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Regional Development Agency

I congratulate my hon. Friend the Member for Gloucester (Mr. Dhanda) on securing this Adjournment debate. I credit him on his efforts in support of his constituents. He is an assiduous Member, who always fights for more investment in Gloucester. The detail that he has given today shows how much his constituents have benefited—not only from having a Labour Government, but from having a Labour Member of Parliament. My hon. Friend referred to the fact that I am standing in for the Minister for Employment Relations and Postal Affairs, my right hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden), who commences his paternity leave today, and we all wish him well. The subject of this debate is very important, both in the context of the current economic climate and in reflecting the challenges faced by businesses and communities up and down the country. Over the past decade, Gloucester and its hinterlands have made a significant contribution to boosting and underpinning economic growth in the south-west region. It has led the way in developing a high valued-added, advanced technology and manufacturing base, which has driven up skill levels and provided well-paid jobs for the local community. I recognise that Gloucester—in particular, its advanced manufacturing sector—has been hit particularly hard by the economic downturn and recession, and my hon. Friend has worked closely with many businesses to help them through these difficult times. It is vital that the Government and their economic development agencies do as much as possible to help to mitigate the immediate problems faced by local businesses and individuals and to secure the skills base that has been developed so successfully. For example, several high-tech firms—in aerospace engineering and motor manufacturing, for instance—in the county are being impacted on through the supply chains. The situation is being monitored closely by the regional economic taskforce, led by the Minister for the South West and including the RDA. Gloucestershire First, too, has set up an economic taskforce to deal with the business issues associated with the downturn, and the local authority has undertaken work to support local people affected by the downturn. The focus is on better information. The Federation of Small Businesses will survey banks in Gloucester to ensure that they are following the national criteria. The support packages announced by the Government will ensure that the national measures are working on the ground and that the information is getting out through the banks and various agencies. We all hope that that will happen in all our constituencies. I cannot pretend that there are any easy solutions or quick fixes to these significant problems. The global downturn requires global solutions, and I am proud of the way in which the Government have led the way in developing ideas and practical actions aimed at mitigating the effects of the recession and preparing for the recovery. The current economic climate means tough choices on public spending. Like other parts of government, businesses and households, RDAs nationally have had to face budget reductions and declining capital receipts. SWRDA must work within its financial allocation, and re-prioritise its investment plans and existing financial commitments, to ensure that funding is directed in the most efficient and effective way, to help the regional economy and businesses to survive and recover. The agency is re-prioritising its spending programmes and looking for further efficiencies in its own operations. Inevitably, that will impact on some of the work that it has planned. It has informed its partners and stakeholders in the region that it will make announcements about the outcome of its re-prioritisation exercise in June, after its board meeting later this month, and it will consider recommendations. I am sure that officials will draw attention to the strong case that my hon. Friend has made on behalf of his constituents, businesses and developments in his constituency. Naturally, concerns have been raised locally, but SWRDA has been extremely responsible in keeping its partners and stakeholders informed of its plans. However, it has signalled that, as part of its refreshed corporate plan, priorities will include planning for a sustainable recovery and longer-term economic prosperity; supporting businesses through the recession; and setting the foundations for a low-carbon economy. SWRDA is playing a key role as part of the Government response to the recession, as set out in its publication, "First Steps: Action for Recovery", launched in November 2008. The Government have worked with, and through, the RDAs to give help to businesses in the south-west. I shall return to that a little later. Nationally, supporting businesses is at the heart of the package of measures developed to support what are, in effect, the lifeblood of our economy—small and medium-sized businesses—through this difficult period. The package of support, delivered through the RDA-run Business Link networks, provides practical solutions to help businesses to secure credit and finance, to plan for managing day-to-day operations through these difficult times and to plan for future investment priorities. That includes several different schemes. Under the enterprise finance guarantee scheme, the Government have provided £1 billion of guarantees to support up to £1.3 billion of bank lending to smaller firms. Under the working capital scheme, the Government have provided banks with up to £10 billion of guarantees, covering 50 per cent. of the risk. That will secure up to £20 billion of working capital credit lines for companies and free up capital that the banks will use for new lending. Under the capital for enterprise scheme, we have set up a new £75 million fund—£50 million of Government funding and £25 million from the banks. Professional fund managers are providing equity investment, which can be used to pay off existing debt, to free up capital for day-to-day cash flow and for future investment for viable companies. Working with the European Investment Bank, the Government have helped UK banks to negotiate credit lines of more than £4 billion to provide loans to small and medium-sized businesses. Sitting suspended for a Division in the House. On resuming—