government behaviour that has changed people's use of independent retailers; it is a product of the different way in which people shop. The independent retailer network recognises that and successful independent retailers are consequently more flexible in their shopping times and offer greater quality and reliability in their products. Many are competing successfully with supermarkets by offering innovative and distinctive products that people want to buy.
All the speeches that have been made are worthy of comment. The hon. and learned Member for Torridge and West Devon has a long record of campaigning on this issue. He spoke clearly and eloquently about his community. On broadband, the Labour Government's commitment of at least 2 megabits by 2012 has been removed by the Liberal-Tory Government. Unfortunately, his community will have to wait longer for satisfactory broadband services. I am sorry that Devon is not progressing as quickly as Cornwall. It is unfortunate that that commitment, which would have helped villages and smaller communities, has been reneged upon.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) spoke about Rhyl-few people know more about Rhyl than he does. He spoke of the importance of safety, cleanliness and presentability to all communities. We all recognise and value those things. It is important that communities are safe and we should recognise the important contribution that CCTV makes in our communities, including in my community of Wrexham.
The hon. Member for Newton Abbot (Anne Marie Morris) mentioned theft from shops, which is a big problem for smaller shops, where there are often fewer members of staff. It is clear that CCTV makes a major contribution to tackling that problem. I would not like to see the popular provision of CCTV in places such as Wrexham diluted by the Government. It is not clear whether the current review will lead to a reduction in CCTV provision. It has had a big impact in providing a safe and satisfactory shopping environment in my constituency. She also spoke about regulation, to which I will return.
I was interested in the contribution of the hon. Member for Aberconwy (Guto Bebb) on corporation tax. It was such a good point that the only other person whom I have heard make it is me. We talk too often about reductions in corporation tax. Those of us who have run a business as a sole trader know that those reductions do not result in any benefit for such individuals. We need to be more flexible in the way in which we use such provisions.
The hon. Member for Hove (Mike Weatherley) was right that the phrase "the nation of shopkeepers" comes from Adam Smith. The hon. Gentleman made
an interesting point about regulation. I am sorry to disappoint him, but the Secretary of State for Health spoke only this week about additional regulation on tobacco products, with the introduction of plain labels. Far from following the hon. Gentleman's advice, the Government are going in the opposite direction.
The hon. Member for Solihull (Lorely Burt) told us about Asda in her constituency, and it is also a major influence in my constituency. We all face the conflict between supporting the work of independent retailers, which are important to our communities, and wanting to bring more jobs to our communities, which supermarkets are very effective at doing. They often provide flexible terms of employment for those who want to work there. We must get that balance right, which is difficult.
The hon. Member for North Swindon (Justin Tomlinson) made a valuable contribution. I am pleased to hear of his work with the all-party small shops group and I am sure he will continue to make valuable contributions.
One of the most difficult issues for independent retailers is regulation. That is a difficult issue for all of us. Many of the proposals that have been made in the debate, such as on parking and charity shops, would require additional regulation and new legislation. It is easy to create good soundbites such as "one in, one out", but it is more difficult to devise the regulation that is necessary to pursue particular policy ends without its being onerous for small business.
As a former Minister with responsibility for regulatory reform, I know that the Better Regulation Executive will provide excellent support to the Minister by nagging him on regulation-I am sure it will nag him just as avidly as it nagged me. Contrary to the perceptions of some Government Members, I did not used to wake up dying to regulate every morning, but tried to reduce regulation as much as I could. One of the previous Government's most positive moves in reducing regulation was the forward regulatory programme, whereby Departments have to publish what they propose to regulate. It frightens Ministers when they see the length of the list they present. I am delighted that the Government are continuing with that programme, because it is a good discipline. Dealing with new regulation is in many respects more difficult than dealing with stock. It is quite easy to get rid of a regulation about driving horse-drawn carriages across particular heaths, but it is more difficult to prevent Ministers from legislating with new regulations. As we all know, independent retailers suffer disproportionately from regulation because they have so many other things to do.
We have a common aim of improving the position for independent retailers. There is a lot of imagination in the independent retail sector. When I was fortunate enough to be a Minister at the Department for Business, Innovation and Skills, I made an interesting visit to Westway in west London, where, under the ring road, there is a co-operative enterprise of different shops that offer distinctive products. If the hon. and learned Member for Torridge and West Devon has an opportunity to visit that enterprise, I commend it to him. It shows that when a community is changing, independent retailers often identify more quickly and appropriately the opportunities in the market, and are often more imaginative in the products that they provide.
We have discussed some interesting incentives such as rate relief and enabling students to consider taking on empty units for a limited period-perhaps for a month
or two. We should encourage such flexibility at a local level. Contrary to the observation of the hon. and learned Gentleman, the Opposition want small business to succeed and see it as an important driver of economic growth. Economic growth is vital and it is regrettable that the Government have not yet brought forward their growth White Paper.
I agree with the hon. and learned Gentleman that growth is imperative. We want small businesses and large businesses to succeed. We need to convince our young people to run their own small businesses, which is something I did but would never have contemplated as a teenager-it just happened that way in the end. Doing so gives you individuality, freedom and potential, and we should be encouraging people to do it. We need to devise and put in place the policies to take that forward.
3.50 pm
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): May I begin by congratulating my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), not only on securing the debate but on his characteristically eloquent and powerful advocacy of the arguments that he had marshalled? He ranged across some of the crucial touch points that allow our town centres, villages and high streets to prosper but that, in some cases, prevent them from trading at all. I want to touch on as many of those points as I can.
It has been an excellent debate and there have been a number of common themes. I will use the nine minutes or so remaining to tackle some of the wide range of issues, but I will canter through them, if I may use the white knight metaphor without too much danger, leaving it there for Members to mull over if they have strong stomachs. I will not get into some of the finer points or the broader issues around regulation. We have important issues such as business rates, planning, the role of high streets, town centre management and the commission that my hon. and learned Friend mentioned.
First, as someone who started his own business at the bottom of the previous recession, I share my hon. and learned Friend's interest in and passion for enabling our independent retailers to start and grow. Times are difficult for many retailers, as well as other small businesses. The point that hon. Members in all parts of the Chamber have made is that small businesses, and small shops in particular, are not just vital parts of the local economy, but focal points for the community. We need to bear that in mind.
It is also important to bear in mind that at the moment, in some places, independent retailers are often feeling squeezed out by some of the larger chains, which can threaten to reduce consumer choice and competition. In the time that I have, without stretching the metaphor too far, I will seek to saddle up and tackle some of the practical issues, which our constituents are keen to learn about.
The Government inherited some plans that would not be good for small businesses, such as planned increases in small company corporation tax and in employer's national insurance. We have made it clear that we will reverse both increases. For example, the impact of the planned national insurance rise, which we
have now shown how we will reverse, would in the estimation of the Federation of Small Businesses have cost up to 57,000 jobs-often in the local shops that our communities value. We are, therefore, reversing the approach on employer's national insurance, for the most part. On small company corporation tax, from next April we will be cutting-not increasing-the level of the rate on profits by 1%, which should be crucial for the viability and, indeed, profitability of many of the smaller retailers.
A number of people raised some powerful issues about charity shops. The question concerns when people enjoy special treatment but trade in areas that they had not previously traded in. I want to raise those issues with my ministerial colleagues.
The hon. Member for Hove (Mike Weatherley) mentioned tobacco displays, but the choice is difficult. We all want to ensure that underage smoking is tackled, but we do not want to penalise the smaller business unduly. We are having a strong discussion in Government on that subject, and the Secretary of State for Health will be making an announcement shortly.
The issue of business rates was raised by a number of hon. Members. When running a business, business rates sit on the overheads-they are fixed costs, so in good and bad times they affect people equally. That is why I can confirm in one case, and newly announce in two other cases, changes that address many of the questions asked in the debate about small business rates and the relief.
I confirm that we are doubling the level of small business rate relief in England for one year, with effect from this October, reducing the fixed cost for small businesses and helping them to continue to trade while the economy returns to growth. As suggested by hon. Members, that means that eligible businesses occupying properties with a rateable value of up to £6,000 will pay no rates, with tapering relief up to a rateable value of £12,000.
In practice, what does that mean? It means that more than half a million businesses in England will benefit, with 345,000 businesses paying no rates at all. In value terms, the saving amounts to £390 million. In particular, my hon. and learned Friend the Member for Torridge and West Devon will wish to know that we think about 65,000 businesses in the south-west will benefit. My right hon. Friend the Secretary of State for Communities and Local Government has announced that we intend to proceed with legislation to ensure that small business rate relief will be automatic. We made that commitment before the election, and we are honouring it. It will be set in legislation shortly.
Today, we announced our plans to change the rules so that councils can set further business rates locally, to respond to specific needs or to help high streets that are struggling and where a little local application of further discounts could help. It is a good local programme, funded locally, which will provide vital flexibility in our areas. I hope that right hon. and hon. Members will take those points further forward.
Planning was raised by several hon. Members. Independent retailers in the high street have been anxious about some of the changes made under the previous Government. This Government strongly support a localist approach to planning for the high street, which is why we have a clear commitment to the "town centres first"
planning policy. In practice, it gives local authorities the ability to consider the vitality, viability and diversity of shopping districts when considering controversial planning applications.
Ministers are also making it clear that any specific changes to national planning policy will be brought forward through the national planning framework. There is, therefore, clarity and an element of consistency. We are committed to returning power to local communities, to enable them to shape the development of their areas, which is why we will present to Parliament a simple and consolidated national planning framework covering all forms of development. The announcement will be made soon, in particular on how we propose to progress the framework and on the implications for specific areas of planning policy. However, to be very clear, the principle of "town centres first" is a vital part of that framework.
Mr Cox: Will the Minister give way?
Mr Prisk: I will canter on, if I may, because I feel honour bound to mention a couple of questions asked by other Members.
On procurement, the answer for the hon. Member for Solihull (Lorely Burt) is 16%. Measures for transparency and removing red tape will help. If she looks at the UK Trade & Investment website, rather than at the Department for Business, Innovation and Skills one, she will find the export advice that she seeks.
I turn briefly to two other things, one being rural broadband, about which my hon. and learned Friend the Member for Torridge and West Devon is keen to have answers. We are determined to ensure that we do not just have a slight improvement-2 megabits-but that we have super-fast broadband right across the country. Our commitment is to deliver that by 2015, backed by a £530 million package. We are piloting it, in particular, in rural areas-we understand their difficulties-such as the highlands and islands of Scotland, Herefordshire, Cumbria and North Yorkshire. The commitment is clear, and we want to ensure that we deliver on it.
Lastly, I turn to the broader question. My hon. and learned Friend was, under the chairmanship of my hon. Friend the Member for Northampton South (Mr Binley), part of the commission referred to in the debate. A vital beginning to that process is the document-the tool-that I am holding, entitled "Healthy High Street?". The process is about understanding the holistic issues that affect town centres-whether planning, parking or whatever. I happily and strongly commend the proposals, which have come from the retail industry jointly with the Government. The document begins a process to strengthen town centres.
Times are tough for retailers, which is why we are tackling their costs, dealing with planning and are open to helping them in the months and weeks to come.
Concessionary Travel
3.59 pm
Karen Lumley (Redditch) (Con): It is a pleasure, Mr Weir, to serve under your chairmanship. I thank all hon. Members for giving up their time to attend this debate, which is about an important subject. Concessionary fares come with a history of controversy, and I have received many representations on the topic from my constituents. I hope that we get some clarification from my hon. Friend the Minister today.
Concessionary travel is vital to many communities, especially to the elderly, the disabled and those who live in rural areas, who would otherwise be cut off from basic services. Eleven million people in England qualify for the concession, which is no small number. Since the introduction of the scheme in Worcestershire in 2008, we have seen an 18% increase in the number of concessionary journeys made in the area, and the county has issued more than 100,000 cards.
The preservation of concessionary travel is a huge deal. For me, it is especially important to Worcestershire and my constituency of Redditch. When I was a Redditch councillor in 2004, the Conservative minority-control council scrapped the free bus pass on advice from council officers, who told us that it could not be sustained, but we soon realised what a gigantic mistake it had been. At the following local elections, Labour election literature branded me the "bus pass snatcher". Needless to say, we lost the election, and I am certain that the issue was a significant factor in my losing Redditch in the 2005 general election. The Labour group reinstated concessionary fares in 2004, but the disaster that I have mentioned must not be repeated.
Mr Robin Walker (Worcester) (Con): I congratulate my hon. Friend on securing this debate. She makes a strong point. Does she acknowledge that the problems of the present concessionary fares scheme affect county towns such as Worcester particularly badly, and that if the Government are going to switch it from the districts to the counties, it is essential that they reallocate the grant and not simply the cost of the scheme?
Karen Lumley: I totally agree with my hon. Friend. I shall probably come to that point later.
I fully support the announcement in the Government's comprehensive spending review to
"Protect the statutory entitlement for concessionary bus travel, ensuring that older people can maintain greater freedom and independence."
However, I am worried that it does not go far enough. I believe that the Government are not effectively addressing the serious concerns voiced by district and county councillors about the reduction to local government resource grants of 28%, the transfer of grant funding administration and the 20% cuts to the bus service operators grant. Together, those will have a significant effect on the provision of concessionary travel.
Today, I wish to speak particularly about the implications that the transfer of grant funding from district councils to the county council, mentioned by my hon. Friend the Member for Worcester (Mr Walker), will have for two-tier authorities. I stress that the problem is not the principle of transferring the funding to county councils, but the
process of reallocating financial responsibility. Under current plans, the national scheme, which is administered locally, is to be withdrawn from district councils and transferred to county councils from April next year. In the past, councils have often had to deal with substantial shortfalls in funding for the scheme, and the latest development appears to be a continuation of this struggle.
Harriett Baldwin (West Worcestershire) (Con): I congratulate my hon. Friend and Worcestershire colleague on securing this important debate. Does she agree that it would be desirable for councils, whether at district or county level, to be net-net-not out of pocket either way-when implementing the scheme on behalf of the Government?
Karen Lumley: That is the point that I am making. The proposal could be devastating for district councils, as they stand to lose significantly more than they spend. The system has been described as a mess by the District Councils Network. Changes to the formula need to be clear, transparent and accurately carried out, but many councils are concerned that the implications have not been properly thought through.
Mark Garnier (Wyre Forest) (Con): I congratulate my hon. Friend on securing this incredibly important debate. To give substance to her argument, I should say that the leader of Wyre Forest district council told me only this afternoon that the potential cost to that one council would be £1 million if the worst option is selected. That is £1 million a year on top of the expected cuts resulting from the comprehensive spending review.
Karen Lumley: I thank my hon. Friend for that. I know that Redditch is looking at similar figures.
It is most likely that the transfer will result in neither a fair nor a transparent funding deal, some councils being hit harder than others through losing a disproportionate amount of grant funding.
Simon Kirby (Brighton, Kemptown) (Con): On that point, Brighton and Hove city council is looking at a shortfall of £1.3 million. I suggest that a grant should be provided to cover the fact that some places are tourist destinations and have extensive bus networks as a result.
Karen Lumley: We in rural Worcestershire suffer from different problems, but I take that point on board.
The system is surely not in line with the Government's message on fairness. I wholeheartedly support that message, but on this matter it is failing to get through. We need to ensure that funding is allocated fairly and equitably.
Heather Wheeler (South Derbyshire) (Con): My hon. Friend makes a good point. The changes affect different parts of the country differently. In South Derbyshire, we are trying to negotiate friendly terms with Derbyshire county council. However, in the past Chesterfield and Derby city lost huge sums as a result of various changes.
I understand that consultation with the Government is going well. There are four options. In two we lose dreadfully, and in one we are just about okay. As for the
option for the rural and tourism areas, I sincerely hope that our ally will come along with some good news later this afternoon.
Karen Lumley: Like my hon. Friend, I hope that we get some good news this afternoon. That is why we are here.
I seek clarification from the Minister. Will he assure the House that district councils will not be significantly financially disadvantaged as a consequence of the transfer of the administration of concessionary fares from district to county council level? If some councils are to be disproportionately affected, may I suggest a top-up fund to ensure that those councils likely to face substantial losses will not be financially disadvantaged?
In the light of the tremendous upheaval that the transfer will cause, the time scale allowed for councils is less than satisfactory, given that local authorities already have to deal with the comprehensive spending review. Will the Minister consider making representations to his Department to change the date required for publication of the scheme from 1 December? As we know, the spending allocation will not be published until later, which will leave local councils second-guessing how much will be needed.
Justin Tomlinson (North Swindon) (Con): I congratulate my hon. Friend on securing this excellent debate. I feel like the odd one out, given that I represent a unitary local authority. Does she agree about the need for clarity, especially in the long term, so that local authorities can plan accordingly?
Karen Lumley: Wouldn't that be nice! When I was a councillor, we worked year to year; we never got any further ahead than that. I totally agree with my hon. Friend. That would be fantastic.
I hope that the Minister agrees that clarity would allow districts fully to assess the impact of funding adjustments, and thus be able to make more informed decisions on the possibility of continuing local enhancements to the national scheme. For example, the Redditch scheme runs for the whole day, so whenever the buses start-it is usually 7 am-residents are able to use them. However, the national scheme starts at 9.30 am, and our residents lose out by not being able to travel during busy commuter times.
I shall speak briefly about the bus service operators grant. There was much speculation before the comprehensive spending review about Government plans to cut the BSOG entirely, but it proved to be unfounded. Instead, the grant will be reduced by 20% from 2012. I welcome the Government's view that that reduction will have a marginal impact that can be absorbed without fares needing to rise. However, many do not believe that. The impact of individual cuts could be absorbed, but when combined with cuts to the revenue grant and changes in the funding system, they will have a potentially devastating effect. Will the Minister say exactly how these cuts can be absorbed, and what practical measures are in place to ensure that concessionary fares will not cause increases?
Many authorities are approaching the comprehensive spending review outcomes positively-I know that Redditch is-and they hope to be in a position to meet the loss in grant without a disproportionate impact on service
delivery. However, some councils will not be so lucky. As we heard from my hon. Friend the Member for Wyre Forest (Mark Garnier), many will have to raise fares, reduce service availability, alter or cancel routes altogether and consider the impact on longer-distance rural bus services, all of which will significantly undermine the concessionary scheme. I have to ask what the point is of having a bus pass if there are no buses to use.
We understand that cuts in all services are a necessary evil, given the economic catastrophe left by the last Labour Government. However, the lack of clarity about the transfer of funding and about where the brunt of the cuts will fall is unacceptable.
Rosie Cooper (West Lancashire) (Lab): I congratulate the hon. Lady on securing this debate. We have heard about councils that are net losers today. My local authority of West Lancashire is a net gainer and must contribute to the county these days.
Does the hon. Lady agree that concessionary travel is a lifeline for many pensioners? As for rural areas, she is absolutely right-there is no point in having a bus pass if there are no buses. Would she seek to ensure that all pensioners and all communities have fair and equitable access to concessionary travel, especially because, as I say, West Lancashire is a gainer?
In my area, my local pensioners want to have the option of concessionary rail travel on the same basis as their neighbours in Southport, Wigan and Liverpool. The pensioners of West Lancashire actually feel that they are not getting a fair deal out of concessionary travel and yet it is a net gainer, so there really are swings and roundabouts here.
Karen Lumley: I agree. There are obviously swings and roundabouts across the whole country and it would be nice if we had a uniform scheme whereby everybody could benefit; it would also be nice if we had the money to do that. However, I understand that we are in very difficult times and we have to make very difficult choices.
Gavin Williamson (South Staffordshire) (Con): I congratulate my hon. Friend on securing this debate and I thank her very much for giving way. On that point, some of the current schemes that have been discussed are incredibly penal against rural district councils and we could actually see many services just being totally destroyed, such as those in my district council of South Staffordshire. We must have consideration for those authorities in the future, a point that she has been explaining fantastically well in this debate.
Karen Lumley: I thank my hon. Friend for that intervention.
Part of my constituency is rural and part of it is urban, so the problems facing those two parts are very different. That is one of the reasons why I wanted to speak today, because it is probably easier to get a bus in Redditch than it is to get one in Wychavon, which is the rural part of my constituency. So, as the hon. Member for West Lancashire (Rosie Cooper) said, it is only right that we treat people as fairly as we possibly can.
Andrew Bridgen (North West Leicestershire) (Con): My constituency is very similar to that of my hon. Friend; it has both urban and rural areas. My district council has currently budgeted to spend £887,000 on the concessionary fare scheme this year, and it will receive a specific grant of £196,000 to meet part of that cost. However, my county council is concerned that, when this spending on concessionary travel passes to county councils, the formula grant will be reduced by more than that £691,000 shortfall-many other Members have expressed similar concerns about shortfalls today-and that that would put added pressure on a budget that has already been cut by 25%. If we want to avoid rural isolation, we must have a guarantee that we will not have a shortfall.
Karen Lumley: I agree with my hon. Friend and I look forward to hearing the Minister's reply to the debate in a few moments' time.
The Government have promised to examine smarter ways of administering the bus service operators grant subsidies, as well as a system that more clearly-
Andrew Jones (Harrogate and Knaresborough) (Con): I congratulate my hon. Friend on securing this debate and I thank her for giving way.
In the area that I represent-Harrogate and Knaresborough-the actual cost to Harrogate district council of concessionary fares in 2009-10 was £2.9 million and yet the total special and formula grant received was only £1.5 million, leaving the balance of £1.4 million to be met by local taxpayers.
As the grant is reallocated, with responsibility for the service transferring to the county council, it is quite important that we allocate the grant and not the cost that county councils and district councils have been facing, so that the local taxpayers of Harrogate district council are not hit twice.
Karen Lumley: I totally agree with my hon. Friend and let us hope that we can move on to the type of system that he has just suggested.
We need to look at a system that allows local communities and local authorities to determine how the funding that is allocated to their area should be spent, but I do not think that we have seen any evidence of such a system yet. I ask the Minister today to reconsider the proposed changes in the light of the cumulative effects that they will have, not only on district councils and local authorities but on the provision of vital services for our elderly and disabled people. I also ask him to address these issues as a matter of urgency.
4.14 pm
The Parliamentary Under-Secretary of State for Transport (Norman Baker): I begin by congratulating my hon. Friend the Member for Redditch (Karen Lumley) on securing this debate on a very important issue. This debate has probably set a record in the House of Commons for the number of interventions in 15 minutes. I counted 10 interventions-so 11 speeches, as it were, in 15 minutes perhaps sets an example to other Members in other debates.
Let me say right away that the coalition Government are committed to protecting the concessionary bus travel scheme. We made that clear in the coalition agreement, the Chancellor reconfirmed that commitment in the
recent spending review, and the Prime Minister has given his own support for the continuation of the scheme.
The scheme is of huge benefit to millions of people, allowing free off-peak travel anywhere in England and providing older and disabled people with greater freedom and independence. The concession enables older and disabled people to access facilities both within and outside their local area, and it helps them to keep in touch with family and friends. It also provides new leisure opportunities, so that when eligible people are visiting other parts of England on holiday, they can travel free on local buses at off-peak times, and it encourages those people to visit popular tourist destinations-such as Brighton and Hove-which brings benefits to the wider community.
About £1 billion is spent on concessionary travel every year. The Government currently provide funding for the scheme through two channels. The majority of the funding comes through the formula grant system, and since 2008, when the England-wide concession was first introduced, the rest of the funding has come through a special grant from the Department for Transport.
In line with the reduction in separate funding streams to local authorities, from April 2011 all funding for the scheme will be provided through formula grant, giving local authorities the freedom and flexibility they want in their use of funding. Overall, the Department for Transport is reducing the number of funding streams for local authorities from 26 to just four, which is in line with the Government's general trend towards localism.
The Government are aware of how precious this benefit is to older and disabled people, which is why we are focusing our efforts on assisting local authorities to find efficiencies through reforms to the administrative and reimbursement arrangements for the scheme, rather than cutting back on the entitlement.
Only one change has been made to eligibility for the scheme-to increase the age of eligibility in line with the changes that are taking place to the state pension age. In fact, that change was introduced by the previous Government, and I understand that it was done on the basis that people are living longer, staying healthier for longer and tending to stay in work until later in life. That change will clearly assist with the financial sustainability of the scheme.
From April 2011, responsibility for administering the scheme will move from lower-tier local authorities such as district councils to upper-tier local authorities such as county councils. This reform will assist in overcoming a number of problems that have been identified by local authorities, stakeholder groups and operators. The change will enable efficiencies to be realised, through economies of scale and by reducing the number of negotiations with bus operators. It will also make accurate funding by formula easier, because there will be less variation in the size and characteristics of authorities. Furthermore, it will harmonise concessionary travel and wider transport authority responsibilities.
If individual councils have had a rough deal, such as the one in Harrogate, and other councils have benefited rather more in the same county area, such problems should therefore be eliminated by this scheme. I accept that it will not solve all problems, but that is one problem that can be eliminated by this move from districts to counties.
The Department for Communities and Local Government recently consulted on how the transfer of responsibility for concessionary travel will be taken into account in authorities' funding allocations from 2011-12. That consultation was an opportunity for local authorities to influence decisions on the final distribution method. By the way, I should say that many of the points that have been raised by Members today are actually points for the Department for Communities and Local Government, in a sense, rather than for the Department for Transport. Clearly, I will do my best to answer those points, but the funding allocation is through the DCLG rather than the DFT.
A number of authorities, especially district councils-including my own district council in Lewes-have expressed concerns about the potential implications for their future financial position as a result of the administrative changes. That is the nub of the case that is being put today. Discussions have been taking place at official level between the DFT and the DCLG to try to ensure that the distribution method taken forward after the consultation does not result in unintended consequences for authorities.
It is important to remember that the figures presented in the DCLG consultation were only illustrative and that the actual effect on authorities is likely to differ, following final decisions on matters such as the amount of funding to be transferred from lower-tier to upper-tier authorities for concessionary travel and the level of floor damping to be applied to particular types of authority. In other words, the change will be phased in, which I think was one of the concerns expressed today. My hon. Friend the Member for Redditch talked about "top-up" funds. The DCLG's preferred method is through damping and the provision of floors, to ensure that there is not a sudden cliff-edge. I am sorry to use all these terrible metaphors; they are official DCLG metaphors.
The overall amount of funding available for local government was set out in the spending review. DCLG will publish details shortly about the outcome of its formula grant consultation and how the overall funding pot will be distributed among authorities. The formula grant is allocated on the basis that the level provided overall is sufficient to enable authorities to deliver effective local services while ensuring that they do not set excessive council tax increases. In a sense, local authorities will be more able to decide how they allocate their funds than they have hitherto been.
The hon. Member for Brighton, Kemptown (Simon Kirby) asked about the effect on unitary authorities. I am afraid that I cannot give any specifics on that matter until the DCLG makes its announcement on the spending review, but I can say in general that all the comments made today are being noted by officials and will be passed back to the DCLG as part of ongoing discussions between our Departments. I also mentioned that the impact will be mitigated by the use of floors to prevent sudden changes in local government finance for individual authorities.
In her introductory comments, my hon. Friend the Member for Redditch asked whether the date for the publication of local authority schemes could be moved from 1 December. I am afraid that that is not possible. Travel concession authorities are required by the Transport Act 2000 to publish schemes four months before they
come into force. It is not possible to amend the date without primary legislation, which she will understand could not be enacted before 1 December.
I am aware that concerns that have been expressed about the potential impact of the administrative changes on local discretionary concessions; I believe that the hon. Member for West Lancashire (Rosie Cooper) mentioned it. It is not the intention that the change in responsibility should have any impact on the additional entitlements offered by local authorities. The order laid before Parliament earlier this year to enact the change does not prevent upper-tier authorities from maintaining or introducing district or local level discretions where needs differ within different parts of a county boundary, for example. Nor does it prevent district councils from providing funding to county councils to administer discretionary concessions on their behalf.
Furthermore, district councils will remain able to consider discretionary travel schemes using the well-being powers in the Local Government Act 2000, so in theory, they could introduce concessionary rail travel within their areas if they wanted, irrespective of any move from district to county. However, local authorities should take legal advice when creating, amending or withdrawing discretionary concessions and should also ensure that they comply with their own disability equality schemes.
We are assisting local authorities to make efficiencies through reforms to the arrangements for reimbursing bus operators, on which we recently published draft guidance. We held a consultation on the new concessionary travel reimbursement guidance and will be issuing the final guidance to local authorities shortly, with a view to introducing changes to the reimbursement regime for schemes beginning in April 2011. I stress that it is for local authorities to decide whether they wish to take advantage of that guidance, but it will nevertheless be issued by the Department for Transport in order to enable local authorities to engage more effectively with bus operators.
The consultation sought views from stakeholders on the revised reimbursement guidance, which adopts a more directive approach to reimbursement calculations, requiring fewer data inputs and assumptions but leaving scope for local flexibility where appropriate. Analysis of historic reimbursement by travel concession authorities indicates that councils could make up to £130 million in savings under the revised reimbursement arrangements. The proposed new guidance is based on extensive new research carried out by the Institute for Transport Studies at the university of Leeds and will help to simplify the current system and enable more accurate reimbursement.
My hon. Friend the Member for Redditch mentioned the bus service operator grant. As she will know, all sorts of wild suggestions were made in the national press that BSOG was being abolished. I made it perfectly plain to the House in June or July that the Department
values BSOG as a sensible contribution to ensuring good public transport. I therefore hope that it was not surprising that BSOG was retained with a cut of just 20%, which is below the average cut for revenue budgets in the spending review. That is a recognition from the Treasury and the Department for Transport of the value of its contribution to bus services. I spoke to the chief executive of the Confederation of Passenger Transport UK, which represents the five main bus companies, after the Chancellor's spending review. The chief executive was hopeful that in general terms, the cut in BSOG could be absorbed without any increase in bus fares. That was a good outcome.
The concessionary fares scheme remains based on the same solid principle as ever: bus companies should be no better and no worse off as a consequence of the scheme. That is relevant when we consider the new guidance on reimbursement arrangements. Concern was expressed that the changes might affect the level of service provided. As I said, bus companies should be no better and no worse off as a consequence of their dealings with local authorities. Therefore, in principle, irrespective of anything else, there is no reason why service levels should be affected. The concessionary fares scheme, if it delivers its outcome, should not lead to a reduction in bus services.
I point out that the vast majority of bus services are commercial rather than subsidised, so the secondary and understandable concern expressed by my hon. Friend and others that local authority budgets will be stretched, as undoubtedly they will, would in any case relate at maximum level only to subsidised services, not commercial services, which are independent of local authority funding. That said, local authorities, particularly rural ones, provide subsidies for some bus services in their area, and they will want to consider how best to use their funding. I hope that when it comes to difficult decisions, local authorities will consider-as central Government have done in recent months-where they can make savings without affecting front-line services. Affecting front-line services through cuts is the easy option. Rather than resorting to unfortunate cuts, local government can make a number of savings-for example, by combining back-room functions-without affecting the public. I hope that local authorities will approach their budgets in that way.
I hope that I have been helpful in responding to hon. Members' comments. I recognise that the issue is important-the turn-out has reinforced that-and I take it seriously. The Government's overall intentions are, first, to protect the concessionary fares scheme, and secondly, for good environmental and social reasons, to get more people on buses. We do not want to pursue policies that have the opposite objective or consequence. We will take back the comments that hon. Members from all parties have made this afternoon and feed them through to the Department for Communities and Local Government, which will ultimately decide the allocation for local authorities.
Pennine Lancashire Local Enterprise Partnership
4.28 pm
Graham Jones (Hyndburn) (Lab): This is a matter of importance in supporting growth in Pennine Lancashire and the north-west of England. I intend to discuss three main points. First, Pennine Lancashire's skills base and great heritage make it perfectly placed to pursue a local enterprise partnership. Secondly, a pan-Lancashire LEP is not an appropriate solution for either east or west Lancashire and will not work in the region. Thirdly, the Government must recognise the unique differences between those two local economies and the need for two LEPs for the region, and move toward a solution involving a Pennine Lancashire LEP.
When the Government invited local authorities and business leaders to submit proposals to form LEPs, we in east Lancashire saw it as a perfect opportunity to build on years of existing partnership work. In his letter of 29 June, the Secretary of State makes three clear points:
"some local and regional boundaries do not reflect functional economic areas. We wish to enable partnerships to better reflect the natural economic geography of the areas they serve and hence cover real, functional economic and travel to work areas."
There is no doubt that Pennine Lancashire functions as a natural economy and fits the three points mentioned by the Secretary of State.
Economic, skills, housing and transport strategies are already developed and implemented along the lines of that footprint, and they have been for many years. With a population of more than 500,000 people, the area is greater in size than many major UK cities and is similar in size or greater than some of the LEPs already approved. The area is characterised by a strong manufacturing base and entrepreneurial people. More than 21% of employment in the area is in the manufacturing sector, compared with 10% in the UK as a whole. Self-employment rates are significantly higher than regional and national levels. Despite not having a dominant city centre, the area collectively contributes more than £6 billion gross value added to the economy each year.
Export-led growth will drive economic recovery and Pennine Lancashire is well placed to capitalise on that, with more than 700 businesses involved in significant export activity this year. It is vital that we recognise what makes up east Lancashire. A key point is that there is a high degree of connectivity and interdependence between the Pennine towns. More than 10,000 jobs are provided by Blackburn employers and the same figure is provided by Burnley employers for residents of the area. In terms of Pennine Lancashire districts, my constituency provides 9,000 jobs. Some 84% of resident employees work in the area and only 16% work outside of it. Of those people who do not access employment outside the sub-region, almost three times as many commute to Manchester as do to Preston. We are talking about a very small connection to Preston. Independent analysis shows that more than 200 high-growth businesses have achieved at least three years continuous growth, despite difficult economic conditions. We are working hard as an east Lancashire region. Hundreds more businesses have the potential to grow and provide new jobs for the area.
I shall turn to why a pan-Lancashire solution is not suitable. The Pennine Lancashire LEP proposal is private sector led. The existing business leaders' forum works alongside the east Lancashire chamber of commerce and other support organisations, such as the Federation of Small Businesses and the Asian Business Federation. The forum comprises prominent business leaders from each of the six district councils and a cross-section of representatives from local high-growth companies. It is chaired by a well-respected business leader and includes the chamber of commerce president and chief executive, college principals and the Lancashire Business Environment Association. The forum will act as a shadow LEP board. It is important that the Minister recognise the work already achieved in east Lancashire. There are already 150 business men and women involved in partnership activity within Pennine Lancashire.
Gordon Birtwistle (Burnley) (LD): Does the hon. Gentleman agree that the fact that the business community is starting up two specific chambers of commerce-one for Pennine Lancashire and one for Preston and west Lancashire-proves that the business community wants two specific LEPs? The business community will work on that basis and will give such a proposal its full support.
Graham Jones: I accept that and I will come to that point.
The chamber of commerce in east Lancashire has a proven record of partnership development and business support delivery, not only locally but beyond its boundaries. However, its west Lancashire cousin hardly ever meets and does not function. The east Lancashire chamber has 800 members and covers 60,000 employees. One in four of the working population is covered by that chamber of commerce's businesses. It has led a programme of consultation during the development of the LEP proposal and has circulated information to 8,000 businesses. The chamber's elected board of directors fully endorse the Pennine proposal. Last week, the shadow east Lancashire private sector LEP board met to finalise governance arrangements and to give input into the development of a regional growth fund bid.
East Lancashire's business leaders are getting on with the job in hand, so why are we having this debate today? Despite Pennine Lancashire fulfilling every criteria set out by the Government, the bid has yet to be approved-not because of the quality of the proposal or the private sector backing, but because of the conflicting bids from the county, particularly the county council. It is worth highlighting that the county council's proposal does not cover the historic area of Lancashire and that it excludes Blackburn and Blackpool. They do not wish to participate. That is why I describe it as a Swiss cheese proposal-it leaves two great big holes in Lancashire and does not provide a pan-Lancashire solution. The proposal does not even command the support of the majority of district councils in Lancashire. On the other hand, east Lancashire local authority leaders are united and have been working on a cross-boundary and cross-party basis to promote economic growth in Pennine Lancashire for many years. In particular, Regenerate Pennine Lancashire is an exemplary example of economic co-operation.
East Lancashire welcomed the assurance given by the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge
Wells (Greg Clark) in his letter to the district councils' network on 25 August. The letter reiterated what has been said before:
"we are not expecting County Councils to act as sole 'building blocks.' We want to see economic geographies reflected in proposals, not administrative ones".
Experience has shown that pan-Lancashire structures put in place to deal with economic issues are ineffectual and that local arrangements reflecting local economic footprints work better. If we are not careful, we will have the unnecessary duplication of bureaucracy of region and locality. Indeed, only this year, Lancashire partners agreed that the existing pan-Lancashire economic partnership was no longer fit for purpose and that the attempt to create a Lancashire-wide skills board has failed. However, the private sector-led Pennine Lancashire Employment and Skills Board goes from strength to strength.
There are also two British Chambers of Commerce accredited chambers of commerce in Lancashire. This point relates to the comments made by the hon. Member for Burnley (Gordon Birtwistle). One chamber of commerce is in the east and one is in the west. They both reflect the unique differences of the economies they serve. A two-LEP Lancashire solution is staring us in the face. A recent poll suggested that almost 70% of businesses in west Lancashire would back a two-LEP solution.
Rosie Cooper (West Lancashire) (Lab): I congratulate my hon. Friend on securing the debate. None of the bids from Lancashire were accepted by the Secretary of State. In reply to a question I asked the Secretary of State, he said that the bids from Lancashire were
"overlapping...fiercely competitive and different."-[Official Report, 28 October 2010; Vol. 517, c. 490.]
I understand my hon. Friend's preferred position on dual Lancashire bids, but local authorities in Merseyside and Greater Manchester can work together, despite their areas being very different. Having two such dominant and powerful LEPs in the north-west will surely make it difficult for Manchester to compete for such resources-not to mention when we have to compete against other LEPs across the country. Does my hon. Friend agree that the predominantly Conservative administrations across the council need to act collectively to ensure that the people we represent are not at the back of the queue?
Graham Jones: I appreciate my hon. Friend's comments, but I do not accept any of them. I do not accept that there is a pan-Lancashire solution because Blackburn refused such proposals and had the common sense to look south to Manchester. Blackpool is hesitant on the matter. I shall come on to some of the conflicts that exist. We do not have a pan-Lancashire solution; we have a proposal based on three separate areas. The problem is that three proposals are being labelled as one proposal. We will all lose out. There is no pan-Lancashire solution-there never has been and there never will be. There is Lancashire county council, Blackburn borough council and Blackpool borough council.
Gordon Birtwistle:
The hon. Gentleman may remember that when he was, I think, a member of Hyndburn council and I was a member of Burnley council, we put forward multi-area agreements-the right hon. Member
for Blackburn (Mr Straw) will remember those. Pennine Lancashire put forward its MAA and I had the pleasure of coming to No. 10 Downing street to sign it off with the previous Prime Minister. I do not think that the west Lancashire MAA was ever done. Why are we, in Pennine Lancashire, being held back while we wait for the rest of Lancashire to come up with some sort of solution to what they need?
Graham Jones: The hon. Gentleman makes a fantastic point. East Lancashire has an MAA and now west Lancashire has decided to have one because east Lancashire has one. That reinforces the point that there are two economic models and two different regions divided by the M6 motorway. He also makes the point that the direction of travel to work is to Manchester or inwards; there is none to the west.
Following that recent poll, which I think is striking, a strong Government recommendation to that end would quickly resolve the situation and leave Lancashire settled with a two-LEP solution.
The two areas are distinct, encompassing both Blackburn and Blackpool. I remind the Minister that we have recently seen a costly legal battle between the two areas over Tithebarn, a retail development intended to revamp Preston city centre. Lancashire county council backed Preston city council against Blackburn with Darwen borough council over the Tithebarn project, and £1.5 million of taxpayers' money has been wasted in that legal battle. That is what will continue if we try to mix oil and water, and Tithebarn will not go away in the next decade. Trying to merge the two areas will result in a terrible situation. That battle in the courts was about not civic leaders but retail, and it was between businesses and, primarily, Blackburn council.
I am concerned by the fallout from Tithebarn. I do not see how Lancashire county council has a mandate for that proposal, and I do not know why it is bringing that forward. I have never seen an executive report on the issue from the county council, and nor have I ever seen the matter go to full council. I have never seen it brought forward. It is undemocratic, and I would like to see how much the county council is spending on it, as it does not even have a mandate from its members in the council chamber. It is a ridiculous bid and should be thrown out. It is a cynical attempt to undermine the established Pennine Lancashire LEP bid, and to use issues such as Tithebarn to impose a west-of-Lancashire solution. It goes against the spirit of local economic partnerships and the Government's wider localism agenda. Lancashire county council should not be allowed to disrupt and jeopardise the economic prosperity of an area it is meant to serve in a misguided attempt to reassert control over the existing county boundaries on issues such as Tithebarn and others.
In summary, Pennine Lancashire LEP is based on evidence and understanding and has the support of the private sector, district authorities and all local MPs from the three main political parties. Business and civic leaders in east Lancashire all recognise what works locally and have a sense of common purpose about what needs to be done, one that transcends political differences. The economic capital should not be discarded, as years of work have gone on in east Lancashire involving all the authorities-of different colours-to try to drive growth in the area, which we have done.
It is clear that Pennine Lancashire has had a business-led and focused partnership that has developed over years. There is nothing comparable to the west. To send everyone back to square one to suit the county council's agenda would be a gross waste of taxpayers' money and would hit growth in the region. I urge the Minister to resolve the situation, approve a Pennine Lancashire proposal as a matter of urgency and allow us to get on with creating the private sector jobs and growth that the area so desperately needs.
Mr Mike Weir (in the Chair): Order. It is normal for the Minister to have 15 minutes to respond to the debate, but I will allow other Members to speak if they do so briefly.
4.43 pm
Lorraine Fullbrook (South Ribble) (Con): I wish to address the issue of parochial interest, which is in danger of overriding the greater and more holistic approach in fostering and enhancing the economy of Lancashire. If we allow Lancashire to be divided, we will be unable to offer a broad and integrated approach to our economy. To argue that the Pennine area should be separate because of its manufacturing base is to encourage a parochial view of business.
Graham Jones: Does the hon. Lady not accept that, on travel to work, 84% of the people are contained in the east Lancashire region, and that that is where they work? Does she not accept that there is no economic connectivity of any significant scale between the east and west?
Lorraine Fullbrook: I appreciate the hon. Gentleman's comments but I do not agree, because I believe that industry, the manufacturing base and professional services all have to be integrated across Lancashire.
Graham Jones: Will the hon. Lady give way?
Lorraine Fullbrook: I would like to make progress. We now live in a global economy, which demands a consolidated approach in all sectors: manufacturing, tourism and professional services. I submit that a united Lancashire is a stronger economic powerhouse than one divided into separate bids identified by geography. By unifying the system, the Government are cutting red tape and bureaucracy. Any investor looking to invest in the north-west will automatically be attracted to a unified LEP that offers a one-stop shop.
Graham Jones: Will the hon. Lady give way?
Lorraine Fullbrook: I have nearly finished.
The Business Secretary said last weekend that not one of the three proposals to create the partnerships had been successful, claiming that they would have ended up competing with each other for the Government's regional growth fund. Meanwhile, schemes in Manchester, Merseyside, Greater Manchester and Cheshire have got their acts together and are getting the go-ahead. Other unified LEPs are currently bidding for funds that could be usefully deployed in Lancashire. The North and
Western Lancashire chamber of commerce has said that an LEP based on the county of Lancashire is the preferred model for chamber members and the wider business community. On 2 November, Babs Murphy, chief executive of the chamber of commerce, said:
"A pan-Lancashire Local Enterprise Partnership was the only realistic model for this area, a model that had the support of the business community."
Gordon Birtwistle: Will the hon. Lady give way?
Lorraine Fullbrook: I am nearly finished. I hope that we can come together to protect Lancashire as a whole and as a brand. Tourism, manufacturing, agriculture and professional services should unite and, regardless of parochial interests, work together to strengthen and enhance the great economic potential of Lancashire. I echo the words of Frank McKenna, chairman of the business lobbying group, Downtown Preston, who has said that anything other than a pan-Lancashire bid would stifle development and growth.
4.46 pm
Andrew Stephenson (Pendle) (Con): I will refer briefly to some of the comments that have been made. I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate. As he pointed out, 84% of the work force in the region live and work in the Pennine Lancashire area, and three times as many people commute to greater Manchester than commute to Preston. It would make far more sense for Pennine Lancashire, if we cannot go alone, to go in with Greater Manchester, rather than with Preston. Going in with Preston would, economically, be complete nonsense. Lancashire is an historic county and there are many things that we can do by working together, and I applaud the work of the county council, but if LEPs are supposed to reflect natural economic areas, the case for Pennine Lancashire is fantastic. I hope that the Minister will set a decision date, and I urge him to bring the issue to a head.
4.47 pm
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate and thank those Members who have been able to contribute. Although normally only a Minister replies in such debates, I think that it has been useful to allow other Members to contribute in this one. It is clear that there are strongly held differing views, both within the House and among the people whom Members represent. In that context, I want to help and have a positive proposal, to which I will come in a moment.
For the Government, creating the right long-term economic framework, whether in Lancashire or elsewhere, is an extremely important issue, and one that we take very seriously. Having once worked in Lancashire, I know the economic strengths across the county. BAE Systems, for example, has a heavy presence in the hon. Gentleman's constituency, and it also has operations across the county. There is also the nuclear industry and, as others have mentioned, the automotive and paint manufacturing industries.
We believe that Lancashire would benefit-I mean the economy of Lancashire, and there is a slight nuance there-from the focus on economic growth that we
strongly feel LEPs would bring. On 28 October, we announced the first wave of successful partnerships. In fact, the 24 partnerships that have so far been cleared are diverse, have strong ambitions and are focused on the local priorities that they think matter. They are wide in their scope and imaginative in what they are trying to achieve. If we look at the 24 partnerships that have so far been cleared, we will see that they represent, outside of London, more than half England's gross value added, 58% of the businesses and nearly 60% of the work force.
The point about LEPs is that they should enjoy broad discretion so that they can choose the priorities for action in response to local needs. A number of them are focusing on the need to remove barriers to growth, whether they relate to transport and planning, matching skills provision with employers' needs or helping fledgling companies get off the ground.
As Members will know, we were unable on 28 October to clear every bid we received to become a partnership. Of the three bids we received from Lancashire, we judged that none were ready to proceed without further work. The area covered in what I will call the pan-Lancashire bid included Preston, Lancaster, South Ribble, Chorley and West Lancashire. The Fylde coast bid comprised Blackpool, Fylde and Wyre, and the Pennine Lancashire bid originally comprised the area including Blackburn, Pendle, Ribble Valley, Burnley, Hyndburn and Rossendale. We were impressed by the commitment and ambition demonstrated in all three proposals. As with some of the cleared bids, we saw that there was a real wish to look at how, in response to local need, economies could be diversified. There were strong merits to the bids.
Let me turn to the problems. As they originally stood, the three overlapping bids clearly competed and conflicted with one another. Before we could consider whether they should progress, we had to be confident about the structures, and ensure that they were right for the business community and the communities as a whole. Clearly, where there is strong local disagreement among the potential members of a partnership, the possibility of making that partnership last is sharply diminished. Therefore, it has been disappointing that there have been continuing disagreements across the county, not only in local government but among the business community.
However, I now understand that partners involved with the Lancashire bid and the Fylde coast bid have been having productive discussions about the possibility of joining forces in one partnership. I hope that their discussions reach a successful outcome. It would be progress, but the problem would remain: we would still have two bids in opposition to each another in Lancashire.
To be open with Members, and to allow them to see exactly what the principles are, let me return to the criteria with which we are working. The criteria we set were that every partnership had to demonstrate, first, that it encompasses a natural economic area; secondly, that it has the clear support of business; thirdly, that there is an ambitious approach to transforming the area-something that adds value; and, fourthly, that it has buy-in from the key councils in the designated area.
Let me look at the two bids that we are debating in this Chamber today: the pan-Lancashire and Pennine Lancashire bids.
Graham Jones: Will the Minister accept that there is no such thing as pan-Lancashire when we talk about historic Lancashire? We are merging two concepts. Blackpool and Blackburn, particularly Blackburn, are totally resistant, and Blackburn is an equal partner in local government with Hyndburn. They work together effectively. If Blackburn withdraws-it is insisting that it will go with Manchester-there will be no pan-Lancashire solution. There is a Swiss cheese solution that covers the vast majority-12 out of 14-but there is not a 14 out of 14 solution. There is no pan-Lancashire solution.
Mr Prisk: I will not comment on the value of the groupings. They are the ones that came forward. If a group chooses to call itself pan-Lancashire, that is its judgment. Given that we have a pan-Lancashire and a Pennine Lancashire, I thought that it would be easier to use that shorthand so that we know what we are talking about.
On the first criterion, the pan-Lancashire bid represents a strong, functional economic area. On the second criterion, it is clear that the bid enjoys strong business support, particularly from larger employers, but the support is not unanimous. On the third point-this is the issue around ambition and added value-pan-Lancashire also scores well. It would deliver the critical mass needed for Lancashire to compete with the likes of Greater Manchester, Merseyside, and West Yorkshire, as my hon. Friend the Member for South Ribble (Lorraine Fullbrook) pointed out. It would enable a joint approach to be taken on key sectors such as manufacturing. In addition, it includes Central Lancashire and Lancaster universities, and its scale is sufficient to bring together adjacent areas, thereby better integrating transport and planning.
It is the fourth criterion-local government support-that is the root of the problem. Clearly, some councils falling within the geographical scope of the bid are not signed up to it.
Mr Jack Straw (Blackburn) (Lab): Will the Minister be good enough to acknowledge that support for the Pennine Lancashire bid and the serious concern about the so-called pan-Lancashire bid, arise not just from the local authorities in east Lancashire, on an all-party basis, but from the majority of businesses in east Lancashire? I cannot emphasise that point enough. BAE Systems, for reasons that one understands, has decided to sit on the fence, but it is not passionately in favour of one versus the other; if I were in its position, neither would I be. But the East Lancashire chamber of commerce, which is very representative and a very good chamber of commerce, and all the businesses that I know of-I believe that this is shared by my colleagues across the valley-are passionately in favour of the separate east Lancashire solution. In fact, none of us would be supporting that bid if they were not.
Mr Prisk:
I totally understand the right hon. Gentleman's point, and I respect the fact that where one is seeking secure evidence, it is inevitably often easier and quicker for larger organisations to respond. We have been mindful
of the fact that there may be smaller businesses, about which we do not have evidence, that may support one bid or the other. I am mindful of the danger of assuming that familiar names on a particular bid's proposal somehow mean that the whole of the business community is unanimous. I am sensitive to that-it is an excellent point. That is why we try to make sure that once we receive bids, we dig beneath the proposals and get a better understanding of the genuine nature of the support or otherwise, so that we can make a value judgment. That allows me to turn to the Pennine Lancashire bid.
On the first criterion-the question of a functional economic area-it has a plausible claim. I understand that economic geography changes. One of the points about changing the regional development agencies is that, in many ways, some of their boundaries simply do not reflect the economies that we have today, which have changed dramatically in the past 10 or 12 years. We think that the Pennine Lancashire bid has a plausible claim to being a functional economic area.
However, its links with other parts of Lancashire and Greater Manchester mean that its economic self-containment is not quite as strong as Lancashire's as a whole. There are pros and cons. The hon. Member for Hyndburn rightly made the point that a high proportion of people work in the area, but we also need to look at the potential long-term success of a partnership-we need to think about its connectivity. The debate is two-sided; nevertheless, it is true to say that there is a plausible argument and a plausible element to the first question on whether there is a functional economic area.
On the second issue, on the evidence that we have to date-I will come to how we might solve this in a moment-the Pennine Lancashire bid's claim, in terms of business support, seems to be smaller than that of the pan-county bid. [Hon. Members: "Not true."] I hope to offer hon. Members a solution to that in a moment.
There is support from local businesses, especially including small and medium-sized enterprises, and I am grateful to hon. Members who highlighted that so that we can make an informed judgment. I am acutely aware of the two different chambers of commerce. I shall not comment on the pros and cons of either, but the fact that historically they exist tells me something about the nature of the economic geography in the county-I do understand it.
On the third criterion, Pennine Lancashire argues that its bid would give it the freedom to build on already close links with Manchester. The evidence is that 17,000 workers travel south to Manchester, and a far smaller number into Preston. I understand the motorway network, and that one does not look west; people look south, if anything, and perhaps a little east. In addition, private sector jobs growth is expected to be focused on Manchester. That brings me back to a point I made earlier about self-containment and balance.
There is then the question of the added value that would come from a Pennine Lancashire bid. We are looking for additionality in the proposal. What is the extra element? That is one of the questions that we want resolved. Like the pan-Lancashire bid, this bid failed on the fourth question-the issue of local authority support-as several hon. Members pointed out.
I am mindful of the challenge. Overall, we feel that the pan-Lancashire bid has some strong elements, but that the Pennine Lancashire bid also has good arguments in its favour. Neither is without its flaws. Like many hon. Members, I am keen to bring the matter to a conclusion without undue delay, so the Government are today asking partners involved in the competing bids to submit revised proposals no later than 8 December. We will write to the proposers today. Any revised proposal needs to be backed up with clear and compelling evidence to support the arguments that it presents. I hope that that clearly spells out the Government's position. We want a lasting partnership, and that means that the partners must agree. We cannot make that happen without there genuinely being such a wish. That is the key point.
Graham Jones: Will the Minister give way?
Mr Prisk: I am running out of time, and I am mindful that I will be in trouble unless Mr Weir allows me to stretch beyond 5 o'clock, but I do not think that I can do that.
We want to make a prompt decision and allow both sides to put their evidence firmly. That will allow us to make a judgment on which should be cleared: one, two or neither. We will seek to make that decision if the evidence is presented to us.
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