Productivity and Economic Growth: East Midlands

Miatta Fahnbulleh Excerpts

Tuesday 17th March 2026 Westminster Hall

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Miatta Fahnbulleh)]

I thank my hon. Friend the Member for Rushcliffe (James Naish) for securing the debate, and I thank Members who have spoken for their insight, passion for their area, and fantastic contributions. Let me start with my hon. Friend’s insightful analysis of both the challenges and opportunities in the area. I look forward to reading the APPG report, and to drawing insights on how we can continue to work with the area to advance its economic potential.

We all agree that economic growth is paramount, and it is one of the Government’s top priorities. Economic growth is central to raising living standards, which we absolutely must do, funding improvements in public services after a decade and a half of under-investment by the Conservatives, and rebuilding the country. That is why the Government are determined to not only drive growth from the centre but empower local leaders with the tools they need to drive growth in their area—local leaders such as Mayor Claire Ward, a fantastic Labour mayor whom I have had the privilege of working with, and who has been an important champion for the region before and since her election.

Productivity, as my hon. Friend the Member for Mansfield (Steve Yemm) pointed out so eloquently, is one of the key drivers of growth. While we can debate the causes, we all recognise that productivity has been weaker in the years following the 2008 financial crisis. Improved productivity will require relentless work and a focus at every level of government—from national Government, through to our regional government and our local authorities—in partnership with the business community and industry.

That work is essential to everything that my Department and others are doing to make progress—and we are making progress. Analysis by the Resolution Foundation last month showed that UK productivity grew more in the last year than in the previous seven combined. But we acknowledge that there is more that we need to do. My hon. Friend the Member for Rushcliffe was right to point out that productivity varies across the country. Indeed, the gap between our cities, where we would expect some of the highest productivity, and the UK average stands in contrast to the performance of many comparable cities across the OECD. Cities such as Lyon, Frankfurt, Turin and Bilbao have productivity higher than the UK average, while many of our own cities have productivity lower than our UK average. As my hon. Friends the Members for Rushcliffe and for Loughborough (Dr Sandher) pointed out, devolution is key to unpacking, unlocking and dealing with the challenge.

We know the impact that devolution can have on growth and in improvements for local people. The parts of the country with the longest and deepest devolution of powers and funding are the ones where growth is taking off. That is why we are giving more areas, including the East Midlands combined authority, the tools and funding that they need to address the challenges in their areas and to realise the opportunities for growth. Devolution is fundamental to achieving the change that the public expect and, frankly, deserve: growth, more joined-up delivery of public services, and politics being done with communities, not to them.

I am conscious, however, that the debate is not just about the East Midlands combined authority; it is about the whole of the east midlands. Local leaders have an important role to play in growing the economy. We want more collaboration, not less, and we are supporting places to access devolution so that they can work together to drive outcomes locally. We have therefore issued a call for areas without devolution, including parts of the east midlands not within the combined authority, to come together with their neighbours to form strategic authorities so that they can benefit from devolution.

Local leaders will have greater control over economic development levers, transport and skills, as well as having revenue-raising powers, to ensure that they invest in the economic prosperity of their area. In the meantime, we encourage local leaders to work together and to set a vision for their area. Many local authorities already have an economic strategy, and we encourage them to set out a vision for growth in their area and to work across administrative boundaries for the benefit of their region. Industrial strategy zones are a perfect example—industry, innovators and government coming together, and local leaders equipped with a powerful set of tools to drive growth in each of the sectors.

My hon. Friend the Member for Rushcliffe rightly pointed out under-investment in these areas, and Members across the House reiterated that point. I would say that that is, in fact, a double whammy, because we have had under-investment across the piece under previous Governments for 15 years, in every key part of the economy and in the infrastructure that we need to unlock economic development. In addition, investment was skewed to some areas, to the disadvantage of others, and we are absolutely determined to turn that around and put that right.

That is why we as a Labour Government are putting in record investment across all key sectors of the economy. On the key point of transport, where Members have pointed out a range of transport investment schemes and key pinch points to economic growth, the Department for Transport has unlocked a record £2 billion of support for transport in the east midlands. That is an important first step to deal with some of the critical transport connectivity issues, combined with investment in the green economy—which we see across the east midlands —in advanced manufacturing and in defence, with £180 million of local growth funding next year alone, to ensure that we put the money in to unlock the potential that we can see and that my hon. Friend the Member for Rushcliffe so eloquently pointed out.

My hon. Friend the Member for Derby South (Baggy Shanker) made the point that when we put investment in, it does not always touch our communities or lift the lives of people in those communities. We need to be intentional about it, which is why what my hon. Friend the Member for Derby North (Catherine Atkinson) and other Members said about skills is absolutely critical. We have to combine the investment with intentional work to ensure that we develop a workforce strategy for the area and the skills, and ensure that we have the employment support to get people into jobs. That is the approach that we will take with the combined authority and that we intend to take with Team Derby. Our absolute commitment is to do our bit to work alongside leaders to unlock potential.

My hon. Friend the Member for Amber Valley (Linsey Farnsworth) talked about the critical role of the visitor economy, which we absolutely recognise. One of the key requests of our mayors was for a visitor levy so that they can raise revenue that can then be invested in the enabling infrastructure and the support we need to boost the visitor economy. We are now consulting on that, and we will legislate on it.

My hon. Friend the Member for Erewash (Adam Thompson) talked about how this cannot be just a short-term blip; we need a long-term commitment and long-term plans. In the mayor, Claire Ward, we see a long-term plan for the area, but that long-term commitment from local leaders must be matched by a long-term commitment from this Government. That is why we are moving to multi-year funding that is looking at the long-term horizon in our places, and standing with our local leaders to invest and unlock that potential over the next decade.

As my hon. Friends the Members for Sherwood Forest (Michelle Welsh) and for Mid Derbyshire (Jonathan Davies) made clear, however, the plan cannot just be for our urban centres, as critical as they are as engines of growth in the region. It must also speak to our rural areas to make sure that we unlock opportunities, not just in our towns and cities, but across the agricultural sector and our rural economy. We must also ensure that we deal with those pockets of deprivation.

Pride in Place is targeted at that very question: how, alongside the big work that we are doing regionally or in a local area, do we get investment into some of our deprived communities so that they can invest in the things that will lift up their area and restore pride in place? That goes hand in hand with the work that we know needs to be done regionally.

Finally, the hon. Member for Torbay (Steve Darling) made the important point about SMEs, which make up 99% of businesses in the economy. Under the last Government, however, we saw a huge neglect of the SME economy. Our job is to make sure that we support the backbone of our economy, which is why we have an SME strategy that looks at everything from late payments to procurement and how we provide the support to ensure that SMEs continue to be the key engine for growth.

I will end by referring to the comments of the shadow Minister, the hon. Member for North West Norfolk (James Wild), who spent a long time bemoaning the Government’s growth record. I would gently point out, as has been acknowledged by Members across the House, that the legacy that we are trying to turn around is a function of the fact that we had a decade and a half of Governments who did not have an economic strategy, who chose to under-invest in key services, and who deliberately took money away from regions across the country, such as the east midlands, to make sure that they did not meet their economic potential. We are turning that around; that is the job and we are getting on with it.

The underlying fundamentals are there. We have been in power for 18 months; it will take time to repair the damage that was done over a decade and a half, but we are getting on with that job. Today, the Chancellor will set out our economic plan and the sectors that we will be boosting. Part of that will be a critical step around how we devolve to areas, such as the east midlands and across the country, to ensure that they work alongside us in partnership to unlock their potential.

To sum up, it is clear that we all agree on the need to boost productivity and support economic growth across the east midlands. I hope Members can see the Government’s commitment, passion and determination to work alongside leaders in the east midlands to ensure that we do that. Devolution is a critical part of that, and my job is to ensure that, whether through mayoral strategic authorities or foundation strategic authorities, we equip our local leaders with the skills, tools and capabilities they need to do their job.

But that is just one part of the answer: from day one, the Government have been clear that while local leadership in all its forms and at all levels is vital, it sits alongside the work that we are determined to do at the national level to boost the economic potential of the east midlands and every region across the country. I again thank my hon. Friend the Member for Rushcliffe for being such an amazing champion for the area. I look forward to working with him and Members across the House to make sure that we do right by the region.