Older Industrial Areas: Economic Disparities

Debate between Toby Perkins and Grahame Morris

Thursday 25th June 2015 Westminster Hall

[Toby Perkins (Chesterfield) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Rosindell, for what I think is the first time. I congratulate my hon. Friend the Member for Easington (Grahame M. Morris) on securing the debate and on his extensive and incredibly important contribution. As we have heard in the other contributions in what has been a one-sided debate, the issues that he raises about his community are felt in many other communities in older industrial areas.

My hon. Friend quoted extensively from the Industrial Communities Alliance report. That is an important piece of work by a very important organisation that ensures that these issues are brought before the Government and that the Government are forced to consider the legacy that exists in our older industrial areas and cannot close their eyes to the poverty and deprivation that have resulted particularly from the collapse of the mining industry, but also from post-industrialisation—the attack on the manufacturing sector that happened, as others have said, under the Conservative Governments of 1979 to 1997. Therefore, the work of the Industrial Communities Alliance is incredibly important, and my hon. Friend reflected its report very well.

My hon. Friend spoke many times about the northern powerhouse and whether that was a real thing or simply a chimera—an illusion—or possibly just a press release. I think that he is on to something there. We have all seen in the past few months the Chancellor of the Exchequer suddenly discovering the north after many years of policies that have made life in northern communities much more difficult. I am talking about huge cuts to local government in the north and the huge increase in inequality that we saw under the previous Government. Suddenly, he arrived in his hard hat and high-visibility vest and announced that we had a northern powerhouse or, if not, he was going to create one.

[Grahame M. Morris]

This is a very important issue, worthy of the Government’s full attention, not just a photo opportunity with a brightly coloured jacket pre- election. As my hon. Friends have said, many of the problems faced by coal closure areas, such as mine, are multifaceted. The legacy is not just joblessness, but an environment impact, derelict land, substandard former colliery housing, despoliation and ill health. It requires the Government to take a co-ordinated approach, beginning with a recognition of the particular problems of not just coalmining areas, but steel areas, textile areas and, indeed, many of the old industrial areas that face similar problems.

[Toby Perkins]

I could not agree more. My hon. Friend’s contribution was speaking to many of the partnership approaches that were taken under the last Government. These problems are complex. He is absolutely right to talk about the combination of poverty, historical benefit dependency and ill health that results from what people have put their bodies through while working in heavy industry and from the link, which other hon. Members referred to, between poverty and ill health more generally.

A co-ordinated approach and a Government who take the situation seriously are required. The Government must prioritise the regeneration of our industrial areas and recognise that the situation is not easily resolved. The situation cannot be resolved with a press release or a photo opportunity; substantial partnership and cross-agency work between all organisations—central Government, local government, the business community, the voluntary sector and health authorities—over a considerable period is required to alleviate the situation.

My hon. Friend will be aware that my constituency of Chesterfield features in the Industrial Communities Alliance report. The area had a significant history of coalmining and manufacturing, much of which has now gone. Chesterfield was once a town in which five or six employers employed 3,000 or 4,000 people each; and now it is a town in which 3,000 or 4,000 employers employ five or six people each. The changing face of our economy poses significant challenges, including inequality.

[Grahame M. Morris]

I take issue with my hon. Friend’s suggestion that we have had a long-term dependence on benefits. Historically, Easington had a long tradition of almost full employment when the pits were working. We are in our current predicament because of the difficulty of attracting inward investment due to the complexity of the problems, which are compounded by various aspects of Government policy, including this week’s announcement of a £200 million cut in public health funding. Indeed, £3.5 million will be cut from Durham County Council’s budgets. That funding is used to address the long-term issues of ill health and poor diet in some of the poorest communities. The Government need to end their short-term approach and take the long-term, co-ordinated approach needed to address the problems in Chesterfield, Easington, Neath, Sheffield, Glasgow and all older industrial areas.

[Toby Perkins]

I agree with my hon. Friend. I am referring to what happened in such areas, particularly after the closure of the coalmines and manufacturing sector. The irony of the Government’s approach to welfare—they suggest that there is a group of people who want to live on welfare—is that that was precisely Mrs Thatcher’s approach when she shut all the pits. She went to all these people, shut down entire communities and threw them out of work. She put huge numbers of people on incapacity benefit and parked them there for a long time. Inasmuch as there was a history of welfare dependency, it was Mrs Thatcher who caused it, and my hon. Friend is right to clarify that point.

My hon. Friend also spoke about local enterprise partnerships, and I will speak in more detail about their role and the previous role of regional development agencies and how the Government’s decisions prevented them from being as effective as they could have been, particularly when their help was really needed. He raised a couple of issues that I want to explore. He talked about the insecurity that goes with the increase in self-employment. I was self-employed for six years before first coming to Parliament, and I know that self-employment is an insecure line of work, but we should be encouraging self-employment, which is a great thing. Simultaneously, we must recognise that some people set up their own businesses because there are no other options. Self-employment is sometimes a sign of a local economy’s weakness; and at other times self-employment should be welcomed. It is important to recognise such insecurity in the workplace. He may also have been referring to bogus self-employment. Some people who appear to the majority of us to be self-employed are actually in insecure employment.

[Grahame M. Morris]

My hon. Friend is being generous in giving way. It is important to challenge the accepted logic that an increase in self-employment is necessarily a good thing. We need to consider where it is happening. The Union of Construction, Allied Trades and Technicians and other trade unions that organise in the construction sector are concerned about the increase in casualisation and the use of umbrella companies by unscrupulous employers to decrease job security and drive down terms, wages and conditions on building sites, and there are other such examples. A number of people who were directly employed in the offshore industry are now classed as self-employed not by choice but because they have been forced down that route. Self-employment is not necessarily a positive thing for local economies. I accept that we want to encourage small businesses to grow and to take on employees, but that does not necessarily translate in the figures that have been quoted on the growth in self-employment in areas such as mine.

[Toby Perkins]

This is a multifaceted issue. I feel like I have been responding to my hon. Friend’s speech for longer than it took him to deliver it, so I will move on. [Interruption.] He rightly says that we have a bit of time.

There were other important contributions. The hon. Member for Glasgow Central (Alison Thewliss) reflected on the extent to which industrial jobs have gone from her constituency. Like my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), she represents a city that has seen huge regeneration and positive change, but there is still the legacy of industrial decline in such older industrial communities. When listening to the hon. Member for Glasgow Central, I was struck by the similarity between the experiences of her constituents and the experiences described by other hon. Members. After hearing Glasgow and Sheffield Members reflecting on the challenges in their cities and hearing my hon. Friends the Members for Easington and for Neath (Christina Rees) talk about the impact on former mining communities like mine in Chesterfield, I am struck that there is a lot more that links us than divides us in the industrial areas of England, Scotland and Wales. We should consider that as we think more broadly about the direction in which our country is going. A huge number of issues affect us all. We have shared experiences and new opportunities, but we have also endured and shared painful legacies.

My hon. Friend the Member for Sheffield, Heeley said that the legacy of Mrs Thatcher has cast a dark shadow over older industrial areas, and she reflected on the importance of rebalancing our economy. My hon. Friend the Member for Neath said that the scar of mine closures is still felt today, and she spoke powerfully about the impact of ill health and its link with poverty. She also made an important point about the impact of spending cuts on local government and the knock-on impact on the voluntary sector. We all know that, over many years, the voluntary sector was incredibly powerful and important in the Labour Government’s approach to regeneration. Ironically, a Conservative Government who came to power promising us a big society and a revolution in the voluntary sector have achieved the absolute opposite: a weakened voluntary sector that is unable to pick up the pieces in many of the ways that it did previously.

Many issues raised in the report, complex and long-standing as they are, were being addressed under the Labour Government. We saw huge regeneration of our great cities. On the motorway in my area we have the new junction 29A, which is still known as “Skinner’s junction” after the campaigning of my hon. Friend the Member for Bolsover (Mr Skinner), and next to it is a huge new industrial estate. The Industrial Communities Alliance report says that there are 4,900 extra jobs in Bolsover, which is one of the most successful older industrial areas in terms of employment growth precisely because the Labour Government made the decision to invest in such communities. So we can get results if we invest. The Coalfields Regeneration Trust did so much work and was strongly supported by the Labour Government.

The Labour Government made huge investments in health promotion, which my hon. Friend the Member for Easington mentioned, and recognised the massive challenges that face older industrial communities. We recently saw the announcement of a £200 million cut in health promotion, which will have a significant impact. The powerful contributions to today’s debate have expressed the importance of this issue.

In terms of earned income, the United Kingdom is the fourth most unequal of the 30 countries in the OECD; only the USA, Israel and Mexico are more unequal than we are. My right hon. Friend the Member for Doncaster North (Edward Miliband) was absolutely right to say that inequality is one of the huge challenges facing our country, although not only our country. The Labour party will give considerable thought to it over the next five years as we attempt to put together a programme that can again win the support of the British people.

Income is spread unequally across the UK’s regions and nations. The average household income in London is massively higher than in the north-east. In addition to income, overall wealth is unevenly spread across the UK—the average household in the south-east has almost twice as much wealth as an average household in Scotland—and different regions of the country have a different percentage share of UK gross disposable household income: London and the south-east have 32%, and the north-east has just 3.5%. Those disparities exist. It is important to recognise that poverty is not the preserve of the north. Areas throughout our country face substantial challenges: for example, Cornwall, which we might have expected to be represented here. None the less, a specific challenge faces the older industrial areas, and it is important to reflect that.

Many Members have discussed why we are in this position. There are three or four key reasons. The first is the failure to invest in retraining and vocational skills for the forgotten 50%, leaving people in the older industrial areas vulnerable to falling into a life of low pay. Far too many people in the UK today do a hard day’s work and still live in poverty and visit the food bank on the way home. The Prime Minister continually tells us that a job is the route out of poverty, but increasingly, people in poverty are also in work. Under this Government, work alone no longer pays enough to allow people the dignity of being able to feed their family.

More than 5 million people are now in low-paid jobs, and more than 250,000 are estimated to earn less than the national minimum wage. The problem of low pay has got significantly worse under this Government. Not only has the national minimum wage fallen in real terms since 2010; the official figures show that without action to tackle low wages, spending on tax credits for people in work is set to rise by an estimated £2.5 billion over the course of this Parliament. Only this Government could think that the response to that environment of low pay, and to all those people who work hard all week and still do not have enough money at the end of it to put food on their table for their kids, is to cut tax credits.

What an appalling legacy this Government will leave in terms of that increase in child poverty. We already hear that this Government are thinking of repealing the Child Poverty Act 2010, so that they will no longer be held to account for that increase in child poverty, but in communities throughout our country, people sitting around the kitchen table know the reality of life under this Government.

There has been a huge increase in the productivity gap. Professor Van Reenen, head of the Centre for Economic Performance at the London School of Economics, has said:

“By Thursday lunchtime the other”

major countries in Europe

“have produced as much as it takes us to produce by Friday afternoon… So basically, we could take every Friday off if we could be as productive as those other countries and earn the same amount of money.”

The productivity challenge is partly linked to the lack of investment and the short-termism that other colleagues have mentioned. For too long, the British economy has taken a short-term approach to matters of research and development. There are far fewer people involved in R and D in this country than in many of our European competitors. Likewise, although we have waited an age for a final decision on a new runway for London, Charles de Gaulle airport outside Paris has had four runways for years. There are many reasons why the endemic challenges in the older industrial areas have not been addressed.

The Government are exacerbating problems. The policies of a truly one nation Government would help overcome regional disparities, but as my hon. Friend the Member for Easington discussed, spending on infrastructure increases such disparities. Spending per head on London is 24 times higher than on the north-east of England. He quoted statistics that bear repeating; I also have them. The amount spent on Crossrail alone is nine times more than the amount earmarked for rail projects in the whole of Yorkshire, the north-east and the north-west.

There is a substantial gap in the ability of businesses in older industrial areas to access finance. The access to finance market is much less competitive there, so the amount of money lent by the banking sector to our businesses is substantially different depending on location: £2,647 per head of population was lent to businesses in London, but less than half that was lent to businesses in the north-east and the east midlands. Entrepreneurs in areas with huge growth potential are crying out for support but finding that, unless they live in an area that is already coping better than most with the post-crash world, the Government’s door is shut to them.

My hon. Friend the Member for Easington referred to the closure of One North East and the local enterprise partnership’s ineffectiveness in his case. Many local enterprise partnerships are working hard to make a contribution, but it was a strange decision at a time when the economy was desperate for growth—we should remember that we already had growth then, in 2010 at the end of the last Government, but we still needed a great deal more—for the Government to shut the regional development agencies and set up those fledgling agencies with limited resources and an unclear role. They have all attempted to the best of their ability to find a role, but they have been inconsistent in their ability to do so. Only now, five years after they were desperately needed, are some of them starting to come to fruition. That is another Government measure that has had a negative impact.

Strengthening local enterprise partnerships so they can provide greater capacity and stronger services is an important part of the solution, as is strengthening local authorities. We welcome steps to strengthen the combined authority in Greater Manchester, but we want more combined authorities to tackle the chronic problems of poor skills, infrastructure and economic development. We need reform of our business rate system, which has worked against business development in older industrial areas. If we had had the business rate re-evaluation counselled by the last Government, business rate bills for people in my hon. Friend’s constituency would be hundreds if not thousands of pounds lower and business rate bills in central London would be higher. That would have made a big impact on our local communities.

We believe that local areas and local authorities should be supported where they are succeeding in attracting and supporting businesses by retaining more of the business rate revenue generated by growth to invest in building further success. We also need greater decentralisation of Government infrastructure, so that more Government money is spent in the older industrial areas.

We support a Government with a commitment to a high-wage, high-skill workforce; devolution to English city and county regions that puts local councils at the heart of building up the older industrial areas; dealing with the huge increase in the productivity fall under this Government; an access to finance system in which money goes to businesses in our older industrial areas; expanding the capacity and strength of the local enterprise partnerships; fair funding for local authorities in the poorest areas; and a reform of business rates that supports small businesses in our communities. That is the kind of programme that will start to support and improve our older industrial areas.

This debate has been important in putting the issues before the Government, but we need them to stop the rhetoric and start the action; if they did, our communities might get the support that they deserve.