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Coventry and Warwickshire City Deal

Volume 558: debated on Thursday 14 February 2013

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

I am grateful to have secured this debate on the Coventry and Warwickshire city deal proposal, which has now been put before the Government. I congratulate the Coventry and Warwickshire local enterprise partnership, the Coventry and Warwickshire chamber of commerce, Warwickshire county council, Warwick district council, Coventry city council and all the local organisations, businesses and authorities—as well as my colleagues in the Chamber this evening—who have contributed to and supported the bid.

I fully support the city deal concept. I believe that devolving power to local communities and the principle of subsidiarity—devolving power to the organisation most capable of taking a decision—should be at the heart of Government policy. The city deal approach is that principle in action. Our city regions can be the engines of growth, and by crafting deals that provide targeted support and resources, we can generate significant economic momentum.

There are three factors in building a good city deal. First, it needs to build on local strengths and expertise. The UK economy is diverse, and city deals therefore have potential.

I congratulate my hon. Friend on securing this important debate. He mentioned local priorities. In our area, manufacturing is a local priority. It has been a strength for many years and continues to be so. Does he agree that the city deal will enable us to build on the strength of our manufacturing skills—there could well be a skills gap in the next few years—and thereby of our manufacturing industry?

I thank my hon. Friend for attending the debate. The main part of my speech addresses those very issues.

The UK economy is diverse and city deals have potential as they can be tailored to the needs of local economies and build on the infrastructure that already exists. We should not be trying to reinvent the wheel or impose a top-down plan for economic growth on the country, and a good city deal will work with the grain of the local economy.

I, too, congratulate my hon. Friend on having secured this important debate. The city deal affects the economy of the constituencies of all of us who have participated thus far. Does my hon. Friend agree that one of the most important aspects of the city deal is that industry and business have worked with local authorities of a variety of political complexions in the best interests of the entire area?

I do agree.

Secondly, a city deal needs to have wide-ranging private sector support. Too often, we create proposals and then put them to business, and that approach does not generate the best results. A good city deal should be co-produced with small, medium and large local businesses, and should seek to remove their barriers to growth.

Thirdly, a city deal needs to have widespread political buy-in. City deals should try to build as strong a consensus as possible among local authorities, so that businesses get the policy clarity they need and feel the confidence they need to invest in the future.

The Coventry and Warwickshire city deal meets all three criteria, and is an example of how a city deal can make a significant difference to the local economy. The bid focuses on advanced manufacturing and engineering. As co-chair of the associate parliamentary manufacturing group, I am pleased to see this vital part of our local economy recognised and championed.

Coventry and Warwickshire have a great manufacturing heritage, and the area is home to a range of world-beating manufacturing and engineering businesses. Our city deal area has one tenth of all English motor manufacturing jobs and the second highest proportion of employment in advanced manufacturing and digital media by each LEP area. My constituency alone has fantastic companies such as AGA Rangemaster and Dennis Eagle, which are examples of the pioneering businesses to which our area is home. Infrastructure is already in place with our world-class universities, further education colleges such as Warwickshire college and transportation links—and we should use these assets to our best advantage.

We are at the heart of the UK’s manufacturing, and as I and many other hon. Members have said repeatedly in debates in the past, manufacturing has the potential to bring jobs and to rebalance our economy towards a more export-oriented economy. This city deal recognises that the next 10 years are not going to be like the last. That kind of forward thinking is to be applauded. We need proposals that can adapt to the changing economic circumstances—national and international—that we face. I think this city deal does exactly that. The deal has been created in partnership with businesses, and I believe that this shows the thrust of the city deal’s proposals.

We all recognise that the bedrock of a strong manufacturing sector is skills. If we are going to grow advanced manufacturing and engineering in our region, we need to have the skills in place to enable businesses to grow and make the products that are wanted around the world. This city deal cuts right to the heart of this problem, and highlights the skills shortage that is holding back our local economy. According to the latest estimates, there is a shortage of about 18,000 high-level engineers in the west midlands. The Coventry and Warwickshire area is likely to need up to 25,000 level 2 and level 3 engineers to replace our existing work force. If we are not able to meet that demand, businesses will not be able to grow and we will have to spend more income trying to retrain staff or poach them from other businesses, reducing funding for investment, research and development —holding back growth in the long term.

I endorse my hon. Friend’s remarks about the work force in the Coventry and Warwickshire area. I visit businesses in my Rugby constituency, many of which are doing well, growing and supporting the developing motor industry. I see workers there operating skilled machinery who are generally of the same generation as myself—there are few younger people there. Businesses tell me that that they have the business to grow and develop, but that they are struggling to find the youngsters with the skills. That is why the Game Changer proposal that is part of this city deal is so important.

I thank my hon. Friend for that intervention. Part of solving a problem is recognising where the gap is. I think that the city deal goes a long way towards solving that particular problem in the local area.

I repeat that the city deal has strong political support from across the region, with Coventry city council, Warwickshire county council, Warwick district council and five other district councils supporting the proposal from across all the political parties. I believe that this will ensure that businesses can feel confident in these proposals and can know that if they invest in skills and training, they will be supported and will find partners in our region if they want to expand and grow their work forces.

The deal has brought various business groups together, such as the local chambers of trade and Coventry and Warwickshire chamber of commerce. In the light of the city deal bid, Coventry and Warwickshire chamber of commerce has today agreed a new partnership with the Manufacturing Advisory Service and EEF, which will provide better services for manufacturers, engineering companies and automated businesses. It is an example of the additional concentration and focus that the bid has been able to provide.

To achieve this, the Coventry and Warwickshire LEP will create a re-engineering skills board, which will bring together businesses, universities, colleges and local authorities to join up supply and demand so that both providers and employers can plan for the future, matching training provision to business cycles rather than fixed academic cycles. The board will work on new courses to meet the specific requirements of local manufacturers, and to build on local successes such as the advanced skills accreditation scheme chaired by Jaguar Land Rover. The proposals sensibly focus on the upskilling of existing engineers and the retraining of unemployed people, which would enable us to use the labour resources currently at our disposal to achieve the maximum impact. All this will come under the heading of the Game Changer skills programme mentioned by my hon. Friend the Member for Rugby (Mark Pawsey), which will be a brand that both local people and businesses can recognise and understand.

The city deal makes four requests. First, it asks the Government to devolve control of skills and apprenticeship funding to deliver the programme. Secondly, it asks them to allow Coventry and Warwickshire to pilot the new traineeships programme and level 6/7 apprenticeships. Thirdly, it asks for local flexibility that would allow it to adapt the Work programme to the proposal, so that those aged 18 to 24 could attend GAME changer skills programme events. Finally, it asks for capital funding to be realised for the development of an advanced manufacturing apprentice resource at the manufacturing technology centre in Ansty.

I believe that these are targeted, sensible proposals which will ensure that we obtain the maximum value for money and build on the programmes and infrastructure that we already possess, but they must be weighed against the expected benefits. I believe that this city deal bid shows great potential for the future of our area. The aim is to deliver 5,000 new engineers to the workplace over the next two years, and to eliminate the city deal area’s engineering skills shortage by 2020, as well as significantly increasing the number of engineering apprenticeships being delivered at intermediate and higher levels.

On the back of that stronger skills base, the city deal could potentially eliminate the productivity gap in Coventry and Warwickshire, adding billions of pounds to our economy and creating the environment for tens of thousands of new jobs. The bid itself estimates that about 30,000 jobs could be created through its skills programme alone. I believe that those are significant benefits which are in line with the Government’s objectives of reducing unemployment, rebalancing our economy towards manufacturing and exports, and reskilling our economy so that we are able to adapt to future and desperate needs.

I recognise that there is competition for wave 2 of the city deals project, and I know that Ministers will be considering a variety of other bids. However, I believe that the Coventry and Warwickshire city deal has fantastic potential for our region and for communities across the west midlands. There is a shared sense of purpose throughout the public, private and independent sectors as a result of the bid, and we have a unique opportunity to capitalise on the momentum that has been generated by this proposal.

I urge the Government to pick the Coventry and Warwickshire city deal bid, and to invest in the skills of local people in an area which has the infrastructure in place to grow. That will not only enhance our competitiveness but, most important, create tens of thousands of jobs.

I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on his excellent speech, and on securing a debate that is very important to his area. In the two and a half years for which he has been in the House, he has already established a reputation for being a tenacious champion of manufacturing industry and, indeed, the area that he represents. I know that his passion for manufacturing and for the creation of jobs in his area is entirely shared by our hon. Friends the Members for Rugby (Mark Pawsey) and for Nuneaton (Mr Jones). It is delightful to see them both in the Chamber.

As Members will know, the debate is very timely. The expressions of interest in the next wave of city deals were submitted just a few weeks ago. I am considering them as we speak—not at precisely this second, but as soon as I leave the Chamber I will resume my consideration of them. This bid is a tribute to the joint working and the enthusiasm that has been generated locally. The litany of different organisations that my hon. Friend the Member for Warwick and Leamington mentioned underlines the degree of support for and consensus behind what could be a major opportunity for his area, if we are able to approve this city deal.

My hon. Friends will know that I visited Coventry last month to discuss the evolution of the city deal bid, and I was particularly impressed by the level of representation from all the local authorities in the area and businesses at the highest level. Sir Peter Rigby, the chairman of the local enterprise partnership, chaired the meeting, and other business organisations were represented, as were the universities and people from right across the board. It was clear that this is a united bid, very much looking to a very positive future for the area. It was particularly impressive to see everyone working together in that way.

It was also impressive to see the laser-like focus on manufacturing and skills there. My hon. Friend is absolutely right to say that one of the proudest traditions of the area that he and his colleagues represent is that of being the heartland of British manufacturing. Far from that being a story just about the past, it is very much a story of today and of the future. The people behind this bid were prescient in emphasising that the undoubted opportunities that will flow through the increasingly internationally competitive world of advanced manufacturing can be grasped only if we make sure that the work force in the area are equipped with not only manufacturing skills, but the particular skills that the new technologies of the future in this field will offer. The support of the universities, in particular, and of the research institutions make it clear that this is a very high-quality offer that is being made.

My hon. Friend will understand that it would be invidious of me to give any kind of nod or wink to him this evening—tempting though that might be—not least because this evening’s proceedings will doubtless be being viewed by 19 other places around the country. They will be very envious of his good fortune in securing this debate, so he will forgive me if I do not do that. Let me instead take the opportunity to reflect on the city deals process and the arrangements we have put in place. I start with a point that my hon. Friend made, which is that we should recognise the importance of local strengths in the future of our economy.

Obviously, it is of prime importance that our country has the right macro-economic conditions to sustain growth and prosperity in the future. Paying down the deficit we inherited and having an economy in which international lenders can have confidence is the foundation of any future economic success. All Government Members are engaged, day after day, in making the changes necessary to secure that. However, it is also important that we have the right micro-economic conditions: a tax system that is supportive of business and enterprise, and that encourages investment; and flexible labour markets that allow people to go into the places with an expanding number of jobs and allow employers to expand employment with confidence. Again, the work being done in not only my Department, but the Department for Business, Innovation and Skills and the Department for Work and Pensions is very much geared to having those conditions in place.

If we do all that, it is still necessary to reflect that our economic prosperity ultimately depends on local places prospering. Economic growth does not happen in the abstract; it happens in particular places, when employers locate, expand their production and take on people. These are places that people can visit and address; they are tangible.

For too long—over many decades—how we have conducted our economic policy has paid too little heed to the importance of locality. It is tempting for politicians in Westminster and our officials in Whitehall to peer out from London SW1 and assume that the rest of the country is uniform, when we know that one of the glories of our country is that it is full of areas, towns and cities with proud traditions that are the foundation of our future economic success. The city deals programme is intended to ensure that that sense of place is part of our economic policy.

As soon as one considers that we should have a sense of place in economic policy, it becomes obvious that every place is different. We have already discussed the importance of manufacturing in the traditions in the west midlands, but that is true across the country. Everywhere has its local traditions and capabilities. Even cities as close together as Liverpool and Manchester are very different in their economic character, their skills, trades and industries, their politics and in almost every respect, so to treat them as if they are identical seems to me to deny them the possibility of living up to their potential and planning for the future.

The city deals programme was designed to reflect the differences between places. We started with the eight bigger cities outside London and in July 2011, when the Prime Minister asked me to become the Minister responsible for cities, we gave each of those cities the right to take the initiative and set out to negotiate what, in their view, would be the measures that would best unlock their potential. There was some scepticism at the time about whether it would be possible to break the monopoly of Whitehall in determining how things should be done, but in less than a year we were able to conclude a city deal with each of those eight places, which were transformational. In Greater Manchester, for example, £2 billion of local investment in infrastructure is being made in return for the city’s share in the resulting prosperity. In Leeds, apprentices and school leavers are being trained in the skills that the city’s future economy needs, as Leeds and the authorities around it have identified needs that should attract a particular focus.

My right hon. Friend is making an extremely important point about locality and the need to ensure that we tailor the Government’s support package to each area. Does he agree with me that that is a far better and more effective approach than that taken by the previous Government through regional development agencies such as Advantage West Midlands? Private sector employment fell during that time rather than increasing. I appreciate that, as he has told us, my right hon. Friend will not be able to tell us the result today, but does he agree that if the Coventry and Warwickshire city deal was granted, it would be a far better step forward for the area than the previous regime?

My hon. Friend is absolutely right. The problem was that the regional development agencies were branch offices of Whitehall in the country, which seems to be the opposite of the approach we need to liberate the entrepreneurialism and local strengths of particular areas. The areas should be coming to Whitehall, as they are—as the Coventry and Warwickshire local enterprise partnership has—and saying what they want to do. The problem with the RDAs was that it was the other way around.

The RDAs described a geography created by administrators rather than something that reflected the genuine historic and economic geography that prevails. The west midlands is one example, but the north-west is another. The identities of world-renowned cities such as Manchester and Liverpool were subsumed and became totally anonymous in the Northwest Regional Development Agency, so it is absolutely necessary to make these changes. My hon. Friend is right to point out that even in their own terms the regional development agencies were a failure because the differences between London and the south-east and the regions widened during all that time. So it was right for city deals to be a priority.

One of the contrasts between our country and other countries on the continent of Europe, for example, is that in Germany almost every German city outside the capital of Berlin has a higher income per head than the national average, whereas in this country only one of the bigger cities outside London, Bristol, is above the national average. All the others are below. On the continent, not just in Germany but in France, Italy and other countries, the powerhouses of the regional economy drive the national economy, whereas regrettably over the past 20 years ours have been lagging behind that.

I thank my right hon. Friend for giving way again. He is making an extremely important point, which is reflected in the west midlands region, where gross value added has been on the decline since the mid-1970s, with the decline in manufacturing industry and the unbalancing of our economy. What he says is absolutely right. With the city deal that we hope to get for Coventry and Warwickshire, we could see that manufacturing base start to increase again, accompanied by an increase in gross value added and a better average income in our area, compared with the south-east and London.

I totally agree with my hon. Friend. That is exactly the point of the city deals programme. It is designed to reflect what is undoubtedly the case, especially with the strength and breadth of the local engagement that this bid demonstrates. Who better to be able to make the decisions and the analysis of what is needed for the Warwickshire economy than the business people, the civic leaders and the leaders of some of the finest universities in the country, who are there? It is important that we build on those strengths.

Does my right hon. Friend agree that it is refreshing that local people and local businesses, having determined what is best to grow the local economy, ask not for infrastructure, roads, buildings or grandiose schemes, but for investment in people and in skills that will enable the economy to grow and prosper?

My hon. Friend accurately reflects the difference between places. In some places the pressing need is for infrastructure because they have a legacy of infrastructure that is not fit for purpose, that has been made redundant and out of date. In other places the need is to supply the skills. That is the beauty of the bid programme.

Let me say a little about the second wave of city deals. Following the success of the eight initial city deals, I was very keen that the programme should be spread to other cities and areas around the country, so we have issued an invitation to 20 more areas to make a proposition to the Government. It is important to emphasise at this stage that these are expressions of interest and will be evaluated as such. It is not the final word. Those that are invited to go forward will be asked to engage intensively with me and my officials so that we can shape a proposition that can then be put to my ministerial colleagues for approval. There will be some way to go in those negotiations. It is right to remind people locally as well as in the Chamber that this is not the last word. It is an important expression of interest, but it has a further way to go.

We have said that there is no limit on the number of city deals that we will be able to conclude. For all those expressions of interest that demonstrate potential, my ambition is that we should be able to take them forward and achieve something important with them. Having spoken in Coventry with the leaders whom my hon. Friend the Member for Warwick and Leamington mentions, I think it important that we take advantage of the focus on advanced manufacturing and on skills, and the benefit of important institutions such as the Manufacturing Technology Centre and the motor industry research centre being located there.

The prospect that is held out is for 5,000 high quality engineering jobs. I can think of no finer contribution that my hon. Friend, following his advocacy today, could give to his constituents than to inject that into the future of his economy. Without pre-empting the announcement that will be made shortly, I congratulate him on his excellent support for a very encouraging bid.

Question put and agreed to.

House adjourned.