Wednesday, 14 November 2012

Throwing away jobs and economic growth

Earlier this year, I chaired an all-party committee which looked at regional economic growth. In particular, we were looking at the use of the regional development funds in a context where the government had abolished the regional development agencies.

The European Regional Development Fund (ERDF) is the EU's main tool to reduce economic disparities between the regions. Worth €201 billion between 2007-13, most of the funding goes to the poorer regions in eastern and southern Europe. England's allocation during this period was nearly £3bn, with the largest share of the funds going to Cornwall and the Isles of Scilly, Merseyside and South Yorkshire, all of which face significant and long-standing challenges to economic growth.

It has contributed to major schemes such as the Eden Project in Cornwall, the Sage concert hall and the Baltic art gallery in Gateshead and the Kings Dock redevelopment in Liverpool and, many years ago, the renewal of the Lyceum Theatre in Sheffield. It has also supported many smaller projects across the country to boost enterprise and support small businesses.

However, ERDF funds have to be matched by public bodies in the UK – for every £ in ERDF grant, a public body – like a council – has to invest a similar amount. The abolition of the Regional Development Agencies removed the main source of match funding for ERDF projects, and the economic downturn has reduced the options for match funding even further.

We concluded that the Government simply did not seem to appreciate the problems that projects are facing in securing the match funding needed for them to go ahead. It failed to deliver on its promise to make it easier for projects to use its Regional Growth Fund (RGF) as match funding.  We urged the Government to set aside RGF money specifically for this purpose.

We were quite clear that if urgent action wasn’t taken to spend each region's ERDF allocation before 2015, the UK would not only be returning unspent ERDF grant, but also that value for money would suffer and ERDF would not make the significant impact it might do to generate economic growth in areas with the highest unemployment.

We believed the government was being totally complacent about the matter. Having abolished the Regional Development Agencies in a fit of ideological pique, it simply didn’t understand – or perhaps even care – how important ERDF funds were to local economic regeneration.
Last week, I reminded Michael Fallon - the Business Minister responsible – about the Committee’s recommendations which would have ensured that all the ERDF resources would be used and which the government had rejected.

For the first time he confirmed that ERDF would be underspent. In other words, grant-aid from the EU budget specifically designed to secure economic regeneration in the UK’s poorest areas was going to be returned to Europe.

Thus, at a time when we need to use every endeavor to increase local jobs and to support economic renewal, this government – through sheer incompetence and ideological indifference – has thrown away millions of pounds in grant which would have made a significant difference to the poorest areas in the UK.

Yet the media ignore it. Of course, it doesn’t involve sex, scandal or chocolate. It’s just about a huge loss of jobs and economic growth in communities which need it most. It’s about thousands of people who will remain on the dole instead of working in productive jobs.
It’s a scandal.

Tuesday, 13 November 2012

Planning to cut growth

The government has introduced a Growth and Infrastructure Bill. The best that can be said is that the title suggests that the government has at last recognized that economic growth and infrastructure renewal are crucially important. The bad news is that the Bill is a rag-bag of measures which have not been thought through.

Construction activity has declined again in both the private and public sectors. 400,000 homes could be built on sites which already have planning permission. 87% of planning applications are approved.

Last year, the government produced a review of the national planning policy framework. The all-party Select Committee, which I chair, took evidence from a wide range of organizations concerned with planning, development and housing. We were unanimous in our report, which was quite critical of many of the government’s key proposals. To give the government credit, it accepted most of the recommendations we made.

Yet, just a few months after that major overhaul, we are back discussing fundamental changes in the planning system. This is despite the fact that our investigation could find absolutely no evidence to support the view that the planning system was hindering appropriate development or house-building. When we asked Ministers, they have been unable to provide a single piece of evidence to suggest planning is the problem.
So, why are we back discussing these measures? Over the summer, we could almost see the wringing of hands at No. 10 and No. 11 because the economy would not move. They were worried about why there was no growth, not sure what to do about it and looking for others to blame. We could almost hear the call to the Secretary of State: “Find me some initiatives. Anything will do, so long as we look as though we’re doing something.” So we end up with a rag-bag of measures which have not been thought through. Government Ministers at the Department, given the job of trying to justify them have signally failed.

But just because they’re a rag-bag, it doesn’t mean they’re unimportant. For instance, the first clause of the bill effectively removes from any applicant the right to appeal to an independent body against a decision of their local planning committee. Having previously asserted their determination to remove all targets and central assessments, the government is to introduce new targets – but we don’t know what they are – and a central assessment process, except that the government can’t tell us what the criteria might be. Taken together, the proposals go completely against localism and introduce centralism to the planning system. 

What we do know is that the new uncertainties which the government has introduced will cut and delay development activity even more.
You can read the debate on the Growth and Infrastructure Bill at Column 596 at

You can watch what I said in the debate at:

Monday, 12 November 2012

Losing Energy

Energy bills are soaring, driving up inflation and contributing to the cost of living crisis afflicting millions of families. The government’s response is to tell consumers they’re to blame for not shopping around enough and to cut back on the support it is offering to help people heat their homes.

Last week the Prime Minister promised to legislate to force energy companies to put everyone on the cheapest tariff. Within 24 hours, this policy had completely unraveled. Now, all the Government is actually promising is to get the energy companies to write to people.

It is clear that nuclear energy will continue to play a key role in a balanced energy strategy, especially when addressing climate change. The UK currently has 10 operational nuclear power stations, but all have scheduled closure dates between 2014 and 2035. Delivering on new nuclear power is a huge task. Investors need certainty and confidence about the Government’s direction of travel and commitment to nuclear power.
Yet the government is all over the place. This is not surprising as the Liberal Democrat Minister for Energy was responsible for launching a ‘Say No to nuclear’ campaign in 2006.

And now the junior Conservative Energy Minister John Hayes declares that building “onshore wind farms is at an end. Enough is enough”, whilst his boss, Liberal Democrat Energy Minister Ed Davey, says “He doesn’t make policy. There’s going to be no change in the government policy on renewable energy. Onshore wind is one of the cheapest renewables. It has an important role to play in our energy future.” What a shambles.

The most sustainable way that people can cut their bills is by reducing energy use, mainly by insulation improvement. However, the government has slashed the Warm Front programme which had secured insulation improvement in more than 2 million homes over the last 10 years and - despite the fact that nearly 30,000 qualifying applications were turned away last year – plans to abolish the scheme next year.

In its place, the government has proposed the Green Deal – basically a pay as you save scheme. . Homeowners install measures such as insulation, lagging and double glazing with no upfront cost. The costs are then paid back over a period of up to 25 years with the savings expected to be made from lower energy bills. In April, the Deputy Prime Minister Nick Clegg said: “We'll ensure customers are never charged more for the home improvements than we expect them to make back in cheaper bills.”

However, the government is now proposing that the interest rate on the loan will be at 7.5%. The typical scheme is estimated to cost about £10,000, which at that rate would require an annual repayment of about £886. As the average annual dual-fuel bill is now £1,335, that would require cutting the typical household energy bill by two thirds just to break even. You’re right, it doesn’t stack up.

Meanwhile, our fuel bills will continue to rise and the energy companies will continue to make super profits.