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Torbay (Economic Support)

Volume 594: debated on Wednesday 18 March 2015

I think this may be the first time that I have served under your chairmanship, Mr Weir. It is a pleasure to do so.

My speech today is not going to be a big whinge about what has gone wrong. In fact, I am going to praise the Government for many of the things that have happened, but I do want to talk a little about some of the problems facing my constituency that are not unique to it but shared by a number of coastal resort economies.

Many of our key tourist resorts exist as a consequence of two major developments: first, the coming of the railway, which made them accessible to large populations; and secondly, the social change of statutory holiday pay, which gave the working person a few days of the year when they could take a holiday, and in those days the train took them to our tourist resorts. Many of the problems faced by my constituency give us much more in common with Scarborough, Blackpool, Hastings and other tourist resorts than with other communities in the south-west—the region in which my constituency lies. The holiday resorts grew, with big investment in attractions such as piers, theatres, pleasure gardens and all sorts of things that the Victorians loved and cared for, but today that infrastructure is perhaps looking a little faded. I am grateful that this Government are the first to recognise that some of our piers should be funded. I will come to other things funded by the Government, but will also highlight some problems.

All our seaside resorts were hit very hard by the invention of the jet engine, which enabled the development of package holidays. Let us be honest, if people only have a week or two of holiday, will they go to where the sunshine is guaranteed or will they spend a similar amount of money going to a hotel in an English resort? Our English resorts are less likely to be people’s primary holiday destination. They are more likely to be a secondary destination for a short break. As a result, they have had to change their offer.

Other developments have taken place at the same time. Businesses in most of our seaside resorts were family owned. Small hotels and guesthouses ploughed their profit back into the area, keeping electricians, carpenters and others in work in the winter. Today, however, we are more likely to find brands and national chains, which take their profit out of the area; they purchase their food and services centrally and bring them in, so less of the tourism pound stays in the local economy. That is a real challenge for many of our seaside resorts—none more so than Torbay.

Conferences, which were becoming big business, have changed. Government money was invested in convention, conference and exhibition centres in our cities. Furthermore, conferences do not last as long as they used to, so an accessible location became more and more important, which has certainly hurt the coastal resorts on the periphery when competing with inland conference centres for important business.

If I am going to have a whinge, it is going to be a whinge over a period of time. For years successive Governments, whether Conservative or Labour, have tended not to recognise the problems of coastal economies. In the latter days of the previous Labour Government, they came up with a programme called coastal change, which involved a small amount of money to help, but in general terms my constituency in the periphery of the south-west, which is dependent on tourism, at a time of economic downturn has tended to go in early and deeper and to come out later.

The coalition has achieved a lot for my constituency. I will run through some things and the Minister, too, might refer to them. Perhaps the most important was the money for the bypass at Kingskerswell. Connections to the rest of the country are vital for all communities, but for one that depends on visitors that is doubly true. For more than 50 years we have wanted a better road link. One can travel from the Penn Inn roundabout to the north of Scotland without once leaving a dual carriageway or a motorway, but the last five miles from that roundabout into Torquay, a big urban community with a population of 137,000, is a single-track road. That was becoming a barrier—a barrier to investment and to businesses. When businesses based in our area wanted to grow, they would cite road links and move elsewhere. They would grow their business out of the area even though it had started in it.

The Government granted the money and Devon and Torbay councils came together with their contributions, so a dual carriageway will now open in November or December this year, we hope. Already that is having an impact. Businesses that in the past would have grown and moved out of the area are staying. Consequently, unemployment has fallen faster in Torbay than anywhere else in Devon. For the first time ever, we have been coming out of recession faster than other areas, rather than always being the ones to lag behind.

Other things have helped, such as the South West Water rebate. On privatisation, with 3% of the population having to fund 30% of the nation’s coastline, our water and sewage bills rocketed to meet the new clean water directives. The rebate of £50 last year, £50 this year and £50 next year brings us down closer to the national average, but still leaves us with higher water bills than most areas, although not the highest.

Broadband has come to Torbay ahead of most other areas. That is an important aspect of connectivity—not only physical links, but digital links are important. The broadband money that has come in ahead of other areas means that 97% of business addresses in my constituency had access to superfast broadband by the end of last year, although we still have 3% to go.

Assisted area status was taken away 15 years ago, but is now back. That is important to help businesses grow and to support entrepreneurial activity in the constituency. The coastal communities fund, which replaced the fund created by the Labour Government, is also important, although I have to say that it is too small a fund, given that it is oversubscribed.

The regional growth fund is important as well, although there is a real problem with it, and I wonder if the Minister will take this one away with her. The regional growth fund rests heavily on the private sector being able to lever in large amounts of money. An economic community that is mainly small, with few medium and no large businesses, cannot get such leverage so that it is able to compete with the larger inland towns for regional growth funding. I argue that we ought to take a small amount away from the overall regional growth fund budget and put it into the coastal communities fund. That would have a big impact on the ability of coastal communities to access funding to help their businesses to grow and regenerate their economies.

On convergence funding, we argued the case with MEPs and with Ministers and, at last, agreement was reached. The area has benefited greatly from European funds, so to be able to continue to do so has been vital. The Plymouth and south-west peninsula city deal linking in Torbay, in particular with mentoring schemes for young people who have been unemployed for a long time, is vital and long overdue, so I am glad it is happening. Furthermore, having such designations has enhanced our ability to access lottery funding, which historically we have not done as well as other areas in obtaining. Only the other week the Deputy Prime Minister announced £5 million for marketing Devon and Cornwall to overseas visitors, and that was very helpful.

More needs to be done, though. We need to diversify our economy away from its overdependence on tourism. We need three things, the first of which I have already talked about: connectivity, both physical and digital. Secondly, skills are crucial for businesses to be able to grow and expand in the area. We have good schools and an outstanding college but, sadly, too many of our skilled workers—our young people certainly—move away to fill market labour gaps in other areas. They cannot afford to live in Torbay, so affordable housing is the third thing—the missing link. We need to do far more on that.

Our tourism industry could still do with more support, certainly for skills training, to help schools and colleges to make tourism a more attractive option for work. Young people look at tourism and think, “Oh, I don’t want to be a waiter, make beds or do this, that or the other,” yet hotel and restaurant managers and chefs, for example, can earn good money and offer good careers. We need to get across that tourism has some good opportunities and lift the status of tourism in the eyes of school leavers.

Earlier this week, we had a debate in Westminster Hall on VAT and tourism, with the suggestion of a cut in VAT to levels similar to those in the rest of Europe. That would be worth up to £10.5 million a year to the Torbay economy, but it is not only an issue for coastal resorts. We tend to focus on them when we talk about tourism areas, but London and Birmingham need the tourist pound as well. They have new hotels and convention centres to help them get it, but a VAT cut could be just as important to them.

On education, as people in my area have low incomes, a lot of pupils qualify for free school meals, so we have done very well out of the pupil premium, but our overall funding for local government places us in the f40 group of local authorities whose underlying education grant does not reflect where our funding ought to be. I ask the Government to look again at the case made by the f40 campaign, for the sake not just of my own local authority but the other 39 that find themselves in that position.

I mentioned convergence funding. It is absolutely fantastic, but we need to match European funding. That is a difficulty for Torbay and other west country areas. In coastal areas, there are costs that tend not to be met by the local government grant. For example, if an area has a population that goes up two and a half to three times in the summer season, it needs more bins, which have to be collected more often, than it would for a much lower population; it needs more parks and gardens, promenades and car parking spaces, which all have to be maintained for 12 months a year, even though they will be used to capacity only for a short time in the middle of the year.

The local government grant is one subject on which I will have a whinge. It is not just my whinge; it is my Conservative-led council’s whinge and my elected Conservative mayor’s whinge—in fact, it is everybody’s whinge. We have had a poor deal from the local government grant. Although every local authority has had to suffer a reduction in cash, year on year, during this period of trying to get the economy back on track, the fact remains that we have not had the kind of reserves to dip into that other councils have. We hear quite often from Government, “Local government has billions of pounds of reserves, so that justifies us cutting local government budgets,” but some councils, mine included, simply do not have the reserves to cut into any more. There are predictions from my town hall treasury that the council could be bust within a few years unless something changes radically.

The only radical change there really could be would be to the grant system itself, if we looked again at the peculiarities of coastal resorts, which tend to have a high level of people on minimum wage, if they are in work, and of people who are welfare-dependent, as well as large numbers of older people and pensioners who are winding down economically. Areas need somehow to ensure that they can still provide the services that those people need and that still have to be provided when the grant is being cut.

Finally, I will talk about one feature of coastal communities that is becoming critical in my constituency. It is wonderful to have lots of older people. They are really important: they keep the voluntary sector, the local council and public bodies going because they can volunteer their expertise, knowledge and time, but in some communities the demographic balance has become too far skewed towards older people. That need not be a problem if there has been planning for the fact that there will always be that imbalance. The problem comes when the imbalance increases.

In the commercial market, there has been a move towards more and more accommodation for older people. The Minister may well know about this from her own constituency—the McCarthy & Stone and Peverel developments that come before planning committees, which see them as good investments that meet national targets on providing housing. Those developments provide housing for people who move in at the height of their earning capacity and who are often attracted from other areas by national advertising; often they come from areas that are capital rich, and can therefore use their purchasing power. That lifts house prices in the area they have moved to beyond the reach of people who would otherwise have found housing there—I will not use the term “local people”, but working people of working age. After people have moved into those developments, the demands on health and social care services increase. If a community already has a way above average number of people who depend on health and social care services and the balance is suddenly skewed even further, it is really unfair to the people who were already there to have to compete for those services, and the local authority—underfunded by the grant—will not be able to meet the need.

We need more people of working age, who are earning a living, paying taxes and making sure that communities are more balanced. That is not necessarily in the Minister’s power, but it should certainly be taken into consideration when looking at housing targets. They should not be seem only in numerical terms. It should be a case of meeting local housing need, rather than building nationally advertised lifestyle accommodation that in the long term creates enormous financial pressures and competition for services within certain communities.

My speech was not entirely a whinge, then. We have done well, in government and out of it, but we could do better, and I hope we will do so in future.

It is a pleasure to serve under your chairmanship for the first time, Mr Weir.

I congratulate my hon. Friend the Member for Torbay (Mr Sanders) on securing this debate, which affords me the opportunity to speak about the Government’s track record in supporting growth and creating jobs and to praise the businesses and organisations in his constituency. My experience from visits there is that the people are incredibly resilient and entrepreneurial. They have seized the opportunities the Government have provided to create jobs, improve growth and assist and improve quality of life. I have a soft spot for Torbay—it is the place of my birth—so I am delighted to take part in the debate.

The Government are committed to the devolution of power to the local level. That is not a one-way deal but a partnership: we have given local areas powers to drive economic growth, and in return we are asking them to show strong and accountable leadership and the ability to improve efficiency and outcomes in their area. Lord Heseltine’s independent report, “No Stone Unturned”, which was published in October 2012, recommended that more funding, freedoms and flexibilities should be devolved to local level to help places grow. That was a starting point for the unprecedented degree of devolution that the Government have achieved.

The Government published their response to the report in March 2013 and accepted its key proposal, which led to the creation of the local growth fund and growth deals. They represent a genuine revolution in how our economy is run. For the first time ever, housing, infrastructure and other funding are being brought together in a single pot and put directly into the hands of local authorities and businesses. That means local power to build stronger local economies, taking power and money from Whitehall and giving it to the people and organisations who know their areas best, and so know best.

Through growth deals, every local area in England is sharing money from the local growth fund to spend on projects that matter to their people and local economies. Growth deals have been made in all 39 local enterprise partnerships in England, with £12 billion available for the deals announced in July 2014. The deals have been allocated £2 billion from the local growth fund for 2015-16, and a further £4 billion has been committed for future years. The quality of proposals was excellent, and because of that, in some cases we have committed to funding projects over the long term, providing certainty and stability for local areas.

In the autumn statement, the Chancellor announced a further £1 billion worth of funding to be distributed through local enterprise partnerships. That funding has now been allocated to projects aimed at increasing economic growth around England, including in the hon. Gentleman’s constituency. His constituency has benefited considerably from growth deals made with Heart of South West local enterprise partnership. The hon. Gentleman touched on a number of those initiatives, including £3.4 million towards the Torquay gateway transport scheme, which will deliver road junction improvements and improved cycle links in the Torquay gateway area, much improving access into the town from the northern boundary; £400,000 to improve town centre access; £3 million for an electronics and photonics centre, based at Whiterock business centre in Paignton; a commitment to a new rail station and infrastructure; and £2.6 million of Public Works Loan Board funding to accelerate the delivery of 350 homes at Whiterock.

In the Budget today, the Chancellor announced a new enterprise zone in nearby Plymouth, which will be focused on growing the marine sector. That will be an important driver of growth in my hon. Friend’s LEP area, as businesses in his constituency in the supply chain will benefit. That is on top of an earlier £76 million investment in the south Devon link road, which he referred to.

We set up the coastal communities fund in 2012 in recognition of the unique challenges faced by coastal areas, as the hon. Gentleman said. In his area, £3 million of funding is going towards a new cycleway, which will put Torbay on the map for cycle tourism. To date, that funding has helped more than 320 businesses, supported 95 new business start-ups and created nearly 150 jobs.

Those opportunities would not be seized, taken up and made a reality without the drive and enthusiasm of businesses and other organisations in the hon. Gentleman’s local area. I saw that first hand when I visited the South West Coast Path Association, which had £1 million of coastal communities funding to safeguard nearly 800 jobs. I also visited Brixham Sea Works, a work hub developed with £1.4 million of coastal communities funding, focused on social enterprise and start-up businesses. It is benefiting from the investment in broadband that is also going into his constituency: Heart of South West will get 95% coverage and there were further announcements on broadband today.

The hon. Gentleman is right to touch on the older and ageing population of coastal communities and to point out the advantages that that brings. Next week, I will meet with Age UK to discuss how we can unlock some of that community’s potential. As he mentioned, they have tremendous knowledge and experience and our voluntary sector is propped up by them. They also have a tremendous amount of business experience that we can capitalise on.

On our care reforms, although they are not strictly in my brief, as well as helping alleviate the situation in which self-funders become reliant on state funding, we have also pushed for people to receive or be signposted towards independent financial advice when looking for a care home place or sheltered housing. That is sensible, because it is better for the individual, who gets advice, and for the local authority, which will not wind up with an enormous bill in future years. Our coastal communities are really embracing the opportunity. One community that has a lot of difficulties to overcome is Jaywick, but it has seen the care sector as the route to driving its economic growth. It is not just providing accommodation, but having a centre of excellence for innovation in the sector, providing jobs to the local community. It is a matter of seeing opportunities, not problems, and turning them into positives.

There is more to do. We recently set up the coastal heritage revival fund, which will be a fantastic catalyst. We understand the difficulty of unlocking private sector funding. Sometimes, with heritage assets in seaside towns, whether piers or lidos, we get a perfect storm. Perhaps the local authority does not want to get involved because it is worried about liabilities and the private owner does not have cash to put in, so a huge amount of community good will cannot be unlocked. That fund is designed to be a catalyst in unlocking that and helping those organisations, whether through charitable means, crowdsourcing and all that stuff or through levering in private sector investment. That is what the fund is there to do. I hope that we will see the coastal communities fund evolve and continue its good work.

The Minister has spoken a lot about peripheral funds. Sadly, Brixham and Whiterock are not in my constituency, but they are important to my constituents because many of them work there and there is a lot of interaction. She has not, however, addressed local government funding—the bread and butter, core funding for the area—which has gone down by 11%, 4%, 5%, 10% and, in the last year, by 17%. We have done well on the periphery, but the core funding has been reduced.

The hon. Gentleman anticipates my finale. We are clearly aware of the Barnet graph of doom, which years ago predicted that all local authority budgets would have to be spent on adult social care. Our local authorities are having to adapt. In today’s Budget, we had announcements about some areas getting 100% business rate retention, but we need to shift how we fund our local authorities.

Councils across the country have been doing a fantastic job in becoming more efficient, pushing more money to the front line and finding new ways of doing things. We have supplemented those pots of money with new initiatives. For example, the power to change fund, which will come on stream soon, will enable local people to pick up services that a local authority does not wish to continue. We must think of new ways of working. We recognise the additional challenges that coastal communities face, which is why we set up bespoke support and why they have the first ever Coastal Communities Minister.

From the work I have seen in the hon. Gentleman’s constituency and around the country, I know that local people have the resilience, creativity and drive to be successful. We need to keep listening to them, learning and sharing good practice, but I am confident about the future. The journey has just started; we have got to continue growth, creating jobs and sticking with our long-term economic plan.

Question put and agreed to.

Sitting adjourned.