HC Deb 07 July 1999 vol 334 cc997-1004

1 pm

Mr. Adrian Sanders (Torbay)

I am tempted to move to the Dispatch Box, given the absence of Conservative Members, but—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. This is the second time I have had to intervene. These half-hour Adjournment debates are the personal property of the hon. Member introducing them. The relevance of any other hon. Member attending them is not at issue; they are a matter only for the hon. Member introducing the debate and the Minister replying.

Mr. Sanders

The south-west region suffers from an outdated conception of its prosperity that is based either on an old-fashioned view of current conditions—often resulting from people's childhood experience of pleasant summer holidays—or a view that the east of the region, which is prosperous, is somehow typical of the entire region. In a sense, we are the victims of our own marketing strategy. We spend thousands of pounds marketing the area to the rest of the nation and overseas as a place that is good to visit, with a high-quality environment, good standards of accommodation and plenty of attractions. That tends to hide some of the social problems that lie behind the facade of the marketing strategy.

Cornwall's designation as an objective 1 region demonstrates that there are substantial problems in the west of the region, but those problems do not end at the Tamar bridge. My Cornish colleagues may even agree with me when I say as a Devonian that parts of my county are indistinguishable from the county of Cornwall: the tin mine ruins of west Devon, the chapels of north Devon, the fishing port of Brixham and, linking both counties as a main centre of education and employment, the city of Plymouth, which provides thousands of jobs, as well as education and health services, for people who live in Cornwall.

The Plymouth-Torbay-Devon arc essentially represents a dividing line between the prosperity of the main south-west region and the Cornwall-Devon periphery, where unemployment is significantly higher and GDP per capita considerably lower than the national, regional or European averages. Indeed, 56.5 per cent. of people in the arc area are economically active compared with 62.6 per cent. of people in the south-west generally, and 16 per cent. are recipients of income support, compared with just 12 per cent. in the rest of the region. Average earnings are 84 per cent. of the UK figure and our GDP per capita figure is 82 per cent. of the European average. The figure for my constituency of Torbay is equivalent to that for Cornwall, at 71 per cent.

The area's historic economic rationale and its recent problems derive from its natural environment. Inland, the importance of agriculture and the natural environment dominates, while, on the coast, the traditional industries of tourism, fishing, defence and support services have been in decline for some time.

The decline of dominant sectors has affected every part of the north, west and south of the county, and includes a substantial decline in industrial employment in Plymouth, the slow and inexorable decline in agriculture-related employment throughout the rural part of the area, a continuing decline in the service sector, particularly resort tourism employment in Torbay and other coastal locations, and a decline in fishing and related industries.

Mr. John Burnett (Torridge and West Devon)

I am grateful to my hon. Friend, who is making a powerful case. We in Devon are delighted that Cornwall has received objective 1 status. Does my hon. Friend agree, however, that if the Devon arc does not achieve objective 2 status, investment and jobs will go to Cornwall or remain in the prosperous areas to the east of the Devon arc, leaving us with a corridor of neglect?

Mr. Sanders

My hon. Friend makes an important point. There is already evidence of that. A prospective call centre that wished to locate in my constituency is now looking at Cornwall rather than Devon because it has objective 1 status. There could be more such cases in future if our bid is not successful. One of the criteria laid down by the European Commission—which is also part of the Government's remit—is to assist areas adjacent to those that receive the maximum objective 1 support.

Ms Candy Atherton (Falmouth and Camborne)

I am grateful to the hon. Gentleman for giving way. He will know that we in Cornwall were very grateful for the support of colleagues from Devon for our bid for objective 1 status. Is he aware of how much we recognise the importance of Devon's objective 2 bid? It is important to acknowledge that we are not in competition here. One reason for Cornwall's success was the unanimity across the wider south-west that we needed objective 1 status. It is vital that the message gets through that Cornwall is also calling for objective 2 status for the hon. Gentleman's constituency, just as Devon called for objective 1 status for us.

Mr. Sanders

The hon. Lady is absolutely right. Other partnerships of support are emerging throughout the south-west. I was very pleased about the support from Somerset, Gloucester and Bristol and from right across the south-west, as well as from Cornwall.

Our economic problems did not occur overnight with the loss of a major employer or an industry such as steel or shipbuilding, but the social and economic effects are just as severe. The question that has to be answered is not whether the area should receive assistance but when.

The Plymouth-Torbay-Devon arc bid is not an immediate reaction to a new set of events, but a considered response to a long-term trend. Traditional employment opportunities have been in long-term decline, new sectors have failed to emerge and low-wage and often part-time employment dominates the labour market.

The trend towards low-wage and part-time employment has increased in recent years. The majority of jobs in sectors under threat, such as fishing and defence-related industries, have been full time and higher paid. As those jobs have declined, they have been replaced by predominantly part-time and lower-paid service sector jobs. Even in lower-paid industries, such as agriculture and tourism, there has been a move away from year-round, full-time jobs to more seasonal part-time jobs.

Even though there is a strong and vibrant hotel and catering industry in the region, and especially in my own constituency, it supports far fewer people in the area than it did in the past. Gone are the days when a small guesthouse could generate enough to provide a sole income for the owners. Gone are the summer months when family-owned local shops would get a boost in trade that stopped the business from going under in the winter months. Gone are the week-long, bucket-and-spade holidaymakers in their thousands, whose holiday pay circulated in the local economy for months after their visit.

Today's visitor will spend more, but less of that money will stay in the local economy. It will be spent in national accommodation chains, nationally owned petrol stations and superstores, nationally run entertainment centres and tourist attractions and nationally franchised fast food outlets. Nationalisation in the literal sense has seen to that. Globalisation has had similar effects in fisheries, agriculture and defence—the other main south-west industries.

One of the main consequences of those changes is that well-educated, trained and skilled labour is fast becoming our main export to the rest of the United Kingdom.

Our problems were recognised under the far south-west objective 5b programme, the Plymouth objective 2 programme, through funding drawn down under European social fund objective 3 and Community initiatives such as PESCA, LEADER and KONVER.

The far south-west has an established track record of successfully implementing a number of European programmes, but the nature, mechanics and scale of previous programmes have only slowed the economic decline of the region. The 1994–99 programmes can be regarded as the start of the process of reversing decline, but it is far from complete.

The intention behind the new objective 2 bid is to build on past programmes. Already, a comprehensive partnership of local councils, businesses, community groups and voluntary organisations have come together and identified the main drivers for change. They include competitive small and medium enterprises. The long-term prosperity of the region is dependent on a strong, outward-looking and competitive business sector.

Technology and knowledge-based industries are also important. The growth of industries in which physical location and accessibility are less important presents opportunities for the far south-west. For example, 70 per cent. of all internet traffic in north America is transported on equipment made in south Devon. With our skilled work force, clean environment and strong university bases in Plymouth and Exeter, the area is very well placed.

We need to support sectors in transition. Adjustments in the agriculture, fisheries, defence and tourism sectors have hurt the local economy. With support from all four of the strands in the objective 2 programme, we can help those industries to create new opportunities and improve their competitiveness.

Mr. Anthony Steen (Totnes)

The hon. Gentleman is wise to have given way to me, because I intend to support him on this occasion and say what an excellent initiative he has taken in securing this debate. My hon. Friend the Member for Teignbridge (Mr. Nicholls) and I share his sentiments and support his case, and we hope that the Minister will be able to give us some good news.

Does the hon. Gentleman agree that one of the major factors in getting new money into Devon is that we should have a good transport network? Does he share our concern about the lack of railway development and agree that, without good air and rail transport, new industries will not want to locate in our area?

Mr. Sanders

I thank the hon. Gentleman for his support and agree that transport links are crucial. We may be able to tackle some of the transport problems through objective 2 funding, so it is doubly crucial that we secure it.

Community regeneration is another important economic driver. The major task will be to tackle the severe deprivation in the region's major urban centres as well as in some of the smaller towns. The failure of trickle-down approaches to the regeneration of deprived communities is now widely accepted. The region has a strong track record in community-led and co-operatively structured initiatives, with wealth and job creation centred on local needs, local labour markets and local solutions.

I think that the case has been made. It is one with which the Minister is familiar, as he has taken the trouble to visit the region and sample the reality of our economic circumstances. For that, we are grateful, and we assure him that a warm west country welcome awaits him should he want to make a return visit.

We await with confidence the Government's decision on which areas will qualify for the new objective 2 programme. There is all-party support for our case, and a wide partnership of councils, businesses and voluntary organisations is working together and hoping for the best. We know that we meet the criteria and we can demonstrate that we have the networks and partnerships to maximise the opportunities that objective 2 designation will bring.

We would like a hint that we are moving in the right direction, that the Government recognise that there are structural problems behind the marketing image that we create to attract visitors to our area, and that assistance is at long last on the way.

1.12 pm
The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn)

I thank the hon. Member for Torbay (Mr. Sanders) for securing this debate. We are trying to bring more sense to the way in which we spend public funds in the English regions and to consider more strategically all the elements that need to be put together to tackle the problems in areas such as his, which, as he says, I visited a few months ago. The regional development agencies have a role to play in advising Government on the disbursement of the single regeneration budget, on the development of our assisted areas map and regional selective assistance, and on the structural funds.

We are genuinely trying not only to formulate joined-up policies for the regions but to get joined-up money to implement them. The representations of the RDAs have made this an interesting period.

Mrs. Linda Gilroy (Plymouth, Sutton)

I congratulate the hon. Member for Torbay (Mr. Sanders). This debate is as important to my constituents as it is to his.

The difficulties of the economy in Plymouth are deep-seated. Is my right hon. Friend saying that we will be able to tackle the disparities through that joined-up thinking? The Treasury's public expenditure statistical analysis shows that the south-west is among the three regions receiving the least identified general Government expenditure. As he probably knows, in 1996–97 Scotland got £4,756 per head; Wales £4,553; the north-east £4,235; and London £4,601. By contrast, the south-west got only £3,651, or a whole £1,000 per resident less than Scotland. I hope that we will be able to begin to redress that, and the importance of objective 2 in that respect cannot be overstated.

Mr. Caborn

I cannot answer directly, because I do not know the composition of all the figures, but my hon. Friend makes a telling point.

We must take a strategic approach, and land use and transport planning are major parts of that. I hope that when the examination in public for the regional planning guidance for the area takes place we will be able to factor in some of the problems. One of the RDA's first actions was to underline its support for the extension of the runway at Plymouth airport: a decision clearly taken with an economic as well as an integrated transport perspective.

The hon. Member for Torbay eloquently put the case for his area and for Plymouth. As the Minister with responsibility for the English regions, I welcome the opportunity to reply to the points that have been made.

At the Berlin summit in March, my right hon. Friend the Prime Minister secured a very good deal on European funding for the regions in Britain, and many areas of the United Kingdom will benefit from funding for economic development and regeneration over the next seven years. We have always accepted the need for member states to take cuts in the size of their population covered by the funds to make enlargement affordable—that has been generally agreed in the House—but the cuts have to be fair. We are pleased to say that we have negotiated an outcome that we believe to be fair and affordable for all future and existing member states, including the United Kingdom.

Figures released by the Commission on 1 July confirm that the UK got a good deal at Berlin. UK regions will get funding of more than £10 billion for 2000-06 for economic development and regeneration. That funding will be good for jobs and investment in the regions. Money will be spent on projects involving business support, education, transport and the environment. We aim to target the support directly to the UK's neediest areas.

That deal shows the Government's commitment to maximising the benefits of European Union membership for the people of Britain.

Mr. Steen

As the Minister probably knows, a third of Torbay is in my constituency.

Mr. Sanders

A quarter.

Mr. Steen

A quarter, is it? I thought a third.

The Minister mentioned the most needy areas. Does he accept that the area under discussion is a needy area?

Mr. Caborn

I shall come to that in a minute.

A unique package of support for Northern Ireland was secured at Berlin, as well as a special deal for the highlands and islands; both areas will continue to receive generous support of about £1 billion in total. Cornwall, West Wales and the Valleys, and South Yorkshire—my area—will receive objective 1 funding for the first time, and Merseyside will continue to be eligible.

It is not a great accolade to get objective 1. I think that I said that when I was in Cornwall. We do not aim for objective 1 or 2. We want to be at the top of the wealth creation league in Europe. That is what we have to strive for. I hope that, if I still have this job in seven years' time, I will not have to read out a catalogue of areas that have got objective 1 or 2 funding.

Mr. Burnett

The Minister is making a powerful point about market forces, but does he concede that, in our part of the world, there are, rightly, significant planning constraints, and that objective 2 would help us to get the seed corn investment in jobs that we so urgently require?

Mr. Caborn

I take that point, and it is why we are in the process of modernising the planning system. I have explained our new planning guidance on housing to the House several times, and have just done so to the Select Committee on the Environment, Transport and Regional Affairs. When I was in the Torbay area a few months ago, 350 workers had just been made redundant at Nortel. However, I spoke to the firm yesterday and was told that 500 people have been taken on to work in a new development. The Government want to assist wealth creation by business, through transport, land-use planning, and the economic benefits stemming from the regional development agencies.

Perhaps the most notable success in the Berlin summit discussions on the structural funds was to secure the two thirds safety net for most UK regions. Given the cuts in funding coverage, the safety net will be of significant benefit to the UK, as it will maintain two thirds of the existing population coverage under objectives 2 and 5b, which have been amalgamated. The original plans were not fair, and we had to negotiate hard to secure the safety net, which means that about 13.8 million people—rather than the 6.5 million originally proposed—will be covered between 2000 to 2006 under objective 2. That shows the extent of the Prime Minister's success in the negotiations.

On 30 March, the Government issued a public consultation paper, announced to the House by my hon. Friend the Minister for Small Firms, Trade and Industry, to determine eligible areas for objective 2 funding. My hon. Friend invited interested parties to submit their views on possible eligible areas, as well as comments on preferred geographical areas—the NUTS areas to be covered—and outlines of the criteria that might be used to determine eligible areas.

That consultation ended on 25 May. More than 360 submissions were received from a wide range of individuals and organisations—indeed, 41 Members of Parliament wrote in support of their constituencies. I am very aware of the importance of the structural funds to the regions, as underlined by the response.

My hon. Friend and I have seen an enormous number of delegations over the past few months. As I said earlier, I have met the RDAs and representatives from each of the regional and local partnerships to discuss their objective 2 proposals. That has all contributed to the process of drawing together priorities for the proposed areas. The work of the RDAs has been a significant contribution to what has been a mature discussion in Whitehall about dispensing public funds, and I am grateful for it.

We also need to bear in mind the fact that this is just one of a range of instruments to address need at regional and local level. The Government are committed to providing a strategic and co-ordinated approach to tackling need, however it is manifested. That means matching the instrument appropriately to need.

During my meetings with regional delegations, I have emphasised the need to ensure that their objective 2 proposals are inclusive of other forms of funding, such as the single regeneration budget and the new deal for communities. The structural funds should be part of a funding package for the next seven years, led by the regional economic strategy. It is unfortunate that the RDAs will not produce their economic strategies until the end of the year, but they became operational only on 1 April. However, the RDAs' emerging economic strategies have contributed to their thinking, and they have been able to factor some of that thinking into their representations to Government about how the regeneration funds should be dispensed.

My Department, in consultation with the Department of Trade and Industry and other Departments, is now looking at the criteria and areas for funding based on local and regional representations, to help draw up the UK's list of areas eligible for objective 2 status, with a view to submission to the European Commission in the summer.

However, I stress that no decisions have been made yet. All areas will be considered equally for inclusion on the basis of need and against objective criteria, whether they are industrial, rural, urban or fisheries areas. The Commission's proposed breakdown of percentage covered by each strand—10 per cent. for industrial areas, 5 per cent. for rural areas, 2 per cent. for urban areas and 1 per cent. for fisheries areas—is indicative at EU level, not at member state level.

The Commission's definitive position is not yet known. It has released the amounts of money involved, but it has not yet clarified the criteria. We are waiting for that clarification, and we shall start work on the various maps as soon as we get it.

Mr. Sanders

Does the Commission have to make that decision before any announcement of which areas qualify can be made? Will the Minister say who will make the decision, and how? Will it be made known first to the House?

Mr. Caborn

I would hope that the announcement will be made to the House, but of course that cannot happen if the House has risen for the summer recess. As soon as we get the information from the Commission—and we hope that that will be sooner rather than later—we will make the announcement, but the timing is not altogether in our gift. I hope that the Commission can be hurried up a little, but we shall have to wait and see.

Discussions will take place with the Commission after we submit our proposed areas to it. We expect that agreement will be forthcoming in the autumn. An announcement will be made of those areas that we propose to the Commission for eligibility under objective 2.

As I said, areas losing full objective 2 and 5b status will receive continued funding, at a reduced rate. They will have the flexibility to profile spending across the six years of transition that we have negotiated. The transition fund will be worth about £450 million, and will ensure continued funding for many areas that currently benefit from the structural funds.

I am sure that all hon. Members welcome objective 1 status for Cornwall. I hope that the county uses this unique opportunity effectively.

Ms Atherton

May I take this opportunity to thank my right hon. Friend, on behalf of the people of Cornwall? I know that they are universally grateful for the work that he has done to secure objective 1 status for the county.

Mr. Caborn

I thank my hon. Friend, and can tell her that I shall be going to Cornwall for my holidays this summer, as I have done for the past 15 years. When the beauties of Torquay and Torbay were described earlier, I was reminded of my honeymoon, which was spent in Torquay. I have fond memories of the area.

Cornwall will receive about £315 million over seven years from 2000, which will go towards the regeneration of its infrastructure and economy. That will be a much needed and welcome boost for the area. I referred earlier to my meetings with delegations from the regions. During my meeting in May with the south-west delegation, led by Jill Barrow, chief executive of the RDA, we discussed, among other things, the case for Torbay and Plymouth's eligibility for objective 2 status. As I said, well before that meeting I had visited Torbay in October 1998, at the invitation of the hon. Member for Torbay. I was made very much aware then of the importance of gaining objective 2 status for the economic and social regeneration of the area.

I have taken note of what has been said in the debate, and of the powerful case that has been made for objective 2 status for the Plymouth and Torbay area. As I have said, the Government have not yet finalised their proposals for the new map.

Mr. Steen

Does the Minister accept that Torbay is a needy area and requires objective 2 status?

Mr. Caborn

The representations made on behalf of the area have placed it in its rightful position in terms of the needs of the south-west as a whole.

Mr. Steen

It is not what it was on the Minister's honeymoon.

Mr. Caborn

That is true, but we shall consider the whole picture. I therefore cannot predict the outcome of the consultation for any area, and it would be wrong to try. We have been objective and transparent in the way that we have considered the wider issues of regeneration, beyond the structural funds. However. I can assure the hon. Member for Torbay that the case for Plymouth and Torbay—as for all areas in the UK—is being carefully considered.