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Employment: Cuts in Public Expenditure

Volume 722: debated on Tuesday 9 November 2010


Asked By

To ask Her Majesty’s Government how they will generate the increase in private sector jobs growth in the north of England to offset the employment impact of the Government’s planned cuts in public expenditure.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as the chair of Cumbria Vision, the soon-to-be-abolished sub-regional partnership with the North-West Development Agency.

My Lords, we recently published our White Paper on local growth, which sets out our approach to rebalance the economy and to drive sustainable growth. Initiatives will include local enterprise partnerships that will see local business and civic leaders working together to create new jobs in their communities and the regional growth fund, which will support communities currently dependent on the public sector, helping them make the transition to private-sector-led growth and prosperity.

I thank the noble Baroness for her Answer, but I sadly find her response inadequate to the challenge that areas like the north of England face. When will the Government understand that a combination of a growth fund worth £1.4 billion over three years, which is two-thirds only of what the RDA spent in each year, and an announcement of local economic partnerships, which so far do not cover, in the north, Lancashire and large parts of the north-east, and have no resources whatever from central government, at a time when the capabilities of the agencies are being abolished—

Is this not a totally inadequate response to what independent experts expect to be a rise in unemployment and 233,000 jobs lost as a result of the spending White Paper?

My Lords, the noble Lord, Lord Liddle, is something of an expert on this subject because of course he worked with the previous Administration to see how they could make the RDAs work. The RDAs spent £19 billion over 10 years and failed to make any impact on the imbalances in growth. Although I am delighted to hear what he has to say, I am not sure that I would take lessons from it. We do not yet know how significant the cuts in public sector employment in the north will be. As there is less money, it is important to ensure that our investments are well targeted. It is less money because we were left with no money.

Noble Lords may hear that many times, but unfortunately, it is what we have to base all our decisions on. Private sector growth is not just about spending money, it is about creating the right business environment—for example, cutting red tape—and making the United Kingdom an attractive place to do business in comparison to its international competitors.

My Lords, has the noble Baroness seen the recent statistic that home owners in the north-west have the highest percentage of negative equity of any UK region? Does she accept that that demonstrates the economic problems that could face that area and highlights the importance of attracting private sector jobs, particularly to the north-west?

I think that we are all aware of how difficult the situation is, particularly in the north. Over all these years, the previous Government were not able to bring together prosperity in that area. We believe that the new way of approaching this—moving power from central government down to local government, where people know what their problems are and what they will need—will mean that the regional growth fund will be available to support projects and programmes, which promote jobs and growth, and, in particular, to support areas that are currently dependent on the public sector to make the transition to private-sector-led growth. We hope then that things will improve regarding the ownership of homes.

Does the Minister believe that she has the support of Conservative and Liberal local authorities throughout the north-west region for the policy that the Government are undertaking?

My Lords, I am fortunate indeed to be part of a coalition. Because we are a coalition we are able to debate and discuss things between ourselves and to put together all the information that we have. Our economic ambition is to create a fairer, more balanced economy, which is not so dependent on the narrow range of sectors that were used in the past. We have great opportunities and this should be a good time to look forward to, if we can overcome the real problems we have in finance at the moment, which were left to us.

My Lords, does my noble friend recognise that the ICT and digital part of our economy now accounts for about a fifth of our entire GDP? It is the fifth largest sector of the GDP. Can she assure the House that every effort will be made to build on this growing part of the economy in the north?

I agree with my noble friend and yes, of course, we want to aid and help wherever we can through the mechanisms that we are putting in place and through pushing power back down to the people who know what they want. I come from Cornwall and I know what it was like to be under an RDA that was run out of Exeter and Bristol—an incredible distance. We need to bring all the pressure to bear and all the help that we can to these areas as they would want it delivered.

My Lords, does the Minister at least accept that there is a distinct possibility that the private sector will not replace the jobs lost in the public sector and that, in those circumstances, growth will decline and so will jobs? Is she prepared to make the case for change with the Chancellor and to tell us what he says? She may have a better chance than me because she is a noble friend of his.

That was said so nicely that I got lost along the way. On support for the north of England, we have talked about the regional growth fund, local enterprise partnerships and the national insurance contributions holiday until 2013. There will be particularly strong new allowances to help these areas. I cannot emphasise that enough. There will be superfast broadband, the Green Investment Bank and, particularly, apprenticeships and support for science to take us forward into the jobs that we should be looking at all over the country. The north of England has a proud heritage of being able to adapt to changing circumstances and I am absolutely sure that it will do so this time too.