Motion made, and Question proposed, That this House do now adjourn.—(Mr Dunne.)
It is almost commonplace nowadays to say that the greening of our economy must take place, and must take place quickly. We know that a low-carbon economy offers not just challenges—although it certainly offers challenges—but enormous opportunities, and the success of the green investment bank is vital to that process.
I congratulate the Minister and his Department on an initiative which, as the Minister knows, has been welcomed across the country, if only in the locations where councils are making active bids. As I shall demonstrate, the level of support in Greater Manchester is such, and the quality of the Manchester bid is so strong, that had Manchester not submitted a bid, the Minister would probably have asked us to do so.
I can certainly say that the bid has the support of a number of people, including, obviously, my hon. Friends the Members for Blackley and Broughton (Graham Stringer) and for Bolton West (Julie Hilling), my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), my hon. Friends the Members for Stretford and Urmston (Kate Green) and for Stalybridge and Hyde (Jonathan Reynolds), and the hon. Member for Bury North (Mr Nuttall) on the Government Benches. It is important to say that the hon. Member for Altrincham and Sale West (Mr Brady), the chairman of the 1922 committee, has asked me to place on record his strong support for the Manchester bid.
Manchester has some strong positives when it comes to meeting the criteria that the Government have said are fundamental to the location of the green investment bank. It is always tempting for anyone from the north of England to take a position that does not always see London as the centre of the universe, possibly because it is not, but there are strong reasons why locating the bank in London would send the wrong signals about the type of economy that we want to build in the United Kingdom. That is not an anti-London statement, but a simple matter of practical fact.
We want to use the green investment bank to engineer investment, particularly in manufacturing, and we want to break the cycle of an investment system that has historically been quite hostile to manufacturing, and that is very much based round the London service ethos. People in parts of the north of England have said to me that it is difficult to get the merchant banks to take seriously investment outside the golden triangle of Oxbridge and London; we need to consider location as a key factor in that, particularly if we recognise that one of the roles of the green investment bank will be to overcome the traditional problems of market reluctance or, even worse, market failure. In that sense, a location outside London is important.
Of course, there are practical reasons why the Manchester bid would be better than anything that could possibly come from within London, but I repeat that this is not about pitting Manchester against London; historically, when that has happened, Manchester has normally won the intellectual arguments, if not the physical arguments that go with them.
The Government have laid down important criteria, one of which relates to the concept of connectivity. Of course, in the modern world, Manchester’s international airport is a tremendous asset, particularly when we consider that some 200 cities around the world are accessible from Manchester airport. I would not pretend that that competes with the southern regional airport system that includes Heathrow and Gatwick—of course it is possible to access more cities from them— but Manchester is only a short flight away from that London airport system. We also have very good train communications.
In the modern world, it may not be the physical transportation of people that matters, but the movement of information and, in that area, Manchester scores very highly, not simply against other non-London cities, but against London. Manchester already has one of the most advanced, competitive telecommunications and internet infrastructures in Europe, and it is the only UK city outside London with an international internet exchange. It is the only city in the UK including London to offer next-generation broadband, with fibre to premises allowing remarkable speeds in a true open-access network. BT has completed a £575 million investment programme that places Manchester 10 years ahead of other UK cities, in terms of access to digital communication. Those are the types of connections that the world of today—and the world of tomorrow—will demand.
As for the requirement for adequate office space and energy-efficient offices, the modern offices in Spinningfields, the Co-operative Bank area and Piccadilly place are already the rival of any in the country. Such offices are easily available in Manchester, and are being built to the very highest environmental standards. I think that it is true to say that we have more office space that hits the highest levels of environmental efficiency than other cities outside London.
Manchester has huge and growing business, financial and professional services sectors; 250,000 people already work in those sectors, 50,000 of them in finance, insurance and banking. Of course, Manchester also has a powerful transaction ecosystem—one of the criteria that the Department for Business, Innovation and Skills specified was necessary for a successful bid. We have the Manchester Private Equity Group, and a financial and banking system that is already well used to operating in a transaction ecosystem. Of course, Manchester scores very highly in its cost-effectiveness as a location.
My hon. Friend is making a splendid and excellent speech, which I am sure the Minister will not be able to resist. May I just add two details that might aid him? First, Manchester airport has more destinations than Heathrow and, secondly, banks thrive better where there are other banks and Manchester is undoubtedly the second financial centre in this country.
My hon. Friend probably knows more about transportation—and particularly air transportation —than almost any hon. Member and he is right about the position of Manchester airport. That is a very important plus, because Manchester airport, by definition, is down the road from the thriving city centre. The growing efficiency of our local transportation system means that it is easily accessible by anybody who comes to the city.
My hon. Friend’s second point is absolutely right, too. The strength of Manchester’s banking system is really important and, in that light, I want to mention the quite recent move by the Bank of New York Mellon, which invested in the city centre. The bank took a decision to come to Manchester some six years ago. Before it first came, it scoured the country in a manner that was very similar to the process that is going ahead for the green investment bank and it considered very similar criteria for the location of its new investment in Britain. At the time, the investment covered a couple of hundred people, who were easily found. They were people of the highest quality, of course, because BNY Mellon was not going to set up without people of both expertise and competence, given that those people would be dealing with the bank’s UK clients. Those people were recruited from the Manchester labour market, because the existence of the banking system mentioned by my hon. Friend the Member for Blackley and Broughton meant that that labour pool was easily available.
BNY Mellon has found that as it has expanded—it has expanded very quickly in six years and now employs more than 1,000 people—it has been able to expand its pool of labour precisely because of that nexus of people in the banking and financial services sector who were readily available. In particular—I hope that the Minister will pay particular attention to this point—the fact that people had the skills and were in the professions that the bank was looking for meant that, as the labour force increased, that had a non-inflationary impact on the bank and on the local labour market. That is an important factor to consider in the location of the green investment bank.
I am aware that the hon. Member for Bury North wants to show that support for this bid is felt strongly across the normal partisan political divides in the House, so I shall conclude. The bid is supported by people from all political parties and by people from all backgrounds, by business, the trade unions and local authorities, and by all those who make up the firmament of modern Manchester and modern Greater Manchester.
I understand that the Minister will be able to say very little tonight because of his almost quasi-judicial position, but I hope he will go away and reflect on the strong case for the Manchester bid. It is a powerful bid from a city that is used to such innovation and from a city that has demonstrated in the past its capacity to work practically, not ideologically. That has seen the city transformed over the 20 years since my hon. Friend the Member for Blackley and Broughton was leader of the city council. Manchester, in transforming itself, has demonstrated the old adage that what Manchester thinks today, the rest of the world does tomorrow. If we are to make this bank a success, let us begin to think that thought in Manchester and ensure that it is a success.
Let me start by congratulating the hon. Member for Manchester Central (Tony Lloyd) on securing this important debate, which gives hon. Members an opportunity to extol Manchester’s virtues as the ideal home for the new green investment bank. This is not about whether I think it is a good idea to have a green investment bank. What matters is that there is broad consensus across the parties and across all sectors in Greater Manchester that it is the best place to have the bank. There are many good reasons why it should be in Manchester—so many that we could fill a whole day’s debate with reasons—but I want to concentrate on five key areas that are crucial to this decision.
First, locating the bank in Manchester would provide taxpayers with excellent value for money because the cost of locating it there would be far less than putting it in London. Of course, it would also help to bridge the north-south divide. Secondly, there is excellent office accommodation available and waiting in Manchester, ready for use by the bank. Thirdly, as the hon. Member for Manchester Central has mentioned, we have excellent transport links. Even with the existing rail link it is just over two hours to London, but that time will be slashed with the advent of HS2. Fourthly, it is important that the staff of the bank have experience of handling transactions of this nature, and there are people with that experience, as I shall demonstrate in a moment.
Fifthly, there must be a thriving professional and financial sector. Greater Manchester has the largest number of firms in the financial and professional sector outside London and the largest legal, accounting and management consultancy sectors. The Manchester city region employs more than 50,000 people across the banking, finance and insurance sectors, and those with specialist skills are available in project finance, structured finance, and advisory and investment management. More than 60 banks are already based in Manchester, which is home to the largest United Kingdom accountancy sector outside London, and is the largest centre of mid-tier private equity in Europe.
It is not good enough just to have the staff—they must also be experienced in the sort of deals that the bank will be required to carry out. In 2011, Manchester professionals in this sector conducted 620 corporate finance deals, which was an increase of 2% on the 2009 total in the north-west. There is also great experience of working in partnership across the public and private sectors, which will be of tremendous value to the green investment bank. In conclusion, I note that the Minister has been listening most attentively and although I do not expect a definite yes this evening, I trust that he will examine Manchester’s bid most carefully and will view it favourably.
I congratulate the hon. Member for Manchester Central (Tony Lloyd) on securing the debate and commend my hon. Friend the Member for Bury North (Mr Nuttall) and the hon. Member for Blackley and Broughton (Graham Stringer) for speaking about the importance of this institution and making the case for Manchester to be its home. The House notes that Members from across the Greater Manchester conurbation, and indeed elsewhere, have attended the debate to give their support. That is important for the bid and to put forward the case regarding this institution.
I entirely support the argument that Manchester is a city with a strong and notable industrial heritage. I think I am right in saying that it is home to the very first industrial canal and the world’s first railway station. Manchester has not only a long-standing role in the development of key industrial sectors—engineering and chemicals come to mind, and textiles of course, but also the electrical industries—but an important record of innovation. The hon. Member for Manchester Central pointed that out in saying that it is a city used to transformation. That is an important characteristic in this instance.
I have to be careful, as the hon. Gentleman said. Applications closed on Monday, so he will understand that I must desist from making further remarks, positive or otherwise, about this individual case—strongly represented as it has been in tonight’s debate—because I do not want to prejudice the application in a challenging field. I am sure hon. Members will understand that.
What I can say is that, throughout the country, there has been tremendous support for the bank. The hon. Gentleman said that that has involved principally those places that seek to become its home, but it has been good to see how many other areas that did not, in the end, make an application showed genuine interest. Indeed, the proposal has drawn support from across the political divide, as we have seen here this evening. We welcome that support—that enthusiasm—for the institution.
We see the green investment bank as a key component of the transition to a sustainable economy. It should complement other policies and drive growth in the sector, which is already worth more than £116 billion. This country is well placed to seize the benefits of the transition, being already the sixth largest low-carbon economic goods and services market in the world.
As the hon. Gentleman rightly pointed out, we in this country have a wealth of expertise and many leading innovative businesses in this field which are well placed to secure their role in what will become a global market that is already estimated to be worth about £3.2 trillion. There is a wide range of opportunities here. One thinks immediately of wind power, wave and tidal, building technologies and ultra-low-carbon transport. All those have a key role to play in the debate.
We are committed to ensuring that UK businesses are able to seize those opportunities. That is why last summer my Department, the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs together published our range of policies to support that transition to the green economy, which has been mentioned in the debate.
The plans will form the basis for an important developing partnership between Government and business, but also universities and local communities, if we are to make this a lasting change. Clearly, low-carbon technologies are new—many are only nascent—so in order to invest the substantial resources required in this area, business needs to be certain that the low-carbon sector is indeed here to stay. We are doing our best, and we have taken some positive steps in providing that certainty. For example, we are committed by law to a 50% reduction in carbon emissions by 2025. We have launched the world’s first incentive scheme for renewable heat, which should increase investment in those technologies by £7.5 billion by the end of this decade. We have announced the green deal, whereby householders, businesses and landlords will be able to improve the energy efficiency of their homes and their business premises at no up-front cost, instead recouping the payments through instalments on bills. We are putting some £200 million into supporting the early take-up of that, so we see that market develop and grow.
Clearly, the transition to a green and growing economy requires unprecedented investment. For example, we think that the energy sector alone will require some £200 billion. To ensure that a lack of sufficient funds does not become a barrier to the scale and pace of the transition, we recognise that we need to go beyond traditional policies. That is why we are establishing the green investment bank, which will be the first of its kind in the world.
Capitalised with £3 billion, the green investment bank will complement other green policies to help to accelerate the provision of essential capital. The bank will build the kind of deep expertise in financial markets and in sustainable technologies and innovations that is vital if we are to take those bright ideas and turn them into commercial ventures. It will be a new and enduring institution, rather than a series of Government interventions, and it will address the areas of under-investment that have persisted in years past.
For the benefit of Members, I will briefly explain the development of the policy and the specific issue of location. As I explained in a previous debate, the green investment bank will need to be approved by the European Commission before we can establish it as a fully independent financial institution. We expect to obtain this approval by early 2013. We recently announced that the Government are to pave the way by making investments in green infrastructure, on commercial terms, from April this year. The investments will be funded from the £775 million allocation for 2012-13 made available in the Budget. The investments will be made by my Department’s UK green investments team and overseen by a new investment committee. As part of this, the Government have made available £100 million for investment in waste infrastructure projects and a further £100 million for investment in the non-domestic energy efficiency sector for the next financial year. We also stand ready to invest in offshore wind projects.
Looking ahead, the green investment bank’s operational remit will be to focus on green infrastructure, which means that our initial priority sectors for investment will include offshore wind power generation; commercial and industrial waste processing and recycling; and support for the green deal. The bank will work towards a double bottom line, which in plain English means that it will achieve a significant green impact but also have to make financial returns.
The essence of the matter we are debating is the location of the bank, which has clearly generated a lot of interest. This is the second such debate I have had the pleasure to respond to; there was another from the other side of the Pennines, but I will say no more on that, given that the majority of Members present are from the Manchester side and I do not wish to spoil the debate’s harmonious nature. Clearly the bank’s location will be crucial to its success. It will not be a vast institution—we think it will employ no more than 50 to 100 full-time equivalent staff—but it is clear, as was apparent in both speeches we heard, that people already recognise the economic value of having the organisation in their community and that it will be a genuine asset to whichever area it is located in.
On 12 December last year the Department published a document setting out the criteria that will be taken into account in deciding on the bank’s location. The criteria are the ability to recruit and retain the specialist staff needed to run the organisation; a location that enables the bank to work closely with other parties involved in deals as well as other investment bodies, project developers and green technology providers; and a location that provides good value for money to ensure that the bank is cost-effective. The document invited interested parties to self-assess their location against those criteria and submit relevant information for consideration. I am pleased to say that the process has been met with a powerful and positive response. Manchester was one of 32 locations across the country that submitted a self-assessment. The closing date for receipt of the assessments was Monday, which is why I am being careful not to make any prejudicial remarks on the case for Manchester, because it is important that this is done in a fair and open manner.
All the submissions will now be reviewed against the criteria set out in the guidance document so that we can best identify the viable options, and a review panel has been established to perform the task. Advice will then be put to the Secretary of State, who will announce his final decision in late February and outline the reasons informing his decision. The submissions will also be published at that point. In that sense, this will be an open and clear process. It will not be needlessly lengthy, but people will be able to look at how we reach the conclusion in a few weeks’ time.
To conclude, we are committed to taking action now to enable the transition to a green and growing economy, and we very much welcome Manchester’s contribution to that aim. We believe that we are firmly on our way to a more sustainable economy, with the policies that we have already put in place, with the strong relationship that we are building with businesses to help them to maximise the opportunities, and with a green investment bank that will be able to address the market failures affecting key infrastructure projects. To that end, I confirm that, along with the bids from other potential locations, Manchester’s application to become home to the green investment bank will be given the most careful consideration.
Question put and agreed to.
The House divided:
The House divided:
The House divided: