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Westminster Hall

Tuesday 12 February 2013

[Mr Philip Hollobone in the Chair]

Manufacturing (East Midlands)

Motion made, and Question proposed, That the sitting be now adjourned.—(Nicky Morgan.)

9.30 am

Mr Philip Hollobone (in the Chair): I am not allowed to take part in the debate from the Chair, but, because I am an east midlands MP, I hope everyone present has enjoyed an east midlands breakfast of either Weetabix, Ready Brek or Alpen, all of which are made in Burton Latimer in my Kettering constituency.

Mr Mark Spencer (Sherwood) (Con): It is a pleasure to serve under your chairmanship, Mr Hollobone. It is also a pleasure to be here to discuss the manufacturing sector in the east midlands.

We have a great deal to be proud of. Nottinghamshire has been at the heart of manufacturing for centuries. Members will be familiar with brands such as Raleigh, which started in the city of Nottingham in 1887, but they might not be familiar with William Lee, the reverend who invented the knitting frame in the village of Calverton in my constituency, starting the industrial revolution. That is something of which we can be proud. We have many claims to fame.

Chris Williamson (Derby North) (Lab): Will the hon. Gentleman concede that the world’s first factory was the silk mill in the centre of Derby?

Mr Spencer: I am keen that we remain as a team in the east midlands. I do not want to get into the Nottinghamshire-Derby rivalry, because—[Interruption.] I forget there are other counties in the east midlands.

As a region, we have a great deal to offer and a proud history. Many other Members will go on to talk about some of the great companies such as Toyota and Rolls-Royce in Derby. Of course, in the town of Hucknall in Sherwood more than 800 staff work at Rolls-Royce making parts for jet engines assembled in Derby. Rolls-Royce has invested more than £40 million in the Hucknall plant in the past 10 years, with more to come for the industrial estate.

Manufacturing is not only about greasy metal, but a range of different manufacturing processes, including drugs—we have Boots in Nottingham—food, hosiery and many other products to which value is added.

Sir Edward Garnier (Harborough) (Con): I am grateful to my hon. Friend for giving way so early. Does he also accept that, although great names such as Rolls-Royce, Boots and other well known regional and national companies are to be found within the east midlands, the bedrock of the industrial and manufacturing scene in our area are the smaller, family-sized businesses with

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perhaps 10 employees or fewer and a turnover of less than £500,000? That is the real foundation of the manufacturing sector in our region.

Mr Spencer: I absolutely agree with my hon. and learned Friend—it is easy to focus on the big boys, but small family businesses are driving the economy. They are starting to expand and take on new staff, and they will move us forward as a region so that we are seen on the map. I want to highlight some of those companies.

I do not want my speech to turn into a list of companies in my constituency, but I have mentioned hosiery and I still have a sock manufacturer, F. J. Bamkin and Son. The company was formed in 1886 and is still making socks in the town of Hucknall. It has made them for the Ministry of Defence, although the MOD has decided to procure its socks from foreign manufacturers over the past 15 years. I hope the Government can redress some of those changes of the past 20-odd years—we have looked to foreign rather than UK-based manufacturers—and start to consider quality. I can guarantee that the socks are top quality. I have even worn a pair myself. [Interruption.] I am not wearing them today.

Yesterday I was at a company called Doff Portland, which, as well as manufacturing fertilisers and agri-chemicals for garden centres, is one of the major manufacturers of slug pellets. Anyone with an allotment or garden will know what a fight it was last year to keep slugs out. If it were not for companies such as Doff Portland that turn UK-grown wheat products into slug pellets and distribute them, we would all be much hungrier.

Not all the companies in my constituency date from 1886 and 1887. Howard Marshall Engineering was formed only 10 years ago. Howard Marshall is a young entrepreneur who set up his own agricultural engineering company, and he can produce anything out of metal that people might want. He has worked for a well-known BBC car programme that I had better not name, because it does not want to be publicly linked. He has also designed and made a grass-collection machine for Arsenal football club. His going from a young man starting in business to having more than 20 staff should be celebrated, and he should be congratulated.

David Simpson (Upper Bann) (DUP): We started many things in Northern Ireland but not the industrial revolution. I congratulate the hon. Gentleman on securing the debate. On the point he raises about a young man starting in business, will he congratulate the new university in Derby that will teach not only manufacturing but business, entrepreneurship and financial skills to young people at 14?

Mr Spencer: I happily add my congratulations to the new university. I will go on to talk about skills training, which is one area we need to improve.

I want to highlight two more companies. Many Members may be familiar with the old Robin Hood sports cars, which were manufactured locally; the company is now called Great British Sports Cars Ltd. I know the Minister might not be able to afford a sports car on his salary, but should he ever decide to purchase one, I highly recommend the two-seater manufactured in my constituency. Perhaps at some future point he would like to visit the great constituency of Sherwood to see those cars for himself.

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Chris Heaton-Harris (Daventry) (Con): If he has a mid-life crisis.

Mr Spencer: I am sure the Minister is more than comfortable with his own life, but should any Member decide to purchase a sports car, I highly recommend one manufactured in the constituency of Sherwood.

Next door is a company called Jonam Composites, which is at the other extreme. It manufactures high-tech composite bicycle spokes that have the same tensile strength as steel but are much lighter. That is a real indication of the progress we have made in manufacturing in Nottinghamshire and the east midlands. We are going in a high-technology direction. We are at the cutting edge of what is possible in manufacturing. As a country we must acknowledge that we will probably not become the great shipbuilders of the world that we were, but there are lots of opportunities to be right at the cutting edge, as we always have been. We were at the cutting edge of the industrial revolution, and we can remain there by looking to new technologies and using our skills, so that we can once again trade with the rest of the world and ensure that we are at the right place.

One area we often overlook is food and drink. Again, Nottinghamshire has a great tradition of producing food and drink with companies such as Home Ales and Mansfield brewery, which sadly have been bought up and gone to other parts of the country. Food manufacturing makes an enormous contribution not only to the east midlands but to the UK as a whole. Mr Hollobone, I know your constituency has an interest with companies such as Weetabix.

Smaller manufacturers have been mentioned. Every butcher in my constituency adds value to their product. They produce their own burgers, pasties and pork pies. Given the issue that is right at the top of this week’s political agenda, anyone who wants a top-quality burger or pork pie and wants to know exactly what has gone into it can buy one from their local butcher. [Interruption.] The hon. Member for Leicester South (Jonathan Ashworth) tempts me to mention farm shops, but I would have to declare an interest if I did. By going down the chain to smaller manufacturers, people can get the high-quality products that consumers are keen to purchase.

However, we can do more. The east midlands is ideally placed. We hear a lot about our country’s north-south divide, but the east midlands are smack bang in the middle. Geographically, we are ideally positioned to trade with the rest of the country. We have great connections with the A1 and M1, fairly good railway links, the possibility of High Speed 2, and East Midlands airport and Robin Hood airport. We have lots of good communication links and the ability to get products in and out.

Toby Perkins (Chesterfield) (Lab): I congratulate the hon. Gentleman on securing this debate. He, like the rest of us, will be aware of the Smith Institute report showing that the east midlands fares the worst of any area in being awarded regional growth fund money. Given what he is saying about the great strengths of the east midlands—I entirely concur—why does he think the region fares so badly when it comes to Government support from the regional growth fund?

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Mr Spencer: I think we need to look at ourselves: perhaps we MPs should be banging the drum harder. We should be cheerleading for the east midlands and supporting our businesses in making bids. Because the east midlands is ahead of the game and other areas are trying to catch up, perhaps we have not done as well as we could in that regard. The hon. Gentleman makes a fair point. We need to get out there and bang the drum for the east midlands. We need to ensure that people know we are there and know what we can offer, and I hope this debate will contribute to that knowledge.

Sir Edward Garnier: On the subject of banging the drum, may I commend to my hon. Friend Premier Percussion in my constituency?

Mr Spencer: I must confess that I have never banged a Premier drum, but I shall endeavour to do so at some point in future.

The east midlands also has energy supply, which is important to businesses—

Andy Sawford (Corby) (Lab/Co-op): I congratulate the hon. Gentleman on securing this debate. It is a pleasure to serve under your chairmanship, Mr Hollobone, particularly as you are my constituency neighbour. On the subject of energy, one of the great industries of Corby in east Northamptonshire, as I am sure the hon. Gentleman knows, is the steel industry. That, along with boot and shoe, made communities in my constituency, but Tata Steel’s particular concern at the moment is energy prices, which are much higher in this country than in France and Germany. Does he not agree that it is important that the manufacturing industry in my constituency and his can compete on a level playing field, including on energy prices?

Mr Spencer: I agree, and it is important that we as a Government address those concerns, but the hon. Gentleman will recognise how difficult it is to strike a balance between energy prices to consumers and to industry. It could be argued that logically, the more energy one buys the more cheaply one should get it; that would have a knock-on effect on our consumers and constituents. It is difficult to strike that balance and ensure that energy-consuming industries get a reasonable price, as well as our constituents who are struggling to pay their energy bills.

It comes down to energy security as well as price. Within the east midlands, the Trent valley provides a lot of electricity generation, so at least we are not far away from a power station, but we need to do more. The Government particularly need to consider carbon leakage. Energy-intensive industries are under pressure and looking to relocate elsewhere in the world. We talk about reducing the carbon footprint of industry and manufacturing, but it would be wrong to push out industries to other parts of the world where energy is probably bought from higher-carbon sources than in the UK, and then to import the goods. We should be aware of that.

Chris Heaton-Harris: I congratulate my hon. Friend on securing this debate. On the point about energy, we are now in the midst of global competition on a scale never seen before, and it is a threat to UK manufacturing. In the US, gas has fallen to one sixth of the price of four

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or five years ago, while our energy prices continue to rise, partly because of the contribution made to bills by wind energy. It is causing great concern in businesses such as Tata and Cummins, in my constituency. Does he have any views on that?

Mr Spencer: I recognise those challenges. Energy supply will be vital if we are to see our way through and ensure a thriving manufacturing sector. The Government need to address it and are addressing it. We must ensure that we have energy security as we move forward.

Lilian Greenwood (Nottingham South) (Lab): Does the hon. Gentleman think that it is important for the Government to provide certainty about their direction of travel on energy? In my constituency, we have a fantastic engineering company, Romax Technology, which relies on providing service to the automotive industry and offshore wind. I know how important it is for the industry to have certainty about where the Government are travelling, in order to have the confidence to invest.

Mr Spencer: I recognise that challenge, but I feel that we are 15 years behind the game. We should have addressed these problems a long time ago. The nuclear decision was put off by previous Governments. Had we bitten that bullet much earlier, we would not be as concerned about energy security as we are today. I am glad to see that the current Government are trying to address the issue and get a clear direction. Of course, being a coalition Government brings its own challenges. Sometimes there is disagreement within the coalition about the best way to procure energy security.

I have been open about my view that nuclear is a great option that we should be pursuing. I also think coal has a role to play. Sherwood sits not only on a former coal field but on great reserves of shale gas, which could assist us. We also have a great deal of water, which can be important to manufacturing. Nottinghamshire sits on Bunter sandstone with aquifers. However, at the top of the list must be a willing and ready work force, which we in the east midlands have. We have great skills. As we have a thriving manufacturing sector, we already have a high skills base for any company that wants to relocate to the east midlands.

I hope the message of this debate will be that the east midlands is open for business to manufacturers of any sort looking for somewhere to relocate. The east midlands is the ideal place, and we would welcome manufacturers with open arms. I hope the Minister, as he goes around the country in his many dealings, will recognise how important the east midlands is and what it has to offer. If he is having discussions with any foreign or other companies looking to relocate, I hope he will recommend the east midlands. It would assist us in procuring more companies to come and make use of the area.

There is a lot more that we can do, and I want to emphasise what Government and local authorities can do. Broadband is important. People trying to run businesses in rural locations need access to good-quality broadband, and we must do more to get it out into rural locations so that companies can relocate to those areas as well. Infrastructure and traffic are a constant battle. Every time one improvement is made, it knocks on to another

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area. We must keep doing more to improve infrastructure to remove bottlenecks, so people can get around the country.

Finally, on training, we need the best-quality engineers and the most highly skilled individuals, which requires the work and support of some of our great training institutions, such as Loughborough university, Nottingham university and the many others that educate people to a high degree. Some colleges in and around our constituencies deliver courses on food and drink manufacturing, welding skills and so on. Such skills will be absolutely vital to our companies as we go forward. We have a little bit further to go.

Many of the businesses I talk to are crying out for good quality, highly skilled staff and they do not want to look to eastern Europe to procure those people; they want UK-based, qualified people and we need to keep pushing that door to ensure that they are coming forward.

Andy Sawford: It is my hope, as I am sure it is the hon. Gentleman’s, that the manufacturing industries in our constituencies employ local people. Does he recognise many people’s concern about the role of agencies, particularly those recruiting in eastern European countries for jobs that could be done by local people? Does he agree that we ought to ask the Government and Opposition Front Benchers to consider how we can deal with that?

Mr Spencer: I agree; it causes a great deal of frustration. Constituents e-mailing me with a copy of a job advert published in Polish feel excluded from that process, although I have tried to argue that such an advert is probably published in English as well. Our companies need quality staff and if they cannot procure local people, I suppose they will look to the rest of Europe to try to get people with the skills they need. We need to ensure that we train our constituents in those skills, so that they can compete on a level playing field. We are starting to get there—starting to push back and improve things—but there is further to go. There has been a deficit in the past 10 to 15 years and we need to start dealing with that. I hope that we are starting that process.

I am conscious that other hon. Members want to speak, so I do not want to take up too much time. I want to emphasise the fundamental message of this debate: there is a great manufacturing sector in the east midlands and we are open for business. If people want to locate somewhere, the east midlands is a great place to come. I hope the Minister takes the opportunity to visit businesses in Sherwood. I would be delighted to be his host, should he find time in his diary.

Several hon. Members rose

Mr Philip Hollobone (in the Chair): Six Members wish to speak. If they limit their remarks to about six minutes each—it is not a formal time limit—they will all get in, with one or two interventions. That is just a guideline. The first four speakers will be in this order: Lilian Greenwood, Andrew Bingham, Jonathan Ashworth and Andrew Bridgen.

Mr Spencer mentioned that socks are made in his constituency. I am standing before you in Loake’s quality men’s shoes, made in Kettering.

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9.52 am

Lilian Greenwood (Nottingham South) (Lab): Mr Hollobone, it is a great pleasure to have an east midlands Member of Parliament in the Chair for this debate, particularly one who makes such a fantastic contribution every time he introduces a speaker.

I congratulate the hon. Member for Sherwood (Mr Spencer) on securing today’s debate and on giving us the opportunity to highlight the strengths of, and the challenges faced by, the manufacturing industry in the east midlands. As he said, the industrial revolution began in the east midlands, and manufacturing there still employs a higher proportion of people than in any other region: within the D2N2 local enterprise partnership, covering Nottingham, Nottinghamshire, Derby and Derbyshire, 16.7% of full-time jobs were in manufacturing, compared to 14.5% in the east midlands and 10.5% in the whole UK. Unfortunately, that is not so in Nottingham city, where at the moment manufacturing accounts for only 6.2% of full-time employment.

The largest manufacturing subsectors in the D2N2 economy are transport equipment, metals and food and drink. I will say a bit more about the local firms involved and their needs shortly. In the 19th century, Nottingham was at the centre of the world’s lace industry, a legacy that recently once again received national attention when it was featured in Mary Portas’ “Mary’s Bottom Line” programme. Sadly, there are no lace manufacturers left in the city.

During the 19th century, world-famous names were founded in the city, some of which have been mentioned already, including Boots the Chemist, the Raleigh Bicycle Company, and John Player and Sons. I cannot resist mentioning Frederick Gibson Garton, who recorded his secret recipe for HP Sauce in the Meadows in my constituency in 1894.

Life in those industries was immortalised by local writers, including D.H. Lawrence and Alan Sillitoe. Although we do not make bicycles in Radford now, the Saturday nights and Sunday mornings of Arthur Seaton are still familiar to the city. Thousands of visitors come to Nottingham every weekend for a great night out in our purple-flag city centre. That shows that it is not just the manufacturing industries that are important; there is knock-on for the other industries in the area.

In the 21st century, Nottingham faces both opportunities and challenges. Government policy has led to the loss of some 53,000 public sector jobs in the east midlands. With three in 10 people in Nottingham city employed in public service, we must diversify if we are to become more resilient and avoid the damage wrought by high unemployment and a lack of opportunities for our young and growing population.

“The Nottingham Growth Plan”, published in 2012, aims to reconnect the city with its proud history and create a manufacturing renaissance, rebuilding our international reputation as a place that designs and makes things. Some of the elements needed for that renaissance are already in place. We are fortunate to have two universities that produce world-class research and a highly educated work force, and we already have highly successful companies and emerging sectors in areas such as digital content, life sciences and clean technology, which can provide prosperity and sustainable employment if we give them the right support as set out in that plan.

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One of the city’s new growth sectors is digital content—a far cry from the grease and noise of the Raleigh factory, perhaps, but it already employs 6,400 people. That sector offers huge opportunities for growth. The games developer, Crytek, located on Canal street in the heart of my city, employs almost 100 people in the lucrative video games market. Many smaller gaming industry companies are locating in the Lace Market area, now the centre of Nottingham’s creative quarter, backed by the city deal.

Crytek stood to gain from Labour’s tax break for video games developers, but the incoming Government scrapped it in 2010, only to reconfirm it two years later, by which time the UK’s advantage had been lost to competitors in other countries. It would help if the Minister said how we can avoid such a stop-start situation in future.

Also in Nottingham’s creative quarter is BioCity, the UK’s leading bioscience incubator, established 10 years ago as a joint initiative between Nottingham’s two universities and the regional development agency. BioCity builds on Nottingham’s long-standing expertise in biosciences. It is on the site where ibuprofen was discovered by Dr Stewart Adams in the 1960s, and provides lab accommodation, facilities, expertise and access to finance. It currently sustains more than 80 fast-growing businesses —biotech, pharmaceutical and health care start-ups—and is looking to expand further to meet demand. The Government’s decision to cut total science spending, including in research and development, is exactly the wrong decision for the future development and expansion of this sector.

On the role of Government and support for regeneration, the Smith Institute recently published a report that identified the low levels of public investment in the region. That was the subject of discussion by the all-party group on the east midlands. The report’s authors describe how they realised in 2012 that

“something was going seriously wrong in the allocation of central government investment in the East Midlands”.

In the first two rounds of the regional growth fund, the east midlands received just 4% of the total funding available, the lowest share of any region. In round 3, the east midlands again received the lowest share of funding; it was allocated just £14 million, compared to £105 million for the north-east and £88 million for the north-west. That put it in a worse position than before the scrapping of our regional development agency; we were allocated 8.9% of total regional funding in the RDA’s last three years—more than the south-east, the south-west, or the east of England. I hope the Minister will say what he can do to address that under-investment, which, as the Smith Institute report says,

“in terms of jobs and growth and in rebalancing the economy, makes no sense whatsoever”.

Finally, let me return to one of our most historic sectors—food and drink, and specifically brewing, which is dear to not only my heart, but the hearts of many thousands of my constituents. I am fortunate to have four breweries in my constituency, Castle Rock, Nottingham Brewery, Trent Navigation, and a little micro-brewery, Magpie. They are responsible manufacturers who have continued to grow despite the recession. They are being hit, however, by a combination of higher VAT and the

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beer duty escalator. The escalator was introduced in different economic times. Should not the Government review alcohol taxation to support those vital manufacturers and the pubs that serve their produce?

10 am

Andrew Bingham (High Peak) (Con): It is a pleasure to serve under your chairmanship this morning, Mr Hollobone. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this debate, and on giving the east midlands a chance to shine and us a chance to put ourselves on the record about what a great place it is for manufacturing.

I represent the High Peak which, to many of my constituents, does not necessarily feel part of the east midlands. We are the most northerly constituency, and much of the High Peak looks to the north-west: we have north-west postcodes and north-west television, and many of my constituents travel to the north-west to work and shop and for their recreational needs. Another part of the High Peak faces east, and the Hope valley gravitates towards Sheffield, parts of it receiving their media from the Yorkshire region. Forgive the geography lesson, Mr Hollobone, but I want to get over that the High Peak, far from being remote and miles from anywhere, as people sometimes think we are, is not only in the east midlands but is very much the cockpit of the north of England. Ideally situated between the cities of Manchester and Sheffield—I live 24 miles from either city—we are in striking distance of many other cities, including Leeds, Doncaster, Barnsley and Liverpool. Consequently, a huge variety of manufacturing businesses have grown up in the High Peak over many years. I want to talk about one or two of them, to stress how the High Peak as part of the east midlands is ideally placed for manufacturing.

We have many household names. Many people watching the Formula 1 Grand Prix will have seen the name Ferodo, manufacturers of brake linings. Ferodo was founded in 1897 by Herbert Frood in Chapel-en-le-Frith, in my constituency. Those brake linings are still produced there, in the east midlands, to this very day. Some of the manufacturing was outsourced abroad, but it is now coming back into the High Peak because we are doing such a good job. Despite Ferodo being acquired a couple of times since the name came out, anyone coming off the roundabout and going towards the factory will see the name “Ferodo” still proudly emblazoned on the front of the factory. I should probably declare an interest at this point, because I supplied that illuminated sign in a previous life, when I had my own business. The sign, which has been there for many years, is still working, which is testament to the quality of the goods that I supplied in my heyday—I am not sure whether that is now or then.

We also have a company called Street Crane, which manufactures cranes and crane kits that go all over the world. A while ago, as a member of the armed forces parliamentary scheme, I went out to Afghanistan, and I was particularly proud when I walked into the maintenance warehouse in Camp Bastion and saw two huge overhead cranes with “Street Crane” on. It was a proud moment to be in Camp Bastion with High Peak-made cranes straddling the warehouse, showing that Street Crane is exporting all over the world and doing its bit for the country, batting for Britain in a worldwide market.

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Another company is Otter Controls. We all use and see many of the goods manufactured in the High Peak, but we are not necessarily aware of them. This morning, many of us put our kettle on, and there is a good chance that the thermostat in it was manufactured by Otter Controls. The company was founded at the end of the war to manufacture snap action thermostats that—to get technical—are used in a three-legged bi-metal blade. Those who did science at school should remember the bi-metal strip and how it moves with heat. The concept behind the switch was developed when the founder of Otter’s experimented with the strips for heated suits for RAF pilots during the war, because the pilots got either very cold or very hot in their aircraft. Having come up with the idea of the thermostat in the suit, after the war he decided to roll it out into other areas. The company was all about making people a little ’otter—that is where the name Otter came from. This is a High Peak product that people use without realising it.

Valentine’s day is nearly upon us, and I am sure everyone has been out shopping frantically—I hope the gentlemen have, anyway—so I draw my colleagues’ attention to another product that many will see: the famous Love Hearts by Swizzels, as well as Drumstick lollies and Refreshers. Those of us who have offices in Norman Shaw North know that there is usually a supply in my office—I am a bit like the pied piper sometimes—and those sweets are made by Swizzels-Matlow in New Mills. Swizzels employs hundreds of people, most of them from within a 10-mile radius of the factory. It has made sweets for the royal family and received royal visits, and it is a great name known throughout the world, also manufacturing in the High Peak. Many years ago, on holiday abroad, sitting in a little wooden hut having a cup of coffee with a friend of mine with some children, the guy behind him brought out some sweets for them: he brought out some Love Hearts. We thought: “We have come all this way, and they are giving us sweets that we could have nipped down the road to New Mills to get.”

In a previous life, as I say, I had a small business and supplied many High Peak engineering companies with equipment. Since being elected, I have renewed my acquaintance with many of those businesses, such as the GJD group in Glossop, which makes engineered components for the aerospace industry and timber-frame buildings for the construction industry—that shows the breadth of business.

I have a particular fondness for micro-businesses, which I shall just touch on—I am conscious of the time. I recently went to see a Mr Philip Taylor, who is a cordwainer. You, Mr Hollobone, were talking about Loake shoes; Mr Taylor makes specialist footwear. He has made more than 1,500 pairs of shoes for people. When I visited him, he had a client in from Canada, because Mr Taylor was the person who can make shoes to deal with the client’s condition.

I could talk about many more companies in the High Peak, such as the quarries and the quarry-related products. My wife works for a company that makes linings for gutters—instead of changing our gutters, we could line them—and, given the amount of rain we get in this country, it is busy. Business is tough, however, and there are challenges. We want better transport links and, certainly, better broadband. I am proud that the Government are rolling out better broadband, and agree

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that they should—I describe broadband as the fourth utility. The High Peak, within the east midlands, is working hard and punching above its weight. We are making a wide range of products and selling them to the UK and throughout the world. For anyone who reads the debate, let me say this: I agree with what has been said—the east midlands is a fantastic place to bring business to and, in my view, the High Peak is the best place in the east midlands.

If I may, I shall take a second to touch on the regional growth fund. I hope that the Minister will look carefully at the bids in the fourth round. We have a bid in from Buxton in my constituency. It is shovel-ready, it will create jobs, and I hope that it may be successful, as it has not been in previous rounds.

10.7 am

Jonathan Ashworth (Leicester South) (Lab): It is a pleasure to serve under your chairmanship, Mr Hollobone. As an east midlands MP, I hope that you will later be eating a bag of Wotsits crisps made at the Leicester Walkers site.

I thank the hon. Member for Sherwood (Mr Spencer) for his success in securing the debate. He spoke well, and I learned something about Calverton of which I was not aware, although I will of course be checking it out later with my father-in-law, who was his geography teacher at school in Calverton only a few years ago.

I want to repeat some of the points made about the importance of manufacturing to the east midlands economy. Manufacturing makes up a greater part of the economy in the east midlands than in any other English region. According to figures I have seen, manufacturing gross value added was around £12.5 billion, or 15.8% of total regional GVA output—a higher proportion than any other region—compared with an average of 10.3% for the UK as a whole. Manufacturing employment in the region amounted to 265,000 or more than 13% of total employment—again, the highest proportion of any region, and it compares with a UK average of about 8.5%. Our manufacturing firms score highly on productivity, with many of our sectors outperforming national averages. We have already heard not only about many of the big ones, such as Toyota, Rolls-Royce, Bombardier, Caterpillar and Walkers, but about the many smaller manufacturers that make up our huge manufacturing base.

The hon. Gentleman talked about food and drink. In Leicester and Leicestershire, more than 11,000 people are employed in food manufacturing, so it is important for our region. As he said, some of the reasons our region does well is that we are central, our development in the past has been driven by coal in the north and ironstone in the south, and we have concentrations of grade 1 agricultural land. We do not have any major, dominant economic centre. I would, of course, argue that Leicester is the premier city in the region, not least because we have a former king of England there.

Andy Sawford: On the point of manufacturing, it is a shame for those of us who feel that Fotheringhay, the birthplace of Richard III, should be his final resting place, that my hon. Friend is manufacturing a case for Leicester.

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With regard to the food and drink industry, does he recognise that, while there is a fine tradition in all parts of the region, including my constituency, in many ways Government policy has helped to shape some of the opportunities for manufacturing? For example, in the 1980s the enterprise zone helped to bring lots of food and drink companies to Corby. Will he support my case that we ought to have an enterprise zone today in Corby in east Northamptonshire, where, as he knows, there are high levels of youth unemployment?

Jonathan Ashworth: I thank my hon. Friend for a point he puts well. However, we in Leicester have fought off York and will certainly fight off his constituency when it comes to Richard III.

On balance, the lack of a major dominant conurbation is a strength for our region and its development opportunities, even if it does sometimes mean that we tend to lack a regional identity. That brings us one or two disadvantages that I will touch on in a few moments.

Although the debate has been conducted in a good cross-party spirit, there are problems in our economy, in the cities and former coalfield areas. Unemployment rates remain too high, and are much higher than they were at the 2010 election, even if they have come down a little in recent months. Youth unemployment rates are still too high. Let us be clear: we are seeing a huge squeeze on incomes and many changes to benefits, such as the bedroom tax and the council tax benefit changes. Regardless of the rights and wrongs of that debate, that will suck money out of the local economies of the east midlands. Household consumption will be depressed again.

In the past, Ministers have talked about wanting to rebalance the economy, and we would all agree with that. However, we would like more details about what that rebalancing means. I know that Ministers want to move away from an economy that is solely dependent on public investment and household consumption, towards one that is more in favour of export-led recovery.

Chris Williamson: Does my hon. Friend share my disappointment that, although the Prime Minister came with his whole Cabinet to Derby in March 2011 to make the point about the importance of rebalancing the economy towards manufacturing, three months later a decision was taken to appoint Siemens as a preferred bidder for the Thameslink rolling stock programme? Will he join me in calling on the Government and the Minister, even at this late stage, to think again about that decision? If they cannot reverse it, can they at least ensure that, whenever Government contracts are concerned, notwithstanding EU procurement rules and so on, they take appropriate steps to ensure that British manufacturing has a fair chance of winning them?

Jonathan Ashworth: I thank my hon. Friend; he is absolutely right. I want to pay tribute to the work that he has done on Bombardier. The Bombardier decision was tragic not only for Derby and Derbyshire, but for manufacturing in the east midlands. The whole supply chain was affected by it.

I agree that trade and increasing exports are an important part of the rebalancing of the economy that we want to see, and supporting our manufacturing base is vital to our exports. The regional growth fund is

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supposed to be part of driving that rebalancing, as my hon. Friend the Member for Nottingham South (Lilian Greenwood) mentioned, yet, consistently and sadly, the east midlands has lost out. In round 1, £450 million was allocated. The east midlands made up 13% of the bids and won just 4% of the successful awards. In round 2, £950 million was allocated. The east midlands made up 11% of the bids and was given just 8% of the awards. In round 3, over £1 billion was allocated to private sector projects. East midlands was allocated just £14 million, or 2%.

Frankly, that is not good enough. Given that manufacturing is so important to the east midlands region, and that it is the leading region in manufacturing, why are we not getting a fair deal on the regional growth fund bids? I would be grateful if the Minister said a word or two about that. It has been suggested in the media that the quality of our bids was not good enough. I do not accept that, given the strength of our manufacturing base. To be honest, it is a bit of an insult to our manufacturers.

Will the Minister outline some of the criteria by which those bids are judged? He will no doubt be aware of the National Audit Office report that has cast doubt on the objectivity of the criteria. The NAO argued that,

“a significant number of projects in the first two rounds performed relatively poorly on criteria such as the amount of additional employment supported and the ratio of economic benefits to public costs”.

Will the Minister shed some light on why the east midlands has done so badly? Some have suggested that the reason is that a lot of the bids have focused on the cities. The Department for Communities and Local Government has been keen to focus growth through the core cities initiative. For example, 47% of round 2 of the regional growth fund money went to core cities. Leicester, of course, went along with the great vision of the Secretary of State for Communities and Local Government and the Prime Minister. We went for the directly elected mayor model; not many places did. Although we are now in discussions about a core city deal, we were left out in the first round, although parts of Nottinghamshire and Derbyshire have been covered by a city deal. That has meant that the majority of the east midlands region has been left out. Perhaps that is another reason why we have not done so well at getting our fair share of regional growth fund money.

We no longer have a regional development agency, and I do not think that my party is arguing for its return. There may be such an argument, but everyone accepts that the development agencies have gone, and it is not our policy to argue for their return. Given that the east midlands region has 36 local authority districts, five county councils and four unitary authorities, that fragmentation leads to a lack of a consistent voice on such matters. I do not necessarily know the solution, but we should all be banging the drum as a group of east midlands MPs. We must think about what more we can do collectively to ensure that our region gets its fair share of bids.

I am conscious that I am taking a lot of time. I want to say a couple of things quickly about Leicester. It is a city with a strong manufacturing base and deep links, as everyone will know, with India, Bangladesh, east Africa and Pakistan. In Leicester, we have manufacturers exporting to those parts of the world. Asian food made in Leicester is exported to the middle east, Europe and India. When

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I meet exporters, they tell me of the difficulties of accessing export finance, especially for smaller volume exporters. When people raise UKTI issues with me, they talk about the fees involved in the overseas market introduction service. One matter is always being raised with me: given that cities such as Leicester have communities with deep cultural ties to parts of the world where we now want to export more, should the Department for Business, Innovation and Skills not be doing more to work with organisations such as Leicester’s Indo-British trade council and other groups to leverage the expertise of those communities?

Finally, I want to mention our higher education sector. De Montfort and Leicester universities do great work linking with local manufacturers. There are lots of great examples of how they are adding value to many firms and supporting our manufacturing base. Most of those projects, however, do not lead to any financial benefits to the universities. Given the importance of such projects to our economic future, will the Minister think about financial incentives to support the HE sector to link up more with manufacturers? I know that De Montfort university, having done a lot of projects in the past, is now thinking of scaling back, as such work is not in its financial interests.

Given that the HE sector is so important to our economy and exports—worth £15 billion nationally—will the Minister, who was brought in with great fanfare and was going to shake things up, deal with the crazy policy of the immigration cap on student numbers, which is doing huge damage to our economy? We need to support our HE sector at the moment.

10.19 am

Andrew Bridgen (North West Leicestershire) (Con): I, too, would like to congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I very much enjoyed the evident passion and pride in his speech and his enthusiasm for manufacturing, quite rightly not only in his constituency but across the whole east midlands.

I had better declare an interest, Mr Hollobone. I am the non-executive chairman of a fresh food processing company based in my constituency. I founded the company 25 years ago with my younger brother with £1,000, and it thrives today, turning over in excess of £25 million and employing more than 200 people.

My constituency has a rich history in manufacturing, and that continues to this day. We have a diverse range of manufacturing output, from two of the leading brick manufacturers in the country to high-tech companies that are enjoying record rates of expansion. There is no doubt that the UK economy needs rebalancing, regionally and in terms of production, after the previous Government’s dependence on financial services and the public sector led to the record deficit that was bequeathed to the coalition Government.

Chris Williamson: Does the hon. Gentleman agree that there is a symbiotic relationship between the public and private sectors, and that many in the private sector—particularly small and medium-sized enterprises—rely on public sector procurement? Does he agree that it is important that where local authorities and other public sector bodies are letting contracts, they look, wherever they can, to support SMEs in their local economy?

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Andrew Bridgen: Absolutely. In North West Leicestershire we are a pioneering a buy local campaign whereby local companies can register, and not only will the local authority look to procure from local firms offering services, but that website facility is then open to other companies in the district, and it is hoped that they will join in. However, I bring the hon. Gentleman back to the point that we cannot have the situation we inherited, where 50% of the economy is public sector and 50% is private sector, and we are asking the latter to support itself and pay taxes to support the former. That is unsustainable. That is why we have a huge deficit and why we need to rebalance our economy.

Andy Sawford: The tone of the debate has been very constructive. It was set very well by the hon. Member for Sherwood (Mr Spencer) and it is to Members’ credit that political point scoring has been resisted. However, for the record, we cannot allow that point to stand. Was it the previous Labour Government who were selling sub-prime mortgages in America, for example? The hon. Member for North West Leicestershire (Andrew Bridgen) is entirely wrong on that point.

Andrew Bridgen: I thank the hon. Gentleman for his comments, but I will not allow him or any other Labour Member to rewrite history. The fact is that under the previous Labour Government, manufacturing as a proportion of GDP in this country fell by 50%. It is not a record that I would be proud of if I were sitting on the Labour Benches. The hon. Gentleman should think on that. It is this Government who will address the need to grow manufacturing and rebalance our economy.

Lilian Greenwood: I simply want to respond to the hon. Gentleman’s comment about the public sector somehow riding on the back of the private sector. Those people who are employed in the public sector doing vital work in our schools, hospitals and universities also pay tax and make a hugely important contribution to our economy.

Andrew Bridgen: The hon. Lady is absolutely right. Public sector workers do vital work, but the answer is that all the wealth creation comes from the private sector. We cannot ask 50% of the economy to support itself and the other 50%. That is why we need to rebalance the economy. It is simple maths and it is why we have a deficit.

In the 1980s, following the closure of the coal mines, we needed to rebalance our economy in North West Leicestershire, and as a result of that successful rebalancing it is now in the top 20 districts for business-led growth in the whole of the UK, and in the top 15 for export-led growth. I would like to cite the success of two small-to-medium-sized companies to illustrate the huge contribution they are making to the local and national economy.

Norton Motorcycles, which is based in Castle Donington in the north of my constituency, was founded in 1898 but rejuvenated in 2008, when Stuart Garner bought the rights to the brand. Success and growth has followed, with the help of the Government underwriting a loan in 2011. The company has doubled production of motorcycles, from 500 to 1,000, and it has an order book going forward of some £25 million. Some 90% of its sales are for the export market and 83% of the motorcycle

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components are manufactured in the UK. It has also started a Norton academy with Stephenson college, based in my constituency at Coalville. The project is focused on youngsters and limbless ex-servicemen, whom we are already working with at BLESMA—the British Limbless Ex-Service Men’s Association—to give them a chance to get settled back into our society and employment post-injury. That illustrates the wider impact and community benefit of our thriving manufacturing success in North West Leicestershire.

Another firm that I have visited in my constituency is Zeeko, a technology company based in Coalville that produces ultra-precision polishing solutions for optics and other complex surfaces. It is growing at a significant rate, taking on more staff every year, and it is exporting all over the world. In 2011, it won a Queen’s award for innovation.

Those are only a couple of examples of how my constituency and the east midlands as a whole are exporting overseas, and are at the forefront of the Government’s mission to rebalance the British economy to ensure that we can pay our way in the world. Encouragingly, as other Members have mentioned, exports from the east midlands have recently reached another record high, sending some £13.5 billion-worth of goods overseas for the 12 months to the end of September 2012.

Another very encouraging signal for the sustainability and growth of east midlands manufacturing is the fact that the latest figures from Her Majesty’s Revenue and Customs show that non-EU exports now account for 57% of exports from the east midlands. Europe may have been the future once and it is still a very sizable chunk of the market, but with its heavy indebtedness, sclerotic economies and adverse demographics, it is a market that, while important, we will have to look beyond for the future of our manufacturing export growth.

My constituency also plays an important part in distributing manufactured goods, both in the UK and throughout the world. East Midlands airport, which is located in my constituency, is the largest dedicated cargo-handling airport in the UK, currently handling over 310,000 tonnes of flown cargo every year, with ample room to grow. The airport is another advantage for our exporting manufacturers. Together with the proposed strategic rail freight interchange, which will get more freight off the road and on to rail—if HS2 does not run straight through the middle of it—that again illustrates the advantages and opportunities for manufacturers in the east midlands. It is worth pointing out that the strategic rail freight interchange will involve £500 million of private sector investment in my constituency, creating in excess of 7,000 new jobs, hopefully by 2016.

To sum up, the east midlands is leading the way in manufacturing growth in the UK, and my constituency is playing a key role. In addition to the Government, we must all do what we can to provide the conditions for that growth to continue. Lower corporation tax, increased capital allowances, and many measures in the Enterprise and Regulatory Reform Bill will help to ensure that growth is promoted not only in the east midlands, but across our country.

Several hon. Members rose

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Mr Philip Hollobone (in the Chair): Three Members are seeking to speak. If we start the wind-ups at 10.40 am, and if you limit yourselves to no more than four minutes, including interventions, you will all just about get in. The order will be Jessica Lee, Chris Heaton-Harris, and Heather Wheeler.

10.28 am

Jessica Lee (Erewash) (Con): Thank you, Mr Hollobone. It is a pleasure to serve under your chairmanship, and I, too, would like to join hon. Members in thanking my hon. Friend the Member for Sherwood (Mr Spencer) for securing this extremely important debate. One matter that will always unite us across the House is the pride we all take in the different industries and the range of products manufactured across the east midlands. We have heard about the magnificent range of manufacturing across the area. I will be doing my best this morning to convince everyone that Erewash is, in fact, the beating heart of the east midlands and of manufacturing in the area, ably supported and assisted—I would concede—by surrounding constituencies.

A valuable part of being a MP is visiting different businesses in our constituencies. We all learn so much, and we have probably all met so many inspirational people who have taken that risk and followed their ideas, made innovations and created businesses.

Just last week in Erewash—to deal with an historical matter for a moment—we unveiled a blue plaque with Derbyshire county council at the home of Frances Bush, a remarkable woman. She was a lace manufacturing entrepreneur and well known in the east midlands at the time for her vision and her successful business. Lace has been mentioned this morning. We also have Cluny Lace, the last remaining traditional lace factory in the country, which made part of the Duchess of Cambridge’s wedding dress—something that I always mention. It has a niche exporting market and is doing extremely well.

There have been other successes recently. Gill Manufacturing was awarded the Queen’s award for enterprise. It exports its clothing around the world. Other successes include up-and-coming businesses, such as Goodeseats. Mr and Mrs Goode won a national competition for their cushion seating. It is a fine example of the hard work and vision involved in bringing a product to the market.

The centre of upholstery and furniture making was Long Eaton for many years, and it continues to do well. If anything, there is a need to encourage more young people to consider the benefits and rewards of going into the furniture and upholstery industries. That links to the Government’s drive for apprenticeships and university technical colleges. In Erewash, we face the prospect of two schools merging in Ilkeston. In my view, to continue the site with an educational use, a UTC would be an ideal project. That project is in its infancy, but I will be doing all I can to encourage the site to become a UTC in the near future. With national apprenticeship week fast approaching, I think we are all spending time—I certainly am—visiting many businesses that take on apprenticeships in our manufacturing areas and do so much to support young people. That, too, needs to be encouraged.

Time is against me. I shall briefly mention just a couple of other points to allow other Members to make their contributions. The brewing industry has been

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mentioned. The county in the UK where brewing is growing most is of course Derbyshire, as Members will be pleased to know. I certainly spent a happy morning learning the art of brewing—trying not to get in the way, of course—at Muirhouse Brewery. That business, too, started at home but is now expanding and doing very well, and there are many more to follow.

Manufacturing in the east midlands involves a wide range of products and areas. It is diverse and forward looking and brings all the essences of entrepreneurship together. We can celebrate the increased number of women also involved and the range of businesses emerging. As I said, the east midlands is at the heart of our country, at the heart of manufacturing and is very much open for business in this area.

10.32 am

Chris Heaton-Harris (Daventry) (Con): It is a pleasure to speak under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I should follow the declaration made by my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) by saying that I used to buy his product when he wholesaled it, and I made more money out of it than he did.

I was very lucky to be the Member of the European Parliament for the East Midlands for 10 years. One of the wonderful things that Members of the European Parliament get to do is travel widely and see in operation all the businesses that invite them. Not many hon. Members from Lincolnshire are here today, but there are fantastic manufacturers in Lincolnshire. Siemens in Lincoln is one of them, and it has just won a massive contract in Australia. In my constituency, I have the full range, as every other hon. Member does, of big, medium-sized and small manufacturers. There is Cummins, a big multinational. Power generation is its thing. It has produced diesel engines in the UK for more than 50 years. It is in the top 40 list of UK exporters, with 70% of its products exported, generally outside the European Union.

Mercedes-Benz has its Formula 1 precision engine plant in the village next to where I live, Brixworth, where it employs more than 600 people. It illustrates some of the issues that manufacturing faces in more rural areas, because it has problems with a consistent energy supply and had to put in, at huge cost to itself, a broadband supply, because it takes real-time readings from precision engines firing round Formula 1 circuits across the globe and can adjust things almost remotely from my constituency.

I have the fantastic shoe manufacturer Barker in my constituency—Barkers are just slightly better than Loakes. The Northamptonshire shoe industry is booming now, because it is a quality product that is being exported massively across the world.

Like other hon. Members, I have food manufacturing in my area. Butcher’s Pet Care has just invested £38 million. It produces food for the pet sector—and it knows what goes into its product. There is proper traceability and line of sight.

Hambleside Danelaw produces roofing and ventilation products, rooflights and cladding. That sounds boring, but it is a very big business. Its products are on all the big sheds that we see around the place. That is its business; that is what it does, and it manufactures in my

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constituency. There are also smaller companies. B and D Dyes produces little washers that go into very fast cars. It is amazing precision engineering.

These companies are doing fantastic things, and they are all served by the logistics base that the east midlands is so good at providing—we are proud of how we do logistics—and by a good education base, which is constantly improving. On my patch, I have Moulton college; a UTC will be opening in the next few months; and there are very good regional universities. What does that lead to? It means that I am very lucky in my constituency; I do know that. There are more jobs on offer at my local Jobcentre Plus—or there were at the end of last year—than there were people on jobseeker’s allowance across my constituency. Not many constituencies can say that.

There is more interesting news from the Northamptonshire chamber of commerce, whose latest report to MPs said that despite concerns about some things, which Government can do very little about—they include the cost of raw materials, competition and cash flow—Northamptonshire businesses, in both the manufacturing and services sectors, had reported an increase in confidence relating to both expected turnover and profitability in the coming 12 months. There is good news out there. Manufacturing in the east midlands is a sector that we should be very proud of and should nurture as best we can.

10.36 am

Heather Wheeler (South Derbyshire) (Con): I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this Westminster Hall debate. It is a pleasure to speak in it under your chairmanship, Mr Hollobone.

I personally have a special relationship with Toyota, as its factory in Burnaston is located in my constituency, and time after time I have been extremely impressed by what it is doing as a company. Toyota is not only one of the world’s leading car manufacturers; as a leader, it is committed to the environment and the economy. In fact, Toyota Motor Manufacturing UK was the first British car manufacturer to achieve zero waste going to landfill and has recently embraced solar energy at the plant, too. On top of that prodigious achievement, Toyota has provided employment and training opportunities for people throughout the region. On a recent visit to the factory in Burnaston, I was delighted to hear that Toyota is expanding its apprenticeship programme. Toyota also has a charitable trust. That funds the Lucy Prince award, which last time was awarded to Alfreton Park community school.

Apart from Rolls-Royce and Toyota, which respectively focus on jet engines and cars, Bombardier is a world-renowned manufacturer of rail vehicles. In fact, including Bombardier, there are 230 rail engineering companies around Derby alone. Bombardier is well known for the high-speed rail vehicles that have been installed in China and Italy. The hope is that, if all goes well, it will be contracted to design the vehicles for our own HS2.

Manufacturing companies in the region have truly proven that it is equally important to benefit the growth of the economy while creating opportunities for people. I cannot express the pride that I have in the manufacturing

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industry in the east midlands. From having the manufacturer that first powered the Boeing 787, the most widely used aeroplane, to a transportation company that has an installed base of more than 100,000 rail vehicles, to an international car company that exports back to Japan, our area has proved to be a manufacturing hub in the UK and an asset to the whole world.

Derbyshire exports more per person than any other place in England. Despite how impressive the large companies are, I find the local businesses to be equally important to the success of the manufacturing industry in the east midlands. In my constituency alone, there are multiple manufacturing companies that stimulate economic growth and provide global services.

One of the smaller firms in my area is Appleby Woodturnings. That specialist family business in south Derbyshire produces wood pellets to conceal screws and boltheads and, furthermore, it produced bespoke tapered wood pellets for the deck and hull of the Cutty Sark in London and the door frames in Portcullis House. Appleby Woodturnings is an excellent example of the ingenuity and skill that we have in south Derbyshire.

Another major manufacturer that has had national and global success is the JCB Power Systems factory, which is a purpose-built, multi-million-pound manufacturing plant and assembly line in Foston. JCB builds construction vehicles and recently needed to employ hundreds of extra skilled workers to cope with the increase in overseas demand for its equipment. Overseas demand for the UK-built products is coming from Brazil, Russia, Turkey and particularly India. In fact, JCB finalised a deal with the Brazilian Government to supply 1,000 machines to improve the nation’s infrastructure in time for the 2014 World cup and 2016 Olympic games, which Brazil will host.

The success of the manufacturing industry in the east midlands shows that it is vital that the Government continue to make manufacturing in the UK easier and continue to work with small businesses and manufacturers, so that the growth we have seen in the region can lead to growth in the national economy. Manufacturing in south Derbyshire is important. It is so successful that between May 2010 and December 2012 unemployment decreased by 18%—I can think of no better way to end my contribution.

10.40 am

Mr Iain Wright (Hartlepool) (Lab): May I start by saying what a pleasure it is to serve under the chairmanship of a strong east midlands MP, Mr Hollobone? I congratulate the hon. Member for Sherwood (Mr Spencer) on securing this enjoyable debate. I thank my hon. Friends the Members for Nottingham South (Lilian Greenwood), for Leicester South (Jonathan Ashworth), for Chesterfield (Toby Perkins), for Corby (Andy Sawford) and for Derby North (Chris Williamson), and the hon. Members for South Derbyshire (Heather Wheeler), for High Peak (Andrew Bingham), for North West Leicestershire (Andrew Bridgen), for Erewash (Jessica Lee) and for Daventry (Chris Heaton-Harris) for their important and significant contributions.

We started the debate by hearing from the hon. Member for Sherwood about Mr Lee, who invented the knitting machine that the hon. Gentleman claimed started the industrial revolution. For the avoidance of doubt,

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and at the risk of alienating you, Mr Hollobone, and much of the Chamber, I can confirm that the industrial revolution started in my region—north-east England.

It is clear from today’s debate that the east midlands is and should be a leading player in any UK industrial policy. The hon. Gentleman started by saying that the region has a great deal to offer, and the debate has shown that to be true. As my hon. Friend the Member for Leicester South said, a greater proportion of the region’s economic output comes from manufacturing—more than 15% of regional gross value added—than it does in any other part of the UK.

The region is home to some truly world-class companies. No discussion about manufacturing in the east midlands would be complete without reference to one of the world’s greatest engineering companies: Rolls-Royce. The company employs something like 14,000 people in the east midlands, the majority at its plant in Derby, which I had the pleasure of visiting last year. It adds £2.4 billion of value to the regional economy, providing 33,000 jobs in indirect employment.

Andrew Bridgen: Will the shadow Minister give way?

Mr Wright: Let me finish these statistics, because they are impressive.

One in every 165 people working in the east midlands is directly employed by Rolls-Royce, which rises to an astonishing one in 11 working people in the city of Derby. The company spent over £300 million on its supply chain in the east midlands.

Andrew Bridgen: Is the shadow Minister aware that more than 265,000 people in the east midlands are employed in manufacturing and that that is more than in any other region?

Mr Wright: I shall come on to that important characteristic of the east midlands economy. I mentioned the important success of Rolls-Royce, but it would be wrong to think of the east midlands as a one-company region. Every hon. Member who contributed today, including you, Mr Hollobone, highlighted successful manufacturing firms in their constituencies, and it is important to do so.

Andy Sawford: The largest employer in my constituency is RS Components. One of its great features, and I am sure a great feature of Rolls-Royce and the many other companies that have been mentioned, is the way that it contributes to the local community, adding additional value though fundraising, supporting schools and so on. Will my hon. Friend congratulate our industries across the east midlands on that?

Mr Wright: I certainly will. An important characteristic of a good and responsible company is that it realises that it is part of a community, not isolated from it, and contributes, not only directly by providing employment, but to social good.

The hon. Member for South Derbyshire mentioned Toyota, an important manufacturer for not only the region, but the UK. I am looking forward to visiting the Toyota plant next Tuesday—I am giving her advance notice—to see the investment recently pumped into building the new Auris model. The investment in the new plant totals £100 million, and is creating an extra 1,500 jobs, with a further £85 million spent in the local supply chain.

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The shape of the region’s economy is distinctive. It is particularly strong on mid-sized businesses that are crucial to the growing specialisation and increased productivity that manufacturing requires. The Mittelstand in Germany is often cited as a reason why the German economy is so successful, and if there is an equivalent in the UK, I suggest that it is in the east midlands. Mid-sized firms employ 290,000 people in the region. I agree with the conclusion in Grant Thornton’s report on the mid-sized business sector:

“MSBs—many of the East Midlands’ and UK’s most dynamic organisations—are integral to the recovery prospects and long-term health of the British and local economy.”

Within that, Government’s role is to provide a framework in which businesses can flourish, and to provide resources—whether by sector, by region, or nationally—so that businesses can realise their potential and enhance our competitiveness.

I therefore have a number of questions for the Minister. My first is on how Government procurement can help manufacturers and their supply chains. I am pleased to see my hon. Friend the Member for Derby North here, because he has been a strong champion of Bombardier. We are all aware of it, because it is probably the most vivid example of Government procurement policy failing British manufacturing. The Department for Transport looks specifically at price, rather than thinking about wider value to the supply chain; that illustrates that the Government do not seem to be joined up. What has the Minister learned from the Bombardier example? How can procurement back British manufacturing? I do not believe in protectionism at all, but we can have patriotism in procurement policy to create, as my hon. Friend the Member for Derby North said, a level playing field for British companies. Other nations do it; we should too.

Chris Heaton-Harris: I point out to the hon. Gentleman that in France there is a social element to the procurement of big projects—something that we do not have. If it is legal for the French to take that approach, surely it must be legal for us to do so.

Mr Wright: I absolutely agree. We should use economic values. If Bombardier or any other company fails to win a contract, we should consider the wider economic consequences, in terms of lost taxes, the money that could have been pumped into the local economy and the losses in the supply chain. Those important factors should be part of procurement decisions.

The second point I want to mention relates to a particularly distinctive strength of the east midlands economy and its manufacturing firms: the supply chain. I am interested in it, because it is an important part of improving competitiveness. In November last year, the Minister announced the advanced manufacturing supply chain initiative—we are now on round 2. Despite the importance of mid-sized firms in the east midlands and their potential, will he confirm that no east midlands firm was successful in the bids? What will he do about that to help to realise the potential in the supply chain?

Thirdly, the whole House will agree on the importance of an export-led economic recovery. As we heard today, there is potential for that in the region, but the Derbyshire and Nottinghamshire chamber of commerce’s latest quarterly survey says:

“Export sales are at their lowest levels since December 2009”.

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It goes on to say:

“Net manufacturing export sales balances remain significantly lower than the national averages.”

As an interested outsider, it is clear to me that the region is not reaching its potential for an export-led recovery. What can the Minister do in conjunction with UK Trade & Investment and others to ensure that that potential is realised?

Andrew Bingham: Is the hon. Gentleman aware that exports from the east midlands in the first three quarters of 2012 were £13.5 billion, which is up £500 million on the same period in the previous year?

Mr Wright: That is welcome, but we should not be complacent in any region. In my region of the north-east, the economy has an important export-led component, but we cannot be complacent in what is a fierce race, as the Prime Minister has said. We should be resolute in ensuring that the potential for exports is fulfilled as far as is possible, so that we can have an export-led recovery.

Jonathan Ashworth: I am grateful to my hon. Friend for giving way; I will be very quick. Does he agree that when senior Ministers, from the Prime Minister downwards, go to India and Turkey on trade missions, they should take representatives from some of the small and medium-sized manufacturers, and business people from cities such as Leicester, rather than the great and the good?

Mr Wright: I hope the Minister will respond to that excellent idea.

I also want to mention access to finance, which manufacturers tell me is still a problem across the country. I again quote the latest Derbyshire and Nottinghamshire chamber of commerce quarterly survey:

“There was a net 3% increase in the firms reporting deteriorating cash flow. The lack of access to working capital continues to be a problem for firms. DNCC welcomes the creation of a state-backed business bank but is concerned that this will take too long to be formed and must have the ability to provide loans directly to growing businesses”.

Will the Minister say what is happening with regard to that British business bank?

Finally, several hon. Members mentioned the regional growth fund, and the fact that the east midlands region is not reaching its potential in that regard. My hon. Friend the Member for Nottingham South said that the east midlands secured only 4% of all projects in rounds 1 and 2, and my hon. Friend the Member for Leicester South said that in round 3, firms in the region gained moneys for only five projects, totalling just £14 million—the lowest amount of any region in England. Will the Minister explain why? Does he think that manufacturing firms in the east midlands do not warrant such support? What will he do to redress the balance?

This debate has been important and positive. Manufacturing is important to the UK, and it is certainly important to the east midlands. We must ensure that it realises its potential, and I hope that the Minister will explain how we can do that.

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10.51 am

The Minister of State, Department for Business, Innovation and Skills (Michael Fallon): I repeat what hon. Members have said in welcoming you to the Chair, Mr Hollobone. I, too, congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this debate. As he said, the east midlands has a long, proud and—as we have learned—historical tradition of manufacturing, which is vital not just for UK manufacturing but for growth in the wider economy. Its location at the geographical heart of the UK, an abundance of natural resources, and a spirit of invention put the east midlands at the centre of the industrial revolution. As we have heard, inventions that have come out of the region include the jet engine, ibuprofen, DNA fingerprinting and the MRI scanner. My hon. Friend’s constituency has a long history of mining, and it has been home to Rolls-Royce since the 1940s. The food and drink industry is a major employer there, and it has a strong record of productivity.

Nobody in this debate has been under any illusions about the scale of the wider economic challenges we face as a country. The continuing sovereign debt crisis in the eurozone is affecting the real economy and depressing demand, which has caused uncertainty for British businesses and damaged some of our manufacturing output. That damage was already pronounced under the previous Government, which presided over the fastest ever decline in manufacturing as a share of the economy: manufacturing fell by nearly 10% as a share of gross domestic product, and almost 1.7 million jobs were lost in the sector. Under this Government, manufacturing’s share of GDP is growing again and our manufacturing capability is increasing in quality—nowhere more so than in the east midlands.

Chris Williamson: Will the Minister give way?

Michael Fallon: I will not.

I had the pleasure of visiting Toyota’s factory at Burnaston near Derby last week, and I saw for myself how a world-class work force in a cutting-edge facility can produce workmanship that is second to none. Earlier last week, I also met Rolls-Royce to hear its plans for the future. To kick-start the recovery, the first thing we had to do was to tackle the deficit, but we have not focused only on that. We have taken a wholly proactive approach to unlocking growth, reducing the red tape that holds back business and creating a competitive tax system so that businesses choose to locate and grow here.

In the autumn statement, the Chancellor of the Exchequer announced multiple measures to encourage greater investment in manufacturing. There will be a significant temporary increase in the annual investment allowance from £25,000 to £250,000. An additional £210 million will be added to the £2.4 billion regional growth fund until March 2015. There will also be an extra £120 million for the advanced manufacturing supply chain initiative. Let me reassure colleagues that the Government have never been clearer in our commitment to manufacturing, which we see as an essential building block of a more resilient, innovative economy.

A greater proportion of the east midland’s economic output comes from manufacturing than in any other English region or part of the UK. Some 12.3% of the

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work force are employed in manufacturing, compared with 8% across the UK. The region has a positive balance of trade in manufactured goods, and the latest figures are expected to show that it achieved its highest annual level of exports in 2012, worth some £18 billion. The iconic names that are at the heart of the region’s manufacturing base—Rolls-Royce, Siemens, JCB and Toyota, to name just a few—employ thousands of people directly, and are at the centre of the network of hundreds of smaller businesses that make up their supply chains across the region. As we have heard, the region has a thriving sector of small and medium-sized enterprises working in the advanced manufacturing supply chain, and in the automotive and aerospace supply chains in particular.

Last week, I met the private sector chairs of the region’s local enterprise partnerships and some council leaders from the east midlands. I was impressed by the common sense of purpose across the public and private sectors, across political divides and even across traditional geographic rivalries. I saw for myself the determination to ensure a strong recovery for all parts of the east midlands and to tackle some of the barriers and bottlenecks that they have identified.

Mr Spencer: Will the Minister commit to coming to Sherwood to see some of those small and medium-sized enterprises, so that he can stand on the factory floors and hear the concerns at first hand?

Michael Fallon: I will certainly try to work that into my diary, and I look forward to such a visit.

Let me turn to a couple of points mentioned. The regional growth fund is distributed not by ministerial allocation, but by competition. It is a competitive fund, as indeed is the advanced manufacturing supply chain initiative. The fund is already helping to rebalance the economy, particularly by assisting areas that have been over-dependent on the public sector, and it is already unlocking private sector investment in the local economy.

The east midlands has had some strong successes under the fund. Derby city council’s £40 million business support scheme, which has been approved, will provide funds to support the growth of enterprises in Derby, creating nearly 1,000 direct jobs by 2015, to fund a global technology cluster and to enable redevelopment of the Derby railway technical centre. The Northamptonshire, Leicester, Leicestershire and

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D2N2 LEPs and Nottingham city council have all had conditional offers of support for programmes that will address local needs under the regional growth fund.

On the advanced manufacturing supply chain initiative, we need strong manufacturing supply chains if we are to have more major manufacturers investing in the east midlands. We have invested in that initiative to bolster supply chain capacity, and the scheme has attracted bids involving major companies from across the country, including the east midlands. There was high demand in rounds 1 and 2; there were more than 70 bids with a total funding ask in excess of £300 million. That is why we announced, in the autumn statement, additional funding of £120 million for a further two rounds of the initiative. That further investment in advanced manufacturing supply chains underscores our ongoing efforts to create the right conditions for UK suppliers to grow and remain competitive on the world stage. It will be based around a single national funding pot that will be open to supply chain companies from across manufacturing sectors, including in the east midlands.

The Government have announced other recent investments to support economic growth in the east midlands, including £500 million to electrify the midlands main line north of Bedford; £160 million to dual the A453 in Nottinghamshire and Leicestershire, a key route between Nottingham and the M1, which businesses told us could simply not cope as a single-track road; and £22 million towards the work, which is now well under way, to provide a new dual carriageway linking Kettering and Corby. We have increased the numbers of apprentices, which have grown from 21,000 in 2009-10 to 39,610 in the east midlands, a rise of almost 90%. Significantly, apprenticeship starts in the engineering and manufacturing sectors have grown by 156% over the same period.

In conclusion, the Government are working hard to encourage and support British manufacturers, and to create the environment in which they can thrive and compete in a global marketplace. We want manufacturers in the east midlands to be our partners in achieving that economic transformation and in fulfilling a strategy that places world-class manufacturing at the heart of a healthy and rebalanced economy across the United Kingdom.

Mr Philip Hollobone (in the Chair): From Wotsits to widgets, we have just about covered it all.

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Alexandra Hospital, Redditch

Mr Philip Hollobone (in the Chair): It is not compulsory, when a Member has a debate on their local hospital, for them to attend on crutches, but I am delighted that the hon. Member for Redditch (Karen Lumley) has arrived.

11 am

Karen Lumley (Redditch) (Con): It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the Minister for being here to listen and, I hope, to answer some of my questions about the Alexandra hospital. I pay tribute to the staff who work at the Alex. As you mentioned and as you can see, Mr Hollobone, I visited the accident and emergency department at the Alexandra hospital during the past couple of weeks. I had a good experience and was looked after well, and I did not spend too much time there. I want my constituents to receive what I received, and I hope to outline the need for a vibrant hospital in Redditch that serves not only my constituents but those in surrounding areas such as Bromsgrove, Mid Worcestershire, Stratford-on-Avon and Kidderminster.

A quick history of the hospital is vital to understand the context in which I speak, because, sadly, we have been here several times before. I will be brief, but it is important to understand how many times this hospital has been under threat, and how unsettling that is for patients and staff alike. Three attempts have been made during the past 15 years to downgrade the accident and emergency ward and the maternity wards at the Alex. On each occasion, the argument has been made that the downgrades were crucial for sustaining a high-quality, properly staffed service, and that it would better for residents if some services were concentrated in Worcester. At each attempt, the people of Redditch have fought to save their hospital, and once again they have joined together in a cross-party campaign to do so.

Mark Garnier (Wyre Forest) (Con): I congratulate my hon. Friend on securing the debate, which affects my constituents as well as hers. She will be aware that a number of years ago, the same fear was in prospect for my constituents when the A and E department at Kidderminster hospital was closed. The outcome was truly tremendous, with an enormous campaign to save the hospital and the election of an MP dedicated to trying to do so. Sadly, he did not succeed, but those events reinforce the point that people feel very strongly about their local services and should be listened to.

Karen Lumley: My hon. Friend makes a valid point, which I will return to. I want to be here after the next election, however; I do not want to be replaced by an MP dedicated to looking after the Alexandra hospital.

I pay tribute to Neal Stote, the chairman of the “save the Alex” campaign, Ian Dipple, the editor of the Redditch Standard, and the leaders of my local councils, Bill Hartnett, Roger Hollingworth and Chris Saint, who have all worked tirelessly together with me to save the Alex. The Minister will remember his visit from members of the “save the Alex” campaign before Christmas, when he listened to the justification for retaining services at our hospital. A petition to save the hospital has received more than 50,000 signatures and there was a

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major rally in Redditch town centre, all of which goes to show that the residents of Redditch are united in trying to secure services at our hospital.

I want to look now at the current and historical financial position of the Worcestershire Acute Hospitals NHS Trust. In 2002, the trust posted large deficits, which rose to more than £14 million in 2003-04. The trust came back into surplus, however, and since then it has posted alternate deficits and surpluses, including in each of the past three years. The trust had a cumulative legacy debt of £18.4 million from 2000 to 2007. The Government provided a £12 million emergency loan in December 2012 to deal with the problem, but it is obvious that the situation cannot continue. For too long, the easiest course of action has been to kick the can further down the road without addressing the root causes. The current situation is a ticking time bomb. A £1.9 million deficit has to be met by April of this year. Many operations are being cancelled because of the terrible norovirus in our wards, and times will be tough for the trust.

Part of the problem is that we have an expensive private finance initiative hospital that was built in the wrong place fully to service all of the residents of Worcestershire. The Worcestershire royal hospital opened in March 2002 under a PFI deal that costs the trust £13.6 million a year at the best estimate. Indeed, Patricia Hewitt, the former Health Secretary, described the PFI deal as a disaster in 2006. The deal will, however, run until 2032, by which time it will have cost the taxpayer more than £700 million. The Alexandra hospital is not a PFI hospital; it is owned by the NHS.

I understand that the trust needs to save money, and that certain services in our country must be centralised to provide centres of excellence. I also understand the difficulties of recruiting specialist consultants, and I realise that as a result of an ageing population and changing lifestyles, patients have more complex needs. We must recognise, however, that the trust employs more than 5,600 staff across the county and has approximately 940 beds with 140,000 A and E attendances —of which I was one—and about 500,000 out-patient appointments. The people of Redditch deserve a sustainable future for their health service. They are realistic, but they need to know what is going to happen. One of the reasons for the difficulty I have just mentioned of recruiting specialist consultants, which is a major problem facing the trust, is that the hospital cannot provide the job security that specialist consultants need because it is constantly under threat.

As I have said, this is the third time we have been in this situation, and if we do not find a solution, I have no doubt that in a few years we will be here again. Repeatedly experiencing such circumstances is damaging to the public, staff and patients, and we need a lasting solution. I welcome our Government’s introduction of clinical commissioning groups. I recognise that without them we would be in a very different place and I certainly would not be standing here asking the Minister to look at the future of my hospital. I have been working closely with the local commissioning group for Redditch and Bromsgrove, and would like to place on record its hard work on the future of the Alex, especially its support on the joint services review; it has continually stood up for Redditch in circumstances that have often been difficult.

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Last week, I listened to the Prime Minister talking about the terrible situation at Stafford hospital, and especially the roles of Members of Parliament. He said:

“Like others in the community, we love our local hospitals and we always want to stand up for them, but we have to be careful to look at the results in our local hospitals and work out whether we should not sometimes give voice to some of the concerns rather than go along with a culture that says everything is all right all of the time—sometimes it is not.”—[Official Report, 6 February 2013; Vol. 558, c. 286.]

I took that to heart, as I know many of my colleagues did. I know that the NHS must change and we cannot always have everything we want where we want it. I hope I am being realistic about what we can provide for the people of Redditch.

That brings me to some good news about innovative thinking that is going on in our town. Redditch is situated in the north of our county and the majority of my constituents look to Birmingham rather than Worcester. The Minister cannot be expected to know about transport links in our county, but the links between Redditch and Worcester are fairly dreadful. If someone has to go to Worcester by train, they get on a train to Birmingham, get off at the university stop—where the university hospital of Birmingham is—and double back to Worcester. Buses are also a nightmare and often involve two or three changes. I was delighted to meet Dame Julie Moore, the chief executive of the University Hospitals Birmingham NHS Foundation Trust, before Christmas to talk about the trust providing some services at the Alex. I look forward to meeting her again next week, and to meeting Penny Venables, the chief executive of the Worcestershire trust.

Peter Luff (Mid Worcestershire) (Con): I congratulate my hon. Friend on securing the debate and on the manner in which she is conducting it. I wish her well in the campaign she is conducting on behalf of her constituents, whom she serves remarkably well. Does she understand that as we look at the options for the future of the hospital services in Worcestershire, particularly for the Alex, we must be certain that no decisions that are taken in relation to the Alex have the unintentional consequence of reducing the critical mass of the health economy in the wider county and, therefore, damaging the service provided to my constituents and to those of my hon. Friends the Members for Worcester (Mr Walker) and for West Worcestershire (Harriett Baldwin)? Any loss of service provision might have serious consequences for the rest of the county. We must take the matter forward together with a single voice, because we all share the conviction that we can achieve a win-win situation for all our constituents.

Karen Lumley: Those who know the Worcestershire MPs know that we generally hunt as a pack; we are renowned within different Departments for doing so. I share my hon. Friend’s concerns, but obviously at the end of the day I am the MP for Redditch, my hospital is the one under threat and I must do what is best for my constituents.

There are several questions I want to ask the Minister today. First, who owns the Alexandra hospital? Secondly, if the local commissioning group wants to commission services with University Hospitals Birmingham NHS Foundation Trust, will his Department help to make that happen? Thirdly, does he agree that this uncertainty has gone on long enough, and will he encourage the

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Worcestershire acute trust to co-operate with the UHB trust in Birmingham? Fourthly, will he reassure staff and my constituents that he and his Department are working as hard as they can to ensure the best outcome for them?

I have probably said enough now, but I will finish by saying that we are grateful to the Minister for his attention to our hospital in Redditch. We look forward to welcoming him in April to see for himself what a fantastic hospital we have—a hospital that we must not forget belongs to the residents of Redditch. We are realistic about what has to happen, but I want to put on the record today that there are two options on the table, and it is only fair to my constituents that both be looked at in a fair and open way. That is all we are asking for, and I hope that he and his Department will ensure that it happens.

Mr Philip Hollobone (in the Chair): In this debate, we have not only an out-patient but a doctor. I call Dr Daniel Poulter, the Minister.

11.11 am

The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter): Thank you, Mr Hollobone, for calling me to respond to the debate. It is a great pleasure to serve again under your chairmanship.

I pay tribute to my hon. Friend the Member for Redditch (Karen Lumley) for her advocacy on behalf of her constituents and local patients, and indeed for paying tribute herself to the hard-working staff at her local hospital. As she rightly points out, the future of the Redditch hospital has been discussed for far too long and I hope that, during the next few months, we can come to a conclusion that will not only be of benefit to local patients but bring higher-quality care to people in Redditch and the whole of Worcestershire. Any redesign of services must be led by local commissioners and—crucially—must also consider the best interests of local patients; those redesigning services must listen to the voices of local patients.

My hon. Friend rightly outlined in her speech the fact that no hospital or trust operates within a vacuum in the NHS, and she is also right to say that private finance initiative deals in the local area have been problematic and have left a very damaging legacy; that has happened not only in her part of the world but throughout the NHS. We must learn lessons from that in the future. It is distressing and regrettable that bad PFI deals sometimes have an impact on neighbouring hospitals, and it is a position that we, as a Government, have inherited. We will continue to do what we can, by working with trusts with difficult PFI deals, to try to mitigate those difficulties.

My hon. Friend rightly highlighted the fact that decisions about her local trust have an impact on the wider health economy in Worcestershire, and that that broader impact needs to be taken into account by those making decisions about the Alex hospital. When my hon. Friend and I met my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi)—my hon. Friend the Member for Bromsgrove (Sajid Javid) was unable to attend that meeting—the point was made clearly that many hospitals in the wider health economy of Worcestershire have natural links with Birmingham. That must be taken into account when services are redesigned for the benefit of patients.

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Increasingly, clinical evidence is stacking up that some specialist clinical services need to be run from specialist centres, because those centres produce much better outcomes for patients, so the link to the major population centre for the surrounding counties should be taken into account. As I say, we need specialist centres of excellence for the benefit of patients.

My hon. Friend the Member for Redditch made the point that the Alex hospital has a historical legacy of difficulties, with big, intermittent deficits at the local trust. There have been commendable attempts to deal with those difficulties, but there has been a difficult situation for a number of years. Clearly, we want to see long-term stability for Redditch, for the local trust more broadly and for the local health care economy. Key to achieving those things is having high-quality medical personnel working in the hospital, and the ability to retain and recruit high-quality consultants.

Peter Luff: To be clear, for the majority of Worcestershire residents Birmingham and its services are a very long way away and very inaccessible.

Dr Poulter: With regard to “bread and butter” day-to-day medical services, my hon. Friend is absolutely right to say that. My point was that for some services—for example, trauma or stroke—having specialist centres brings better results for patients, and there is good clinical evidence to back that up. However, day-to-day, higher-quality “bread and butter” services for patients—such as heart care or children’s services—are often best provided locally, and he is absolutely right to make that point.

Mr Robin Walker (Worcester) (Con): I congratulate my hon. Friend the Member for Redditch (Karen Lumley) on securing this very important debate.

The Minister mentioned the issue of recruitment of clinical staff. One thing that the NHS in Worcestershire has worked very hard on is a cancer strategy to keep cancer care within the county and to make the Worcestershire Royal hospital a centre of excellence for cancer care. We are looking to secure a radiotherapy unit in the near future. I urge the Minister, in taking whatever decisions are necessary to ensure that the county has the strongest, most sustainable NHS, to pay attention to that work and to the importance of having a cancer service for the county.

Dr Poulter: My hon. Friend is absolutely right to praise the high-quality work done in Worcester to look after cancer patients. It is exactly the point that I was making in response to the intervention from my hon. Friend the Member for Mid Worcestershire (Peter Luff): the high-quality day-to-day services that patients need must be delivered locally, but more specialist operations—such as for head and neck cancer—might be carried out at a specialist site that is geared up for such operations. Day-to-day oncology care, however, is often best carried out locally, particularly when people are unwell with cancer and receiving sometimes very intensive treatment. In those situations, they need to be looked after locally.

It does not benefit patients, for medical and many other reasons, to have very long distances to travel. However, when surgical outcomes might benefit from operations being carried out at specialist centres, we

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must differentiate day-to-day treatment from the more specialist care that may be required as a one-off surgical intervention. We should do that when the evidence stacks up that specialist centres for such surgical interventions often deliver better results and better care for patients. Nevertheless, my hon. Friend is absolutely right to pay tribute to his local trust for the work that it does on cancer care in Worcester, which I know is very important to him personally.

I will now respond specifically to some of the points that have been made in the debate, and consider how we go forward from where we are now. Hon. Members, particularly my hon. Friend the Member for Redditch, have made us well aware, through their articulate contributions, of the challenges that are faced by the local health care economy. Such ongoing uncertainty about the future of local health care services is wrong and completely undesirable. When local commissioners bring forward proposals for the two options that are likely to be considered later in the month, I urge them to move forward as promptly as possible to bring certainty to the situation. That will allow consideration of important issues, such as the need to have high-quality professionals working in hospitals. When there is uncertainty about the future of a trust or a particular site within a trust, it can be difficult, as my hon. Friend rightly outlined, to recruit high-quality staff to work in that trust. That is not in patients’ best interests, so the sooner we can have certainty, the better. I know my hon. Friend will join me in urging local commissioners to bring things forward as expediently and quickly as possible.

As we know, the trust is committed to providing the best-quality care for patients. That is essentially about finding the best solution for the people of Worcestershire so that they receive the best care in the future. As my hon. Friend outlined, Worcestershire Acute Hospitals NHS Trust and the West Mercia cluster have jointly commissioned a strategic review of services in the area. The review is essential to secure the clinical and financial sustainability of high-quality services for local people. That is about looking not just at getting through the next couple of years, but at what will be right for the local health economy in five or 10 years’ time.

I understand my hon. Friend’s concern that there have been delays with the review, and I once again urge local commissioners to take things forward as expediently and quickly as possible. The Worcestershire joint services review started in January 2012, and it was expected to be completed by November 2012. I hope my hon. Friend is somewhat reassured that we will move forward more quickly, notwithstanding a patchy history on resolving local health care issues. There is a need for certainty locally, and we must make sure that the time line is met and that we have a firm conclusion.

Importantly, the review involves clinicians and commissioners across the area and the NHS. It engaged with local people last summer to inform the development of proposals. As we know, developing proposals for the future of local services is about clinical leadership and about clinicians saying what is important and in patients’ best interests, but it is also about local involvement and engagement. When I met my hon. Friend before Christmas, we discussed that. The local newspaper has played a tremendous role in promoting local patients’ needs. My

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hon. Friend and the local population should be proud of the cross-party consensus on the importance of Redditch’s future.

Through the review, local people will have made, and will continue to make, their voices and views clear. That is important for the Government and for our four tests for reconfiguration. It is also important that local health care providers, the local trust and the trust’s board listen to local people and local health commissioners to make sure that their views are informed by what local patients want and need and by what local clinicians say is in patients’ best interests.

The joint services review steering group met on 12 September 2012 and, unfortunately, decided to delay the process again until it could explore all options to allow it to maximise service provision at the Alexandra hospital, including investigating the potential to work with other NHS providers—Birmingham being a case in point.

My hon. Friend will be aware that the Redditch and Bromsgrove clinical commissioning group has started initial discussions with three NHS providers in Birmingham to explore the feasibility of providing services from the Alexandra hospital: the University Hospitals of Birmingham NHS Foundation Trust, Birmingham Women’s NHS Foundation Trust and Birmingham Children’s Hospital NHS Foundation Trust. Those discussions are still in their early stages. However, my hon. Friend is right that when proposals are brought forward—hopefully, by the end of this month—we should move things forward quickly for the benefit of local patients.

No decisions have been made, and the discussions are only about the Alexandra hospital—that needs to be clearly set on the record. The Worcestershire Acute Hospitals NHS Trust would continue to provide all other services. Given the concerns my hon. Friends have raised, it is important to note that, although the services the trust provides need to be seen holistically, the ongoing discussions are about the specific future of Alex’s site in Redditch. That is an important distinction, and I hope it gives my hon. Friends some reassurance that any proposals are unlikely to disrupt local services to the patients they care about.

Ultimately, the decision is for local determination, and it would not be appropriate for me to comment on the discussions in further detail until we have firm proposals. We will continue to meet regularly. I am visiting Redditch in the near future, and will take a keen interest to make sure I can do all I can to support the right result for local patients.

Mark Garnier: The Minister will no doubt know what is coming: will he visit Kidderminster when he is next in Redditch?

Dr Poulter: I would be delighted to visit Kidderminster hospital. It might not be on the same day I visit Redditch, but I will make sure I put it on my list of priorities to visit. I would be delighted to see the excellent work done at Kidderminster hospital and, indeed, at Worcester, at

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some point in the near future. In addition to the bit of clinical work I still do, I prioritise going out on a Thursday as regularly as I can to see the NHS on the ground and to see what is going on. I would be delighted to visit other local trusts, when I can fit them into the diary, later in the year.

What are the next steps? If agreement is reached on a clinically and financially sustainable solution in the interests of local people, a robust process needs to follow. The Worcestershire joint services review steering committee will meet on 26 February to set out options for consultation. We are then likely to have two options regarding the way forward. One is likely to involve Worcestershire Acute Hospitals NHS Trust continuing to operate services from the Alexandra hospital. The other is likely to involve exploring the feasibility of the Birmingham foundation trust operating services at Alexandra hospital, if that is in local people’s best interests.

The final proposals will require the support of the NHS in Worcestershire. However, the local NHS has assured me that it will continue to engage with people while proposals are finalised. Of course, I would expect any proposals to meet the four tests for service change that we have clearly outlined—principally, that any changes are clinically led and have strong patient and public engagement. The local NHS expects final proposals to be ready for public consultation later in the summer. However, it is vital, as we have stressed throughout the debate, that we hold those involved firmly to their task and reach a conclusion for the sake of staff and patient certainty and for the benefit of the local NHS.

Karen Lumley: One of my questions was: who actually owns the Alexandra hospital?

Dr Poulter: As my hon. Friend will know, the local hospital is designated as part of a trust. It is a non-foundation trust, so there is direct regard to the Secretary of State in some matters relating to the trust. I hope that gives her some reassurance. Of course, the NHS is owned by all of us, which is why it was so important when we set out our four tests for reconfiguration that we made sure they were about strong clinical leadership in the best interests of patients, as well as strong patient and public engagement, so that patients and the public can clearly see that any changes to local services are in their best interests and so that they can properly engage in the process. There has been strong local feeling and opinion on this issue, and I am sure it will be listened to carefully when decisions are taken about the future.

In conclusion, I encourage my hon. Friends and local people to participate in the consultation process to ensure their views are fully taken into account. I will maintain a keen interest. I am looking forward to visiting each site in the trust in due course. I am always available to talk through matters if Members have concerns.

11.29 am

Sitting suspended.

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Food Banks (Wales)

[Mrs Linda Riordan in the Chair]

2.30 pm

Kevin Brennan (Cardiff West) (Lab): It is a great pleasure to serve under your chairpersonship this afternoon, Mrs Riordan. I am delighted and dismayed in equal measure to open this debate on food banks in Wales. I never thought, when I entered public life as a Cardiff councillor a long time ago, in 1991, that this topic would become a priority for discussion. I never thought I would see, in my time in public life, the rapid expansion of centres to hand out food to the people of Wales, on a scale unprecedented since the 1930s.

Of course, we from Wales have particularly strong and often bitter memories of the 1930s and of poverty. It was often said of my grandmother, Gwenllian Evans, a miner’s wife from Nantyglo, that she could spread an egg over Cardiff Arms park, such were her culinary skills of making a little go a long way. My mother, who is still alive today and living in Cwmbrân, often told me of the poverty that she grew up in, in the 1930s, in Nantyglo and the times when it was a struggle to feed the family.

David T. C. Davies (Monmouth) (Con): Will the hon. Gentleman give way?

Kevin Brennan: I will in a moment. I am just warming up; once I have got into my stride, I will let the hon. Gentleman have a go.

It is for those reasons that I believe the provision of social security is such a strong theme in the history of Welsh politics, and that the rapid increase in food banks in Wales is particularly hard for us in Wales to take.

David T. C. Davies: I am grateful to the hon. Gentleman for the history lesson as to what life was like under Ramsay MacDonald in the 1930s. Returning to the present, given the hon. Gentleman’s interest in food banks, why did no Labour Member of Parliament ask any questions about them during the entire period of the previous Labour Government?

Kevin Brennan: It is because food banks were such a minuscule feature on the scene compared with what we see today, despite the Prime Minister’s erroneous use of statistics recently at Prime Minister’s Question Time, in an attempt to sidestep his failure to take note of the rise of food banks over a long period.

It is particularly apt to talk about the 1930s because we are reliving that period of austerity economics. The failures of, and false theories behind, austerity economics are being repeated. We might expect that from the Conservatives, but it is staggering that it is being repeated in the coalition by the party of John Maynard Keynes through its approach to the economy.

Hywel Williams (Arfon) (PC): Will the hon. Gentleman concede that income inequality grew under previous Labour Governments, as it did under previous Conservative Governments?

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Kevin Brennan: The hon. Gentleman will be aware of the powerful world economic forces that have been at work in the past 20 years. It has almost been like King Canute all over again, trying to hold back the forces of international capitalism over the past 20 years and trying to keep income inequality down. The previous Labour Government did possibly more than any other Labour Government in attempting to alleviate that. For example, they introduced the national minimum wage, which made a massive contribution to trying to alleviate the impact of income inequality, which, in a globalised capitalist system, is difficult to resist.

Ian Lucas (Wrexham) (Lab): Last year, in Wrexham, the first food bank was set up since I first came to Parliament in 2001. This April, the richest people in Britain will get a tax cut because of this coalition Government’s policies. That is the type of ethical approach taken by this Government.

Kevin Brennan: Indeed. I am sure that other hon. Members will want to point out that, while this crisis is going on, the Government saw it as their priority to lower the income tax of the richest.

David T. C. Davies: Will the hon. Gentleman give way?

Kevin Brennan: I will get a bit further into my stride before I let the hon. Gentleman have another go.

It is no coincidence that the three giants behind the creation of what became known as the welfare state came from Wales: David Lloyd George, Jim Griffiths and Aneurin Bevan. It is particularly ironic that the Government presiding over a policy that is helping to trigger the rapid expansion of food poverty and food charity for the poor are a Government who include members of the successor party to Lloyd George’s Liberals.

Hywel Williams: But is it?

Kevin Brennan: The hon. Gentleman calls into question whether the Lib Dems are the successor party. That is another debate for another day. Perhaps Lib Dem members of this Government should recall the words of David Lloyd George as we debate food banks and poverty. In presenting his “people’s Budget” 104 years ago, in 1909, he said:

“This…is a war Budget. It is for raising money to wage implacable warfare against poverty...I cannot help hoping and believing that before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests.”—[Official Report, 29 April 1909; Vol. 4, c. 548.]

I am afraid that under this Government, the wolves of poverty are back, along with the sharks who prey on the financial misfortunes of the poor with their high-rate loans.

Mr Peter Hain (Neath) (Lab): Will my hon. Friend comment on a particular feature of the Neath food bank? Some 1,400 people in the Neath area are dependent on the food bank. Around half of those are in work. It is not solely people on benefits who are dependent on

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food banks; people in work are, too. The Wales Office website has still not taken down the Secretary of State’s commitment that people in work will always be better off than they would be on benefits. Those people are dependent on food banks in my constituency.

Kevin Brennan: Indeed. In a recent debate led by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) mentioned that he had collected food for FareShare in Penarth. Many of the people being helped by the food bank were not the people one might expect, but people in work who were struggling to get by. The hon. Member for Monmouth (David T. C. Davies) has been keen to intervene; I note that a new food bank has opened up in Chepstow. I am sure that he will pay it a visit shortly, if he has not already done so.

In Wales, the rapid expansion of food banks is a subject that resonates and rankles. It is symptomatic of an approach by the Government that represents a shift away from the British belief in the importance of social security, founded by the three great Welsh pioneers and symbolised by the old-age pension, national insurance and the national health service, and its replacement with the alien American concept of welfare stigmatism—the demonisation of the poor and the replacement of the state’s responsibility with the vagaries of the charitable handout. The good society has been gazumped by the ill-named “big society”, in which well-meaning individuals try to patch the gaping holes created by austerity economics.

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): Would it be too much to ask, on such a serious issue, that we steer away from the notion that all this started in May 2010? A food bank in west Wales, of which I am a patron, started in 2000 under the Labour Government. It is keen to stress that the argument that the hon. Gentleman is pushing is misleading.

Kevin Brennan: I am sure that the hon. Gentleman was not accusing me of misleading the House, because you, Mrs Riordan, would have stamped on him if he had done so. My argument is not that food banks are bad things, or that their work is bad—it is not; it is good. What is wrong is the scale of the work that they have to do because of austerity economics and the rise in the cost of living, which are direct results of this Government’s policies. The Government made the ideological choice to follow an austerity economics policy—

Simon Hart: Will the hon. Gentleman give way?

Kevin Brennan: I am still speaking.

The Government are following an austerity economics policy, rather than making the economic choice, as they could have done, to deal with the deficit in a way that would not have led to such poor growth and its consequences.

Hywel Williams: The hon. Gentleman may know that nine of the 23 food banks in Wales opened in the past 12 months.

Kevin Brennan: The hon. Gentleman has hit the nail on the head. That is what is so unfortunate about the Prime Minister’s attempt to use statistical shenanigans to disguise the fact that the real issue is the sheer

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number of people who now have to go to food banks. I compare that with the charitable aid that was on offer under the previous Government, and that will always be present in our society, one way or another, which is to be welcomed. It is the scale of what is being done, not what is being done, that is most important.

Geraint Davies (Swansea West) (Lab/Co-op): In Swansea, tonnes and tonnes of food are being gathered every month for the food bank, and thousands of people are affected. My hon. Friend will be aware that some 30,000 people now rely on food banks in Wales. What is his projection for after April, when 40,000 people will be affected by the second-bedroom tax? Does he agree that the least well-off will be worse off and relying on food banks?

Kevin Brennan: I will not make a projection, but I am sure the Minister will want to do so, because, of course, he should be very concerned about the impact of the Government’s changes. No doubt he has done a considerable amount of work on the issue raised by my hon. Friend, and he will perhaps say something about it when he winds up the debate.

Simon Hart: This is my second and last intervention. Will the hon. Gentleman express a view on a comment made by the 17-year-old food bank in west Wales?

“Statistics are misleading because it takes time to build up referrals and to be known about. The huge increase in recent years should not be taken as being the same thing as a huge increase in need.”

Those are not my comments; they are the comments of a food bank. Will the hon. Gentleman include them in the context of his argument?

Kevin Brennan: Obviously other people assess the need, and not the food bank itself—the vouchers are brought along to the food bank. I cannot comment on the hon. Gentleman’s local food bank, of which I am sure he has a better knowledge than I do; I can comment on my local food bank, however. I have heard stories from other hon. Members, and I have seen evidence from across the country. He is burying his head in the sand if he does not think that the vast expansion of food banks is happening because of the impact of austerity economics, welfare benefit changes and the cost of living.

We called this debate to set the record straight on the growing use of food banks in Wales and to highlight the cost of living crisis facing hundreds of thousands of Welsh families.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): I am here to listen to the debate because I have constituents who work in Wales, and there are people from Wales who come to work in my constituency. As my right hon. Friend the Member for Neath (Mr Hain) highlighted, the issue is as much about people in work as about people out of work. Does my hon. Friend the Member for Cardiff West (Kevin Brennan) share my concern about the explosion of the issue? We have heard about the growth in the number of food banks in Wales, but nationally, a couple of hundred food banks have opened across the UK. By the end of April, 250,000 people in our country will have accessed emergency food aid. Does he not think that is a terrible indictment in 2013 in the seventh most industrialised nation in the world?

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Kevin Brennan: I do, and I apologise in advance if I repeat some of those statistics later. I pay tribute to my hon. Friend’s work in Liverpool, which is sometimes wrongly referred to as the capital of north Wales, although it certainly has a strong Welsh influence. I recommend to Government Members the YouTube video that she made showing the impact of food banks and of the Government’s policies on the people in her constituency. The video is worth viewing.

The number of people relying on food banks in Wales has trebled over the past year, rising from just over 10,000 to just under 30,000. The issue is the sheer scale of numbers, not the percentage increase. The number, as hon. Members have said, is forecast to rise to 40,000 a year over the next 12 months. The growth of food bank usage in Wales is twice the UK average, which the Minister should think about.

The Government, however, will not acknowledge that the growth in food bank usage is a problem. A Downing street source recently said that food banks are for people who

“feel they need a bit of extra food”.

Let us pause for a moment to consider the casual callousness of that comment, because, like many MPs, I find myself reluctantly handing out food vouchers to my constituents from my constituency office and surgeries, and I never thought I would when I entered public life. I assure Downing street and the Prime Minister that not one of those vouchers has been issued to, nor have I ever been approached by, constituents who

“feel they need a bit of extra food”.

Constituents approach me because they are desperate and do not know how they are going to feed their children this weekend. In short, they are in a crisis and the state is not there to provide immediate assistance.

Mrs Siân C. James (Swansea East) (Lab): Like me, I am sure my hon. Friend finds that, when he hands out food vouchers, not everyone who comes to him is a malingerer or a scrounger. There are people who have delayed benefit payments and are being denied the money they need to help keep their family in food and heating.

Kevin Brennan: My hon. Friend is absolutely right that, in many cases, the reason why people are unable to feed their family that weekend is that there is no benefit. They have fallen upon a crisis in their life and there is no immediate assistance available. They have been told they will have to wait for some considerable time, and they are unable to access a crisis loan of any kind, which is why they come to us. We are handing out vouchers so they can get some food for the weekend. That is the reality. It is not a lifestyle choice, though the tone of the comments from No. 10 Downing street suggests it is. They do not want a free box of tinned or dried food to top up their adequately stocked pantries; they are using food banks because of the cost of living crisis that is facing families across the UK.

Luciana Berger: My hon. Friend is generous in giving way, and I will not seek to intervene on him any further. We know from questions asked just before Christmas that neither the Prime Minister, the Deputy Prime Minister, the Chancellor nor Ministers from the Department for Work and Pensions or the Department for Environment,

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Food and Rural Affairs have visited a food bank. Does my hon. Friend agree that had any of those Ministers, including the Prime Minister, been to a food bank, we would not have heard those comments from No. 10?

Kevin Brennan: Yes, I suspect my hon. Friend is right. I am sure the Minister has visited a food bank and will say what impression it made on him. What were his feelings on visiting the food bank?

Government policies such as the Welfare Benefits Up-rating Bill, the VAT hike and the bedroom tax are making the crisis worse. I hope the Minister will distance himself from the comments we have heard from Downing street and acknowledge that Government policies are making things worse, not better, for hundreds of thousands of families across Wales.

Guto Bebb (Aberconwy) (Con): There is no VAT on food, so the VAT change did not affect the price of food, which is important to remember.

Kevin Brennan: The hon. Gentleman is absolutely right, and I am aware of that fact, but he will find that families spend their money on things that do attract VAT, which has a direct impact on their disposable income and, therefore, on their ability to buy food.

Albert Owen (Ynys Môn) (Lab): I congratulate my hon. Friend on securing this important debate. Visitors to food banks in my constituency tell me that, because they are paying VAT on other things, particularly on peripheral items such as fuel, they have less money to spend on food. That is the reason why they come into food banks for the first time. Those people are in work and often work long hours.

Kevin Brennan: Yes, indeed. That is a continuing process. The consumer prices index figures were released today. CPI is 2.7%, which is 1.2 percentage points above rises in income for people in work. There is an impact on everyone, including people in work. As we know, as VAT is a regressive tax, it has the greatest impact on those on the lowest incomes. Also, because their marginal propensity to consume is much higher than that of people on higher incomes, VAT is a particularly hard tax on them.

Some 90% of the food in food banks is donated, mainly by the public via supermarkets, Churches, community centres, schools and other organisations. I pay tribute to the efforts of food banks, many of which are run by the Trussell Trust, including the one in Ely in my constituency, which I have visited. They are intended as a crisis intervention for families in need. As I said in response to an intervention, the problem is not what food banks do but the scale on which they must now do it.

Food goes to distribution centres, where food bank volunteers gather, weigh, account for and issue the food. Food is issued only to recipients with vouchers, and vouchers are issued by front-line service officers trained in the assessment of need. Issuing organisations include, among others, citizens advice bureaux, Jobcentre Plus, GP surgeries, social services, housing officers and now, as I said earlier, Members of Parliament and, I suspect, Welsh Assembly Members, too.

A voucher gives just over three days’ worth of food, and vouchers are typically issued in batches of three. As we heard, the trust operates 23 food banks across

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Wales, nine of which opened in the last year, and four more are expected to open in Wales by Easter this year. There are now more than 270 food banks across the UK. In 2011, some 7,173 adults and 4,038 children in Wales used a food bank, and in 2012, the numbers rose to 18,721 adults and 10,328 children. The trust forecasts that the number of people relying on food banks in Wales will rise to 40,000 next year.

The trust collates information about the people using food banks. The consistent main reason cited for using a food bank, accounting for between 40% and 45% of usage, is benefit changes and delays in benefit payments. About one quarter of usage is accounted for by low-income families, and about one tenth by debt. As we have heard, food bank usage has exploded over the past two to three years. It is sad but typical that the Prime Minister recently tried to suggest that food banks expanded by a greater amount under the last Government than under this one; that abuse of statistics was skewered by Channel 4’s feature, “FactCheck”, which I recommend to hon. Members.

The trust forecasts that this year, 250,000 people across the UK will use a food bank. Hundreds of thousands of Welsh families face a cost of living crisis worsened by the Government’s policies, including welfare changes that are likely to make the crisis even worse. The Welfare Up-rating Bill alone will hit 400,000 low and middle-income households in Wales, including 170,000 families in Wales who currently receive working tax credits. It is estimated that 140,000 people in Wales will be worse off under the Government’s change to universal credit and 40,000 will be hit by the bedroom tax; I know that hon. Members are already getting a lot of traffic in their surgeries about that issue.

The Office for Budget Responsibility has shown that between 2010 and 2013, inflation will have risen by 16%, whereas average earnings will have risen by just half that, or 8%. The TUC estimates that four-year wage stagnation will cost the average worker £6,000. Wales has some of the highest energy bills in the UK, and more families are having to choose between heating and eating. As I said, the VAT hike alone added £450 a year to average household bills. Low economic growth has created fewer opportunities, and unemployment is forecast to rise in the next two years. Public sector job losses are forecast to reach 1 million by 2017. Meanwhile, in April, the Government will give more than 8,000 millionaires an average tax cut of £107,000, and the top 4,000 earners in Wales will benefit from a cut in the additional rate of income tax.

I have a few questions that I hope the Minister will answer in his response. What does he think best explains the explosion in food bank use in Wales? Is it the cost of living crisis facing Welsh families, or the notion that more people have suddenly decided that they want a bit of extra food, to quote No. 10? On the “Politics Show” this weekend, the Welsh Office Minister in the House of Lords, Baroness Randerson, said that the Government are reducing the deficit in the fairest possible way. What exactly is fair about the bedroom tax, which will hit 40,000 people in Wales while taxes are cut for millionaires? What impact does the Minister think the Welfare Up-rating Bill will have on the number of people in Wales relying on food banks? Has he made any estimate of that?