§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sutcliffe.]10.32 pm
§ Mr. Peter L. Pike (Burnley)
I have pleasure in initiating a debate on an important issue for Burnley, Hyndburn and Rossendale. Before I begin my speech, it would be wrong of me not to record my congratulations to Burnley football club on securing automatic promotion last Saturday. I say that in all seriousness; the issue is important not only for the club, but for Burnley, because it boosts morale. It is incredible how much production rises in local industry when Burnley football club does well.
Last Friday, I opened the Northbridge conference centre at Elm street in Burnley. It is in a building that was occupied by Lucas several years ago. Lucas moved out when it relocated, and the building has undergone several alterations. The refurbishment is incredible—an area of derelict houses opposite the building has been cleared, a new car park is being built and landscaping is being carried out.
That work was made possible by help from various Government programmes over the years—objective 2, assisted area status or urban development. Indeed, in a short speech at the opening ceremony, the owners of the building referred to the grants that had enabled the work to be undertaken.
My speech is about three areas because we are making a joint submission. My hon. Friend the Member for Hyndburn (Mr. Pope) is in the Chamber and the Minister for Tourism, Film and Broadcasting, my hon. Friend the Member for Rossendale and Darwen (Janet Anderson), will enter the Chamber any minute now. Both of them are precluded by their membership of the Government from speaking in the debate, but they very much support the case that I shall make in my speech.
My right hon. Friend the Minister saw us on 18 April, and I am very grateful for that. He is an old friend of mine; we both came into the House in 1983. We are grateful for the way in which he has listened to our case, but it is important to make the case publicly in the Chamber to show that we are doing everything possible to ensure that assisted area status is given to the three authorities. My right hon. Friend wrote to us on 19 April, and I shall refer to that letter later in the debate.
Burnley, Hyndburn and Rossendale were included in the revised map that was agreed by the Government last July and that was put forward as the new map of assisted area status. We welcomed that at the time and we thought that the Government had done an excellent job in putting wards together. They put together areas of deprivation and those that met the requirements of the assisted area scheme. They also did a good job in enabling as many local authorities as possible to use the resources available.
Unfortunately, that proved to be a false dawn and the European Union—there was a change in the Commission—was not willing to agree to the proposals. It was a major blow when it was announced on 10 April that the map would be changed yet again.
621 A letter of 10 April from my right hon. Friend the Minister said:In the light of those discussions, the Government today announced that it intends to submit an amended set of proposals for the new Assisted Areas. The enclosed booklet sets out the details.He said that there would be a three-week period of consultation, but he added:I regret that the new proposals do not maintain the level of Tier 2 coverage in your constituency. We will, however, ensure that SMEs continue to have access to the DTI's Enterprise Grant Scheme.That news was a major blow to us; it was a real shock and totally unexpected at that stage.
I am glad that my hon. Friend the Member for Rossendale and Darwen has now arrived. She was obviously delayed by the vote that has just taken place.
On 14 April, the North West regional development agency issued a press release that suggested that its board supported the case for east Lancashire to be reconsidered for assisted area status. It said thatboard member, Kath Reade, supported by Dennis Mendoros, led the call for the agency to help restore Assisted Area to East Lancashire.Mrs Reade said, "East Lancashire has been dealt two body blows in quick succession. The loss of Objective 2 European funding and now the loss of a Assisted Area status is nonsensical in an area of obvious need. I want the Northwest Development Agency to use as much influence as possible to change this decision. We must be able to support our manufacturing base in East Lancashire.Rossendale council has written a detailed letter to the Government office of the north-west and it has made a strong case. Among other things, it says:This decision has caused great dismay and anger here in Rossendale and the Council ask that the Government reviews the decision especially in the light of the current economic situation facing the Borough and agrees to at least re-instate the above wards if not accept the case for the inclusion of the whole of Rossendale on the new map.It points out:Over the past 12 months (February 1999–February 2000) unemployment in Rossendale has increased by 1.7 per cent. compared with a decrease of 10.7 per cent. nationally. This has been caused by the high level of closures and redundancies throughout 1999 and is a very worrying trend.Burnley borough council writes:At the beginning of 2000, unemployment in Burnley stood at 3.5 per cent., or 1,435 people … If the 800 redundancies which have been announced in Burnley since the start of the year "feed through" into the unemployment statistics, Burnley's unemployment rate will increase to around 5.5 per cent. (a 57 per cent. increase), and will stand some 34 per cent. higher then the national unemployment rateas it was in March 2000. It adds:It is worth re-iterating that it is the worsening of the position locally since the original East Lancashire case was submitted in October 1998 which gives … cause for concern.Burnley had a strong case when it was considered in October 1998. However, every factor on which the proposal was considered has worsened since the proposal was made.
Burnley council continues:There have been further declines in the figures for "Gross Value Added" since October 1998, and also for "Net Capital Expenditure Per Head in Manufacturing".The new index of local deprivation, which will be published in June, will show that all boroughs in east Lancashire, including Pendle, are in a much worse position. I am glad that my hon. Friend the Member for Pendle (Mr. Prentice) is also here to support my case.
622 East Lancashire Partnership sent a letter, dated 5 May, to all Lancashire Members, saying that it hopes we willsupport the case for East Lancashire as the loss of Tier 2 Status will have a negative impact on our manufacturing industries and will limit our ability to restructure our economic base to make it more competitive.In a letter to the Minister, the North West regional development agency, the north-west regional assembly and East Lancashire Partnership made the point that their case is supported not only by east Lancashire but by the region. It said:Our case sets out our joint understanding and commitment to the inclusion of Assisted Area coverage for Wards within East Lancashire as part of North West regional Assisted Area coverage and the regional prioritisation of these areas as part of that represented by the Government on behalf of English regions.This is not only a local case, supported, rightly, by vested interests such as those in Burnley, Hyndburn and Rossendale, but one with the full backing of the north-west regional assembly and development agency. They believe that there is a strong case for the change in the present map, which has been put out to consultation. The closing date for responses was last Tuesday.
The original case that was made to the Government was based on structural decline, low gross average earnings and low pay, business registrations and survival rates, unemployment and the 1998 index of local deprivation. On structural decline, it can clearly be demonstrated that the east Lancashire economy has become increasingly vulnerable and continues to under-perform compared with the rest of the UK.
On gross average earnings, wages in east Lancashire are 14 per cent. lower than the national average. In manufacturing, wages are 13 per cent. lower than the national average. Business registrations have fallen because of the economic climate. Unemployment is getting worse, and I mentioned that several redundancies had been announced in the past few months. In crude terms, east Lancashire has been a job deficit area for decades, and the situation has become acute over the years. The index of local deprivation supports our case.
As I said, the latest figures underline the fact that the position is getting worse. For Hyndburn, the gross value added at the time of the proposal's submission in October 1998 was 81 per cent. of the UK figure and the latest figures show a deterioration to 79 per cent. The figure for Rossendale has fallen from 74 per cent. of the UK figure to 73 per cent. In Burnley, the net capital expenditure per head in manufacturing was 68 per cent. of the UK figure at the time of the submission, but the latest figures show a fall to 65 per cent. In Rossendale, the figure was 62 per cent. of the UK figure, and has now fallen to 50 per cent.
Changes in international trade mean that TRW is moving work not to the European Union but to eastern Europe because of low wages there. Only last month, I secured an Adjournment debate on the redundancies that had been announced at TRW, which are a serious blow to the area. As I said, unemployment in Rossendale has increased by 1.7 per cent., and Burnley's unemployment rate is following that trend, as the 709 redundancies announced in March are added to February's unemployment total of 1,454.
Those are the problems that we face. On the index of deprivation, Hyndburn has moved from 76 to 43, Burnley from 65 to 50 and Rossendale from 107 to 65. Many areas 623 that have been included in the assisted area status map have far lower figures of deprivation than the three areas that I am talking about. The automotive industry is a major employer in our area. Many people depend on it for their job, so they are concerned about what will happen at Rover and Ford.
We need assisted area status if we are to develop industrial estates in our area. Shuttleworth Mead in Burnley has 30 acres remaining for development and the potential for 1,800 jobs; Network 65 in Burnley has 27.5 acres remaining for development and the potential for 1,500 jobs; 65 Central in Hyndburn has 86 acres remaining for development and the potential for 3,500 jobs; and Trans-International Park in Rossendale has 7.5 acres remaining for development and the potential for 400 jobs.
One of the points that I made to my right hon. Friend the Minister is that Burnley has 3,000 empty houses: poverty and deprivation are on the increase and people are moving away because there are no jobs. We have the will to tackle those problems, but we need Government assistance. Another problem is the European Commission's official confirmation of the closure of English Partnership's investment programme. It has been said that the Department of the Environment, Transport and the Regions provides assistance, but if we do not get assisted area status it cannot help.
The conclusion of the submission states that the area is a nationally important manufacturing area, with a strong case for support based on poor economic performance and high levels of poverty and deprivation. At a time when the national economy is improving, conditions in the area have not improved—indeed, against many indicators, performance has worsened. Tier 2 status and access to regional selective assistance is vital to partners' attempts to tackle the deep-seated economic problems in east Lancashire. Without it, the already fragile economy will deteriorate even further than it has done since the original submission in October 1998, and the area's efforts to develop in the new economy will be seriously weakened.
In his letter, my right hon. Friend the Minister expressed a willingness to come to the area and meet representatives of the regional development agency and the Government office of the north-west. We hope that he will be able to do so soon, and that he will respond positively and so offer hope to Burnley, Hyndburn and Rossendale.
§ The Minister for Trade (Mr. Richard Caborn)
Before I start to respond to the points made by my hon. Friend the Member for Burnley (Mr. Pike), I congratulate his local football team, Burnley, on making it into the first division. He will be able to join us at Bramall Lane, where my team, Sheffield United, plays. I do not know whether it is the great support for Burnley that got the team into the first division, or whether spin coming out of No. 10 is responsible—I know that one of the official spokesmen there is also a supporter. Whatever the reason, it is good to see Burnley back in the first division.
I commend my hon. Friend on the force of his argument. As he said, we entered Parliament at the same time, so I know that he has always been a strong advocate 624 of Burnley and East Lancashire as a whole, especially its manufacturing base. He speaks with great sincerity on the issues and he has made the case well tonight. The Government recognised the needs and concerns of the area in the proposals for the new assisted areas map published in July last year. We listened closely to the views of local and regional partners, including the regional development agencies, when drawing up those proposals.
I know that my hon. Friend and his constituents share my disappointment that we have been unable to secure Commission approval for those proposals, but I can assure him that we fought hard to secure our July proposals, including all those for east Lancashire, and we are not amending those proposals lightly. The amendments that we announced last month, which have been the subject of a three-week consultation period, were made solely to meet the European Commission's concerns about our July proposals.
My hon. Friend may find it helpful if I set out the Commission's concerns and what we have had to do to meet them. The Commission thought that the approach to the July proposals, which reflected earlier public consultation and dialogue with regional and local partners, would have given the United Kingdom an unfair advantage over other member states of the European Union.
The proposals, the Commission believed, allowed the UK to include industrial locations within the assisted areas, while excluding the population of surrounding areas that might benefit from the regional assistance given to such industry. With our population ceiling, that would have allowed the UK greater scope for supporting industry in competition with our European partners.
To meet the concern that the July proposals would give the UK an unfair advantage, the Commission required that our proposed assisted areas be more compact and self-contained. It also required us to reduce the population coverage of our proposed assisted areas by a third of a million people.
The changes have had an impact on our proposals in east Lancashire. We could not, as we did under the July proposals, extend coverage in a strip from Blackburn to Burnley, Rossendale and Hyndburn. The areas proposed in July were not sufficiently compact to secure Commission approval. Under the new constraints imposed by the Commission, we would have had to include the whole of east Lancashire. That would have required a substantial increase in population coverage—instead of which, of course, we have been faced by a demand from the Commission that we cut the population coverage by a third of a million.
I said earlier that we fought hard to secure our July proposals, but we should be clear that the Government do not have the final say in the matter. Under the European Community treaties the Commission has sole competence. Therefore, as my hon. Friend said, we cannot pay any regional state aid without an assisted areas map approved by the Commission. It was clear that the Commission would not approve our July proposals, and we have had to make changes accordingly.
The Government, however, are conscious of the needs and concerns of the people of east Lancashire. Assisted area status is but one part of a package of measures that the Government have put in place to meet regional and local needs.
625 My hon. Friend knows that when the Government came to power, we inherited an unco-ordinated, disjointed set of regional bodies. Regional activity on inward investment, supply chains, rural development, physical regeneration, and social and economic regeneration all took place in separate organisations. There was no overall strategy to bring together regional activity. We have addressed that problem.
We have devolved power to Scotland and Wales and set up the regional development agencies in England. Last October each RDA produced, with local partners, a strategy for improving the economic performance of its region. The strategies provide a framework for ensuring that all our regions share in Britain's growth. East Lancashire will benefit from the implementation of the north-west's regional strategy—"England's North West: A Strategy towards 2020"—with its work to improve the performance of sectors of continuing and growing importance to the region. Aerospace, for example, is one of the sectors specifically targeted.
Our strategy is not to set one area or region against another, but to use the policy instruments that we have available to make sure that all our regions are competitive and successful.
The framework provided by the regional development agencies, together with initiatives such as the new enterprise grant scheme, to which my hon. Friend referred; the strengthened provision of trade promotion and development services in partnership with local providers, through the formation of British Trade International; the £50 million regional innovation fund to provide support for business clusters; the £30 million phoenix fund; and the £10 million competitiveness development fund will ensure that all areas benefit from Britain's growth.
Our aim is to enable regions to meet the challenges of the new economy. Rather than throwing money at the symptoms, we must tackle the underlying causes, invest in skills and increase opportunities for enterprise. We are doing that.
Those policies are having an impact on the ground. Since the beginning of this year, the new enterprise grant scheme has supported investment of £575,000 in east Lancashire. Training and skills development is being supported through the East Lancashire training and enterprise council, and, from next year, by the learning and skills council. In addition, in June, the Government will announce objective 3 structural fund support for skills 626 and training, and publishing bidding guidance. Based on previous programme allocations, that is likely to mean about £250 million for the north-west, and I would expect east Lancashire to be at the forefront of the bids.
The funding will provide significant support for the Government's employability agenda. It will help people of all ages to get to work. It will also help firms and workers to adapt to new working conditions and thus compete more effectively in the global marketplace. In total, the areas of east Lancashire that we can no longer include in our assisted area proposals will continue to receive Government funding of nearly £40 million to regenerate the area and boost business.
I know that my hon. Friend and his constituents were also disappointed not to secure coverage under the objective 2 structural funds map. However, the Government, through hard negotiation in Europe, secured transitional funding for the areas that lost out. In the north-west, that means that more than £100 million of transitional funding will be available to assist areas such as east Lancashire. That funding is, of course, part of a comprehensive £10 billion package of European structural funding to boost industry and enterprise in the regions.
While I recognise the disappointment of my hon. Friend and the people of Burnley, Rossendale and Hyndburn that they are not included in the amended assisted areas map, I am confident that the amended proposals represent the best package that we can broker with the Commission within the constraints that it has now imposed.
For east Lancashire, we must work together to build on the area's many strengths, which my hon. Friend has highlighted over many years, to ensure a prosperous and vibrant future for the people and businesses of the area. I repeat my offer, which I made to my hon. Friend when he and his colleagues came to see me, to visit east Lancashire and discuss with him and with regional and local partners how we can secure the sort of future for east Lancashire that we all want.
Although I accept that my hon. Friend and his constituents are disappointed, I believe that we have done the best job. I stress that it is only one part of a much larger funding package for our regions, and I am sure that east Lancashire will take advantage of the other provisions that the Government will make available.
§ Question put and agreed to.
§ Adjourned accordingly at two minutes to Eleven o ' clock.