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Coventry and the West Midlands Economy

20 January 2010

I welcome you to the Chair, Mr. Evans. I think this is the first debate I have attended that you have chaired and I look forward to your guidance.

I do not know whether the Cadbury announcement makes this an opportune moment to raise these issues. There has been a lot of concern in the West Midlands over the Kraft takeover of Cadbury. Kraft does not have a good reputation for retaining employees, or on plant closures. Perhaps when the minister gets here he could consider putting pressure on Cadbury to at least meet representatives of the labour force. Just before Christmas, I met the trade unions along with a number of other West Midlands MPs. They were having great difficulty getting information regarding the takeover bid. Perhaps he could arrange with Kraft the start of discussions with the trade unions. They certainly have concerns about jobs and plant closures and they need reassurance. I hope he can do something to get those discussions going.

In initiating this debate, I knew that the government had been working hard to deal with the West Midlands economy. This is not an attempt to denigrate the government's attempts to help the West Midlands economy. I am sure the Minister knows that despite the government assistance, the West Midlands, which I have always said is the powerhouse of the British economy, has been struggling over the past few years. The recession has affected the West Midlands more seriously than any other region because it is a manufacturing area and an innovative area. It has a great reputation for the production of skills and contains a number of great universities. Nevertheless, in the West Midlands, manufacturing is allied to trade. When world trade goes down, manufacturing in the midlands is a victim.

Running alongside that, the West Midlands probably has the highest unemployment rate in the UK at approximately 10 per cent, and we are obviously concerned about that. The area also has the fastest rate of job-shedding in the UK, and there are 12 per cent. less jobs in manufacturing compared with 2008. Employment is not predicted to return to 2008 levels until 2015. The 18 to 20-year-old age group has seen the largest rise in unemployment, to 32.2 per cent., and the area has the worst performance of all regions in terms of business activity.

The minister will know that in recent years we have had the cases of MG Rover and Peugeot; there is the looming closure of one of the Jaguar Land Rover plants, and there is a lot of discussion about that. However, there is some good news regarding Jaguar, as it has said it has a 10-year programme for the midlands. That is good news given all the uncertainties. Recently, Ericsson decided to pull out of Coventry, despite the fact that the government are still in discussions with it to see whether they can persuade it to stay. We must pay tribute to the government for that, and my hon. Friend the Member for Coventry, North-West (Mr. Robinson) has played a major part in those discussions. We hoped that he would be here today, but he has obviously been held up. I pay tribute to him for his efforts, along with those of Ministers and trade unions, to see whether Ericsson could be persuaded to stay in the West Midlands.

The decline of manufacture is nationwide and not only in the west midlands, although that area has borne the brunt. To be fair, there has been a lot of diversification in the west midlands over the last 20 years, which has been an important element. As I have indicated, car manufacturing has declined in the past, and only recently Aston Martin announced the cutting of 300 full-time jobs and 200 temporary jobs at the Gaydon plant as a result of falling sales figures. However, the good thing is that Aston Martin is stopping in the midlands, and we could get growth in that area in the future. It is not necessarily all doom and gloom, although it is for those employees who are affected.

Anyone who has gone through unemployment-and I have-knows what it is like to be unemployed. People lose their dignity and worry about their family, and that can create family situations that are not very pleasant to say the least. The husband and wife are constantly under pressure and worried about their children and their mortgage. Those are some of the effects of unemployment.

Although, as I said, Jaguar Land Rover has given us a lot of good news, it had an extended Christmas closure in one of its West Midlands plants. There is a lot of bad feeling about what happened with Peugeot and the way that "consultation" was carried out in Coventry. It was arbitrary; there was no consultation at all. Trade unions feel that many continental manufacturers treat their employees differently from the way British employees are treated. In other words, British employees feel that they do not have the same protection as their colleagues on the continent. That has been a concern for a long time.

We must also take globalisation into consideration. Despite the government giving companies tax credits, work still goes abroad. It is difficult to prevent that work from going abroad because of what is called outsourcing. The regional development agency in the West Midlands has invested a considerable amount of money to mitigate the recession in the area, and it has also given Ericsson money. As I said earlier, we are still trying to prevent that closure.

The work goes, of course, to economies and countries where the costs are lower. The British worker is competing against employees abroad who are working for far less-in China or Singapore, for example. Recently, we have had the case of Kraft, and as I said, workers in the UK feel that they are not getting the necessary protection. That cannot be said too often. With every closure, workers have been kept in the dark. France and Germany have used short-time working subsidies to protect manufacturing jobs. Those countries have a massive trade surplus, and we have a deficit.

We must accept that the construction industry has gone through a bad time, but we recognise none the less that the government have a number of schemes to kick-start the construction industry. We need affordable houses in this country, but we will not get them by building on green areas such as Kings Hill on the outskirts of Coventry, where the green belt is in jeopardy. The area is environmentally valuable. Residents in the area are not saying that we should not have new houses in Coventry; they are saying that there is capacity for about 25,000 houses on Coventry's brown belt, so there is no real need to bring Kings Hill into the equation. The matter has gone to a planning appeal. We do not know the outcome, as it is being reviewed, but I wanted to highlight it.

I understand that any eco-housing proposals for Coventry would have to be agreed by Coventry city council. In other words, a voluntary scheme has been proposed for Coventry, as it has throughout the country. It will not be imposed on anybody. If Coventry does not want it, we will not get it. That is what I understand from the minister for housing.

We need to do more to retain skills in the west midlands in the UK. We will need them whenever the economy starts to take off. In past economic downturns, we have often found that we lack skills when the upturn comes, which can create many problems for small and large businesses. We also need a strong science base. Coventry, with its two universities, has a lot to offer in that respect. Other universities in the West Midlands-I am not too familiar with them-are probably in the same position. A lot of innovation and effort have gone on in the West Midlands.

Coventry has a skilled work force, but 20 per cent. of people aged 20 to 24 have a national vocational qualification of level 1 or below. They are the most likely to be unemployed. I know that the government are considering what can be done to get such groups into employment. As I said, I welcome Jaguar Land Rover's 10-year plan. Not only has it created 100 jobs; those jobs are graduate jobs, which shows that Jaguar Land Rover is taking remaining in Coventry seriously. What happens after the 10-year programme? We will deal with that as we go along.

Advantage West Midlands is running a graduate internship scheme. There is also a national internship scheme. We must congratulate the government on launching new initiatives to create new apprenticeship schemes, and we should support them as much as we can. In the past, apprenticeships have been neglected. They were certainly neglected by the previous government. I remember that Rolls-Royce got rid of its apprentice schemes many years ago. I am glad to see that the schemes are coming back.

We had discussions with Rolls-Royce this morning about its future in this country, which looks positive despite the recession. The company has a number of interesting ideas about developing new plants. Ansty in Coventry will be one of the plants to be developed. It gives us a lot of heart to know that Rolls-Royce is planning to stop in Coventry for the future.

When we look on the positive side, we must give a bit more credit to Advantage West Midlands, which created Ansty technology park on a new site. We have had a setback with Ericsson, but when the upturn comes, as I am sure it will, Coventry will be in a good position for that area to take off.

We have had problems at Coventry airport, but whatever people think about that airport, the fact remains that many small businesses are on that site. Because of the structure of the lease, they have to negotiate with the airport company, which is in liquidation, so there is concern about the jobs and businesses on the site. I am told that Coventry city council is negotiating with two partners; I do not know who they are. It seems to be quite positive about the fact that it can save that site and possibly the airport.

My concern is not necessarily about the airport itself, but about the consequences if the airport expands. Because there is no infrastructure, expansion would create major problems in the area, and I have always been suspicious that it would be a substitute for Rugby. Nevertheless, whatever I think about the airport, there are many small businesses there and they depend on that site. There is a lot of concern about that.

We went through a period of post office closures in Coventry; everybody has been through that. We welcome the fact that the government have invested £150 million per annum to support the Post Office. The fact remains that the government certainly did not pursue their proposal on privatisation, and we do not know what will happen in the future. The Opposition certainly want to privatise the Post Office. That could have consequences, but nobody ever voted for post office closures in the House, as far as I can remember.

Nevertheless, many positive things are going on in the Coventry area, as I have said. Not only in the Coventry area but nationally there is empty property relief, for which many small businesses campaigned for many years. I know that the Minister will want to give me a detailed response, but I have a few more points to make before I finish. It is heartening that Rolls-Royce has been awarded a £258 million contract to build engines for Royal Navy sea helicopters, some of which will certainly go to Ansty. We should consider some of the other things that the Government have done. The car scrappage scheme has been a major success, with about 15,000 transactions in the west midlands alone. I therefore welcome the scheme and the fact that the government will extend it, as that is a positive measure.

Let us consider the green economy. Lots of exciting work is going on in low-carbon technology, particularly in the Coventry area. E.ON is working in partnership with a Coventry company-Advanced LEDs-to develop a low-carbon LED streetlight, known as Marlin, providing local authorities with low-carbon and energy-efficient streetlights. Another good aspect is that Remploy, which has struggled to survive for many years, will play a major part in the production and shipping of the lights. Again, there are lots of positives about what is happening in Coventry and other parts of the west midlands. In fact, some of the technology to which I have just referred will be used not only in Coventry but in Rutland and, later this month, possibly Blackpool. Such innovation needs to be promoted.

The CABLED-Coventry and Birmingham low emission demonstrators-project is an electric car trial in the West Midlands run by E.ON. It, too, has been awarded government funding from the ultra low carbon vehicles demonstrator competition, and is a trial of 110 electric vehicles with ordinary drivers in Coventry and Birmingham, with 25 cars being tried out in Coventry. The idea is to study how practical and efficient those vehicles are. Charging points will be installed in Coventry in a mix of car parks and kerbsides. That will no doubt generate quite a bit of debate.

We need to encourage such innovation and keep the results in the west midlands-we need to ensure that nobody tries to pinch the patents, use them abroad, then export things back to this country. Other investment is going on. Regional bodies such as Advantage West Midlands contributed regeneration funds of £296 million from 2006 to 2009. I end by saying that it is very important that the Minister unlocks the banks, as it were, particularly to give support for small businesses in the west midlands and nationally. Unless that is done, we in the west midlands will face major problems. Again, it is the small businesses that suffer the brunt of decisions taken by companies such as Ericsson. It is vital to get that money to them as soon as possible.