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Pennine Lancashire Local Enterprise Partnership

Volume 519: debated on Wednesday 24 November 2010

This is a matter of importance in supporting growth in Pennine Lancashire and the north-west of England. I intend to discuss three main points. First, Pennine Lancashire’s skills base and great heritage make it perfectly placed to pursue a local enterprise partnership. Secondly, a pan-Lancashire LEP is not an appropriate solution for either east or west Lancashire and will not work in the region. Thirdly, the Government must recognise the unique differences between those two local economies and the need for two LEPs for the region, and move toward a solution involving a Pennine Lancashire LEP.

When the Government invited local authorities and business leaders to submit proposals to form LEPs, we in east Lancashire saw it as a perfect opportunity to build on years of existing partnership work. In his letter of 29 June, the Secretary of State makes three clear points:

“some local and regional boundaries do not reflect functional economic areas. We wish to enable partnerships to better reflect the natural economic geography of the areas they serve and hence cover real, functional economic and travel to work areas.”

There is no doubt that Pennine Lancashire functions as a natural economy and fits the three points mentioned by the Secretary of State.

Economic, skills, housing and transport strategies are already developed and implemented along the lines of that footprint, and they have been for many years. With a population of more than 500,000 people, the area is greater in size than many major UK cities and is similar in size or greater than some of the LEPs already approved. The area is characterised by a strong manufacturing base and entrepreneurial people. More than 21% of employment in the area is in the manufacturing sector, compared with 10% in the UK as a whole. Self-employment rates are significantly higher than regional and national levels. Despite not having a dominant city centre, the area collectively contributes more than £6 billion gross value added to the economy each year.

Export-led growth will drive economic recovery and Pennine Lancashire is well placed to capitalise on that, with more than 700 businesses involved in significant export activity this year. It is vital that we recognise what makes up east Lancashire. A key point is that there is a high degree of connectivity and interdependence between the Pennine towns. More than 10,000 jobs are provided by Blackburn employers and the same figure is provided by Burnley employers for residents of the area. In terms of Pennine Lancashire districts, my constituency provides 9,000 jobs. Some 84% of resident employees work in the area and only 16% work outside of it. Of those people who do not access employment outside the sub-region, almost three times as many commute to Manchester as do to Preston. We are talking about a very small connection to Preston. Independent analysis shows that more than 200 high-growth businesses have achieved at least three years continuous growth, despite difficult economic conditions. We are working hard as an east Lancashire region. Hundreds more businesses have the potential to grow and provide new jobs for the area.

I shall turn to why a pan-Lancashire solution is not suitable. The Pennine Lancashire LEP proposal is private sector led. The existing business leaders’ forum works alongside the east Lancashire chamber of commerce and other support organisations, such as the Federation of Small Businesses and the Asian Business Federation. The forum comprises prominent business leaders from each of the six district councils and a cross-section of representatives from local high-growth companies. It is chaired by a well-respected business leader and includes the chamber of commerce president and chief executive, college principals and the Lancashire Business Environment Association. The forum will act as a shadow LEP board. It is important that the Minister recognise the work already achieved in east Lancashire. There are already 150 business men and women involved in partnership activity within Pennine Lancashire.

Does the hon. Gentleman agree that the fact that the business community is starting up two specific chambers of commerce—one for Pennine Lancashire and one for Preston and west Lancashire—proves that the business community wants two specific LEPs? The business community will work on that basis and will give such a proposal its full support.

I accept that and I will come to that point.

The chamber of commerce in east Lancashire has a proven record of partnership development and business support delivery, not only locally but beyond its boundaries. However, its west Lancashire cousin hardly ever meets and does not function. The east Lancashire chamber has 800 members and covers 60,000 employees. One in four of the working population is covered by that chamber of commerce’s businesses. It has led a programme of consultation during the development of the LEP proposal and has circulated information to 8,000 businesses. The chamber’s elected board of directors fully endorse the Pennine proposal. Last week, the shadow east Lancashire private sector LEP board met to finalise governance arrangements and to give input into the development of a regional growth fund bid.

East Lancashire’s business leaders are getting on with the job in hand, so why are we having this debate today? Despite Pennine Lancashire fulfilling every criteria set out by the Government, the bid has yet to be approved—not because of the quality of the proposal or the private sector backing, but because of the conflicting bids from the county, particularly the county council. It is worth highlighting that the county council’s proposal does not cover the historic area of Lancashire and that it excludes Blackburn and Blackpool. They do not wish to participate. That is why I describe it as a Swiss cheese proposal—it leaves two great big holes in Lancashire and does not provide a pan-Lancashire solution. The proposal does not even command the support of the majority of district councils in Lancashire. On the other hand, east Lancashire local authority leaders are united and have been working on a cross-boundary and cross-party basis to promote economic growth in Pennine Lancashire for many years. In particular, Regenerate Pennine Lancashire is an exemplary example of economic co-operation.

East Lancashire welcomed the assurance given by the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark) in his letter to the district councils’ network on 25 August. The letter reiterated what has been said before:

“we are not expecting County Councils to act as sole ‘building blocks.’ We want to see economic geographies reflected in proposals, not administrative ones”.

Experience has shown that pan-Lancashire structures put in place to deal with economic issues are ineffectual and that local arrangements reflecting local economic footprints work better. If we are not careful, we will have the unnecessary duplication of bureaucracy of region and locality. Indeed, only this year, Lancashire partners agreed that the existing pan-Lancashire economic partnership was no longer fit for purpose and that the attempt to create a Lancashire-wide skills board has failed. However, the private sector-led Pennine Lancashire Employment and Skills Board goes from strength to strength.

There are also two British Chambers of Commerce accredited chambers of commerce in Lancashire. This point relates to the comments made by the hon. Member for Burnley (Gordon Birtwistle). One chamber of commerce is in the east and one is in the west. They both reflect the unique differences of the economies they serve. A two-LEP Lancashire solution is staring us in the face. A recent poll suggested that almost 70% of businesses in west Lancashire would back a two-LEP solution.

I congratulate my hon. Friend on securing the debate. None of the bids from Lancashire were accepted by the Secretary of State. In reply to a question I asked the Secretary of State, he said that the bids from Lancashire were

“overlapping…fiercely competitive and different.”—[Official Report, 28 October 2010; Vol. 517, c. 490.]

I understand my hon. Friend’s preferred position on dual Lancashire bids, but local authorities in Merseyside and Greater Manchester can work together, despite their areas being very different. Having two such dominant and powerful LEPs in the north-west will surely make it difficult for Manchester to compete for such resources—not to mention when we have to compete against other LEPs across the country. Does my hon. Friend agree that the predominantly Conservative administrations across the council need to act collectively to ensure that the people we represent are not at the back of the queue?

I appreciate my hon. Friend’s comments, but I do not accept any of them. I do not accept that there is a pan-Lancashire solution because Blackburn refused such proposals and had the common sense to look south to Manchester. Blackpool is hesitant on the matter. I shall come on to some of the conflicts that exist. We do not have a pan-Lancashire solution; we have a proposal based on three separate areas. The problem is that three proposals are being labelled as one proposal. We will all lose out. There is no pan-Lancashire solution—there never has been and there never will be. There is Lancashire county council, Blackburn borough council and Blackpool borough council.

The hon. Gentleman may remember that when he was, I think, a member of Hyndburn council and I was a member of Burnley council, we put forward multi-area agreements—the right hon. Member for Blackburn (Mr Straw) will remember those. Pennine Lancashire put forward its MAA and I had the pleasure of coming to No. 10 Downing street to sign it off with the previous Prime Minister. I do not think that the west Lancashire MAA was ever done. Why are we, in Pennine Lancashire, being held back while we wait for the rest of Lancashire to come up with some sort of solution to what they need?

The hon. Gentleman makes a fantastic point. East Lancashire has an MAA and now west Lancashire has decided to have one because east Lancashire has one. That reinforces the point that there are two economic models and two different regions divided by the M6 motorway. He also makes the point that the direction of travel to work is to Manchester or inwards; there is none to the west.

Following that recent poll, which I think is striking, a strong Government recommendation to that end would quickly resolve the situation and leave Lancashire settled with a two-LEP solution.

The two areas are distinct, encompassing both Blackburn and Blackpool. I remind the Minister that we have recently seen a costly legal battle between the two areas over Tithebarn, a retail development intended to revamp Preston city centre. Lancashire county council backed Preston city council against Blackburn with Darwen borough council over the Tithebarn project, and £1.5 million of taxpayers’ money has been wasted in that legal battle. That is what will continue if we try to mix oil and water, and Tithebarn will not go away in the next decade. Trying to merge the two areas will result in a terrible situation. That battle in the courts was about not civic leaders but retail, and it was between businesses and, primarily, Blackburn council.

I am concerned by the fallout from Tithebarn. I do not see how Lancashire county council has a mandate for that proposal, and I do not know why it is bringing that forward. I have never seen an executive report on the issue from the county council, and nor have I ever seen the matter go to full council. I have never seen it brought forward. It is undemocratic, and I would like to see how much the county council is spending on it, as it does not even have a mandate from its members in the council chamber. It is a ridiculous bid and should be thrown out. It is a cynical attempt to undermine the established Pennine Lancashire LEP bid, and to use issues such as Tithebarn to impose a west-of-Lancashire solution. It goes against the spirit of local economic partnerships and the Government’s wider localism agenda. Lancashire county council should not be allowed to disrupt and jeopardise the economic prosperity of an area it is meant to serve in a misguided attempt to reassert control over the existing county boundaries on issues such as Tithebarn and others.

In summary, Pennine Lancashire LEP is based on evidence and understanding and has the support of the private sector, district authorities and all local MPs from the three main political parties. Business and civic leaders in east Lancashire all recognise what works locally and have a sense of common purpose about what needs to be done, one that transcends political differences. The economic capital should not be discarded, as years of work have gone on in east Lancashire involving all the authorities—of different colours—to try to drive growth in the area, which we have done.

It is clear that Pennine Lancashire has had a business-led and focused partnership that has developed over years. There is nothing comparable to the west. To send everyone back to square one to suit the county council’s agenda would be a gross waste of taxpayers’ money and would hit growth in the region. I urge the Minister to resolve the situation, approve a Pennine Lancashire proposal as a matter of urgency and allow us to get on with creating the private sector jobs and growth that the area so desperately needs.

Order. It is normal for the Minister to have 15 minutes to respond to the debate, but I will allow other Members to speak if they do so briefly.

I wish to address the issue of parochial interest, which is in danger of overriding the greater and more holistic approach in fostering and enhancing the economy of Lancashire. If we allow Lancashire to be divided, we will be unable to offer a broad and integrated approach to our economy. To argue that the Pennine area should be separate because of its manufacturing base is to encourage a parochial view of business.

Does the hon. Lady not accept that, on travel to work, 84% of the people are contained in the east Lancashire region, and that that is where they work? Does she not accept that there is no economic connectivity of any significant scale between the east and west?

I appreciate the hon. Gentleman’s comments but I do not agree, because I believe that industry, the manufacturing base and professional services all have to be integrated across Lancashire.

I would like to make progress. We now live in a global economy, which demands a consolidated approach in all sectors: manufacturing, tourism and professional services. I submit that a united Lancashire is a stronger economic powerhouse than one divided into separate bids identified by geography. By unifying the system, the Government are cutting red tape and bureaucracy. Any investor looking to invest in the north-west will automatically be attracted to a unified LEP that offers a one-stop shop.

I have nearly finished.

The Business Secretary said last weekend that not one of the three proposals to create the partnerships had been successful, claiming that they would have ended up competing with each other for the Government’s regional growth fund. Meanwhile, schemes in Manchester, Merseyside, Greater Manchester and Cheshire have got their acts together and are getting the go-ahead. Other unified LEPs are currently bidding for funds that could be usefully deployed in Lancashire. The North and Western Lancashire chamber of commerce has said that an LEP based on the county of Lancashire is the preferred model for chamber members and the wider business community. On 2 November, Babs Murphy, chief executive of the chamber of commerce, said:

“A pan-Lancashire Local Enterprise Partnership was the only realistic model for this area, a model that had the support of the business community.”

I am nearly finished. I hope that we can come together to protect Lancashire as a whole and as a brand. Tourism, manufacturing, agriculture and professional services should unite and, regardless of parochial interests, work together to strengthen and enhance the great economic potential of Lancashire. I echo the words of Frank McKenna, chairman of the business lobbying group, Downtown Preston, who has said that anything other than a pan-Lancashire bid would stifle development and growth.

I will refer briefly to some of the comments that have been made. I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate. As he pointed out, 84% of the work force in the region live and work in the Pennine Lancashire area, and three times as many people commute to greater Manchester than commute to Preston. It would make far more sense for Pennine Lancashire, if we cannot go alone, to go in with Greater Manchester, rather than with Preston. Going in with Preston would, economically, be complete nonsense. Lancashire is an historic county and there are many things that we can do by working together, and I applaud the work of the county council, but if LEPs are supposed to reflect natural economic areas, the case for Pennine Lancashire is fantastic. I hope that the Minister will set a decision date, and I urge him to bring the issue to a head.

I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate and thank those Members who have been able to contribute. Although normally only a Minister replies in such debates, I think that it has been useful to allow other Members to contribute in this one. It is clear that there are strongly held differing views, both within the House and among the people whom Members represent. In that context, I want to help and have a positive proposal, to which I will come in a moment.

For the Government, creating the right long-term economic framework, whether in Lancashire or elsewhere, is an extremely important issue, and one that we take very seriously. Having once worked in Lancashire, I know the economic strengths across the county. BAE Systems, for example, has a heavy presence in the hon. Gentleman’s constituency, and it also has operations across the county. There is also the nuclear industry and, as others have mentioned, the automotive and paint manufacturing industries.

We believe that Lancashire would benefit—I mean the economy of Lancashire, and there is a slight nuance there—from the focus on economic growth that we strongly feel LEPs would bring. On 28 October, we announced the first wave of successful partnerships. In fact, the 24 partnerships that have so far been cleared are diverse, have strong ambitions and are focused on the local priorities that they think matter. They are wide in their scope and imaginative in what they are trying to achieve. If we look at the 24 partnerships that have so far been cleared, we will see that they represent, outside of London, more than half England’s gross value added, 58% of the businesses and nearly 60% of the work force.

The point about LEPs is that they should enjoy broad discretion so that they can choose the priorities for action in response to local needs. A number of them are focusing on the need to remove barriers to growth, whether they relate to transport and planning, matching skills provision with employers’ needs or helping fledgling companies get off the ground.

As Members will know, we were unable on 28 October to clear every bid we received to become a partnership. Of the three bids we received from Lancashire, we judged that none were ready to proceed without further work. The area covered in what I will call the pan-Lancashire bid included Preston, Lancaster, South Ribble, Chorley and West Lancashire. The Fylde coast bid comprised Blackpool, Fylde and Wyre, and the Pennine Lancashire bid originally comprised the area including Blackburn, Pendle, Ribble Valley, Burnley, Hyndburn and Rossendale. We were impressed by the commitment and ambition demonstrated in all three proposals. As with some of the cleared bids, we saw that there was a real wish to look at how, in response to local need, economies could be diversified. There were strong merits to the bids.

Let me turn to the problems. As they originally stood, the three overlapping bids clearly competed and conflicted with one another. Before we could consider whether they should progress, we had to be confident about the structures, and ensure that they were right for the business community and the communities as a whole. Clearly, where there is strong local disagreement among the potential members of a partnership, the possibility of making that partnership last is sharply diminished. Therefore, it has been disappointing that there have been continuing disagreements across the county, not only in local government but among the business community.

However, I now understand that partners involved with the Lancashire bid and the Fylde coast bid have been having productive discussions about the possibility of joining forces in one partnership. I hope that their discussions reach a successful outcome. It would be progress, but the problem would remain: we would still have two bids in opposition to each another in Lancashire.

To be open with Members, and to allow them to see exactly what the principles are, let me return to the criteria with which we are working. The criteria we set were that every partnership had to demonstrate, first, that it encompasses a natural economic area; secondly, that it has the clear support of business; thirdly, that there is an ambitious approach to transforming the area—something that adds value; and, fourthly, that it has buy-in from the key councils in the designated area. Let me look at the two bids that we are debating in this Chamber today: the pan-Lancashire and Pennine Lancashire bids.

Will the Minister accept that there is no such thing as pan-Lancashire when we talk about historic Lancashire? We are merging two concepts. Blackpool and Blackburn, particularly Blackburn, are totally resistant, and Blackburn is an equal partner in local government with Hyndburn. They work together effectively. If Blackburn withdraws—it is insisting that it will go with Manchester—there will be no pan-Lancashire solution. There is a Swiss cheese solution that covers the vast majority—12 out of 14—but there is not a 14 out of 14 solution. There is no pan-Lancashire solution.

I will not comment on the value of the groupings. They are the ones that came forward. If a group chooses to call itself pan-Lancashire, that is its judgment. Given that we have a pan-Lancashire and a Pennine Lancashire, I thought that it would be easier to use that shorthand so that we know what we are talking about.

On the first criterion, the pan-Lancashire bid represents a strong, functional economic area. On the second criterion, it is clear that the bid enjoys strong business support, particularly from larger employers, but the support is not unanimous. On the third point—this is the issue around ambition and added value—pan-Lancashire also scores well. It would deliver the critical mass needed for Lancashire to compete with the likes of Greater Manchester, Merseyside, and West Yorkshire, as my hon. Friend the Member for South Ribble (Lorraine Fullbrook) pointed out. It would enable a joint approach to be taken on key sectors such as manufacturing. In addition, it includes Central Lancashire and Lancaster universities, and its scale is sufficient to bring together adjacent areas, thereby better integrating transport and planning.

It is the fourth criterion—local government support—that is the root of the problem. Clearly, some councils falling within the geographical scope of the bid are not signed up to it.

Will the Minister be good enough to acknowledge that support for the Pennine Lancashire bid and the serious concern about the so-called pan-Lancashire bid, arise not just from the local authorities in east Lancashire, on an all-party basis, but from the majority of businesses in east Lancashire? I cannot emphasise that point enough. BAE Systems, for reasons that one understands, has decided to sit on the fence, but it is not passionately in favour of one versus the other; if I were in its position, neither would I be. But the East Lancashire chamber of commerce, which is very representative and a very good chamber of commerce, and all the businesses that I know of—I believe that this is shared by my colleagues across the valley—are passionately in favour of the separate east Lancashire solution. In fact, none of us would be supporting that bid if they were not.

I totally understand the right hon. Gentleman’s point, and I respect the fact that where one is seeking secure evidence, it is inevitably often easier and quicker for larger organisations to respond. We have been mindful of the fact that there may be smaller businesses, about which we do not have evidence, that may support one bid or the other. I am mindful of the danger of assuming that familiar names on a particular bid’s proposal somehow mean that the whole of the business community is unanimous. I am sensitive to that—it is an excellent point. That is why we try to make sure that once we receive bids, we dig beneath the proposals and get a better understanding of the genuine nature of the support or otherwise, so that we can make a value judgment. That allows me to turn to the Pennine Lancashire bid.

On the first criterion—the question of a functional economic area—it has a plausible claim. I understand that economic geography changes. One of the points about changing the regional development agencies is that, in many ways, some of their boundaries simply do not reflect the economies that we have today, which have changed dramatically in the past 10 or 12 years. We think that the Pennine Lancashire bid has a plausible claim to being a functional economic area.

However, its links with other parts of Lancashire and Greater Manchester mean that its economic self-containment is not quite as strong as Lancashire’s as a whole. There are pros and cons. The hon. Member for Hyndburn rightly made the point that a high proportion of people work in the area, but we also need to look at the potential long-term success of a partnership—we need to think about its connectivity. The debate is two-sided; nevertheless, it is true to say that there is a plausible argument and a plausible element to the first question on whether there is a functional economic area.

On the second issue, on the evidence that we have to date—I will come to how we might solve this in a moment—the Pennine Lancashire bid’s claim, in terms of business support, seems to be smaller than that of the pan-county bid. [Hon. Members: “Not true.”] I hope to offer hon. Members a solution to that in a moment.

There is support from local businesses, especially including small and medium-sized enterprises, and I am grateful to hon. Members who highlighted that so that we can make an informed judgment. I am acutely aware of the two different chambers of commerce. I shall not comment on the pros and cons of either, but the fact that historically they exist tells me something about the nature of the economic geography in the county—I do understand it.

On the third criterion, Pennine Lancashire argues that its bid would give it the freedom to build on already close links with Manchester. The evidence is that 17,000 workers travel south to Manchester, and a far smaller number into Preston. I understand the motorway network, and that one does not look west; people look south, if anything, and perhaps a little east. In addition, private sector jobs growth is expected to be focused on Manchester. That brings me back to a point I made earlier about self-containment and balance.

There is then the question of the added value that would come from a Pennine Lancashire bid. We are looking for additionality in the proposal. What is the extra element? That is one of the questions that we want resolved. Like the pan-Lancashire bid, this bid failed on the fourth question—the issue of local authority support—as several hon. Members pointed out.

I am mindful of the challenge. Overall, we feel that the pan-Lancashire bid has some strong elements, but that the Pennine Lancashire bid also has good arguments in its favour. Neither is without its flaws. Like many hon. Members, I am keen to bring the matter to a conclusion without undue delay, so the Government are today asking partners involved in the competing bids to submit revised proposals no later than 8 December. We will write to the proposers today. Any revised proposal needs to be backed up with clear and compelling evidence to support the arguments that it presents. I hope that that clearly spells out the Government’s position. We want a lasting partnership, and that means that the partners must agree. We cannot make that happen without there genuinely being such a wish. That is the key point.

I am running out of time, and I am mindful that I will be in trouble unless Mr Weir allows me to stretch beyond 5 o’clock, but I do not think that I can do that.

We want to make a prompt decision and allow both sides to put their evidence firmly. That will allow us to make a judgment on which should be cleared: one, two or neither. We will seek to make that decision if the evidence is presented to us.

Question put and agreed to.

Sitting adjourned.