I beg to move,
That this House has considered the North East Independent Economic Review report.
It is not often we get a chance to discuss English regional affairs, so I am grateful to have the opportunity to do so today and to focus on the north-east economic review, an independent review of the economy in the North Eastern local enterprise partnership area.
The debate is important for two reasons. First, it is about the most important single issue facing the north-east of England. The region, including Teesside, has the highest rate of unemployment of any part of the United Kingdom at more than 10%. That equates to more than 83,000 people, of whom 24,415 are young people. Long-term unemployment has increased by 8.6%, or more than 2,300, in the past year. In my constituency, approximately 3,000 people are looking for work, nearly a third of whom are aged between 18 and 24. Those people want to work, but the jobs are simply not available.
The debate is also important for every English region that has a local enterprise partnership. Although the report that we are considering is not the only one of its kind—I think that Manchester has produced something similar—it is clearly relevant to other UK regions that face similar problems.
There is no sustained political disagreement about the problems facing the north-east of England, which is why I am pleased that our debate has been supported by my hon. Friend the Member for Bishop Auckland (Helen Goodman), the hon. Member for Hexham (Guy Opperman) and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). When I was Minister for the North East under the previous Government, I found that it was possible to get a broad consensus among all those who had the region’s best interests at heart.
The report identifies the key problems that the region faces, but it is weaker on what to do about them. The issue at the heart of all this is what we should be doing to bring down high rates of unemployment and to ensure that the citizens we represent have a chance of a job, a decent wage and a secure future in the north-east of England—including in Teesside, for the avoidance of doubt.
While the report focuses largely on structures, I would have preferred it to focus on outcomes. It could have offered practical ways forward, but it focuses on process and reorganising functions. I think that a better approach was the one adopted by the previous Labour Government, with the regional Minister, local authorities working with that Minister through the Association of North East Councils, and essential economic development input coming from One North East, the independent, business-led development agency. Given the need to reduce public expenditure, it would have been better to refocus the development agency on its core business, rather than abolishing it.
There needs to be single-minded focus on broadening and deepening the region’s private sector employment base. Promising individual projects were in the pipeline when I was regional Minister—I believe that they are still in place—so they should be assessed and pushed forward with a sense of urgency. There should be political leadership from an individual Minister appointed to focus on this issue. The crucial point is that such a Minister will have access to the great Departments of State and can act as an advocate for incoming private sector investment. Other parts of the United Kingdom with similar problems have their own economic development bodies, local political decision-making bodies and ministerial champions at Cabinet level. That is true for Scotland, Wales and Northern Ireland, and the north-east, including Teesside, needs a ministerial champion of its own.
In my time as regional Minister, I was able to intervene effectively at the heart of government. I was able to intervene on the region’s side in crucial debates about Nissan, its battery manufacturing facility and the new electric car assembly line to sit alongside that. I worked behind the scenes—we were not allowed to say anything in public—in the campaign to find a future for what was then the Corus steelworks at Redcar. I worked closely with the North East of England Process Industry Cluster, and secured central Government support for public transport initiatives on Teesside and for the Newcastle metro. I also championed the north bank of the Tyne’s industrial strategy, as well as a partnership between the regional development agency, Newcastle city council and North Tyneside council that brought new industrial jobs to the Tyne. A substantial amount of work was undertaken with small and medium-sized employers and an effective Business Link organisation, which I am sorry to see go.
The principal recommendations of the LEP report involve creating a leadership board that is made up of the leaders of the seven local authorities and that will lead on the three functions of transport, economic development and skills training. I understand that the Government support those recommendations because they are similar to their existing policy, but I note that our ministerial presence has been upgraded so, if I have got that wrong, I am sure that the Minister for Universities and Science will tell us when he says a few words.
The recommendations in the report involve organisational change, with no very clear-sighted view of where there would be an improved outcome following the change. They also strike me as being labour intensive. Each local authority leader, perfectly properly from their point of view, will want their own advisers in each of the three policy areas. Tellingly, the report talks of “capacity building” and “joint teams of officers”, with senior leads
“from each Government Department and Agency”.
Does my right hon. Friend agree that the one thing missing from the report is the fact that many local authorities, including my own in Durham, have had to take £209 million out of their budget during this period? The capacity for officers to take up these tasks will be very difficult.
It would certainly be impossible for local authorities to do what the report suggests. My hon. Friend’s point is correct. If extra resources were to be supplied to enable them to do so, frankly it would not be the first priority for expenditure in local authorities, all of which are very hard-pressed at the moment even without taking on extra functions without the resources to carry them out. Let us remember that the recommendations, which effectively are for extra civil service support, be it central or local government—as I read the report, it is both—come just after the Government have closed the Government office for the region.
Of course there is a case for the seven local government leaders to meet. In effect, this replicates, but for a smaller area, the arrangement that pertained under the last Labour Government through the Association of North East Councils. Local authority leaders already take a close interest in economic development questions in their council areas, and they work with others when there is a common interest. But is not the lead on economic development supposed to lie with the LEP, not the local authority leaders alone? The local authority leaders are already all represented on the board of the LEP. What is the relationship between the two supposed to be?
A better approach to the Tyne and Wear passenger transport authority would be to amend the existing arrangements rather than create a whole new authority. The existing authority has the advantage of involving councillors who are not the leaders of their authority and can give the time to specialise in transport matters. Nexus and the integrated transport authority are already working hard to push ahead with many of the recommendations in the report, including smart ticketing and a consultation on a quality contracts scheme.
Similarly, I do not understand, and the report does not explain, what the specific input of the local authority leaders into skills training is expected to bring. The justification in the report is that the local government leaders know their own areas the best and therefore are best placed to identify skills needs and shortages. I am not sure that this is true. In any event, local authority leaders have a great deal to do already, and to demand that they specialise in skills and training issues as well as economic development and transport policy seems to me unreasonable.
A combined authority does not give the region any more access to Government, and it is Government who have the power and hold the purse-strings, and that is more so now than under the previous Government. We have had the LEP up and running now and that has not enhanced the region’s direct access to Government, where the big decisions are made. The LEP has had the lead on the enterprise zone policy for almost two years now. I am not an advocate of the policy, as I made clear at the time, but if it can be made to work, I want it to be made to work. But there is not much evidence of it working so far.
The right hon. Gentleman talks about there not being much evidence of the policy working, but we should celebrate good news. Will he join me in congratulating Nissan on the great news today of the £250 million investment in its new car line, and the 1,000 jobs that go along with that? Let us celebrate good news for the north-east.
I am happy to join the hon. Gentleman in that. Nissan is one of the great hopes for the region. It has the potential single-handedly to make a substantial impact on the employment issues in east Durham and in the city of Sunderland. When I was the regional Minister, I was a great enthusiast for the potential that was there and a great champion of it, and I was able to take its case to the heart of Government. I hope that that helped to bring about the arrangements that are now in place and the success the company now enjoys, but we should never lose sight of the fact that the principal reason for Nissan’s success is the management and the work force. I think that everyone in public life in the north-east wants it to succeed, will fight its corner and stands ready to help. I hope the issue will never divide us when we look for the way forward for our region.
My principal criticism of the report is that it is all about process, rather than outcomes. It is repetitive and has a scattergun approach to initiatives. For example, there is a flurry of ideas around one of the most pressing issues: the need for venture capital and the continuing difficulty in getting banks to lend. That problem is not unique to the north-east, but it has a particular impact on us because we are trying to develop the private sector in our economy.
The report proposes a range of initiatives, including exploring the potential for a regional business bank, a north-east access-to-finance scheme, an investor readiness programme and a north-east finance and investment board. It also proposes what are described as “new investment plans”, a “front of house system”, “client relationship management”, “re-location” schemes and a “North East International” body. There is a flurry of initiatives, but what does it all mean? Do they overlap? I cannot tell. At least, it is not clear from the report.
The report also restates existing projects as if they were new initiatives. I have already mentioned such cases in relation to transport, but there are other examples, such as the “Open Innovation and Growth Centres”, that are already working or have already been announced.
The report mentions in general terms desirable ideas and principles, such as an increase in apprenticeships, greater foreign direct investment and more young people from the region going to university. All those outcomes are desirable and none of these issues is new but, crucially, while stating that they are desirable, the report gives no indication of how best to achieve them. At the very best, the report’s recommendations would deliver administrative change for our region in a few years’ time. The need for action is now. Yet now the Government are actively sucking demand out of the regional economy by changing the national funding formulae for local government, the national health service, policing, transport and infrastructure investment, to our region’s disadvantage.
What the region needs is a politically led and determined drive, involving everyone who wants to help—this really should not divide us—to develop the private sector economy in the region. We have done a tremendous amount to help ourselves as a region, but the scale of the problem is such that more needs to be done. As well as determinedly driving forward the projects that we know are there, there is a case for a short-term emergency response to the emerging problem of long-term youth unemployment. Only central Government can do that. The Chancellor and the Business Secretary could explore incentivising the region’s small and medium-sized employers to take on an extra young person, or more than one, if only to prevent the corrosive and demoralising effects of worklessness and defeated ambition among the young.
In my view, things were moving in the right direction under the structures and leadership of the previous Labour Government. The report confirms that by setting out the region’s progress in the last growth cycle with 67,000 extra jobs, gross value added increasing by 57%, and tens of thousands of jobs created through greater foreign investment. The north-east was moving in the right direction, with the fastest growth rate of any English region, although admittedly from a more modest start. That was delivered under the former economic development structures, which would have worked well to get us through the economic downturn. The report is quick to offer new structures but gives no assessment of how well the old ones worked. In short, it correctly identifies the issues facing the region but is insufficiently bold in offering a way forward.
It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). I suggest that we should be very proud of the report, and very proud in the north-east. As we all agree, it is the most beautiful of regions, and certainly not desolate. It is blessed with a positive balance of payments, as the North East chamber of commerce and the businesses constantly make clear to us.
Not only was the region the cradle of the industrial revolution, but this year we are leading the way. First, in the spring we had the January declaration in the north-east, which made a significant contribution to how we visualise the type of country we wish to be. Secondly, in April we had Lord Adonis’s report, which is fundamentally business-led, with the most pragmatic of Labour politicians at its head; he is someone we can genuinely work with. I am happy to say that I worked with him and supported what he was doing in creating the report. Thirdly, in June, we had the banking conference in Gateshead which a group of us organised to try to facilitate bank lending in a multitude of ways, ranging from a business bank to a local enterprise partnership infrastructure bank to community and local banks—different types of lending and expanding on credit unions that will address the fundamental problem of the lack of bank lending and finance to create the private sector jobs that we all so wish for.
The north-east is leading the way. The right hon. Member for Newcastle upon Tyne East is right that Manchester has produced a derisorily small and not very good report. We have produced a proper report that deals with what all 39 local enterprise partnerships have to do—address specific plans for a strategic economic plan within a particular time scale. Every Member of Parliament and every person in this country will have to address the problems that we are leading the way on. That is very significant. The north-east is not sitting back and accepting the state of things as they are; the north-east is making the case for change.
The strategic economic plan must be submitted by the end of March 2014, and it requires a Government response at a certain stage over the winter. It affects businesses, universities, local authorities and anyone interested in transport, housing, schools or skills—pretty much everybody. I cannot speak to every part of the report in seven minutes, but I can say that I support its broad thrust. The most important part concerns the development that has taken place over the past year-plus with the local authorities all coming together and forming the combined authority. It is absolutely vital that we go on this journey. I take the point about the Association of North East Authorities being a type of combined authority, but it is nothing like what we are going to have in future.
That is a structural change, although I am not opposed to it. To be fair to the north-east councils, they have a very good track record, across the political divide, of working together. However, the hon. Gentleman cannot get away from the fact that his Government have already taken some £240 million from the local authorities covered by the LEP area in the past two years, and that is before the next round of cuts. How does he expect those councils to come up to the mark as the Government are asking them to do?
The hon. Gentleman need not take my word for it; he can listen to the author of the report and the business men and business women who believe in the north-east being able to cope with those difficulties and strongly make the case that there is optimism to be found there.
The next step as regards the combined north-east local authority is to pick a leader. I would certainly support having a mayor.
The hon. Gentleman is talking about a champion—a mayor—to lead the LA7, or strategic authority—[Interruption.] I am not canvassing for the job; I am going to suggest a job for the hon. Gentleman, actually. On that basis, does he support the idea eloquently expressed by my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) that we should have a Minister for the north-east as an advocate who did precisely that job at the heart of Government? Perhaps that would be a good job for the hon. Gentleman.
I am happy to be modest on this occasion.
A mayor is someone working from the bottom up and driving the region forward. A Minister in the Government—I say this with no disrespect to the work of the Minister on the Front Bench or any replacement—is here for at least four days a week and unable to drive things from the bottom up. However much the Member of Parliament who was the Minister would like to be in touch with everything that is going on, it must surely be accepted that someone local needs to be driving it forward. That is certainly the case with the Mayor of London and the mayors of Paris, San Francisco and other regions, and they have been successful. It is, however, a matter for debate, which is what this process is about. A legitimate debate is taking place about how to make progress. Tomorrow I and 400 other delegates will discuss the report’s individual parts at the International Centre for Life in Newcastle. I am not suggesting that anything is set in stone, but one thing is clear: the north-east is leading the debate about where the structures should go.
In the limited time available, I want to endorse the comments made about transport. I recently met staff representatives from Newcastle airport and I welcome the developments there and the attempts to expand transport.
Clearly, future growth must be engineered through education and skills. We cannot plan for the future without more of the brightest and the best getting involved in initiatives such as Teach First and acting as role models for local children. As it stands, the north-east has only a third as many of those dynamic individuals as London. We need to motivate children from all economic backgrounds to apply to Russell Group universities. One of the report’s targets is for 35% of the area’s secondary schools and 40% of its primary schools to reach the top quartile, and it sets out some very good ways, such as Teach First and the north-east schools challenge, to achieve that. It is good that we are encouraging university technical colleges to build links between academia and industry and take advantage of the north-east’s unique characteristics.
On apprenticeships, I am pleased to say that I have made my limited, modest contribution by employing an apprentice—not as an apprentice MP, I hasten to add, but as an office manager. There should be greater incentives to encourage everyone to take on an apprentice, and the report eloquently notes specific measures that could enhance the situation.
On local community banking, at our June conference at the Sage in Gateshead 170 people came together to discuss how they could turn around their local economies and get local communities lending. On larger infrastructure, the local enterprise partnership could run the infrastructure bank. There is no reason why community banks could not be backed by local authorities, universities or the Army, which is looking at them. If we can get regional and local lending to address not just the high-cost credit issues that were discussed in the previous debate, but the issues of bank and mortgage finance, that would be a great deal better than the present, patently insufficient system whereby the big seven banks are remote, London-based and computer-run, and totally unresponsive to and not located in the community.
I cannot finish without raising two particular points. First, I welcome the comments of Northumberland county council on the need for a rural deal so that the report does not just deal with the urban centres. It needs to be for the countryside as much as for the urban centres. Secondly, a survey by Business Quarterly, which is available online, found that there is great confidence that this north-east independent review will address some of the region’s economic needs.
I support the review and will discuss and debate its benefits tomorrow. We must acknowledge that the north-east is leading the way.
I endorse what my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said about wanting a regional Minister again. Having worked very closely with the regional Minister before coming to this place, I know that it was a huge asset to have somebody in the House who was responsible for our region. As somebody who was very involved in the campaign for a north-east assembly and regional government, I found it interesting to hear a Conservative politician calling for a mayor—an elected politician to speak up on behalf of the region.
The report identifies many of the problems in the region, but a lot more work needs to be done on the solutions. It demonstrates that the north-east economy has a solid foundation on which long-term growth can be built. The north-east has a good record of creating jobs. Some 67,000 jobs were created between 1998 and 2008, which was more than in any other region. The north-east is also a trading powerhouse for the UK economy. In 2011-12, it was the only area in England to record a goods trade surplus. That is a real achievement. Our excellent export record is a result of the high levels of foreign direct investment in the region over the past 10 years.
Of course, the north-east economy has several key structural weaknesses that will continue to hinder economic growth and job creation if they are ignored. The two central problems are that there are too few private sector jobs and too few highly skilled, highly paid service sector jobs. That leads to lower productivity and income levels across the region that are simply too low. The north-east has just 38 businesses per 1,000 working-age residents, whereas the national figure is 60. That lack of businesses is a major factor in the high levels of unemployment in the region.
Despite the abjectly chaotic regional growth fund and the dissolution of our successful regional development agency, One North East, the north-east continues to be a driving force in the re-emergence of the British automotive industry. As the hon. Member for Burton (Andrew Griffiths) said, Nissan is a huge success story. It is based in Sunderland, but it benefits not only Sunderland but the entire region.
The Nissan plant employs 7,000 and a further 30,000 people are employed in the supply chain. In the main, those are very highly skilled jobs. In 2011, the Nissan plant in Sunderland produced more than 480,000 vehicles. Nissan has invested more than £3.6 billion in Sunderland since 1984 and it continues to invest in innovation, most recently with the Nissan Leaf, bringing further investment and jobs to our region. Having lived in the region all my life, I have to say that Nissan was brought there not by one person, but by all the parties and all the people who are involved in industry in the north-east. The Nissan plant demonstrates the importance of the UK’s membership of the European Union to the creation of jobs in the north-east. The uncertainty around a referendum is not helping investment and is creating problems.
Universities have a huge role in bridging the gap between education and graduate employment. I have no issue with the Russell Group, but we have excellent universities in the north-east and not all of them are Russell Group universities. As is noted in the report, the Institute for Automotive and Manufacturing Advanced Practice and the university of Sunderland have developed a centre of excellence in low-carbon vehicle technology, which trains graduates with the skills that large employers such as Nissan require. AMAP has introduced the first master of science qualification in low-carbon technology, allowing engineers in the LCV industry to study part time and gain vital advanced qualifications in that fast-growing industry.
On the banks of the Wear, on the site of the old shipyards, the university of Sunderland hosts the Institute for International Research in Glass and the Ceramic Arts Research Centre. The National Glass Centre is part of the university and it offers a glass and ceramics degree in which students can work with professionals in state-of-the-art facilities. That is a fine example of education working with industry to develop the right skills, abilities and network of contacts to build a career.
As has been said, participation in higher education is lower in the north-east than in the UK as a whole. Something needs to be done about that. The increasing adoption of science, technology, engineering and maths qualifications is vital if we are to provide the highly skilled work force that our advanced manufacturing sector needs. Employers often report problems in recruiting people with the right skills. It is vital that we enable more employers to take on long-term apprentices to produce people with the qualifications at level 3 and above that are needed.
Rebalancing the economy is not a meaningless platitude, nor does it mean hampering London’s competitive advantage in banking and finance. It simply means recognising that growth, jobs and rising productivity in regions such as the north-east are vital if we are to see sustainable, long-term economic growth nationally. I urge the Government to take note of the report, empower councils and give LEPs the powers and access to finance that they need to form partnerships with SMEs and universities, so that they can help make the north-east the economic powerhouse it clearly has the potential to become.
I congratulate those who have secured the debate. For a small but beautifully formed part of the country to be discussed in the main Chamber is terrific. I bring apologies from my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who unfortunately cannot be here as he is on Justice Committee business. He certainly wanted to be.
I welcome the high-quality report. I was slightly surprised at some of the critical remarks about it in the opening speech, because I understood it to be a bottom-up initiative by a lot of people in the region, and therefore a good summary of what was happening and what should be done. Lord Adonis said in his report that he had been immensely stimulated by being in the region and meeting various people, and had left “full of optimism”. That is certainly the spirit in which we should see the future.
I welcome the five key aims set out in the report, especially the one about the skills agenda. We saw in the news today that Dyson had said it would employ 2,000 more people if only it could find the technical and engineering staff that it needed. It is frustrating for me, in an area of high unemployment, constantly to meet employers who say that they cannot find the people they need. We also need more entrepreneurs in the north-east. That is not well covered in the report, but we have one of the lowest levels in the country of entrepreneurship and small and medium-sized enterprises. There is plenty of room for growth there.
As a Tees valley MP, I look at the report through the lens of that area, and I would make one observation that is meant to be helpful. The report is quite heavy on structures and low on dynamism and the private sector. I know that there are real issues in the North Eastern local enterprise partnership area, but Tees Valley Unlimited is different in that the local authorities come together in the LEP rather than as a separate group. That leads to cohesion and also gives the LEP a strong mandate for action. It remains to be seen how the north-east’s structures will work in future.
Of course, our region has been hit hard by the decline of traditional industries, but it is recovering. As has been said, it is the only region with a net trade surplus, and we are benefiting from the Government refocusing on manufacturing. Recent figures show growth in manufacturing, and Redcar steelworks had record production just a few weeks ago. The Government are also making more effort on foreign trade, which is benefiting our region, and we can all do our bit. As chair of the all-party group on the chemical industry, I was pleased to lead the north-east process industries trade mission to India in March.
The Government have been working hard on the north-east in many ways. Enterprise zones have been mentioned, and I am delighted that those in the Tees valley have already attracted 10 new companies and more than £400 million of investment. The regional growth fund was derided earlier in the debate, but let us remember that it is genuine regional policy. Only the areas that really need the money are getting it. The north-east is a huge beneficiary—in rounds 1 and 2, the two LEP areas got nearly one third of the entire country’s projects.
Is it not a fact that in the last year of the regional development agency, it had an annual budget of nearly £250 million? Now the Government have taken that away, which the hon. Gentleman voted for, and there is a bidding game in some areas. Some of the decisions that are being taken are difficult to justify given the deprivation that exists and the support that areas need, but they are perhaps being taken for political reasons. The idea that the regional growth fund somehow replaced what was taken away is complete nonsense.
I accept the hon. Gentleman’s point about the amounts of money concerned, but of course we were left in a situation where the Government were basically bankrupt. It is excellent that instead of spraying money around all the regions of the country, the Government have picked the regions that actually need it. The limited amounts of money are coming to areas such as the north-east. The recent announcements of EU funding are of course welcome, and I congratulate the Government on taking only a small slice of it, as opposed to the 50% slice that I believe the previous Government took. The EU’s recognition of Tees valley and County Durham as areas needing special assistance is welcome, because it will result in large amounts of money. There is more to come from the EU youth unemployment funds, because we qualify on that ground too.
The hon. Member for Burton (Andrew Griffiths) said we should celebrate good news. It was great to see the ground being broken for the Hitachi factory a few weeks ago. It already has its first orders. We have heard about the effect that Nissan has had on the north-east. Hitachi has the potential to be a similar success story, with the supply chain as well as the company itself. We should celebrate that.
As the briefing for hon. Members states, the North Eastern local enterprise partnership is the fourth biggest. It is working on a huge number of activities. Were my right hon. Friend the Member for Berwick-upon-Tweed in the Chamber, he would certainly mention the need to continue with rural broadband investment for Northumberland, and to build on the recent Government announcement on dualling the A1.
The overall region is stronger with two LEPs based on the two main conurbations. I have spoken in previous north-east debates on how I believe that the Tees valley lost out under the old arrangement. The statistics are clear on that. I congratulate Tees Valley Unlimited on its work. As well as enterprise zones and successful regional growth fund bids, it has an economic strategy and a business plan. It is aiming to have 25,000 extra jobs over the next 10 years. It has launched a £20 million contract catalyst fund, giving performance bonds for small and medium-sized enterprises; secured £12 million for a pinch point on the A19; and engaged with more than 750 local businesses.
We are getting much needed improvements to local bus and rail services, including a new rail station at James Cook hospital.
The hon. Gentleman makes an excellent point on transport infrastructure, but, on TVU, does he share my frustration that we are not making the progress we should with the Tees valley metro, which would be a driver for our economy locally?
I share the hon. Gentleman’s frustration—in fact, he has stolen the next sentence of my speech. One way in which we have suffered over the years has been the lack of serious efforts on Tees valley transport, particularly in respect of the metro. It remains a scandal that we have railway line passing within half a mile of the airport but no link to it.
We can see the effects of the improvements in my constituency. Unemployment is down by 8% in the past year and by 15% among the 18 to 24-year-old age group. However, unemployment is still way too high, as is long-term unemployment.
I and the North East LEP welcome pragmatism based on real geography. For example, the area I represent is firmly aligning itself with the Welcome to Yorkshire tourism brand. We are part of the historic county of Yorkshire. We have a race course that is marketed under the Go Racing in Yorkshire brand; a large slice of the Yorkshire coast; and part of the North York Moors national park. It is therefore right that we align with that tourism body. I wish the North East LEP well—it is important for all hon. Members that it succeeds—and welcome the joint meetings that are taking place on matters of common interest such as transport and finance.
The threat from the EU was mentioned. The hon. Member for Stockton South (James Wharton) is well aware of my dismay that he should raise that subject in the House. Even the uncertainty is incredibly damaging to the north-east. I have met business people who say that the uncertainty is not helpful. An exit would be utterly catastrophic for our region.
I hope that the joint meetings take place on a case-by-case basis and that we stop short of creating any new joint bureaucracies in the north-east. We need short steps from ideas to action. We already have successful businesses, great universities and institutions, a tradition of hard work and very strong communities. If we can build on the optimism of Lord Adonis, add more aspiration and talk our region up and not down, I am sure there will be a bright future.
I congratulate my neighbour, my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), and the Backbench Business Committee, on securing this important debate. The focus of my contribution will be on skills.
I grew up in Newcastle in the ’60s and ’70s, a city and a region that valued engineering—making and building things. I remember the late Baroness Thatcher telling the country that engineering and manufacturing were the past. It was that relentless pursuit of a service-led economy that saw the level of employment in the north fall by 1.3 million between 1979 and 1987. The associated devastating impact on our communities is still felt today. It is not good for the north-east, or the UK as a whole, to have a deep and growing divide. A one nation economy needs an innovative and dynamic north-east. The region already has world class institutions, businesses, universities and of course people, not to mention—and they have already been mentioned—countryside and culture. As we have heard, we lead the way in exports and are increasingly becoming a centre for hi-tech and digital businesses. There is no better place to live, work or innovate.
The report found that we need an additional 60,000 private sector jobs to provide a balanced and sustainable economy, and that those jobs must be highly skilled and highly paid if we are to compete and prosper. That is a challenge I know the region is up for, given the right resources. In the decade between 1998 and 2008, as my right hon. Friend mentioned, and with the support of the regional development agency, the region added 67,000 jobs, many of them in the private sector. It is right that the seven north-east councils have come together to form a new combined authority. I look forward to working with it and the LEP to improve the skills landscape across the north-east. I welcome the North East LEP piloting a new skills development funding initiative, which will mean a greater say on skills funding in the region.
The report calls for a doubling of youth apprenticeships. If that is to be achieved, Ministers must allow more power and resources for skills to be devolved. If the Government are serious about localism—the evidence so far is not good—then Ministers have an opportunity to devolve significant power to the combined authority. Building the new economy that we want for our region requires an effective partnership between the public sector, the private sector and higher education, and it is vital that the structures are in place to support them. Unlike London, the devolved nations and even Manchester, the north-east has had no collective voice since the RDA was abolished to shout out our strengths or focus on our weaknesses. I, too, echo the desire of my right hon. Friend for a regional Minister.
The combined authority should have real power, knowledge and legitimacy over those in Whitehall who currently make decisions for our region. It must also have the resources. Structures are not enough—it needs the resources to build the new innovative regional economy that is set out in the report.
The resources should be focused on our region. The partnership between the LEP and the combined authority should take control, as much as is possible under current structures, of our region’s future.
As we have heard, the fact that the Government have taken so much out of the region—£100 million has been taken out of Newcastle city council’s budget alone—does not make the task any easier; rather, it makes it much harder. What would help is control over the valuable European funds that are directed to the north-east, to ensure that they go to where they are needed. One area where the report falls down is in ignoring the importance of culture, inclusion and community. The people of the north-east are the north-east. They are an asset beyond a mere skills base. That is why the European social fund, currently administered by the Department for Work and Pensions, which focuses on extending employment opportunities and developing skills should be devolved. I understand that the DWP will match the fund only if it can control it. If that is the Minister’s idea of localism, it is certainly not mine.
There are too many people in the region who are too far from the jobs market to take advantage of the high-skilled economy that we want to build. Councils and industry in the north-east are showing the kind of leadership that we need, by working together—at long last, one might say—to form a new authority that will work with the LEP, universities, businesses and people.
I agree with the hon. Lady about the need to increase skills and training in the north-east. Will she therefore join me in congratulating the Government on increasing the number of apprenticeships available to young people in the north-east by 70% in the last three years?
I really must correct the record. What the hon. Lady said about apprenticeships is outrageous. We have spread apprenticeships across all age groups, including among older people. We are not devaluing apprenticeships; we are doing absolutely the opposite. We are saying that for an apprenticeship to be real, it has to involve genuine employment with an employer—that is what an apprenticeship means to most people—and we are insisting on that.
The Minister should recognise that the changes made to the apprenticeship programme have not met with universal approval. Indeed, there is a report out today criticising the Government for changing the funding of apprenticeships for those over 24 years old.
We need leadership from Ministers and the devolution of real power, including over vital EU funding, which can help to boost our region and its people.
I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing this debate and the Backbench Business Committee on allowing it.
As my right hon. Friend said, the problem with the report is that it contains a lot of structures but very little action. It is action that we need now. The report has another fundamental problem, in that it divides the region artificially in half, talking about transport for the north part of the region. We are a small region, and one thing that we cannot do is put artificial barriers between parts of the north-east. People in my constituency work on Tyneside, in Durham and down on Teesside. That is one of the problems with the report.
The hon. Member for Hexham (Guy Opperman) said that he welcomed his involvement in the report. I say well done to him, because Labour MPs were certainly not asked for their involvement, although that did not surprise me at all, coming from Andrew Adonis. Indeed, he has come up with another structural solution, which is to have a mayor for the new LEP area. I do not think he could have come up with a more barmy idea, because it would do nothing to help the economic development of our region—not even the northern part of the north-east. Fundamentally, this Government do not believe in regional policy, so they have come up with two LEPs. They have no cash, but a nice report will be produced that will possibly gather dust, and also a lot of plaudits—that is certainly what I have seen over the years that I have been in the north-east.
A headline in the Newcastle Journal today, alongside a picture of Andrew Adonis’s smiling face, tells us that £1 billion is coming to the north-east. Only when we read the small print do we see what is really involved. It is £500 million of European money, but the real clincher is that it has to be matched by another £500 million, either from council money or from the private sector. That is a bit like someone winning a car on a quiz show, only to be told not only that it has no petrol in it but that they have to buy an engine for it as well.
It will be interesting to see where that other £500 million will come from, because local authorities are under a great deal of pressure. More than £200 million has been taken from the local authorities in the LEP area in only two years. Over the next financial quarter, Durham county council is going to lose £209 million. What are the Government doing with that money? They are giving it to their friends in the south of England. Let us look at the local authority cuts per head. Durham is losing £168.80. Wokingham is losing £26.53, and Surrey Heath—that place of real deprivation—is losing £24.54.
This Government have no regional policy at all; that is the problem. The report is fine when suggesting structures, but the fundamental problem is that there is no cash behind them. I pay real tribute to councils in the north-east, not just those in the northern part but those in Teesside as well. They have a long tradition—going back to well before the last regional development agency—of working with private industry and other sectors to help the north-east. Nissan came to the north-east because of the dynamism of those different sectors working together.
The fact that Newcastle airport exists in its present form is due to a partnership of seven local authorities working together to provide a regional airport for the northern part of the region. Local authorities have been engaging in such processes for decades.
That is right. I used to be a director of Newcastle airport. It did a remarkable thing under the previous Conservative Government: when they stopped local authorities raising money, it paid for an expansion costing nearly £27 million out of its profits. It had the foresight to do that.
If we are looking to local authorities to provide that extra cash, we must remember that they are under a lot of pressure. The chair of the North Eastern LEP prides himself on having only a small team around him, as though that were some kind of badge of honour. I do not know how the hell he is going to deliver the process if he is going to rely on local authorities to provide that extra funding, because the cash just is not there. Every time a grant is made from the regional growth fund, we hear announcements of so many million pounds coming from the Government to the north-east, but the real sting in the tail is that we never hear how much the Government are taking away from the region, including the £200 million a year that was going to the RDA, and the £2 billion-plus that the Labour Government invested in the north-east over 13 years.
The Government also talk about skills. Well, fine; but this is the same Government who have cut back on Building Schools for the Future. In Durham, for example, only seven of the 25 BSF projects have survived. In Darlington, seven out of the eight projects were cancelled, and 14 out of 21 were cancelled in Sunderland. I say to the authors of the report that it is no good talking about school initiatives when there are schools in the north-east that are crumbling around people’s ears and have water leaking in through the roofs. It is very difficult for teachers to teach in those conditions. Lo and behold, Mr Speaker—I come back to my favourite place: Wokingham—guess how many BSF school projects were cancelled in Wokingham. Not one.
It is no good the Conservative Government, with the support of the Liberal Democrats, arguing that they are somehow supporting the north-east. They are deliberately doing things that take resources away from the region. Local government funding is being skewed in favour of the south-east, and the benefits changes will have a disproportionate impact on our area.
The report appears to give tentative support for High Speed 2, although it does not actually do so, because it admits that the north-east will benefit the least. That is true: HS2 will be a complete disaster for the north-east of England. We have heard about a wish list of transport projects—including a Teesside metro and others—if HS2 goes ahead, but I would say forget it, as that will not happen. What we need is real investment and increased capacity on the east coast main line. Back in 1980, the then British Rail did an experiment, clearing all traffic off the east coast main line. Journey times from Edinburgh to King’s Cross came down to three hours, and from Newcastle to just over two hours. That is what we have to do—invest in that, not in the vanity project for which this Government have fallen. It was dreamed up by Lord Adonis, who I do not think has ever been elected to anything—apart from when he was milk monitor at school.
I wish this report well, but I fear that it will raise expectations, without delivering. What business needs now and what young people in my constituency who face a long term of unemployment need now is action. They do want to hear structural arguments and they do not want a glossy report, which might well make the authors feel good and get them a lot of press coverage locally. What we want is action. We had action when we had the RDA, which could step in and rightly did so when the economic downturn came—not just to help individuals but to help businesses in the constituency. There is now no access to that at all, and some businesses in my constituency are certainly struggling as a result of the lack of investment from banks and other lending institutions.
It is a great pleasure to follow my hon. Friend the Member for North Durham (Mr Jones). I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on showing the same excellent leadership skills in securing this debate as he showed when he was a first-rate regional Minister. I also want to thank the Backbench Business Committee.
The north-east obviously has considerable economic strengths. My hon. Friend the Member for Sunderland Central (Julie Elliott) pointed out that car production and vehicle manufacture at Nissan is an extremely important facility, and the new Hitachi factory has come to the north-east partly because of Nissan’s success and because of the area’s links with Japanese manufacturers. We have the largest integrated chemical plant in the UK and, up to the last election, we had a very good programme on sustainable energy innovation, offshore wind and renewables. We are consequently the only region in the UK with a trading export surplus on trading goods.
It is also relevant to point out that the north-east is an extremely nice place to live, with great cities and beautiful countryside. I wish to commend the AONB—area of outstanding natural beauty—paper for proposing a partnership between the countryside organisations and the local enterprise partnership.
Does my hon. Friend and parliamentary neighbour agree that in our two constituencies, as well as across the north-east, there are areas of outstanding natural beauty, but our local authorities are no longer in a financial position to support or promote tourism in them because of the massive cuts to their budgets?
My hon. Friend puts her finger on the issue.
It would be fair to say that the North Eastern LEP’s independent economic review is a useful report. Its analysis of the state of the north-east’s economy is good; it highlights our strengths and weaknesses; and what it says about the supply side seems to reflect the consensus that has existed in the region for some time, particularly about the importance of skills and the need for higher skills if we are to secure more and better jobs. The proposal to increase apprenticeships is positive, but there is a question about whether, given the current state of the labour market, employers will be able to supply the work placements that are needed for them.
The suggestion that we build public-private partnerships between industry and education at every level from school to university is right, as is the point that we need to build on the clusters where centres of excellence already exist. We have been doing that at NETPark—the North East Technology park—in my neighbouring constituency. The report points out that it is important to build on our export links to Scandinavia, the Baltic States and Russia. It also rightly points out that a number of important infrastructure projects could fruitfully be invested in, especially transport projects. We are talking not just about the inadequate road links with Yorkshire, over the Pennines and to Scotland, but about the bus services that have been decimated recently. Something must also be done about connectivity and broadband. The hon. Member for Hexham (Guy Opperman) drew attention to the importance of access to finance. The distances to London and to Leeds are clearly problems for small and medium-sized enterprises in our region.
It is not so much what is in the report as what is not in it that I find problematic. It was commissioned by the Deputy Prime Minister, and the authors seem to have been far too polite to criticise the abolition of the regional development agency and the loss of a regional Minister. The final section, entitled “Re-balancing the economy”, lists the milestones that have been set for the end of the first year. Every one of them relates to the rebuilding of institutional capacity. No one objects to the notion that local authorities should co-operate on transport policy or innovation, but what this actually means is that if all those aims have been achieved by 2014, we shall be back where we were in 2009.
Furthermore, as was pointed out by my hon. Friend the Member for North Durham, the split in the region is completely nonsensical. A person in my constituency is just as likely to commute to Middlesbrough, and work in the chemicals industry, as to commute to Newcastle. The skills strategy needs to be for the whole region, not just for part of it.
The authors have also given little or no consideration to the purpose of economic development, which has a significant impact on the type of change. Another weakness is their failure to say enough about housing, although I was glad to learn earlier this week that the LEP is ignoring the omission and will invest further in housing.
The biggest weakness in the report, however, is surprising. Our noble Friend Lord Adonis has a reputation for intellectual rigour, but it is surely intellectually dishonest to fail to mention the scale of the cuts meted out to our region and their impact on the demand side of the economy. Supply-side measures are fine, but we must pay attention to the demand side as well. The unfair way in which the Government have addressed the fiscal deficit is extremely significant in our region.
I accept that the hon. Lady is perfectly entitled to criticise the ultimate author of the report, but there are contributions to it from a large section of the business, technical and other communities, and from a number of other authors including Heidi Mottram, Don Curry, Will Hutton, Bridget Rosewell and Jonathan Ruffer, succeeding the Archbishop of Canterbury. It is not simply Lord Adonis who has produced the report.
I agree. In fact, I have spoken to all but one of those people about that weakness in the report, which I think is a very serious problem.
The Chancellor’s switch from current to capital spending sounds brilliant. It sounds like common sense. However, only 1% of the £45 billion involved is coming to our region, although, as the report pointed out, there are plenty of potential projects there. PricewaterhouseCoopers has said that the 2010 round of cuts in our region amounted to £2.8 billion, or 7% of our total gross value added. According to further analysis carried out for us by Oxford Economics, the knock-on effect will be a further £1 billion reduction. If the International Monetary Fund is right, the second-round effect is equal to the amount of the cuts: £2.8 billion. That is totally unfair. The same level of cuts is being imposed on the southern European economies.
The Institute for Fiscal Studies believes that there will be 45,000 job losses, and Oxford Economics believes that there will be 68,000. The creation of 65,000 jobs to which the report refers will merely bring us back to where we were at the start of the process. No wonder we have the highest unemployment in the country. Added to the public service cuts I have just outlined, we have seen significant reductions in incomes to ordinary people in benefits. In my constituency the average working-age adult is losing £560 per year. The Government are taking £310 million out of my constituency. No wonder there are 70 empty shops in my constituency. No wonder 30% of the young people in my constituency have no job. No wonder the citizens advice bureaux, whose resources have been cut, say that debt is the biggest problem that they encounter.
If the Adonis review is meant to solve the great woes that our regions faces, I fear for future generations, and in particular for young people, because it does not address many of the problems.
I am delighted to be here with good colleagues and comrades on the Opposition Benches—and Members on the Government side of the House—discussing the real issues facing the region, but what is amazing is that we are scrapping over the crumbs from the table. Before the election, the region received funds from the regional development agency, which supported hundreds of thousands of excellent jobs. According to the Secretary of State for Business, Innovation and Skills, our RDA was a shining example among the RDAs in the country. There was a pledge not to get rid of the RDA in the north-east because it was so good, yet now we have two LEPs with very little power and even less finance, and here we are scrapping over a report that is trying to address the massive problems we face in our region.
What is the situation in Wansbeck? The proportion of jobseeker’s allowance claimants stands at 7%, compared with 6.7% at the north-east regional level and 4.5% nationally. Youth unemployment is a great problem. It is even more worrying that the proportion of 18 to 24-year-old claimants stands at 13.1% compared with 9.4% at the regional level, while nationally it stands at less than half that at 6.3%. These statistics are shocking, but they hide even more serious issues, such as the extent of the under-employment resulting from shoddy working practices such as zero-hours contracts and people working part-time because they are unable to find full-time work. We will never know, or get to grips with, the numbers involved and the extent of the problem. The consequences of this type of employment are disastrous.
It is, perhaps, because of where we are now that I offer, with some reluctance, my support to this review. Last year the largest private sector employer in Northumberland, Alcan, which was based in my constituency, closed its operation. The knock-on effect on the local community has presented an extreme challenge. Alcan has left behind a power station operated by RWE, which is not without its own challenges in terms of carbon targets.
Wansbeck, however, is not without its success stories. It is easy for me as a Member of Parliament to get up here and continually criticise, but we must press the views of, and the situation facing, the people in our communities. It is no good saying unemployment is fine in the region when it is not. When people say we should be talking up the region instead of talking it down, I say, “Give us a reason to talk it up.” That is what I say on behalf of the people I proudly represent.
In 2014 AkzoNobel will begin the manufacture of its Dulux and wider decorative coatings range from its new state-of-the-art plant in Ashington in my constituency. I am delighted with that, and I give due credit for it. We have also had a number of other successes with small and medium-sized enterprises. I had the opportunity to visit the All-in-One Company in the recess. It is a unique, small factory that specialises in custom-made onesies; I had not even heard of onesies, by the way. People get on the internet, design their own onesie, press a button and then get the onesie delivered to them. The place is absolutely fantastic. The beauty of it is that the person who started the company came from Oxfordshire and she said to me, “Mr Lavery, I was delighted to come to this region because the north-east was the only region that could deliver what I wanted. It had the right people and I think that coming to Ashington in your constituency was an even better idea.” That was a great credit to us, and we have some great people and great businesses in the region—small, medium and large.
Let me now deal with the skills shortages. In the time I have left, I want to place on the record my thanks and congratulations to Northumberland college, in my constituency. It is delivering a range of different things. It is now offering up to 28 different apprenticeship frameworks and has more than 700 apprentices. It is also leading the way locally, having established an employment skills forum, with the aim of driving up skills and employment in Northumberland. We are looking to increase employer and individual engagement and investment in skills; support individuals to gain sustainable employment by improving employability; and strengthen joint working between employers, employer groups, skills networks, universities, colleges, other skills providers and the local authority. The college has done a marvellous job. It is only a matter of a year ago that we could have lost a college that is much needed in the area of south-east Northumberland; it could have been subsumed into a huge university in the area, so I was delighted at what happened.
There is a huge need for the skills gap to be narrowed in my constituency. We have the people, but they are, sadly, unemployed, because the jobs just are not there. Where there are jobs we face a problem with skills. We have the colleges and schools now working together to try to encourage people to join. We have the employers now sitting around the table with the colleges and schools. We are now looking at the whole situation, hoping that we will eventually get together to make Wansbeck a place where employment succeeds.
First, I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing this debate, as well as all other right hon. and hon. Members who supported our bid for it, and the Backbench Business Committee for giving us an opportunity to discuss this important report. In the time available, I want to address some of the issues from the perspective of east Durham, as you might expect me to do, Mr Speaker.
Without being over-critical, and while acknowledging the contributions of everyone who has been involved in preparing the report, not least Lord Adonis, we might be able to offer some reflections that might be helpful in determining a strategy that can produce the best results possible in terms of generating the maximum jobs and growth in the region that we care so much about. As other right hon. and hon. Members have said, we need to address issues that concentrate on process. The one thing that stood out in my mind when I was looking at the report was that it is spatially blind. In other words, it does not concentrate on people or place. In an area such as mine, Easington in east Durham, which is away from the urban core, that will present a particular problem.
I do not want to dwell too much on what has happened in the past, but it is important to inform our opinion and reflect on what has worked and what perhaps has not. Some policies, incentives and strategies have been successful, whereas others have been less so. The collective view, if I may venture an opinion, is that our regional development agency, One North East, which was abolished by the coalition Government, was pivotal in acting as a pole of attraction, not only to bring in overseas investment, but to encourage growth from small and medium-sized enterprises already located in our region. I could list a number of companies in my constituency that were helped by One North East.
Let me emphasise my support for the concept of a Minister for the north-east and pay tribute to my right hon. Friend the Member for Newcastle upon Tyne East for his sterling work in support of projects in the area. Some, such as the centre for creative excellence, did not come to fruition but it could have created more than 1,000 jobs and many hundreds of training places, giving a vista of opportunity to young people in east Durham. Sadly, however, that project is on the back burner, shall we say, because of a lack of funds. I will not go into the precise problems, but it looked at one point as though it would have come to fruition. That would have been a real boost not just for east Durham but for the region and for our further education colleges and universities.
It is important to audit our physical and non-physical assets. East Durham’s physical assets include advanced modern office and factory units, and road and rail transport infrastructure, including Seaham, County Durham’s only port. We have a modern multi-modal distribution terminal—ship, rail and road—and industrial and commercial land, including the large industrial site to which I referred earlier. We have an automotive supply chain and opportunities to develop port-related activities, including distribution. Those are assets on which we could build.
We also have people assets. The hon. Member for Hexham (Guy Opperman) said that not enough students from our region went to the Russell Group universities. We have some world-class universities in the region and many do not get the praise they deserve. Teesside has links and synergies with the chemicals industry, and Sunderland is one of the best universities for pharmacology. I am sure that there are examples from all our universities and they are a real asset that we should build on. Our work force are skilled, interchangeable and adaptable. All those things provide opportunities to develop new skills or more advanced skills for potential employees moving in to the area.
Given that we have a stock of physical and non-physical assets in east Durham, it is important that we market them effectively to potential investors. How we can best achieve that is the $64,000 question. The LEP must recognise that all economic growth and investment cannot be channelled into the urban hubs in the core cities. Although I welcome the establishment of the combined local authorities, they might need to consider particular needs and the targeting of sector-specific support in particular places, especially those on the periphery of the urban core. I am thinking, perhaps selfishly, about Seaham in my constituency and the former new towns, such as Peterlee, which are less strongly connected to growth centres. I know that there are other similar examples in other Members’ constituencies, such as Redcar. I feel that the LEP should have a stated commitment in its strategy to tackle what I describe as economic cold spots in the region—those that suffer particular disadvantage, such as east Durham and south-east Northumberland. I know that there are others.
We must also pay attention to what is happening in the EU. There will be a number of reports, including the fifth cohesion report, that will inform the next round of European regional development fund funding. We must take account of that and ensure that we have an effective place-based policy to get the maximum benefit from investment in goods and services to stimulate growth in our area.
There are issues with those not in employment, education or training and I hope that they will be addressed. Our own East Durham college should play a leading role in that.
Rather than going through the normal formalities and congratulations, I shall get straight on with my speech.
The north-east is not such a desolate place; in fact, it is a place of good news. We have heard the very good news this afternoon that Durham county cricket club now sits at the top of the county championship after defeating Sussex by 285 runs at the Riverside stadium. I was delighted to attend the fourth test match at the Riverside a few weeks ago when we had a good result and some excellent entertainment.
I am afraid that the north-east independent economic review was a lost opportunity as there appears to have been a lack of imagination and ambition, and of inspired and innovative ideas to build the north-east economy. The report sets out a north-east vision of “making, trading and exporting”, but I fear that it just encourages more of the same solutions that fell short of transforming our economy in the past.
There are many recommendations in the report, but mostly things that we as a region have been striving to achieve for many years. The problem is that it is a bit like extolling the virtues of apple pie without providing the means—the apples, the sugar, the flour, the heat and the rest of ingredients required—to produce the pie. It is all wishful thinking—
I am afraid that I will not.
There is no targeted support for key sectors such as tourism, advanced manufacturing and green energy, and no clear strategy for growth that recognises the enormous potential of the region and its people. Most importantly, there is no proposal for a co-ordinated strategic authority such as One North East, the former RDA, or for a Minister to lobby at the heart of government.
I completely support the recommendation to encourage foreign students to attend our universities to diversify the region, but it flies in the face of much of the Government’s policy on immigration and learning academies. The Government seem to disregard completely the fact that international students not only attend lectures, write essays and sit exams, but import money into local economies, create new enterprises, support work with local industry, and make vast academic, cultural and financial contributions to regions such as the north-east of England.
Another significant—if not the most significant—aspect of the report is transport. It is essential that the north-east’s links to national and international economies are improved, so I welcome proposals to pool funding from the various authorities to deliver a regional transport strategy, which would hopefully result in improved roads and rail, bus and metro services.
I use the word “hopefully” because funding is essential to achieve those aspirations, but I am not convinced that the Government are willing to put their hands in the coffers for the north-east to the extent that they are for other parts of the country. In response to that assumption, Ministers might say that I am over-sceptical, given the announced improvements to the A1 in my constituency at the Lobley hill pinch point. Although I am delighted by such overdue improvements, the region should not be settling for scraps from the table. We should be demanding the best and most effective transport systems that are on offer for other regions in the country, so let us consider spending per head on transport infrastructure projects by region.
A report published by the Institute for Public Policy Research in June called “Still on the wrong track” highlights the distinct disparities: the north-east receives only £5.01 per head of population whereas Londoners receive £770 a head. When thinking about national funding and taking into account the needs and special requirements of the capital, we might rationally determine that it should get twice, three times or five times the funding of other regions, but should it get 154 times the funding of a region such as the north-east? Such a thing is repeated year on year. If the roles were reversed, the screaming of London Members in the Chamber would be heard in Southend. I wonder how many Ministers have driven up the A1 north of Catterick and realised that it is no longer a motorway because it peters out into a dual carriageway with the occasional crawler lane as part of the motorway system.
Last month we heard about Government proposals to introduce fines for people hogging the middle lane on the motorway—chance would be a fine thing in the north-east of England. There is no middle lane because there are no three-lane roads; it is that bad. North of Newcastle, north of Morpeth, the road peters out into a single lane in each direction between Newcastle and Edinburgh. It is not good enough. The people of the north-east deserve better, not just from this Government, but from every Government.
Then we are being told that we will get investment from High Speed 2. In 20 to 30 years, that will deliver trains that will do the journey from London to Newcastle via Leeds 20 minutes faster than 20 years ago. In 40 to 50 years, we will have achieved a 20-minute decrease in the journey time to London. That is not good enough.
I emphasise that the report lacks ambition. My borough of Gateshead has largely been transformed in economic, environmental, cultural, architectural and educational terms in the last 30 years. How much more could we do if the whole region was given ambition and galvanised to make the sort of improvement that we in Gateshead have made? We need to do more and much more quickly.
It is a pleasure to follow my hon. Friend the Member for Gateshead (Ian Mearns), who always delivers his speeches with force, but with much humour too.
I congratulate my right hon. Friend and neighbour the Member for Newcastle upon Tyne East (Mr Brown) on securing the debate. He has always been a champion for our area, especially when he was the regional Minister, and he demonstrated that he understands what makes our region work.
The 2010 general election brought our region new challenges, including the removal of the successful regional development agency by the coalition Government, and its replacement with the less powerful LEPs. I know from the shadow Minister that when Labour is returned to power, we will not be rushing to get rid of regional institutions in the way that the Tories did with the RDA. Instead, Labour will strengthen such institutions so that they work to generate economic growth throughout the area.
In the meantime, we must do all that we can to press the coalition Government to take notice of the recommendations in the report, which reinforce the eager ambitions of our public and private sectors for more quality jobs and training, increased trade and ever-higher standards of education, as well as improved transport and infrastructure.
In my constituency, I already see examples of businesses, such as Fabricom and Insure the Box, gaining national recognition for their commitment to skills and training, and providing real apprenticeships that lead to well-paid, secure jobs and careers, which we so much need. I hope that Skills North East, as set out in the report, can learn from these businesses, which have achieved everything that they have achieved without Government funding, and could have achieved so much more with it.
The north-east schools recommendation cannot and must not detract from the success of schools in our deprived areas, such as Churchill community college, which had a 100% pass rate in grades A to C at GCSE this summer.
On transport links, we already have an excellent airport at Newcastle, and the newly published master plan outlines an ambitious future for aviation in our region. On the River Tyne, the Port of Tyne is playing its part in increasing industry and tourism for the whole area, but we must see investment in rail and roads, as so many of my colleagues have already said.
I welcome the coming together of the seven local authorities to set up the combined authority. This new body will bring energy and drive to the implementation of the Adonis review and has within it the experience and expertise to drive the wider economic and social growth that we so need to see.
My own council, North Tyneside, as well as now being part of the combined authority, has already been working closely with the North Eastern LEP. The LEP has provided moneys from the Growing Places fund to support the advanced infrastructure works for the former Swan Hunter yard, so the site is available for companies in the advanced manufacturing sector requiring access to the Tyne, as set out in the north bank strategy.
I will conclude by quoting the elected Labour mayor of north Tyneside. She told me that
“the Adonis Review has provided useful analysis and reinforcement of many and varied strategies and will be useful in focusing the delivery activity, but it can only be delivered if the Government fully support the devolution of resources, as proposed in the Heseltine Review, and actually give the Combined Authority, the North East LEP and others freedom to act in the best interests of the North East.”
I am sure that we all concur.
Thank you, Mr Speaker, for giving me the opportunity to sing the north-east’s praises in this important debate. I start by congratulating my right hon. and hon. Friends and the Backbench Business Committee on securing the debate. I would also like to acknowledge my colleague in the other place, Lord Adonis, and all those who worked with him on the review.
It is fair to say that at times the north-east has an underserved reputation in the media and, sadly, among some politicians. I get fed up with those who do not know how fantastic my part of the world and its inhabitants are, referring to the region as a cold, grim and—dare I say it?— desolate place. I know better, because it is my home. I am so proud of my region, and I am acutely aware of its incredible strengths, which are ready to be harnessed by Government and business. The real failure has been that of national Government, who have overlooked those strengths and neglected our needs, particularly when it comes to infrastructure.
In my constituency, more than one in 10 people are unemployed, including over 1,000 18 to 24-year-olds. Economic stagnation under this Government means that the number of people who have been out of work for over 24 months is four times higher than it was a year ago. Although students in my constituency received excellent GCSE and A-level results at the end of last month, less than a quarter of them will go on to higher education and fewer than one in 10 will start an apprenticeship. The simple fact is that this Government refuse to admit that there are not enough jobs and that, of those that exist, not enough are highly skilled. Job creation and training are essential for the north-east and its people.
The review states that
“lower paid jobs won’t change the economy”.
It is correct. Skills and training are an essential part of transforming our economy. The review recommends establishing a “North East Schools Challenge”, a dramatic expansion of the Teach First programme in the region and the introduction of university technical colleges, which will enable students to study technical skills alongside their GCSEs.
Apprenticeships will have an important role to play. In South Shields there are more apprentices over 25 than under, and the majority of them are at the intermediate level 2, rather than the advanced level 3. It is the level 3 qualifications that employers, and particularly manufacturers, favour. Local businesses in my area are going some way toward remedying that. Ford Aerospace, a local manufacturer, is working in partnership with South Tyneside college to take on 14 school leavers. They will have the potential to earn national vocational qualification level 3 apprenticeships. The Port of Tyne, meanwhile, has taken on seven apprentices, including five teenagers, with more to join later this year.
Ford Aerospace and the Port of Tyne also represent two of the areas that the review highlights as the north-east’s strengths: manufacturing and exports. The north-east’s well-known success as a manufacturer has been maintained in recent years, as it continues to outperform other areas of the country.
It is true that manufacturing provides high-skilled and high-paid jobs and contributes to our local supply chains. The Port of Tyne is one of our great success stories, contributing an estimated £467 million pounds to the region and helping to sustain an estimated 9,500 jobs. But those businesses are not helped by infrastructure that is failing through a lack of investment. The Government announced in the spending review that the transport funding allocated to the north-east will be a third lower than anticipated, and the Institute for Public Policy Research North has revealed that transport project spending per head is over 500 times higher in London than in the north-east.
The second Tyne tunnel, which is in the constituency of my hon. Friend the Member for Jarrow (Mr Hepburn) and feeds directly into mine, has been a success story. By linking the north and south sides of the Tyne, it dramatically reduces travelling times and increases economic activity and potential for business. However, this success is at risk if the investment for the junctions on the north side and the south side is not forthcoming.
It is a shame that the report says little about how smaller towns such as South Shields with a heavy retail and tourist focus can make the most of the plan, especially given that the local authority in my constituency has suffered cuts per head of £262.24—considerably higher than the national average and higher than all our north-east authority neighbours.
We desperately need investment in South Shields. The review sets out a strategy that takes advantage of the north-east’s characteristic strengths. There are difficulties, as my right hon. Friend the Member for Newcastle upon Tyne East and other hon. Friends have stated, but I am totally committed to ensuring that South Shields is part of any transformation plan for the north-east.
I might be slightly biased, but I have to say that the north-east has the best cohort of right hon. and hon. Members anywhere in the country in terms of their passion, commitment and determination for their local area to succeed. We have certainly seen that today. [Interruption.] You should always get them on-side first!
I pay tribute to my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), who was an excellent Minister for the region. It would be wrong to suggest, as has been suggested several times today, that the north-east comprises solely Tyne and Wear, Northumberland and County Durham. The true quality of the region as regards its people, industry and scenery can be seen best of all in Hartlepool—and to some extent, I have to concede, in Middlesbrough, Stockton, Darlington and Redcar.
What has been particularly striking and welcome about the debate is that no speaker has been negative or despairing about our region. It is not a failed region suffering inevitable or irreversible decline. As we heard from my hon. Friends the Members for Sunderland Central (Julie Elliott), for Newcastle upon Tyne Central (Chi Onwurah) and for South Shields (Mrs Lewell-Buck), it has real potential. That is reflected today in the great news that Nissan will be spending £250 million on expanding its factory in Sunderland and increasing its work force by 1,000 in order to become the first Nissan plant in Europe to produce the luxury Infiniti model. The onesies in Wansbeck are also good news.
The biggest single problem facing the north-east is skills and unemployment. Unemployment in our region is 10.3%, and getting worse. The gap between the region and the rest of the country is widening. This needs to be an urgent priority for Government. What is the Minister going to do about it? Will he explain how the abolition of the future jobs fund has helped young people in the north-east to get a foot on the career path? How has the cancellation of the education maintenance allowance helped young people in the north-east to stay on in education or training to get a skill or a trade that will get them a better job? How have savage cuts in the public sector helped demand, economic activity and public sector employment in the region?
Investment and access to finance are essential if businesses in the north are to succeed and grow. Yet the north-east is suffering just as much as other regions, if not more. Notwithstanding the great news from Nissan and Hitachi, the gap in foreign direct investment between London and the regions is widening. The Ernst and Young attractiveness survey for 2013 found that investments in England outside London were 24% below their level in 2010. The north-east secured 26 projects, which represented 4% of the UK market share of FDI—better than the likes of Yorkshire and the east of England but trailing behind comparable regions such as the west midlands, the north-west and, crucially, the devolved nations, and well behind London, which alone captured 45% market share of total FDI. Ernst and Young concludes:
“It appears that the abolition of the RDAs may be starting to undermine not only the regions in which they operated, but also the UK’s ability to sustain its overall leading position for inward investment.”
Will the Minister comment on that? Will he also address a theme that has emerged throughout the debate—that this is not so much about structure or process but about our need for outcomes on employment, innovation and productivity, not at some distant point, but now, to help the people of the north-east immediately?
Very often, the absence of business investment is because firms have no access to finance. Speaking this week to northern MPs, the managing director of the Tees valley local enterprise partnership said that that is the single biggest factor affecting firms and their ability to grow. I mentioned this in a Westminster Hall debate yesterday. Every initiative that the Government have attempted to put in place has failed. Net lending to businesses has contracted in 21 of the past 24 months. That is confirmed on the ground in the north-east. John Anderson, chairman of the North East Business and Innovation Centre, said bluntly in an interview with the Newcastle Journal last month:
“In the North East, Government lending channelled through banks has not been reaching businesses.”
Will the Minister acknowledge that none of the Government’s initiatives have worked? Will he pledge to change policy and come up with schemes that will succeed in securing access to finance for small and medium-sized firms in the north-east that have the potential to grow?
Businesses do not have confidence that the Government’s business bank is having any impact whatsoever. It is slow off the mark—[Interruption.] If the hon. Gentleman would stop chuntering and allow me to speak, I will respond to his question. The business bank is not working. It has had no impact in the regions. It is merely a desk in the Minister’s Department in Whitehall. A proper British investment bank would help fast-growing, innovative businesses, working together on proposals for a network of regional banks, to spark activity and economic growth in the north-east as well as other regions.
A number of hon. Members have discussed Government spending and infrastructure. The north-east has been singled out for particularly savage cuts. My hon. Friend the Member for North Durham (Mr Jones) mentioned the more than £200 million-worth of cuts in the local enterprise partnership area over the next two years. Hartlepool and Middlesbrough have been particularly badly hit.
The Institute for Public Policy Research has set out clearly:
“The North…suffers from weak public investment: government spending per capita on science and technology and transport in the North is almost half that spent in London and the south east.”
As my hon. Friend the Member for Gateshead (Ian Mearns) said, that has a long-term cumulative effect: lower spend and investment lead to weaker demand, competitiveness and economic growth, which in turn undermines a justification for additional spending and investment.
As my hon. Friends the Members for Gateshead, for South Shields and for Bishop Auckland (Helen Goodman) have all said, the north-east did not do well in the Government’s announcement in June on infrastructure. That has been exacerbated by the capital spend cuts of northern local authorities. The North East chamber of commerce said at the time:
“One disappointing element of today’s announcement is the lack of investment in projects in the Tees Valley, which requires significant infrastructure upgrades.”
Will the Minister explain why that was the case?
In the three months since the announcement, there has been precious little evidence of work commencing. When will the construction of the A19 Testos flyover start? When will the A19-A1058 coast road improve access to the Port of Tyne? When I used the A19 last week to visit Ford Aerospace in the Port of Tyne in the constituency of my hon. Friend the Member for South Shields, I saw precious little evidence of work on the ground. There seems to be a big lag between Government announcements and actual work starting. Will the Minister display a sense of boldness, priority and urgency and deal with those matters now?
Will the Minister comment on yesterday’s announcement in the World Economic Forum’s global competitiveness report—[Interruption.]
Thank you, Mr Speaker.
I am conscious of the time, but will the Minister comment on the global competitiveness index, which shows that our infrastructure ranking has moved from fourth in the world to 28th? That will not help productivity and innovation.
It is clear from the remarks of all north-east MPs that the region does not face inevitable and terminal decline. We are not asking for handouts or sympathy as we somehow slide towards obsolescence. The north-east has always been characterised by grit, ingenuity, invention and imagination. It led the world through the industrial revolution and has the potential in the 21st century to be the biggest global player in fields such as low-emission vehicles, renewable technology and high-value engineering.
To achieve that potential, the north-east needs a Government who are on the side of its businesses and its people, supporting it through a long-term industrial policy and giving it the freedoms and flexibilities needed to chart our own destiny, not a Government who prioritise austerity and neglect, as this Government have done over the past three years, and turn a blind eye to high unemployment and low pay.
The Minister has heard today of the potential and ambition of the north-east. We need boldness and action now. Will he and the Government deliver?
I congratulate my hon. Friend the Member for Hexham (Guy Opperman), the hon. Member for Bishop Auckland (Helen Goodman) and the right hon. Member for Newcastle upon Tyne East (Mr Brown) on securing this lively debate. I have occasionally felt that I had found myself in a meeting of the north-east parliamentary caucus, which is clearly a very lively group. It just needs a little more political balance, but we are working on that. This has been a very interesting discussion of what I think is a very important report.
I will start with the important opening speech by the right hon. Member for Newcastle upon Tyne East. I recognise that he has great expertise in this area. He criticised the Adonis report for focusing on structures, but many of his own comments were, in turn, about structures and organisations. He raised issues such as whether there should be regional Ministers. Let me make it clear that in the last few months, we have established the Local Growth Cabinet Committee, which is chaired by the Deputy Prime Minister and is directly involved in decisions on the powerful tools for regional development that we have put in place. Notable among those is the regional growth fund, from which the north-east has benefited substantially, and the city deals, which offer enormous opportunities for the cities that negotiate them.
I was rather disappointed by the approach that the right hon. Gentleman and several other Opposition Members took to the report. I hold no particular brief for this report. Contrary to what the hon. Member for Hartlepool (Mr Wright) said, it was not commissioned by the Government. It was commissioned by the north-east for the north-east and produced by a former Labour Cabinet Minister. I think that it is a valuable report. We should congratulate the LEP on leading the way by producing such an important and substantial report that really tackles the economic challenges facing the north-east.
I congratulate my hon. Friend the Member for Hexham on taking the right approach. He told the House that there will be a meeting in the north-east tomorrow, where 400 delegates will assess the ideas in the report. That will not be the final word, but I hope he will take to that meeting the message that the Government take the report very seriously indeed and consider it to be a high-quality piece of work. We will not get bogged down in endless arguments about process. We look forward to working with the LEP, local councils and local representatives in rising to the challenge, which has just been set by the hon. Member for Hartlepool, of improving further the growth and economic performance of the north-east. That is what this is all about.
There was a range of further contributions. I agreed with the hon. Member for Sunderland Central (Julie Elliott) that we should focus not just on the Russell Group, but look at the strength of all the universities in the north-east. As Minister for Universities I have, of course, visited all of them. They all have distinctive strengths, but they share a commitment to playing a constructive role in the local economy.
The hon. Member for Redcar (Ian Swales) made some important points about the range of initiatives that are available to support economic growth. I have referred briefly to the regional growth fund. He mentioned the opportunities that are presented by enterprise zones and by securing funding from the European Union. He spoke about the commitment on access to superfast broadband, both urban and, very importantly, rural. He also mentioned the good news that comes from major investment decisions, such as that of Hitachi. A lot is going on, but there is always more that needs to be done.
We heard from the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) and then from the hon. Member for North Durham (Mr Jones), who seemed to think that the review was a plot to ignore the views of Labour MPs—a plot so subtle that it involved putting a former Labour Cabinet Minister in charge of the exercise. He clearly has an obsession with Lord Adonis, which is rivalled only by his obsession with Wokingham. I do not think either obsession need detain us any longer, as time is so tight, but I think I represent the only party in the House with which Lord Adonis has not had a political connection at any point, so I can say that we should thank him for the important work that he has led. Of course, I can also repeat our commitment to another of his great visions, High Speed 2, which we know many key business organisations in the north-east welcome strongly.
The hon. Member for Bishop Auckland thought that the report was a plot commissioned by the Deputy Prime Minister. Again, we should treat it as what is—a report from the north-east, commissioned by the north-east, for the north-east.
I was fascinated to hear about onesies. It is great to know that they are one of the many contributions of north-east business to the national well-being
We heard quite a bit about transport, particularly from the hon. Member for Gateshead (Ian Mearns), who made the touching plea that if only there were three-lane motorways, people could be charged with the new offence of driving slowly in the centre lane. We have a substantial programme of transport investment, including the £314 million scheme to upgrade 11 miles of the A1, which will begin in 2014, and the £60 million scheme to improve a further stretch of the A1 between Newcastle and the Gateshead western bypass, which is due to start by 2015. And yes, we will also be moving soon on the development of funding for schemes on the A19. There are also smaller-scale pinch point schemes—I have a note about them and will read it out, as Opposition Members will know more about them than I do—that are planned for completion by the end of 2014 on the A19 junction with the A1 at Seaton Burn and the A19 junction with the A1231 in Sunderland. There is investment in transport.
The hon. Members for South Shields (Mrs Lewell-Buck) and for North Tyneside (Mrs Glindon) also made contributions, but sadly I do not have time to comment on them.
We recognise that the report contains recommendations aimed at local government and businesses, but also those specifically aimed at the Government. We are absolutely up for rising to the challenge of those recommendations. Indeed, one of them is a north-east schools challenge, rather on the model of the London schools challenge, and we very much look forward to hearing full details of it. It is exactly the type of issue that I hope will be discussed at the major meeting tomorrow, because we would be interested to see the proposal worked up.
Skills funding, which Members of all parties talked about, is of course important. We absolutely understand the importance of skills, which is why we have doubled the number of apprenticeship starts since we came into office. As we make apprenticeships increasingly rigorous and expect high academic standards as well as high vocational standards, we are also creating traineeships to help to prepare people for apprenticeships. We are absolutely up for devolving decisions and power on the skills programmes of the greatest significance, and we will do so as part of our skills commitment.
We look forward to engaging with the imaginative proposals in the report, and I hope that message will go to tomorrow’s meeting.
It is a great pleasure to be able to tell the House that when I was a Minister of the Crown, I made ministerial announcements on points that Lord Adonis has now recommended, and the Minister has been able to make them as ministerial announcements again today. I say gently that some of these things are not new.
I thank the hon. Member for Hexham (Guy Opperman) and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) for joining me and my hon. Friend the Member for Bishop Auckland (Helen Goodman) in securing this important debate on matters that concern our constituents. I draw the Minister’s attention to the fact that although the hon. Members for Redcar (Ian Swales) and for Hexham served their parties well in drawing on the positive things in the report, on which I think we all agree, if I had to pick one point that characterised the contributions of Opposition Members, it would be the fear that there will not be much delivery for our constituents on getting them back into work. If the Minister takes away my plea that he and his ministerial colleagues try to do something for the long-term unemployed, and young people in particular, in our constituencies, something will have come from the debate.
Motion lapsed (Standing Order No. 9(3)).