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Employment: Private Sector Jobs

Volume 751: debated on Thursday 30 January 2014

Question

Asked by

To ask Her Majesty’s Government, in the light of the report by the Centre for Cities in respect of the proportion of private sector jobs created in London, what steps they are taking to rebalance the economy across the United Kingdom.

My Lords, the Government are taking a number of steps to ensure that the recovery is balanced across the UK through local enterprise partnerships, enterprise zones, city deals and growth deals. The latest figures show an increase in private sector employment of 928,000 outside London over the past three years, compared to 307,000 in London over the same period, so nearly 80% of all private sector employment growth has come from outside London.

My Lords, according to the recent report, most of the new jobs have come from London and the south-east. Does the Minister share my concern about that? Does he understand that concern against a background of declining exports, a parlous balance of payments situation and the matter of small businesses having access to finance in order to grow jobs still not having been resolved? How will we rebalance the economy and how and when will we know that the economy has indeed been rebalanced?

My Lords, there are a number of measures but one of the key things is what is happening to employment and unemployment regionally. In the past quarter, unemployment fell more quickly in Scotland, Wales and four English regions than it did in London. There is big growth in a number of regions outside London, which is extremely welcome.

My Lords, when it comes to rebalancing, is my noble friend aware that more than 40% of our export earnings come from the services sector, at which we are extremely good? Manufacturing is doing extremely well but services are doing very much better. Can he assure us that the Government will do everything to reinforce and encourage this sector, particularly in international dealings in an increasingly digitalised and networked world where services are the main growth area?

Absolutely, my Lords, and in a number of the major trade delegations that the Prime Minister and other senior Ministers have undertaken in recent times, promoting services has been uppermost in their minds. One of the great strengths of the UK in terms of professional services is that the standards we set here through bodies such as those for chartered accountants and the legal bodies have a worldwide reputation, which underpins the credibility of British companies seeking to sell their services internationally.

My Lords, does the Minister accept that in the north-east there is still a long way to go? Last week’s figures on unemployment showed that the north-east is the region where unemployment has not gone down. The Government’s action in local government finance—putting more money into the least deprived areas and taking it from the most deprived areas—means that the most deprived are seeing cuts of 25% in the services that are critical for those who are suffering from the poor economic position. We do not moan in the north-east—we are proud of it—but it is about time the Government recognised that there are still challenges and that they have a responsibility.

My Lords, the Government recognise that there are still challenges and that we have a responsibility. That is why, for example, the Government have concluded city deals with Newcastle and Tees Valley and are helping those cities grow and why the industrial strategy around the automotive industry has had such a beneficial effect on Nissan’s employment in Sunderland.

My Lords, is the Minister aware that the inward investment arm of UKTI has no regional targets? Would it not be a good idea if it did? Otherwise it can fulfil its national targets by bringing inward investment into London and the south-east.

My Lords, that is an interesting idea, and I will pass it on to colleagues in BIS. While in the past year there was a 22% rise in inward investment overall, which bucked a downward trend internationally, there was an increase in FDI of 191% in Wales and 41% in Northern Ireland, so it is not the case that all benefit of growth and inward investment is coming to London and the south-east.

My Lords, as the Minister knows, earnings are not keeping up with prices and the housing stock in London is not keeping up with demand. How will his Government protect the losers in this equation who far outnumber the winners?

My Lords, I do not agree with that basic proposition. I do not think the losers far outnumber the winners. I remind the noble Baroness that there was an increase in employment of some 450,000 in the past 12 months. All those people are winners. Many people on modest incomes have benefited by several hundred pounds as a result of the increase in the income tax threshold. There are very many winners already, and as the economy continues to grow, there will be a lot more.

Does my noble friend accept that past economic recoveries have always started in London and the south-east and they then spread to the rest of the country? The noble Lord, Lord Harrison, and other noble Lords opposite should be patient. I am sure the benefits will come through by May next year.

My Lords, one of the interesting things that came out of the cities report, to which the noble Lord, Lord Harrison referred, was the beneficial effect that London has on the rest of the country. For example, that report shows that in Southampton in the period 2008-12 local firms cut their employment by 7% but London-based firms investing in Southampton increased their employment by 24%. That is the way in which a successful London helps the rest of the country and why the Centre for Cities came to the conclusion that constraining London’s growth would harm the UK economy generally.