The Government welcome the contribution made by the Centre for Policy Studies report. Levelling up the north of England is a key priority for this Government, and the coronavirus crisis has made it more important than ever that the Government continue to drive forward progress on our promise to deliver real, positive change in the north.
I draw attention to my interest as the chair of the North of Tyne Combined Authority inclusive economy board, as set out in the register. It is rather shaming that the UK is the most geographically unequal of the OECD group of 27 rich countries. The Treasury’s historical approach to investment has widened rather than closed the north/south divide. I want to press the Minister on whether he agrees with the central thrusts of the report: first, that levelling up will rely on the power, dynamism and scale of investment which only the private sector can bring; and, secondly, that the economic success of the north is too important to the people who live there to be left in the hands of those who do not. Do the Government accept that business as usual simply will not cut the mustard?
My Lords, we recognise the need to unlock private investment, and the government investment is designed to do precisely that, with the £4 billion levelling-up fund; but, equally, we need to devolve decision-making closer to the people in the north of England.
My Lords, I congratulate the Government on their £4 billion programme and support the aims of building back better, a green industrial revolution and attracting global capital. Will my noble friend comment on the possibility of using domestic pension assets, of which there are hundreds of billions of pounds, including in local authority funds, which are currently investing only in gilts with extremely low returns and which could be put to more productive use in such building programmes?
My Lords, my noble friend is right that pension assets are an important source of finance for investment in infrastructure. I note that the CPS report proposes updating rules covering UK pension schemes so that we can encourage investment in northern infrastructure.
My Lords, although the paper is entitled A Northern Big Bang, many of the problems described and the possible solutions identified are as relevant to the Midlands as they are to the north—a point the authors stress throughout the report. Does the Minister agree that measures to level up our country are just as, if not more, urgently needed in the Midlands as they are in the north, and will he comment on what plans the Government have to work with the Midlands Engine, the APPG of which I am co-chair, in that regard?
My Lords, I point out that the commitment to levelling up also includes the Midlands. Earlier this month, my right honourable friend the Housing Secretary met the Midlands Engine Business Council and numerous business leaders to work on precisely how we should drive forward the agenda to ensure growth in the Midlands as well as in the north.
My Lords, history shows that major industries, such as gas, water, electricity, engineering, petrochemicals, airlines, biotechnology, telecommunications, computers and medicines, were built or rejuvenated by the state because the private sector showed little appetite for the risks and investment. Does the Minister agree that direct state investment is vital to secure prosperity for the north? If not, why not?
Attracting private investment to the north requires a functioning transport system. Why are Ministers declining to listen to the Northern Powerhouse Rail business case for substantial investment across the north before they produce their own integrated transport plan? What hope is there of the level of improvement to the transport system—for example, the east coast main line, which requires expanded capacity both south and north of Newcastle essential to expanding the passenger and freight capacity of that line?
My Lords, I recognise the importance of transport in driving progress and investment in the north of England. That is why there has been £13 billion of investment—the largest of any Government in history—between 2015-16 and 2020-21, and there is now also a five-year intra-city transport settlement to ensure the north gets the transport infrastructure it needs.
Following on from the question of the noble Lord, Lord Beith, on transport, can the Minister explain some of the figures in his response and why the Government have delayed investment in the trans-Pennine railway line while at the same time spending £760 million on the east-west rail link between Oxford and Bedford, which is certainly not even in the Midlands nor the north? How is this levelling-up the economy?
I am not exactly in the right department when it comes to individual transport projects, but there is a huge commitment to increasing investment in transport infrastructure. The organisation Transport for the North has received funding to develop the strategy so that we can get the right investment into the north.
My Lords, I declare my interests as set out in the register. The big bang of the 1980s was driven by the right regulatory framework and the technologies of the time. Fast forward 35 years and we have a leading position in many of the technologies of our time—AI, distributed ledger technology, cyber and fintech. Does my noble friend agree that if we deploy those technologies, not least in proposed fintech clusters in the north and other regions, it will have a profoundly positive impact on jobs and skills and—if combined with the right regulatory framework rooted in consistency, clarity, competitiveness and innovation—it will truly transform our nation?
My noble friend is right that we need to look at the emerging economy and encouraging fintech clusters so that we get more high-skilled jobs located in the north. That is why the Chancellor’s decision to locate the national infrastructure bank in the north is also helpful in this regard.
My Lords, my interests are as recorded in the register. In the north, we have a double challenge. We need not only north/south levelling-up but rural/urban levelling-up. Can the Minister confirm how soon the Government will announce details of the shared prosperity fund and whether there will be a dedicated rural element to it?
My Lords, there is a glaring omission in this report. Its proposals for business and the built environment have been applied in one form or another since the Jarrow march in the 1930s, and I wish them well. However, levelling up is not a problem of business and the built environment but a people problem. What are the Government going to do to improve education and training opportunities, and invest in people through projects such as Sure Start, to help minority communities and the white working class in the regions break out, so they can make fulfilling lives for themselves and a greater contribution to their regional economies?
My Lords, the noble Lord is right that we need to see not only economic development and growth in the economy but social regeneration and the upskilling of people in the north. That is why one part of the agenda is the devolution of decision-making, including adult education and skills budgets, to the mayors responsible for driving that agenda, as well as the economic agenda.
I draw noble Lords’ attention to my registered interests. On 19 February, the Government made a welcome, if modest, announcement on the establishment of the Advanced Research and Invention Agency. Do the Government acknowledge, as they surely must, that unless the agency is able to deploy money directly to the north of England, as opposed to the golden triangle of Imperial, Oxford and Cambridge, we will not have the inventions or attract the inward investment that the report so graphically laid out?