Lloyds Group (Aylesbury Vale)

– in the House of Commons at 10:04 pm on 1st December 2009.

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Motion made, and Question proposed, That this House do now adjourn. -(Mr. Frank Roy.)

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Photo of David Lidington David Lidington Shadow Minister (Foreign and Commonwealth Affairs) 10:06 pm, 1st December 2009

I am grateful for the opportunity to bring before the House the impact on Aylesbury vale of job losses recently announced by the Lloyds Group.

The Lloyds Group is by far the biggest private sector employer in my constituency or in the wider Aylesbury vale district, which includes the parliamentary constituency of Mr. Speaker in Buckingham. Last week, Lloyds announced major job losses in Aylesbury. To some extent, this news was not surprising. Ever since Halifax-Bank of Scotland-HBOS-was hit by the credit crisis and forced to merge with Lloyds TSB, staff at the company, along with local business and political leaders, have had to live with uncertainty. It was always clear that that merger would lead to a review at some time of office locations and, on top of that, the impact of what is now the deepest and longest-lasting recession since the second world war has clearly reinforced the pressure on Lloyds to cut costs dramatically.

Even so, last week's news was shocking. The Lloyds Group currently employs more than 1,000 people in Aylesbury. Between now and April 2011, 810 full-time equivalent jobs will go. Of those posts, 570 will shift as a consequence of a decision by Lloyds to concentrate its operations in Edinburgh and Bristol, and a further 240 will be lost as a result of the decision by Equitable Life to move its contract for back office work from Lloyds to a different contractor, a decision which the chief executive of Equitable Life explained to me was taken because of a very significant saving he will be able to make on behalf of Equitable Life policyholders by that change of contractor.

When part-time workers are taken into account, the number of people directly affected will be larger than that figure of 810 full-time equivalent posts, and of course there is bound also to be a big knock-on effect on the wider local economy. Small and medium-sized businesses in Aylesbury which supply goods and services to Lloyds or which rely for sales on custom from Lloyds employees, most particularly during the lunchtime, are going to suffer badly.

In addition, we know that the squeeze on public sector spending already planned for in the Government's published figures, and which will take place irrespective of which party forms the Government after the next election, will lead to additional job losses in the town. More than 30 per cent. of jobs in Aylesbury vale district are in the public sector, mostly with Buckinghamshire county council, Aylesbury Vale district council and Stoke Mandeville hospital. The county council is already planning for about 500 job losses over the next couple of years, and the Buckinghamshire Hospitals Trust, which includes Stoke Mandeville, is implementing a programme of emergency savings to try to stay within its budget for the current financial year.

Earlier today, representatives of the Buckinghamshire education and learning partnership, which works on behalf of local business and education and training institutions, told me that the combined effect of the job losses at Lloyds and the county council alone would push up the claimant count in Aylesbury by 1.5 per cent. I acknowledge up front that, in spite of that devastating news last week about job losses, the rate of unemployment in Aylesbury, though it has risen sharply during the last year, is below the national average. However, to those employees who are directly affected, and to their families, that will be small comfort. What makes the decision by Lloyds still more worrying is the impact that it will have on plans to increase employment in Aylesbury and, more widely, in the Aylesbury Vale district in response to the Government's plans for significant new housing in the area.

In 2003, the Government identified Aylesbury vale as part of the Milton Keynes and south midlands growth area. The district has to make provision for just over 27,000 new homes by 2026, and the great majority of that new development will have to be achieved through the expansion of the town of Aylesbury. Ever since the sustainable communities plan was published, Ministers have argued that they want growth involving new homes and new jobs. The current regional plan assumes that, in the case of Aylesbury vale, there should be roughly one new job for each new home built, so a total of 21,000 to 22,000 new jobs will somehow have to be provided.

In previous Adjournment debates about growth plans for Aylesbury, I have said that even that provision is inadequate, given that in most households these days both the man and the woman work. What is surely clear, however, is that the Government's own declared objective of building a sustainable community is not compatible with development that turns Aylesbury increasingly into a dormitory town, especially given its relatively poor road infrastructure. We are already coping with significant traffic congestion problems, and in at least one location in the town an air quality management zone has been declared, because exhaust pollution breaches what are regarded as safe levels under European law.

Aylesbury is already a net exporter of labour-to the tune of roughly 20,000 people a day who travel somewhere else in order to work. Historically, its commercial growth has been a lot slower than that which will be needed to deliver the more than 21,000 jobs that the Government envisage in their regional plan. In recent years, the take-up rate of office space in the town of Aylesbury has been less than 5,000 square metres a year, equating roughly to an additional 350 office jobs annually. Even if additional employment in other industrial sectors is added to that office jobs total, the delivery of 21,000 or more new jobs by 2026 implies for the next decade and a half an industrial and commercial premises take-up rate that is way beyond those levels. It is unrealistic to expect that job creation on anything approaching that scale can come from indigenous growth. Rather, we will have to attract inward investment from elsewhere in Britain and from overseas-and on a scale that defies previous experience.

I wish to make a further point about the local economy. Aylesbury is often seen as linked either to the Thames valley and the M40/M4 corridor area of the south-east economy, or to Milton Keynes-or indeed to both. However, when we analyse the structure of Aylesbury's economy, we find that for a long time it has been less developed and less high-tech than either the Thames valley or Milton Keynes. It is also a town that has only a very small number of big private sector employers. That means that the loss of Lloyds as a major employer will be even more keenly felt.

One of my fears, which is shared by many local business and political leaders, is that despite the good things we can all point to in what is happening in the Aylesbury economy, most notably the opening of the Peter Jones enterprise centre earlier this year, the impact of Lloyds very largely pulling out of the town will be to discourage other big employers from moving in.

Locally, Buckinghamshire county council, Aylesbury Vale district council, Aylesbury Vale Advantage- the local delivery vehicle, as the Minister knows-the Buckinghamshire economic and learning partnership and the South East England Development Agency are working together to try to mitigate the impact of the job losses announced last week and to provide help through the recession more generally. However, the Government's decision to designate Aylesbury as an area for significant new housing development means, in my view, that they have a clear responsibility to help.

I want to list a number of ways in which I believe the Government might be able to offer assistance. I say straight away that I do not expect the Minister to be able to give a definite answer this evening, but I hope that he will undertake to review the situation, to study the menu that I offer him, and perhaps other options, and then to write to me in due course with his detailed response. I accept, too, that there is little spare cash floating around and that much Government money will already have been allocated to particular programmes. I will therefore try to suggest ways in which relatively small sums of money-perhaps tweaks to existing Government programmes-could be effected in ways that would make a significant difference locally.

First, how do we help the 800-plus people who are going to lose their jobs, many of whom may have worked continuously for Lloyds or for its predecessor companies, HBOS and Equitable Life, for many years and have no recent experience of having to go out and search for work in the labour market? There are simply not sufficient local resources available to deal with the sheer scale of the job losses just announced. I would like the Government to allocate some of the funds already earmarked for the future jobs fund to give those people targeted and specific support to maximise their individual employment potential and make it possible for them to continue to contribute to the local and the national economy. Local organisations estimate that about £200,000 would be sufficient to provide the additional intensive support for those unemployed people that would be needed over the next 18 months.

Secondly, there are growth area funds. The Government have already budgeted for GAF to help to finance the delivery of homes and jobs in designated growth areas, but so far Aylesbury vale has done badly out of that funding. Like all the other growth areas, Aylesbury vale had a sizeable proportion-just under £2 million-of funding that the Government had provisionally allocated for next year withdrawn by the Department for Communities and Local Government in order to fund the so-called kick-start scheme for housing development. That clawback by the Department represented a reduction of almost half Aylesbury's original GAF budget for the next year and nearly 20 per cent. of the funding allocated over the entire three-year period.

As if to rub salt in the wound, Aylesbury vale then did not receive any of this funding back through the first round of the kick-start scheme, which was funded out of the money that the Government had decided to claw back. So Aylesbury lost out to other parts of the country, yet still faced and continues to face a major challenge of trying to deliver sustainable housing and employment growth in the current, very difficult economic climate. If all or even part of the GAF funding originally allocated to Aylesbury vale but then clawed back were now restored, those funds could be used to try to bring new jobs to the district.

Thirdly, poor links to the trunk road network are a major disincentive for employers to locate in or close to the town. Local agencies are currently supporting a bid to the regional infrastructure fund to finance the proposed eastern link road, a development that is essential to Aylesbury's ability to overcome the shortcomings in its transport infrastructure and attract new business. If built, the link not only ought to ease congestion within the town, an important objective in itself, but would unlock greater development potential and encourage more business investment in the Aylesbury area.

Fourthly, I would like the Government to accept the application made by Aylesbury Vale district council to be one of the pilot areas for the tax increment finance scheme. If they want to demonstrate that they have joined up their programmes to support and assist the growth areas that Ministers themselves have chosen to designate, they should choose Aylesbury as one of the successful pilots.

Fifthly, the Government have just announced plans to relocate many thousands of civil service jobs to places outside London. Although I believe that the priority in my constituency should be to strengthen private sector investment in Aylesbury, especially given the imbalances in the local economy that I have described, I hope that Ministers will consider the town as a potential destination for any departmental relocations.

Sixthly and finally, inward investment is essential if Aylesbury is to come near to providing the number of jobs necessary to support the residential development that the Government want. Access to key Government bodies such as UK Trade & Investment, and a readiness by central Government Departments to promote Aylesbury vale and its key commercial development sites, would strengthen the efforts already being made at local and regional level to identify and attract potential new investors.

I hope that the Minister will understand the gravity of the Lloyds announcement, its impact on the economy of my constituency and the seriousness with which the matter is regarded across party political boundaries in Aylesbury. I hope that the Government will consider seriously the proposals that I and a number of local agencies are making.

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Photo of Ian Lucas Ian Lucas Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Business and Regulatory Reform) 10:23 pm, 1st December 2009

First, I congratulate Mr. Lidington on securing this debate on an important subject and on the way in which he has acted as a persuasive advocate on behalf of his community. Many of us in Parliament have of course experienced job losses in our communities during the past 18 months to two years, and they are always profoundly to be regretted. They have a profound effect on people's lives, and each individual is severely affected. He put across very strongly how his community has been affected, and I thank him both for the tone in which he approached the matter and the constructive way in which he made proposals to help his constituency at this difficult time. I sympathise profoundly with his constituents, and I want to do all I can to assist. I shall certainly examine his proposals closely.

The financial sector has of course been hit very hard indeed by the recession. Many people in it have lost their jobs, and others are still very concerned about their future. The job losses in Aylesbury are a reminder that, for many employees, these are very difficult times.

The Government have taken action in the past 18 months to avert the collapse of the banks. We wanted to ensure a strong, vibrant financial services sector in the future, with stronger and safer banks that are better able to support the recovery. As the hon. Gentleman said, Lloyds Banking Group, along with other banks, has benefited from a range of taxpayer support. In particular, the Government have a 43 per cent. stake in the bank, resulting from the sector-wide intervention in October 2008. That percentage will be maintained by the Government's subscribing to the Lloyds rights-issue later this month.

Government support for the banks is not unconditional. We have secured various commitments from Lloyds, and from the Royal Bank of Scotland, which has also been a major beneficiary of taxpayer support. They include commitments to increasing lending to businesses and home owners, to ensuring that customer charges are fair and transparent, and to deferring bonus payments. Of course, I recognise that that action is small consolation to the hon. Gentleman's constituents. He described his constituency as he alone knows it, and he described the importance of the financial sector to his constituency well. It was helpful to listen to his exposition.

We are of course, doing all we can to assist those who are losing their jobs in the major job loss in the Aylesbury area. It is worth pointing out that the timing of the redundancies will be phased; they will take place from mid-2010 until the end of 2011. In November 2008, we expanded the Jobcentre Plus rapid response service to offer support to every employer proposing 20 or more redundancies. That service can help employers to support their work force in difficult circumstances. Nationally, more than 3,000 employers have used the service since last November, and we have invested £12 million in the service for 2009-10.

In the south-east, the rapid response service has been extended to cover every person facing redundancy, entitling them to extra support and, in some cases, funding. Jobcentre Plus has been working with the South East England Development Agency, the Learning and Skills Council, the sector skills councils, the Government office and other partners to develop a recovery plan for major redundancies.

In Aylesbury, I know that SEEDA has already convened a local taskforce to provide assistance and advice for those affected by the Lloyds Banking Group redundancies. SEEDA is working in partnership with Aylesbury Vale district council, Buckinghamshire county council, the local economic and learning partnership, Business Link, the Learning and Skills Council, Lloyds Banking Group itself and, of course, Jobcentre Plus. That taskforce brings together all those national and local agencies, and will put in place a co-ordinated package of support, tailored to suit the needs of the people affected. It will include workshops for all employees, looking at curriculum vitae writing and interview skills, skills checks and job search advice. Given what the hon. Gentleman has said, I am conscious that many of the people affected will not have had to look for a job for a very long time. What is happening will be a profound shock to them, and it is important that they have assistance of the type I have mentioned in finding work.

We will also provide support for those who may be interested in becoming self-employed, as ever more people are nowadays. As a result of changes in the local economy, areas such as Aylesbury will of course benefit from innovation among their populations. Many of the people who lose their jobs in the redundancy will have advanced skills and will have much to offer, once they have the confidence and the assistance offered by those with specialist advice who will be available to help. The taskforce will also be organising recruitment days with potential employers that offer jobs in similar sectors, as well as offering job-matching with existing companies and working to try to bring new companies to the town.

Fortunately, Aylesbury has a relatively low level of unemployment-even in the context of Buckinghamshire, but certainly in the context of the national average. That is, I stress again, small consolation to those individuals concerned. I understand that SEEDA has been keeping the hon. Gentleman informed on progress. I am sure that he will keep a close eye on the development agency and on all the other organisations that I mentioned, to ensure that they are providing the type and level of support to which his constituents are entitled.

Partners in the south-east have a good and strong history of responding quickly and positively to large-scale redundancies. Similar local taskforces were set up to support those affected by job losses at Ford in Southampton and at Vestas on the Isle of Wight. In the first six weeks following the Vestas redundancies, 84 people found new jobs, 94 were in training and 157 had been helped through the action fund. I am sure that the people in Aylesbury will also benefit from the experience that has been built up. Unfortunately, we have had far more job losses than any of us would have liked to have seen over the past two years.

The withdrawal on such a scale of a flagship company will of course have a significant impact on Aylesbury, as it would on any community, but I am confident that there will be new opportunities in the area. SEEDA is working with the district and county councils to explore and promote opportunities for continued economic growth in the area. That will include providing assistance for local businesses with growth potential and securing new inward investment.

The hon. Gentleman referred to the growth programme in Aylesbury. The plans for housing growth in this and other locations are, of course, long-term. They reflect existing needs for new housing as well as housing needs that will arise in the future, primarily as a result of demographic change. It is all the more important that we plan for the future at these most difficult times, when a significant job loss situation has been created, and that we provide affordable housing in the Aylesbury and Buckinghamshire area. The prosperity and future of the area will depend on growth within the local community and within industry, because growth will provide employment and opportunities and will enable the community to develop in a sustainable way.

I was very taken by the points that the hon. Gentleman made, and specifically by his constructive suggestions. He kindly indicated at the outset that he did not expect me to give him too many early Christmas boxes at this stage, but I will certainly consider the points he made. Some of them are not my Department's responsibility, but I will certainly relay them to my colleagues and ensure that they consider closely what specific help we can give to the Aylesbury area, in addition to the general help I have already described.

The situation is, of course, very difficult. I am sure that it is unusual for this scale of job losses to affect the community in the Aylesbury area. I am sure that it is a resilient community and it is well represented by the hon. Gentleman. I will consider closely the constructive proposals that he has made and I will write to him shortly on those matters. I thank him for bringing to the House's attention the position in Aylesbury and I look forward to working with him to try to assist his constituents.

Question put and agreed to.

House adjourned.

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