Devon and Cornwall (Hansard, 13 February 1995)

§ Mr. Matthew Taylor (Truro)
Whatever the issues being debated earlier in the Chamber, I am delighted now to be raising the single most pressing issue facing Cornwall and Devon, which is how we can create jobs and build economic prosperity in one of the most deprived areas of the United Kingdom.
Many people, not least Members of Parliament, seem to be surprised to hear the far south-west described as one of the most deprived areas of the UK. It is a cliché to say that the area is more often thought of in terms of its reputation for beauty and long childhood holidays on our beaches and moors. However, local people cannot live on holidays alone, or even on the income from other people's holidays. The fact is that, on any measure, the area is exceptionally deprived.
In the past, claims about the relative deprivation of the region have been met with some disbelief. There has been a tendency to see that as insular moaning or just a few more wild claims by the Liberal Democrats—all the more so when we have argued that, in contrast to our high deprivation, we have suffered from low Government economic support.
However, any such sceptics—ministerial or otherwise—should have been firmly answered last year by the two Coopers and Lybrand reports commissioned by the Westcountry development corporation. Those reports put our case firmly on an independent, non-partisan basis. It is those reports and the case for a fair deal from the Government that I want to put to the Minister tonight, and on which we look for Government action.
The first report was published in June last year. It sought to compare both the needs and resources of Cornwall and Devon with those of the other regions of the United Kingdom. It spelled out starkly the reality of the deprivation to which I have referred, and the way in which the region's position had become steadily worse in relation to the rest of the United Kingdom since the early 1980s at least.
Let me take some of the report's key indicators one by one. The proportion of Cornwall and Devon with a high unemployment level is substantially higher than any other region in the UK. Outside the tourist season, my own county has several areas in the top 10 unemployment black spots in the UK. In December 1993, our unemployment levels were the third highest of any counties in the UK—higher than Teesside, Tynesicle and all Welsh and Scottish counties.
Moreover, between 1990 and 1993, the proportion of long-term unemployed increased by 75 per cent. in the UK, but by 110 per cent. in Plymouth, by more than 150 per cent. in 16 out of the 24 travel-to-work areas in our region, and by 200 per cent. in five travel-to-work areas locally.
Even for people in work, the picture is not much better. Average full-time male earnings in Devon are 7 per cent. below the regional average. In Cornwall, they are 16 per cent. below, the second lowest in the UK. Moreover, between 1981 and 1991, the south-west increased its gross domestic product per head relative to the UK average, but the figures for Cornwall and Devon fell to just 83 per 770 cent. of the average. The figure for Cornwall fell to just 72.9 per cent. of the average. People in our two counties, therefore, are not just poor; they are falling further and further behind the rest of the UK.
In most areas of low income and high unemployment, there is at least the relative compensation of low costs of living, especially housing costs. A number of factors combine in our area, however, to reverse that natural state of affairs. First, high population growth has occurred from two sources: retirement from the south-east, and families seeking the good life that they expect on the basis of remembered summer holidays during their childhood. With houses to sell in London and the south-east, they have had the money to bid up house prices locally to some of the highest levels outside the well-paid areas of the south-east.
Secondly, the Government's policy of privatising the public utilities has led to high charges for those services, caused by the relative expense of supplying a far-flung, sparsely populated area. Privatisation led to the abandonment of national charging structures. As a result, the cost of water in Cornwall and Devon is more than 50 per cent. above the national average. The cost of electricity is 7 per cent. more than the national average.
That means, as the Coopers and Lybrand report shows, that the average cost of living, including housing, for manual households in Devon and Cornwall has consistently been 7 to 10 per cent. above the national average, even after the effects of the recession. Those figures are comparable with those for Hampshire, Berkshire, and Buckinghamshire, where wages are certainly not up to 16 per cent. below the national average, and where unemployment is not higher than in Teesside, Tyneside Wales or Scotland.
The final critical group of factors highlighted by the Coopers and Lybrand report are the so-called demographic ones. First, both Devon and Cornwall are areas of rapid population growth, for reasons that I referred to earlier. Cornwall's population growth has been in the top six in the UK. That ranks it with areas such as Buckinghamshire, Cambridgeshire, Northamptonshire, Berkshire, Dorset and Suffolk. The difference is that all those areas had high economic growth, and so the jobs to match. We did not.

§ Mr. David Harris (St. Ives)
Is there not a paradox? The hon. Gentleman rightly mentions the population increase, but why have those people come to Cornwall? I do not argue against the case he is making; I agree with it. However, is there not some merit in the argument that at least some of those people are coming to Cornwall, and boosting its population growth, to be unemployed for the reasons that he has stated—it is a pleasant place to live, and they enjoy all sorts of other benefits from coming to Cornwall.
Does he agree that the position is not as clear cut as his assessment might suggest, although I am not arguing against the case that he will make about a fairer share for Cornwall?

§ Mr. Taylor
The hon. Gentleman must have seen the detailed statistics that I have seen. The overwhelming majority of people are from the two groups to which I referred—they have retired and are therefore not coming to Cornwall to work; or they tend to be families who are under the misapprehension that the area is relatively wealthy. That is what they remember from their childhood 771 holidays. I am sure that, like me, the hon. Gentleman has at surgeries met people who have often moved to the area without a job, found it virtually impossible to obtain one and then come to us to help them get back to in the area from which they came. Secondly, the high proportion of elderly people impacts on expenditure for local health, social security, housing and personal social services.
If the Coopers and Lybrand report merely set out those problems, it would be useful but hardly dramatic, hardly news. Whenever Members of Parliament, business people or others have in the past pressed the case for Cornwall and Devon with Ministers, we have used similar arguments, but Ministers have always replied—I expect that the same will happen tonight—by stating the levels of Government assistance to the region. For example, Ministers point to the funding for the Plymouth development corporation, the increase in assisted areas and support for European funding eligibility for the region.
No one is suggesting that there is no support—we do not disagree with Ministers in that respect—but the question is, how does it compare to that given to others, and how does it compare to the scale of the problem? The Coopers and Lybrand report draws up a balance sheet to compare the needs of Cornwall and Devon with those of other regions of the United Kingdom and the comparative levels of assistance. It is in the latter respect that the difference is stark.
Figures for overall central Government expenditure per head for all English regions between 1987 and 1992 show that the south-west receives the third lowest amount. Only the east midlands and East Anglia get less, but they have fewer elderly and unemployed people, and stronger local economies. Overall, identified levels of Government spending in the region have averaged up to 10 per cent. lower than the average for all English regions. Indeed, Government expenditure per head of population in the south west was below the average of all English regions for every Department.
In comparison to Wales and Scotland, which face a similar range and intensity of economic problems, our revenue from central Government was exceptionally low. Scotland received £530 million, or more than £103 per head; Wales received £187 million, or more than £64 per head; but Devon and Cornwall received just £51 million, or just £31 per head. I remind the House, however, that, according to most data, we are worse off than Wales or Scotland.
The extent of the underfunding to our two counties relative to our needs is further illustrated by reference to some specific programmes. Despite the fact that Cornwall ranked third and Devon 21st out of the 64 counties in the unemployment league in 1993, DTI and Department of Employment regional spending was more than 25 per cent. less than the average English norm.
Regional development grants to Cornwall and Devon accounted for 2 per cent. of regional development corporation spending yet the two counties accounted for 3 per cent. of the United Kingdom's assisted area population. Even if Devon and Cornwall received all the south-west region's allocation of urban programme funding, we would still have received less than half the 772 allocation that we would have received had it been handed out across the country on a per head basis, irrespective of need.
The conclusion of the report is clear. Not only do we suffer especially great economic problems in the region, but Devon and Cornwall in particular, receive significantly lower levels of Government spending than other parts of the UK".

§ Mr. Nick Harvey (North Devon)
At the beginning of his speech, my hon. Friend mentioned the importance of tourism to the two counties of Devon and Cornwall. Is he aware that more than six times as much per head of population is spent promoting tourism in Scotland than in our area? Can he cast any light on the comment by the Prime Minister when he visited our region, that people inherently know that the south-west is there when they are considering going on holiday, but that, for some reason, Scotland, Wales, the lake district and other areas need promotion?

§ Mr. Taylor
My hon. Friend is right about the figures, but I am sorry that I cannot explain the Prime Minister's comments. I can only imagine that they were made in an effort to undermine the support of the remaining Conservative Members in the region. That was certainly the effect they had among those in the tourist industry.

§ Mr. Gary Streeter (Plymouth, Sutton)
Like the hon. Gentleman, I have read the Coopers and Lybrand report, and I have drawn similar conclusions from it. How does he think the imbalance should be redressed? Should the Government give less funding to Scotland and Wales? Is that what the Liberal Democrat party thinks? Is the hon. Gentleman asking the Government to make more money available for the west country in addition to what is spent in Scotland and Wales? I should be glad to know what the Liberal Democrat policy is.

§ Mr. Taylor
Since the hon. Gentleman agrees with the report, it would be interesting to know what he thinks. Presumably he thinks that funding should come from other areas, since he is not in favour of any increase in spending. My view, as a south-west Member of Parliament, is that I want to get a fair deal for the area so we are not disadvantaged.

§ Mr. Harris
rose—

§ Mr. Taylor
Let me finish answering the hon. Member for Plymouth, Sutton (Mr. Streeter). I said that he asked his question on behalf of the hon. Member for St. Ives, and the hon. Gentleman must let me answer it.
The simple fact is that I want to see a level playing field, so that the area is not disadvantaged. If that means that other areas get cuts in their funding, so be it. However, The Liberal Democrats have put forward costed policy programmes which would see increased investment in getting people back to work. We would argue that ultimately taxes can be lower and everyone can be more prosperous if we get people back to work and paying taxes. That is the best way of cutting the budget deficit.
773 If the hon. Member for Sutton does not want see more Government investment—I suspect that that is the case—the conclusion must be that some money currently spent in other areas would have to come to our area.

§ Mr. Harris
rose—

§ Mr. Taylor
Perhaps the hon. Member for St. Ives will explain whether he is in favour of cutting funding for other areas, or whether he believes that the Government should be spending more than the present Budget.

§ Mr. Harris
I am glad that the hon. Gentleman has touched on this point. Do the Scottish Members of his party agree that help that is given to Scotland and Wales—particularly Scotland—should be cut? Do all the Scottish Members say that Scotland should have less so that the south-west can have more? That is certainly my view.

§ Mr. Taylor
The hon. Gentleman did not listen to my answer. In our costed programmes—we are the only Opposition party which puts forward costed programmes—we have argued for increased investment, so it would not be necessary to make cuts. I believe that we should make cuts in other areas if that is the only way to even spending. I assume that the hon. Member for St. Ives takes the same view.

§ Mr. Harris
Certainly.

§ Mr. Taylor
I do not know whether the hon. Gentleman has asked the Secretary of State for Scotland about that. I would expect the Secretary of State for Scotland to defend his own area, just as I expect Scottish Liberal Democrat Members to defend their area. I am not sure what point the hon. Gentleman thinks he has made at the end of that tortuous interchange.
The conclusion of the report was clear, and it was presented to the Prime Minister last July. He asked the regional director of the Government office in the south-west to produce further reports for him. That request led to the second Coopers and Lybrand report, this time prepared in conjunction with the Government office. I stress that it was prepared in conjunction with the Government regional office, just in case doubts remain in the Minister's mind about the probity of its findings.
Briefly, the report focused in more detail on the economic indicators. Most of them were familiar from the first report, but it added that Cornwall and Devon could face the seventh highest fall in agricultural employment of any of the 181 European regions; the increase in the region's work force between 1991 and 1997 is likely to outstrip employment growth by a factor of three, among the highest in the UK and Europe; and the region received the lowest level of foreign inward investment among all of the UK regions from 1982–1983 to 1993–1994. All the problems which I have identified in the present policies from the Government will worsen in the coming years.
Most crucial of all is the conclusion of the second report, drawn up in co-operation with the Government's own regional office. The report said: In terms of resource allocation the July 1994 report concluded that, because of the rapidly increasing levels of need in Devon and Cornwall over recent years, there appeared to be a strong case for the area to receive increased levels of Government assistance. We believe the issues documented in this report reinforce this case, which needs to be addressed at an early date if the area's regeneration is to take full advantage of the upturn in the economy more generally. 774 The message to the Minister tonight from the south-west is simple. The fact that Devon, and particularly Cornwall, have special economic problems is irrefutable. That case has been agreed by Conservative Members, although they attempted to make some party-political points while agreeing. Those problems are spelt out by the Government's figures.
We acknowledge the support that we receive in the region for tackling those problems, but, as the report makes clear, the support does not match that given to other regions with comparable problems. We get far less support than many regions that have far fewer problems—so much so, that one of the greatest concerns among the farmers who came here to meet us a week or so ago, among businesses, among the Devon and Cornwall training and enterprise council and among those in the Westcountry development corporation, is that we cannot even afford the matching funding demanded by the European aid that we are now entitled to after Europe recognised the problems that we face.
Let me be clear: we believe that we can be successful in Cornwall and Devon. As the report states, we have an exceptional environment, high levels of educational achievement, good labour availability—naturally—with high-quality skills. We have a tradition of local entrepreneurship and innovation, with the highest levels of self-employment in the country. We have a core of high-quality businesses in both manufacturing and services, and a public sector committed—under the Liberal Democrats—to regeneration and developing a significant track record of working in partnership with the private sector.
We are prepared to help ourselves—as we have shown—through a wide range of innovative local initiatives. I shall quote from the Westcountry development corporation again: If there was a level playing field for economic development, the combination of the opportunities and a region prepared to help itself could put Devon and Cornwall in the forefront of regional prosperity. But there is not a level playing field". That is the point.
When Howard Davies, director general of the Confederation of British Industry, visited Plymouth n January, he said: I think the business community here feels that Government support—if we look at the profile of Government support for the region—is relatively low. There is a strong argument for that to be higher and they would like that argument to be pressed more vocally by Members of Parliament. Tonight, that argument is being pressed.
The south-west wants to hear just one thing tonight. Will the Government promise action to give us, not a special deal, but at long last, at least a fair deal?

§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Jonathan Evans)
I am grateful for the opportunity to respond on behalf of the Government to the report on the economic needs of Devon and Cornwall. As my right hon. Friend the Prime Minister has said, we welcome any analysis of this sort that helps us to gain a clearer perspective of the needs of a region. I assure the hon. Member for Truro (Mr. Taylor) that the needs of his region are very much in the Government's mind.
775 The Government regularly receive representations from Members in the south-west, and I note that many of them are present in the House tonight. My hon. Friends the Members for Cornwall, South-East (Mr. Hicks), for Plymouth, Sutton (Mr. Streeter) and for St. Ives (Mr. Harris) are present. I have also received representations from my hon. Friend the Member for Falmouth and Camborne (Mr. Coe). It was a recognition of the Government's concern for the area that lay behind our decision to set up an office specifically for Devon and Cornwall in Plymouth last year as part of the Government office for the south-west.
The Coopers and Lybrand report suggests that various programmes across Government inadequately reflected the needs of the region. That is the thrust of the remarks of the hon. Member for Truro. That thesis is based on an analysis of various data and a number of comparisons with other areas. Let me make it absolutely clear that I do not suggest for one moment that there are not areas of need in parts of Devon and Cornwall, but I believe that we need also to ensure that we get all the facts straight, so I shall make a number of observations.
The report claims that the gross domestic product for Devon and Cornwall is one of the lowest in the country. However, more than one in five of the population of the region are over the age of 60—that is the second highest figure for any region in Europe and necessarily distorts any calculations on GDP. The unemployment data, which were mentioned by the hon. Gentleman and were presented in the report, are selective and rather dated. The figures given for travel-to-work areas are from 1993.
The report makes another significant omission. Between December 1992, when there was peak unemployment, and December 1994, Cornwall achieved a reduction in unemployment of 19.4 per cent. and Devon fared even better, with a reduction of 20.4 per cent.
I turn to the issue of inward investment. We want to encourage competitiveness and promote inward investment. By doing so, we aim to maximise the economic potential of the region and to increase prosperity. It is worth recording that 1993–94 was a record year for inward investment in Devon and Cornwall, with nine successful projects. The current year will exceed that, with no fewer than 17 successful projects, resulting in at least £46 million of investment and almost 1,400 jobs likely to be created or safeguarded.
I turn now to some of the things that the Government are currently doing to stimulate the economy of Devon and Cornwall. First, as the hon. Member for Truro rightly said, in relation to European funding, the Government, in partnership with local organisations, successfully negotiated substantial amounts of aid for the area from the European Union. More than £200 million of European funding will be available to Devon and Cornwall in the next six years. That is about £140 for every person in Devon and Cornwall. All of Cornwall, and much of Devon, is now eligible for objective 5b funding.
The objective 5b programme for rural areas will provide about another £170 million and, bearing in mind the remarks that the hon. Gentleman made about Wales, an area that I am not altogether unconnected with, it is 776 worth saying that that figure is greater than all the spending in all of the areas subject to objective 5b status in the Principality.

§ Mr. Robert Hicks (Cornwall, South-East)
In the case of Wales, in which my hon. Friend's constituency lies, most of the funding is direct grant aid, but in the case of Devon and Cornwall, it is matching money. As we do not have large industry, it is naturally very difficult for the private sector to match the potential availability of funding to which my hon. Friend refers. So it is not valid to compare Wales with Devon and Cornwall.

§ Mr. Evans
I mentioned the matter specifically in the context of objective 5b spending, but my hon. Friend is absolutely right that there is no comparison in context of the levels of support given to Wales and Scotland and to England.
I think that my hon. Friend well recognises that Government programmes are drawn up on the basis that there is, to start with, a split of funding between Wales, Scotland and England, and then within England, on the basis of agreed formulae. However, I mentioned the matter in relation to objective 5b status because it is a valid argument, although I am not suggesting—I think my hon. Friend understands that—that the south-west receives the same type of deal as Wales does. No one suggests that that is the case.

§ Mr. Harris
In fact there is nothing much between, if I may say so, the Members representing constituencies in Cornwall from either side of the House on that matter. Our grumble is that we are not obtaining in Cornwall the same type of deal that Wales, which my hon. Friend represents as a constituency Member of Parliament, obtains, and that we feel that the way in which those things are organised goes against the interests of Cornwall.
Will my hon. Friend discuss the question that I asked the hon. Member for Truro (Mr. Taylor)? Surely it would be wrong to increase the total of aid given. We want a level playing field so that we in Cornwall are treated in exactly the way that Members with constituencies in Wales are treated. Does my hon. Friend accept the argument that there must be a fair way of dealing between those of us in Cornwall and those in Wales specifically?

§ Mr. Evans
As I have made clear, the way in which public funding is arranged is that there are different allocations in relation to Wales, Scotland and England. In the case of England, as many of the larger programmes are formula-based, the view of the Government has been that, until such time as other information is available from my hon. Friends and from Members of Parliament from the region—

§ Mr. Matthew Taylor
rose—

§ Mr. Paul Tyler (North Cornwall)
rose—

§ Mr. Evans
With respect, the view of the Government has been that funding has largely been based on equal criteria throughout England. Therefore, I think that it is important to consider the report in that context. My hon. 777 Friend mentioned the correlation with the situation in Wales, but I think that it is recognised that the situation is different.

§ Mr. Matthew Taylor
I am grateful to the Minister for giving way. I am conscious of the fact that there is not much time left, and I do not wish to embarrass the Minister by pushing the point about Wales.
As I made clear in my speech, there are comparisons with the rest of England which raise similar questions. The Government have received the report, but they have made no formal response to it. Do the Government plan to publish any kind of formal response? Will the Minister meet hon. Members from Cornwall and Devon to discuss the issue, because I think that there is cross-party concern about it, and therefore such a meeting would prove useful?

§ Mr. Evans
The time and the number of interventions that have occurred during both the hon. Gentleman's and my speech will prevent me from explaining the wide range of points to which I wanted to refer. It is absolutely clear—I have seen the correspondence between the Government office in the south-west and Mr. Boxall, who is the chief executive of the Westcountry development corporation—that there has been on-going dialogue for some time.
A letter written by the Government office on 7 December 1994 makes it clear that Mr. Leonard outlined the steps to be taken in another letter at that time. A letter of 19 December 1994 from the Westcountry development corporation to Mr. Leonard refers to the fact that the issue 778 might be raised in an adjournment debate in the House once Mr. Leonard's report had been supplied to the Government.
So far, the Government have not received Mr. Leonard's report, although we have received the report from Coopers and Lybrand. The Government are very concerned to analyse and to consider the contents of the report, but this debate has taken place before the report has come from the Government office in the south-west.

§ Mr. Tyler
I am grateful to the Minister for giving way. Will he confirm that, when he has all the information in front of him, he will be prepared to meet hon. Members from both counties in order to examine the formula that we are concerned is simply not giving us a fair deal or providing an even playing field?

§ Mr. Evans
The correspondence that has taken place and the subsequent discussions with my hon. Friends to which I referred earlier indicate that there is on-going dialogue between the Government and hon. Members. The office of the Department of Trade and Industry is always open to hon. Members to discuss those matters.
However, I make it clear that at this point the Government have not received the report that is referred to in the correspondence. When it is received, the door of the DTI will be open to anyone who wishes to raise further points about it.