Regional Economic Growth

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 28th November 2017.

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Photo of Dan Jarvis Dan Jarvis Labour, Barnsley Central 12:00 am, 28th November 2017

What steps his Department is taking to support regional economic growth.

Photo of Seema Malhotra Seema Malhotra Labour/Co-operative, Feltham and Heston

What steps his Department is taking to improve regional productivity.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The Government recognise the importance of closing the economic gap between regions of our country as an economic and social priority, and the industrial strategy is focused on doing that. If we eliminated just half of the productivity gap with London, we would add £300 billion to our gross domestic product; that is £4,600 for every man, woman and child in this country. That is why the Budget announced a raft of measures designed to move forward our progress on that.

Photo of Dan Jarvis Dan Jarvis Labour, Barnsley Central

The economic case for a wider Yorkshire devolved settlement is compelling, so much so that in Yorkshire it is supported by the CBI, the Institute of Directors, the Federation of Small Businesses, the TUC and many of the Chancellor’s own colleagues in local government. Does he recognise the strength of the economic argument, and, if he does, can he speak to his colleagues in the Department for Communities and Local Government?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The Government are committed to the Sheffield city region deal, which will bring £1 billion of new Government investment to the area. We recognise the debate that is going on about a possible wider Yorkshire-based deal and we are happy to consider that, if it can be done in a way that does not disrupt the existing deal that has been agreed for the Sheffield city region.

Photo of Seema Malhotra Seema Malhotra Labour/Co-operative, Feltham and Heston

The Bank of England deputy governor recently argued that Brexit could lead to a “sharp step down” in the UK’s productivity growth. That is likely to hit regions in different ways, and today the Social Mobility Commission talked about the “widening geographical divide”. What impact does the Chancellor believe the extra resources that he has talked about in the light of preparation for Brexit will have on tackling regional productivity issues and social mobility?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

We know some of the things that drive our low productivity performance. Regional differences are one of them, and others are low levels of capital investment in private businesses, relatively low levels of public infrastructure investment and poor skills. We set out in the Budget a raft of measures that will address all of them. The end result is that this Government, on average, over this Parliament will be investing £25 billion a year more in real terms than the Labour Government invested over their period in office.

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

To encourage economic growth in Stoke, the local council is offering serviced plots of land to finance directors and managing directors to build big houses, bring their businesses and invest, creating more jobs and more economic growth. Does the Chancellor agree that that model could be followed elsewhere? Does he agree that it shows that, as in all other areas of social policy, self-build and custom house building has a great deal to offer, including for economic growth?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

My hon. Friend has been consistent in arguing the case for the promotion of self-build and custom house building, which has an important role to play in our ambition of delivering 300,000 new net additional homes a year by the middle of the next decade.

Photo of Colin Clark Colin Clark Conservative, Gordon

Will my right hon. Friend join me in welcoming the potential for £40 billion of investment in the north-east of Scotland region oil and gas industry, as a direct result of the tax relief announced in the Budget, and could he encourage the SNP and Scottish Labour to get on board?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I am absolutely happy to agree with my hon. Friend. The North sea as a basin is coming towards the end of its life, but none the less there are many billions of barrels of oil to be exploited there, involving very large amounts of economic activity in the region and potentially significant receipts to the Treasury. The measure that we have taken will stimulate economic growth in the region and, if all goes well, generate a windfall to the UK Exchequer.

Photo of Lucy Powell Lucy Powell Labour/Co-operative, Manchester Central

The Chancellor is right to say that poor productivity levels and regional variations in them are closely linked to skills and education, and he will know that that starts in the very earliest years of a child’s life. So will he look kindly on a bid he has had from Greater Manchester to boost school readiness in the early years? It is a small amount of money, but it could really innovate and transform these arrangements.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I heard what the hon. Lady said, and my hon. Friend Andrew Jones tells me that he is meeting the Mayor of Manchester next week to discuss this issue.

Photo of Alex Chalk Alex Chalk Conservative, Cheltenham

Thanks to this Government’s investment of £22 million pledged via the local enterprise partnership, Cheltenham can look forward with confidence to a cyber hub, creating a centre of cyber excellence in the home of GCHQ. Is that not exactly the kind of project that will drive opportunity and boost productivity in constituencies such as mine?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

It is. GCHQ is a world-class resource. The way it has engaged in seeking to use its expertise to create a world-class cyber-security business sector in the UK economy is exemplary, and we should encourage it.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

No wonder George Freeman referred to a leadership academy; three quarters of the Cabinet are queuing up to get into it. What impact does the Chancellor think a £1 billion, two-year grant—equivalent, let us say, to the one he gave to Northern Ireland—would have on regional economic growth in, for example, the constituency of my hon. Friend Dan Jarvis in the Sheffield city region?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I do not like to blow my own trumpet, but on the whole I think my jokes were better than the hon. Gentleman’s. As I said to Dan Jarvis, the Sheffield city region deal would bring £1 billion of new Government investment into the area, which will stimulate local economic growth and job creation, and support upskilling in the area and improvement of the infrastructure. Doing these deals around the country and making funds available to local authorities—they know best what is necessary for their areas —is the way to deliver enhanced economic growth.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

I will give the Chancellor another opportunity to answer a similar question in relation to improving regional productivity. What would be the impact in, let us say, the south-west region, in the constituency of his hon. Friend Steve Double, if the Chancellor provided for that area a £1 billion, two-year grant commensurate with that for Northern Ireland?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

There are many things in which we can invest in every region of the country, and I am pretty confident that I could take £1 billion to any region of the UK and invest it in a way that would enhance productivity and stimulate economic growth.