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Budget (Coventry)

Volume 527: debated on Tuesday 3 May 2011

This is the first time, Ms Dorries, that I have been involved in a debate chaired by you; it is a pleasure to see you in the Chair.

Coventry has had a long and significant economic history, which continues to shape and influence the performance of the local economy and could provide the foundation for its growth. The steady waning of coal mining after the second world war, together with the more rapid decline of our motor industry in the 1970s and 1980s, hit Coventry particularly hard. Coventry’s economic output is now 8.5% lower than the national average, and for Nuneaton and Bedworth it is now 35% below the average, yet Warwick performs 17% better than the national average.

Since the millennium, Coventry has benefited from significant redevelopment and regeneration, and the public sector has been crucial in that process. Coventry has a particularly youthful age profile, and scores well above average in measures of economic adaptability. Rates of growth were increasing before the recession, which suggests that the structural change is largely complete. The city holds many competitive advantages for research and development, engineering and niche manufacturing. However, unemployment is a growing worry. The latest figures from the House of Commons Library reveal that Coventry has 10,324 unemployed job seekers, and things are likely to get worse as the year progresses.

Coventry is famous for making cars, but it is public sector workers who drive much of the local economy. As we know, Becta and the Qualifications and Curriculum Development Agency are being abolished. It may have seemed the easy option to get rid of these education quangos, but they employ a combined total of close to 800 people. Many are former teachers. The relocation of the QCDA cost the Government more than £44 million, and it came at a personal cost to many of the staff who relocated from London.

We cannot ignore the strain on the private sector. Friends Life, formerly Friends Provident, recently announced that it plans to close its offices in Coventry by the end of the first half of 2012. There are 428 jobs at stake, and staff will be badly affected. That brings total job losses in Coventry to around 3,000.

I turn to the scale of the grant reductions that Coventry faces. Because of the cuts, the city council is being forced by the Tory-led Government to cut as many as 500 posts over the next 18 months. The amount of money that the council spends in the local economy will also be dramatically reduced. That, too, will have an impact on council staff. The front-loading of cuts means that staff losses will be required in the early stages of the spending cuts. That will affect families throughout Coventry. The overall impact is that Coventry city council is expected to lose about £45 million over the next few years.

The cuts will have an impact on the economy of the west midlands. They will have a significant knock-on impact on local businesses and employment in the region. We can see what is happening in other sectors as the cuts and reforms begin to bite. For example, cuts of more than 20% to the West Midlands police equate to 2,500 jobs.

There are two parts to the Department for Communities and Local Government cuts for Coventry council. It will lose formula grant of more than £19 million, and specific grants in excess of £17 million. The city council will not be able to continue providing services at the same level. Because of the latter cuts, there will be far fewer grants and they will have a lower overall value. It is a matter of great concern that many grant streams will end.

The vulnerable people of Coventry will be hit a number of times by the Government’s deficit reduction plan. Pensioners were dealt a blow by Government when the winter fuel payment was slashed by up to £100. How can those who are disabled or who live in care homes take part in the Government’s big society once the mobility component of the disability living allowance has been removed? Has the Minister considered the effects of reduced local government budgets on the cost per placement of patients on independent care providers such as Southern Cross? Notwithstanding the burden on the NHS, local hospitals will be expected to deliver far-reaching reforms to patient care as their budget decreases and demand increases. How can the Minister justify removing the provision of face-to-face legal advice for the poorer residents of Coventry in favour of a cheaper phone line?

I am deeply concerned about local provisions for our young people. Building Schools for the Future is to be abolished. That will result in a loss of £300 million to the local economy in construction, which can be added to the cuts in the council’s budget We await the James review—it has been a long time coming—but that is of no comfort to schools that are in desperate need of repair. From this year, the Connexions careers service will operate on a budget that is more than 70% smaller than in April 2010. The service gives young people the skills and confidence to get into the workplace. Its downsizing will doubtless contribute to the high youth unemployment that the region has experienced.

The coalition Government admit that Sure Start will suffer real-terms cuts. Ministers refuse to deny that this will result in the closure of Sure Start centres. However, Sure Start centres in Coventry will lose nearly £600,000, which will be a great blow to young families. Services for young people face other financial pressures. Coventry’s children, learning and young people’s department has announced a further £1.2 million loss because of the ending of the 5% standards fund.

Crucial retention funds that the council had relied upon will not be continued in the next financial year. The largest proportion of JSA claimants in Coventry are aged between 18 and 24. Given what I said about the Coventry’s youthful profile, there is no reason why our young people should not be given the opportunities that they need as it will strengthen Coventry’s regeneration.

All these changes will have an irreversible effect on the economic growth of the region. The leader of Coventry city council estimates that up to £25 million will be taken out of the local economy. The public and private sectors will not be able to invest in the regeneration of the region and its infrastructure.

There is an urgent need to address infrastructure issues. We need an increase in train travel between Coventry and Nuneaton, and Coventry and Leamington. The go-ahead for a new station at the Ricoh arena is vital to Coventry’s economy. Equally, we are waiting for the Friargate development to go ahead; again, it could have a big impact in revitalising the city centre. Revitalising the city will obviously create jobs.

I raise the question of what I fear is the impending sale of the strategically important land at Ansty. If a developer gets hold of that land, the possibility is that it will sit on it, waiting for the maximum return. That will probably be through housing rather than what it was meant for, which was job creation in the high-tech manufacturing sector.

My right hon. Friend anticipates me, as I was just coming on to that.

The abolition of RDA funding means that there is little to lever in private sector investment for large-scale redevelopment projects. Although the prospect of 10,000 jobs in the enterprise zone is welcome, questions arise on the implications for other employment sites such as those at Ansty and Browns lane. In answer to my right hon. Friend, I am sure that he will remember, as will my hon. Friend the Member for Coventry North West (Mr Robinson), that we lobbied hard to get the Ansty site as a technological centre, and the city and the west midlands invested a lot of money in it—if my memory serves me correctly, the investment for the infrastructure was somewhere in the region of £5.9 million. It is vital that the Minister clears up the future of that site. A lot of taxpayers’ money has been invested in it and some companies are operating from it at the moment. How does the development of that site square up with the proposal to create 10,000 jobs at Coventry airport? Although my hon. Friends and I do not deny that such jobs are needed, we need the issue to be sorted out one way or another. The public in Coventry want to know why some of those jobs cannot be located on the Ansty site. My right hon. Friend, therefore, raises a vital point, which is of interest to a lot of people, particularly those in Coventry.

My next point relates to the impact of the Localism Bill. Local people seek assurances from Government that there will be no fire sale of employment sites in need of overhaul, such as the Ansty and Browns lane sites, to help address the deficit. I have dealt with the Ansty site, but of equal importance is the Browns lane site, which was once a manufacturing site for Jaguar in Coventry—let me just say in passing that my hon. Friends and I are glad to see that Jaguar is reinvesting in the west midlands and in Coventry.

The Localism Bill also applies to the Coventry airport site, which is a proposed enterprise zone. Some major environmental issues will arise from the development of that site and the Severn Trent site. People will be testing the Localism Bill to see whether the public will have a major say in any development initiatives. Many people in Coventry are worried about the use of greenbelt land for example. We will soon find out whether the Government mean what they say about localism.

The Government need to address the balance of housing and employment. The highest rates of unemployment are generally found in the neighbourhoods that were based around the mining and manufacturing industries of the past. That highlights the key role that places can play in creating and sustaining unemployment. Areas housing large numbers of unemployed, low-skilled and vulnerable residents cannot generally attract business investment.

I will finish here because I know that my hon. Friend the Member for Coventry North West wants to speak and we obviously want to give the Minister time to answer our points.

We are very grateful to you, Ms Dorries, for your chairmanship of this important debate on the present economic situation in Coventry. I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing this debate and I thank Mr Speaker for granting it.

I should like to develop a few of the points made by my hon. Friend. I want to draw the Government’s attention to them as they contribute to the highly unsatisfactory situation regarding jobs and the prospects for jobs in Coventry at the moment.

My first point relates to the review of the schools building programme. The situation in Coventry is particularly bad. All building was stopped and none was allowed to go forward. Even two schemes in my own constituency—Woodlands school and President Kennedy school—that were on the point of signature were refused. The Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb) is aware that at present the main building of Woodlands school is propped up by scaffolding, and has been for the past two years. What family is likely to want their child to go to a school that is propped up by scaffolding and might collapse at any minute? That scheme should have been given the go-ahead because the school is not fit for present-day purposes. I know that such buildings are the subject of the current capital review that is going on. We are approaching the end of the first year of this coalition Government and the situation is no longer satisfactory.

Similarly, development at the President Kennedy school, which was on the brink of getting the go-ahead, was suddenly stopped. Again, it is a totally unsatisfactory situation. There are a number of other such schools. My hon. Friend mentioned others in his own constituency and in Coventry North East. The matter must be brought to head in the near future.

My hon. Friend mentioned the regional fund, which has been slashed by 70% in Coventry. Such a cut will have a major impact on the level of activity and on the number of schemes that can be carried out with Government support. Many projects could go ahead if we had quicker and easier funding for them.

Let me draw the Minister’s attention to transport. Not so long ago, we had a debate in this Chamber with the Minister of State, Department for Transport, the right hon. Member for Chipping Barnet (Mrs Villiers) in which we tried to thrash out alternatives to the massive High Speed 2 programme. Some £18 billion would need to be spent on the London to Birmingham route. What needs to be done urgently and would hugely contribute to employment activity in the Birmingham and Coventry area is simple four-tracking, which has to be done on the London to Birmingham route. Such a scheme is supported by Centro and local experts who say that it could make a huge contribution not just to employment but to the development of the region by bringing in activity and easing transport between Coventry and Birmingham, which is a very congested area of the west midlands. That scheme is not going ahead now because it has been earmarked to be done in five years’ time—if we are lucky—as part of an £18 billion build. It could be done under a rail package 2 proposal, which has been put up by the same consultants who are doing the HS2 work for the Government, at a fraction of the cost. With many areas under blight, many Conservative MPs in the south-east share our view that we should invest in the areas through which the rail already travels.

Similarly, there is the issue of the Knuckle project, which is the rail link between Coventry and the Ricoh stadium. It goes further north to Nuneaton and further south from Coventry. Again, it is local and regional and could get the go-ahead. We know that it has not been killed by the present Government; it is still there and is still a possibility. The project is estimated at about £18 million, which is chickenfeed compared with the scale of the investments that we are considering in other areas.

The schools schemes and the rail programme could be given the go-ahead and they would make a tremendous difference to the blight that we otherwise face in Coventry.

The last time we went through a similarly bad period was in the early 1980s. The car industry and the machine tool industry collapsed. Virtually all the mechanical engineering sectors that were located in Coventry collapsed. There was nothing much left at the end of that period and we still have not recovered. Although investment and development continued to take place in the country, much of it bypassed Coventry. We face the same problem again and it will affect those sectors that came in to replace manufacturing, notably the public sector. Becta and the QCDA have been closed. The council is announcing huge cuts. The whole public sector that came in to replace manufacturing—not much else came in apart from transport and delivery—is now facing the same sort of cuts at a time of severe recession and once again, Coventry will be pushed down.

I realise that time is limited and I will not go on any more. I have listed a number of specific projects that could be undertaken in the context of what the Government have available now for regional development. I urge the Minister, who has no direct responsibility for any of the projects, to push her colleagues who are responsible at least to consider them.

It is a pleasure to serve under your chairmanship for what must be the first time Mr Dorries.

I congratulate the hon. Member for Coventry South (Mr Cunningham) on tabling and securing an important debate. It is important not only for Coventry itself but more broadly. I also pay tribute to the hon. Member for Coventry North West (Mr Robinson) who spoke, as did the hon. Member for Coventry South, with great passion about the challenges facing Coventry. In the time available to me, I will try to address a number of wide-ranging points that the hon. Members made.

The hon. Member for Coventry South is right to make the points that he did, in the sense that there is not going to be one thing that helps to regenerate and grow the Coventry economy, and create jobs. We need a broader strategy in place to ensure that we are successful in helping Coventry. As the hon. Gentleman will be aware, the main backdrop to the policies that the Government are pursuing is the huge budget deficit that we inherited, which we must tackle. In his speech, he talked about young people; the worst thing that we could do for young people is to pass on to them that debt of the money that our generation has spent, so that they can pay it off. We have an obligation to get our finances back in order so that young people do not face that additional challenge as they enter the economy.

We need to tackle the deficit. However, as the hon. Gentleman pointed out, we have also got to increase economic growth and rebalance the economy across all regions of the UK. I think that he would recognise, as many of us do, that too much of the last economic boom, which took place roughly between 2000 and 2007, was enjoyed by London and the south-east, and not enough of it was enjoyed by cities and regions outside the south-east. We must ensure that, as we generate and create the right ingredients for the next period of growth in our economy, that growth is enjoyed by precisely those communities that can benefit most from it, in terms of jobs, skills and opportunities.

The key aspect at the last Budget was not only economic growth itself but ensuring that we had some plans to stimulate that growth. The hon. Gentleman will be aware that we made a series of proposals at the last Budget to create a model for more sustainable and more balanced growth, including in Coventry and more broadly in the west midlands.

As hon. Members have made clear, Coventry faces some difficult challenges, but it remains a significant contributor to the regional economy in the west midlands. As has also been mentioned, during the last 20 years Coventry has rebalanced its economy somewhat by moving towards more high-tech manufacturing and business services. The reforms set out in the plan for growth, and indeed in the broader Budget, will give businesses and individuals in the region, including in Coventry, a real boost. Those reforms include cutting corporation tax from this month, so that it will be 23% by 2014; increasing the personal allowance by £630 next year, following the increase of £1,000 last month, which will take 25,000 people in the west midlands out of tax altogether; and, of course, building on the success of the manufacturing technology centre in Coventry and in other cities, by creating high-value manufacturing technology innovation centres. They will be the first of an elite network of centres that will enable businesses to access state-of-the-art equipment and technical skills.

The hon. Gentleman will be aware that a further opportunity for Coventry—one that I am sure is already being investigated in the city—is the enterprise zones policy. The west midlands already has two of the enterprise zones that were announced at the Budget. He will be aware of the zone in Birmingham and Solihull, created by the local enterprise partnership, and of the zone in the black country. During the coming months, I hope that Coventry itself will submit a proposal to become part of an enterprise zone.

Can the Minister talk to her colleagues in other Departments about one issue that I do not think her Department—the Treasury—actually handles? That issue is the future of Ansty. A list of sites has been published. In particular, we are talking about Advantage West Midlands, which is the regional development agency. On that list of sites, Ansty is not mentioned, so we do not know what is happening with it. That is one of the points that I made in my speech. A lot of taxpayers’ money has been invested in the site and a lot of effort has been put in by myself and my colleagues to get it developed. We and the public want to know what exactly will happen to it. I do not expect the Minister to answer me directly today, but perhaps she could go away and consider that matter.

One of the things that the hon. Gentleman has been able to do very effectively in his speech is to raise a number of issues—such as transport and infrastructure, which I will come on to shortly—that are not necessarily a concern of the Treasury, but that doubtless have been recognised by the Departments concerned. I will ensure that I pass back his specific comments about the Ansty site to my colleagues in the Department for Business, Innovation and Skills and I will write to him in more detail about that specific site.

As I was saying, enterprise zones are another opportunity to bring some genuine benefits to the hon. Gentleman’s area. In his speech on the Budget debate and again today, he has expressed the hope that Coventry will benefit from inclusion in an enterprise zone in the future. I welcome his enthusiasm for the enterprise zone policy. Of course, the Coventry and Warwickshire local enterprise partnership is welcome to bid to be part of the second tranche of 10 enterprise zones. Regarding timelines, I have no doubt that his local LEP will be working on its proposal already. We expect to take some decisions within Government in the summer about where the next tranche of enterprise zones will be. We do not intend to spend a long time making those decisions. We are aware of the urgent need to get on with this policy, because we believe that it can make a real difference.

The Government have also established the regional growth fund, which is worth £1.4 billion overall, to help to grow a private sector-led economy in England. Of course, Coventry will benefit directly from the first round of awards from that fund, with Jaguar Land Rover having won support for a project to undertake design engineering for a new small common vehicle platform that will be developed in part in its Whitley centre.

There have been other signals that the private sector sees Coventry as being “open for business” and that it has real confidence in the future of the city. Only last week, it was announced that the overhaul of Coventry airport will go ahead, creating new infrastructure and business opportunities in a £250 million development.

The second round of the regional growth fund, in which we are aiming to allocate the remaining £950 million of funding available, is now open for bidding. The second round closes on 1 July and I look forward to seeing many more exciting proposals, including from businesses in Coventry.

Hon. Members have raised concerns about local government funding. As I have already made clear, the last Government left an appalling financial mess behind them and we have a moral obligation to ensure that we pay down our debts as quickly as possible. Tough decisions have been necessary across all areas of public spending. Local government, which makes up a quarter of all public expenditure, has its part to play in that process.

The Government have delivered a challenging but fair settlement for local government to ensure that the most vulnerable communities are protected. Although financial settlements have been tight, local authorities will still receive £29 billion in grant next year. It is also worth noting that formula grant in Coventry will be nearly £500 in 2011-12, which is more than twice what it will be in west Oxfordshire, precisely reflecting the higher levels of need in Coventry. I know that Coventry council is getting on with calculating how it will make the savings that it needs to make. In fact, its deputy leader, Councillor George Duggins, has said that the council was in a “good position” compared with other councils, because it has taken early action.

There is no doubt that these are difficult decisions to make and of course they should be made at the local level by local authorities, to ensure that the priorities of local people, including those of people in Coventry, are reflected in those decisions. Ultimately, however, there is no doubt that the worst thing that we could do is to ignore the huge deficit that our country faces and the need to tackle it.

The hon. Gentleman rightly mentioned the issue of infrastructure in his speech and I want to refer to it briefly. During the spending review period, the Government will actually spend slightly more on infrastructure than the last Government had planned to spend. Of course, investment across the board has already been announced by my right hon. Friend the Secretary of State for Transport, but I have no doubt that the points that have been made today about the regional transport infrastructure in the west midlands, including rail, will also be taken on board by him. Hon. Members are right to point out that high-speed rail is a strategic project that can bring benefits not only to the west midlands but nationally. However, there is still the need to ensure that we get investment in the existing track. Of course, that existing track has a clear role to play in the coming months and years, by helping Coventry and other areas to regenerate their economy.

Finally, I will mention the Building Schools for the Future programme. I recognise the concerns that the hon. Gentleman set out about that programme—they are concerns that I face in my own constituency. It says everything about the BSF programme that a Government who were in power for 13 years could come to the end of their term and still have existing schools in the sort of state that the hon. Gentleman and his colleague, the hon. Member for Coventry North West, described.

However, I have no doubt that such considerations are being taken into account by the James review and I assure both hon. Gentlemen that, as we go through the coming years, we want to ensure that parts of the country outside the south-east, such as Coventry, benefit to the maximum from the next period of economic growth.