§ Mr. Brian H. Donohoe (Cunninghame, South) (Lab)It is a great privilege to be in the Chamber with you, Mr. Deputy Speaker, in the Chair. I know that you will keep me in order as the debate unfolds.
I am grateful to have the opportunity to speak about the Lyons review, having been involved for some time in making representations to various Ministers, not least in the Treasury. I shall say more about that later. The review is important to my constituents and to the whole of Ayrshire, which covers five constituencies. They would all benefit greatly from some of the elements in the review. Ayrshire is one of the most beautiful areas in the country, and it has the potential to be one of the most dynamic, which is one reason for my applying for today's debate. I want to show the advantages of the review, and its economic disadvantages.
Not only is Ayrshire a beautiful county: it contains some of the gems of society. It has two championship golf courses, Troon and Turnberry, which will be hosting the Open tournament in July. A course in my constituency known as Dundonald is a potential third course for the Open. Those courses will clearly be an attraction for civil servants. The area also has some of the best transport links: it is served by two airports, at Prestwick and at Glasgow, and in recent months we have seen fairly substantial expenditure on the uprating of the A77, the main arterial road out of Ayrshire.
The economy of Ayrshire is changing, as is the economy of most of the United Kingdom, but without doubt we are seeing a change in the number of jobs affected by tourism. Ayrshire is one of the most attractive areas, and it is attracting tourism.
I said that I would mention the Treasury. First, I thank the Financial Secretary to the Treasury, my hon. Friend the Member for Bolton, West (Ruth Kelly), for being here, and the Chief Secretary to the Treasury, my right hon. Friend the Member for Brent, South (Mr. Boateng), with whom I had a fruitful meeting on 3 December. The debate is the follow-up to that meeting. I also thank the many civil servants who have helped me with some of the statistics.
I shall take an overview of some of the statistics of Cunninghame, South and, more generally, of north Ayrshire. The latest statistics are for May 2004. Unemployment in my constituency is the fifth highest in Scotland and the 40th highest in the United Kingdom. The total number of unemployed is 2,047, or 6.6 per cent. of those eligible to work. That is made up of 1,536 males, or 8.7 per cent. of those eligible to work, and 511 females. That is a significant figure; it is one reason why I want the Minister to concentrate her mind on my request. We have analysed the unemployment figure and determined that it is always 1.5 to 2 per cent. higher than the national average. I argue forcefully, as does my local authority, that that is due to the lack of public sector jobs.
Another unwelcome statistic is that income in my constituency is among the lowest in the country. Only 10 per cent. of the population earn less than £11,340 a year; and only 10 per cent. earn more than £507 a week, which is £33,000 a year. The latest blow was the finding by the 360WH marketing company Axciom that some 15 per cent. of households in Irvine, the main town in my constituency, have a monthly household income of less than £400. That figure was based on an extensive shoppers survey.
I now turn to the Lyons review and the King Sturge report. On the basis of what I have seen, it does not recommend relocation to north Ayrshire, which I argue—and will continue to argue—is an area in greatest need. I am concerned that the idea was not looked at; there was no suggestion that King Sturge should look at it, and it is not in its report. I would argue that that is due to the fact that it was not included in the terms of reference by those who were responsible for instructing King Sturge. That is an oversight that must be corrected.
The remit given to King Sturge for its report suggested that areas—towns—must have a population of 100,000. Since that stipulation was made, quite a bit of flexibility has been shown elsewhere in the country, but none in the west of Scotland. Only six areas in Scotland have beer identified, four of which are cities. Although the report is only advisory, it will have a major impact if Departments come to choose to act on it; otherwise, it could be argued, why have the study? I do not believe for one minute that Departments will look at the 102 sites considered by Sir Michael Lyons and discount them in favour of an area not recommended in this review. That is why I argue forcefully that this debate is very important.
Unemployment is one of the greatest indicators. None of the other areas have anything close to the unemployment rates that I have mentioned. The unemployment rate in Cunninghame, South is 6.6 per cent.: Aberdeen's unemployment rate is 1.6 per cent.; Edinburgh's is 2.5 per cent.; and the Financial Secretary's constituency of Bolton, West, which is one of the 100 recommended areas, has a rate of 1.6 per cent.
We cannot simply look at population size when considering these matters. I call on the Financial Secretary to ask King Sturge to commission a review in north Ayrshire and the surrounding area. North Ayrshire council has produced a report suggesting that there is a way round the issues. I do not want to add to that report, but I know that the Treasury has a copy and that the Financial Secretary has seen it.
Today, my office spoke to Dr. Angus McIntosh of King Sturge. I am informed that such reviews have taken place elsewhe -e for smaller towns—towns with a population of fewer than 100,000—such as Durham, and Carrick in Cornwall. However, no such reviews have been called for in Scotland. I ask that such an instruction now be given.
At 1 April, there was also a disparity in the number of public sector jobs in different parts of Scotland. There are 10,804 public sector jobs in Edinburgh and 8,823 in Glasgow, but in the whole of north Ayrshire, which has two constituencies, there are only 805 such jobs, and in my constituency there are approximately 150. We can therefore see that there is a crying need for public sector jobs, and on the basis of what I have said that need must be addressed.
We have to contend not only with a north-south divide, but with the east-west divide in Scotland, which must be looked at. It is widely accepted in north Ayrshire and elsewhere that civil service jobs have a 361WH strong beneficial effect on the areas that they go to. North Ayrshire is generally held to be one of the most under-performing areas in the United Kingdom, and all the indicators demonstrate that. Public sector jobs would give an enormous boost to its economy. They create stability in the job market, which the north Ayrshire economy demonstrably lacks. They would bring high wages to an area in which private sector jobs have consistently paid lower wages.
Public sector jobs can also boost are area. They attract industries in a way that nothing else can, as clearly shown by indicators in the economy of north Ayrshire, such as the fact that we do not have a Marks and Spencer. They have them in the east and the south, but there is none in the north. That takes me back to the point about the shoppers survey that showed the obvious deficiencies in north Ayrshire that have to be addressed urgently.
Looking at public sector earnings, one can see that full-time employees on adult rates consistently earn more than those in the private sector. Within that category, the rates are highest in government— particularly central Government—and public corporations. That is why I have spent some six to nine months forcefully arguing about the Lyons review. Before that, I was making representations to the Department for Work and Pensions and other Departments that had indicated that jobs might be dispersed, to ask for those jobs to be sent to Ayrshire, particularly to north Ayrshire. Given my arguments, I hope that the Financial Secretary will reassure me that north Ayrshire will be considered as part of the Lyons review. If it is not included in the top 100 locations in that review, our unemployment will continue at 1.5 to 2 per cent. above the national average. The Financial Secretary could do something about that at a stroke in her response.
In conclusion, while I understand that relocation is not an exact science, I believe that I have outlined a compelling argument that cannot and should not be ignored. I cannot see—and have not been able to find anybody who can tell me logically—why Aberdeen or Edinburgh should have been chosen to be in the top 100, when there is practically no unemployment there; one could argue that there is none at all in Aberdeen. Those cities might be attractive, but the fact that housing prices in the north-east are far higher than they are in my area is not a great consolation to somebody seeking the redeployment that will result from the transfers. I firmly believe that that should be taken into account by the Lyons review, but from what I have seen, it is not.
I hope that the Financial Secretary will agree that north Ayrshire should be considered a priority and that all my representations as well as those of my colleagues in Ayrshire will bear fruit. I hope that we can proceed in an atmosphere in which north Ayrshire prospers and, moreover, its prosperity is considered to be one of the jewels in the crown of benefits that we have accrued by having a Labour Government for the past seven years.
§ Ruth KellyI am grateful for the opportunity to respond to the concerns of my hon. Friend the Member for Cunninghame, South (Mr. Donohoe) about the Lyons review, and to set out the rationale behind it. I 362WH congratulate him on securing this Adjournment debate and on championing the merits of his constituency, north Ayrshire and the rest of Scotland. I note his comments about the beauty of his constituency as well as its economic potential. I know that he has had meetings with my right hon. Friend the Chief Secretary to the Treasury and that my right hon. Friend has listened to his concerns. I also thank the hon. Gentleman for his comments on the constructiveness of the approach taken by civil servants towards his case.
In his Budget 2004 statement on 17 March, the Chancellor rightly welcomed the Lyons report, which was published two days previously and has since been generally well received across the country. The Government accept that the concentration of activities in London and the south-east has not always represented the best value for money or served the country as well as it could have done. Advances in modern telecommunications and working methods, and the ability to deliver efficient, high-quality and value-for-money public services in different and varied locations, made the Chancellor's and Deputy Prime Minister's request both timely and appropriate. It is not surprising that those technological developments and new working methods have contributed to the possibility of more widely and evenly spread public services. They now provide greater opportunities for many different parts of the UK to contribute to the efficient running of our country.
Sir Michael Lyons's report provides a sound basis for the future dispersal of public sector activity and the creation of a more rational distribution of public sector services outside London. The relocation programme will be an integral part of our overall efficiency agenda, which will be driven forward by the efficiency programme, about which I shall say more in a moment. Sir Michael's recommendations chime well with the Government's commitment to the prosperity and development of Scotland, Wales and Northern Ireland, as well as to the prosperity and development of the regions of England. Once they are implemented, they will strengthen our objective to create a modern, more responsive and regionally based public sector that is closer to the people whom it serves.
The Lyons recommendations provide us with a clear blueprint for achieving the important goals of improved public service delivery, greater efficiency and better value for money for the taxpayer. Sir Michael confirmed that 20,000 posts could be relocated to other parts of the UK as a first tranche. He estimated that more than 2 billion could be saved for the taxpayer over 15 years as a result of dispersing those posts. Those are significant prizes by any standard. We accept that it is our duty to ensure that we win them, and we will.
In his report, Sir Michael recognised that the current pattern of locations of Government business is no longer consistent with the Government's objectives for the regions or the development of regional economies. He acknowledged that London, as a capital, needs a governmental core supporting Ministers in order to set the strategic policy framework, but that the status quo is open to challenge in every other respect. The Government accept that challenge and will work to implement Sir Michael's main recommendations in taking forward our public sector relocation agenda.
363WH As the Chancellor pointed out in his Budget statement this March, the Government shall respond to those recommendations as part of the forthcoming 2004 spending review. My hon. Friend will understand that I cannot say at this stage what our response in the spending review will be to the recommendations, as the review is still being completed. Nevertheless, I will say a few words about certain aspects of the report and about what has been happening since it was published on 15 March.
We fully accept Sir Michael's main recommendation that 20,000 jobs could be relocated from London and the south-east as part of the efficiency agenda. He also made several other important recommendations, including that the Government must be prepared to make the necessary investment in relocation, that departmental headquarters should be slimmed down, and that Departments should implement relocation alongside their efforts to align pay with local conditions. Those important recommendations and themes will very much inform the Government's response to the Lyons report. Indeed, Departments are already addressing those issues as part of their efficiency programmes. In addition, with the advances made in telecommunications and more flexible working patterns, Departments are fully alert to the possibilities of locating services outside London and the south-east in order to take advantage of the often more favourable market conditions elsewhere.
Sir Michael said that there should be a strongly enforced presumption against London and the south-east for new activities such as back-office work and call centres. I assure my hon. Friend that we have already acted in that respect, in that Departments and bodies that are seeking to acquire new properties, to operate lease-backs and to sign or renew property leases in London and the south-east must now consult the Treasury on the appropriateness and cost effectiveness of staying in London in light of the potential opportunities that relocation could provide. That requirement has been in place since September. We also accept the case for a more tightly managed and coordinated approach to the civil estate generally, and we are actively considering how that might be achieved without unduly impairing or interfering with Departments' business needs and priorities.
Sir Michael rightly proposed that there should be continuing political and departmental leadership of the Government's relocation agenda. Their new efficiency programme will take that agenda forward under the leadership of John Oughton. It will also help to integrate relocation into the efficiency programme, assist Departments in realising their relocation plans, and ensure that they are fully co-ordinated with each other, as far as possible.
My hon. Friend raised a specific point about the role of the Treasury in promoting his constituency and Ayrshire. We maintain that it will be for Departments to choose their new locations on the basis of their business needs. The Office of the Deputy Prime Minister will provide central locational guidance to Departments and organisations that are planning relocation. The guidance will advise them on the factors that they should take into account when considering relocation. 364WH The ODPM will ills seek to ensure that Departments across Whitehall, and other public bodies, are fully up to date with the various attributes and advantages of particular locations and that they work closely with each other and with local interests where possible. Those responsible for relocating activities will no doubt read the Hansard report of this debate and take into account the particular attributes of my hon. Friend's constituency.
§ Mr. DonohoeI cannot stress this point enough: unless the area is in the top 100, the chances of any Department of state deciding, on the basis of preference, to relocate to somewhere such as Ayrshire is lessened. That is the very nub of my argument.
§ Ruth KellyLet me turn directly to the King Sturge report on the assessment of locations, which accompanied the Lyons report recommendations. Sir Michael commissioned independent research into possible sites for relocated activity, which was carried out by the property consultants, King Sturge. As my hon. Friend pointed out, King Sturge limited its assessment to towns and cities with populations of 100,000 or more, in order to limit the size of the sample. I emphasise that that list was not intended to be exhaustive, and it certainly was not intended to be prescriptive. I assure him that Departments will be expected to consider the widest possible range of locations.
§ Mr. DonohoeThere have been changes since that specification was included in the consultants' terms of reference. As I understand it, the list now includes Carrick in Cornwall, whereas it did not before.
§ Ruth KellyWhat more can be said about departmental plans will be set out in the spending review, which will shortly be announced. Clearly, I cannot add any more about which locations will feature in the departmental spending plans, but I can say that the King Sturge list was purely illustrative, and was not intended to underlie the business cases of individual Departments.
§ Mr. DonohoeDoes the Minister concede that, regardless of its position, a location that is not on the list is at a disadvantage to those that are, as they can pursue work with vigour, and that there are advantages to being on the list?
§ Ruth KellyI do not accept that it is intended to be a definitive guide for Departments. However, they may subtly choose to relocate activity to areas that do not meet the 100,000 population mark that was examined in the King Sturge report, which was independent. Indeed, when he commissioned that independent research, Sir Michael Lyons had no control over what King Sturge subsequently did with its report.
§ Mr. DonohoeWill the Minister concede that in the original report the towns had to have populations of 100,000 or more, that there have been changes subsequently?
§ Ruth KellyI certainly accept that King Sturge, which was commissioned to carry out the independent 365WH research, selected a minimum population size of 100,000. Naturally, it wanted to control the amount of work to be carried out in response to the Lyons request. However, as I hope I have made clear to my hon. Friend, that was purely to illustrate the fact that there could be locations outside London and the south-east that would be attractive to Departments. However, it is not for Departments to base their business plans on the King Sturge report; they have to make an underlying business proposal, which will inform spending review announcements. Of course it is for them to consider all possible locations. My hon. Friend makes his case eloquently, and I am sure that they will take notice of what he says in forming their plans.
The relocation of activities is firmly on the Government's efficiency agenda. As I have said, during the spending review, Departments will come forward with plans to move activities and functions out of London and the south-east. The Government support Sir Michael Lyons's recommendation that relocation should be mainstreamed as part of Departments' normal business planning, and they are considering ways to ensure that that happens. As the Lyons review made clear, central co-ordination is also important, to ensure that Departments and organisations do not operate in their own silos, but work together to the benefit of the public good.
Although at the end of the day the Departments will make the final decisions on what activities should move and where, we shall put in place mechanisms to ensure that they implement their relocation plans in a coordinated way that is fully consistent with their efficiency programmes and with the best outcome for the public and taxpayers.
As I have made clear to my hon. Friend, the relocation decisions are not just about England, but about Scotland. He underlines the fact that Ayrshire unemployment levels remain above chose of the south- 366WH east of England, and are among the highest in the United Kingdom. Unemployment will obviously be one factor taken into account when the decisions are made.
§ Mr. DonohoeWill the Minister concede that that will be the major issue? If anything is to be done to change what has been a trend for a great number of years, it would be common sense to make that a major factor in considering the reallocation of jobs. I am talking about the areas in which it has been clearly identified that unemployment is 1.5 to 2 per cent. above the national average.
§ Ruth KellyMy hon. Friend makes his point extremely well. However, it would clearly be for the Office of the Deputy Prime Minister to outline the guidance that should apply, and for Departments to make a business case for moving jobs outside London and the south-east. We firmly believe that efficiency gains could accrue to Departments by relocating jobs, and clearly unemployment will be one factor that they will take into account. It will inform the business case that they make—for example, how it might affect recruitment and retention levels in the area.
My hon. Friend will understand that I cannot give any commitments in an Adjournment debate shortly before the spending review in which some of the proposals will be examined in more detail. I am sure that he will accept that in his constituency the unemployment count has fallen by about 30 per cent. since 1997. We both share the objective of making sure that that continues in future.
We are at the beginning of a major relocation programme, and Departments have been asked to consider as wide a range of destinations as possible to establish what workforce skills, accommodation and communication are available.
§ Mr. Deputy SpeakerOrder. The Chamber congratulates the Financial Secretary on her reply and the hon. Member for Cunninghame, South on his persistence.
§ Question put and agreed to.
§ Adjourned accordingly at half-past Four o'clock.