Speech delivered at Westminster Hall on 14/05/19
I beg to move that the House considers the Government’s approach to developing the UK Shared Prosperity Fund.
I am pleased to see so many members here. This is an issue that will affect all corners of the United Kingdom. And all of our communities.
There has been considerable discussion and debate, especially within the Welsh, Scottish and Northern Ireland Devolved Administrations, about the Shared Prosperity Fund.
Many of us have been raising it formally with Ministers through Written and Oral Questions and in meetings and through correspondence with the Government over the year.
But it is right that today we take this opportunity to lead a national debate that seeks to heal the divisions in our country.
Divisions laid bare by Brexit – but the seeds of which were sown a long time ago.
Today is an opportunity for us to look at this issue through the eyes of our communities rather than through the prism of party politics, and in particular for the Government to respond to three key challenges:
- The first. The government accepting that it cannot leave local areas facing major financial uncertainty.
- The second. The government signalling that it trusts devolved administrations, mayoral combined authorities and local authorities to know their communities best.
- The third. To commit to a clear timetable for action.
I speak in this debate from a unique position. Not only as the member for Barnsley Central but also as the elected Mayor of the Sheffield City Region.
This unique position gives me a unique perspective.
I have seen first-hand what local areas can do when they come together to drive economic growth.
But I have also seen how limited and constrained they are by the powers and resources available to them.
Both European and Government funding often comes with limitations that inhibit creative thinking, making it virtually impossible to deliver the significant structural changes that we need.
Central government funding in particular tends to be short term in nature. Often pitting places against each other.
It is driven by political short-termism, and sadly, at times, pork barrel politics.
It can be driven by who shouts the loudest. Or the longest.
Under these circumstances it’s hard to plan for the future and it is hard to be strategic.
From 2020 onwards, the funding allocated to regions by the European Union will come to an end.
2021 marks the end of this Government’s Local Growth Fund programme.
Taken together these programmes have totalled billions of pounds of investment.
On the European Funding element in the current programme alone this has been worth:
- €207m Euros in the Sheffield City Region
- €796m for Yorkshire and Humber
- €513m for Northern Ireland
- €895m for Scotland
- €413bn for Wales
Furthermore, if we were remaining in the European Union, research produced by the Conference of Peripheral Maritime Regions suggests that the UK regions would receive 13 billion Euro’s under the future EU Cohesion programme. This is 22% more than the current programme.
With an even greater proportional increase for South Yorkshire, Tees Valley & Durham, Lincolnshire, Southern Scotland, Parts of Outer London, Cornwall & Isles of Scilly and West Wales & the Valleys.
For South Yorkshire we would have seen an increase from 117 Euro’s per head to over 500.
Any future Shared Prosperity Fund must replace these funds on the basis of what would have been received had the referendum result been different.
These are resources that support some of the most vulnerable in society, delivered by large charities such as Mencap and the Salvation Army to local voluntary and community organisations such as South Yorkshire Housing and Sheffield Futures on my own patch.
These are organisations rooted in communities, borne out of need, surviving by the skin of their teeth.
But these resources also support investment in high profile multi-million-pound research and innovation schemes, they unlock town and city regeneration, they provide business support and finance in urban and rural areas, and deliver sustainable development projects that support the low carbon agenda.
Taken together, these local growth and European funds have been the glue holding together our communities. Helping to create new jobs and businesses but also supporting the disadvantaged and hard to reach communities neglected by mainstream state provision.
They are not perfect.
The rules and regulations imposed by both the European Union and the Government have inhibited creativity and flexibility, often funding priorities and projects dictated by those who are far removed from the reality.
But despite all this they helped create new businesses, they have supported people back into work, helped develop new research and innovation capabilities, built greater resilience in our environment and they have fostered relationships with partners across Europe.
The UK Shared Prosperity Fund, which will replace both local growth and European funding, presents an opportunity to press the reset button.
And I believe that enough of us in parliament, and outside of it, understand that to heal the divisions in our country we must think and do differently.
The UK has one of the most centralised systems of public finance, policy-making and political control among OECD nations.
The Guardian newspaper reported last year that in the UK, local government controls only 1.6% of GDP. It is 6% in France. 11% in Germany. 16% in Sweden.
And yet it is local government that delivers around a quarter of all public services.
The inevitable consequence is that decisions, however well meaning, do not adequately reflect the needs or opportunities of local areas.
This issue is no more acute than in the way successive Governments have decided where to prioritise investment.
I have made this point many times before, but when it comes to spending on transport infrastructure, the gap between more affluent parts, such as London and the south east, and the north, is particularly stark.
Despite the work of the Minister and those in Government who work to support the Northern Powerhouse, it is still the case that since the Northern Powerhouse was introduced by the government in 2014, public transport investment per person has been three times higher in London than Yorkshire and the Humber.
It is no surprise that this is the case. However herculean the efforts of those, such as the Northern Powerhouse Minister are, the rules of engagement are stacked against us.
These inequalities are built into the criteria of the Green Book Treasury model.
This model tends to favour infrastructure development in more affluent areas, meeting existing demand rather than stimulating latent potential.
In the words of my friend and neighbour the Mayor of Greater Manchester, Andy Burnham (a former Chief Secretary to the Treasury), the Government “has a tendency to shovel more and more into the areas that are already doing well.”
We see it on transport investment but also on other Government programmes.
I always try and choose my words very carefully. Not for one second would I pit the North against the South. There are areas of deprivation in the south west, the south east, and indeed in London.
In 1960, the UK had the highest level of productivity in Europe. A French worker, on average, now produces more by the end of Thursday than a worker in the UK does by the end of the week.
In the UK the gap between the richest and poorest regions is around 150%. This is almost twice as large as in France and three-quarters larger than in Germany.
These gaps in wealth distribution and productivity are not normal. Nor are they inevitable. And, for some of our most deprived regions they are increasing.
It is the consequence of public policy and investment decisions that entrench the economic and social divide.
But if we fix it, the prize for doing so is huge.
Looking just at the North of England, Transport for the North’s Northern Powerhouse Independent Economic Review suggests that we could add an additional £97bn to our economy by 2050.
That’s over and above business as usual levels.
Over the same period we could add an additional 850,000 jobs. That’s, again, over and above business as usual levels.
And we can do that by focusing on what we are good at.
In South Yorkshire the same qualities that fired the world’s first industrial revolution now power our 21st-century advanced manufacturing and engineering story.
Companies like Rolls Royce, Boeing and McLaren have chosen our region both because we are in the vanguard of developing new materials and developing solutions to real life manufacturing and engineering problems.
This must be the start of our economic transformation. Not the end.
To go further we must have the tools and resources we need.
I’m hugely positive about our ability, at regional and local level, to address these challenges.
Change is afoot and there is a growing recognition that the answers to these issues do not lie in Westminster or Whitehall.
With the recent election of the Mayor for the North of Tyne there are now nine Metro Mayors across England. They represent 20.7m people, that’s 37% of the population of England.
We are adding our voice to that of our friends and colleagues in devolved administrations of Scotland, Wales and Northern Ireland in calling for greater freedoms and greater resources to help us do our jobs.
This is a powerful voice.
And one that, to be fair, I believe that the Government does listen to.
The Government has also made “place” central to its own Industrial Strategy, recognising that no one size fits all and that each and every part of the UK has a different set of opportunities and different approaches required to develop them.
Over the coming months many of us will be working with the Government to develop our own Local Industrial Strategies – joint agreements that set out how central and local government will work together to grow our economy.
And with the creation of powerful sub-national transport bodies such as Transport for the North, we increasingly have the capacity, capability and the voice to effect real change.
Taken together these new models of governance, the growing recognition of the importance of “place” and an acceptance that the status quo cannot be allowed to persist suggests a brighter future.
Which brings me back to the Shared Prosperity Fund.
This fund has to be part of the solution.
But it is with some considerable frustration then that despite many interventions in the House, through Written Questions and correspondence with the Department, despite many promises that consultation will take place we, as yet, do not have clarity on:
- how much funding will be available.
- what activities will be eligible for support, or
- who will take the decisions about how the money is spent.
We do know that the new fund will be a central pillar of the Chancellor’s Spending Review and that Government Departments will, I am sure be working on the development of the fund.
On that basis we have not been standing idly by waiting to be asked.
Indeed, I commend the work of the All Party Parliamentary Group on Post-Brexit Funding and the analysis and contributions of colleagues within local and regional governments who have addressed their mind to this issue.
However, I do not presume to speak for those colleagues as I set out my own principles upon which the fund should be developed.
My four guiding principles are;
- the annual budget for the UK Shared Prosperity Fund should be no less, in real terms, than both the EU and local growth funding streams it replaces, and in particular it must guarantee that regions will not be worse off in terms of the funding available for regional development beyond 2020 because of Brexit. Moreover, this should be a baseline rather than a cap.
- There should also be no competitive bidding element. Instead an open and transparent process must be put in place that strikes the balance between targeting areas of need, of the need to rebalance our economy and support those economies with the greatest potential to grow.
- The fund must be fully devolved to those areas who have in place robust, democratically accountable governance models, including Devolved Administrations, Combined Authorities and Mayoralties. It must be up to local areas how best to invest it, be that on skills, helping the most vulnerable and disadvantaged, infrastructure, employment support and education.
- And the funding must be stretched over multiple years, beyond the vagaries of Spending Reviews and Parliamentary cycles.
I implore the Government to untie the hands of our local areas. Trust that we know our communities.
Trust that we can develop, appraise and deliver projects on time, on budget and in line with local need and opportunity.
The year by year drip feed of central government funding for local economic growth has to end. The imposition of priorities and projects has to end.
The competing against rather than collaborating with our partners for funding has to end.
The Shared Prosperity Fund will be a litmus test for this Government on its commitment to devolution.
It will be the proof of the pudding.
The central question is whether we all have the courage and the conviction to let go of power and resources that for too long have sat in Westminster and Whitehall.
If we want to tackle the scourge of regional inequalities and create a country that works for all, then let us be bold, and let us make sure that the Shared Prosperity Fund does what it says on the tin, enabling all of our communities to share and prosper in this country’s economic growth.