[Mr Philip Hollobone in the Chair] — Economy (North-East)
David Miliband (South Shields, Labour)
I know that I speak for all my colleagues when I say that we are delighted to serve under your chairmanship, Mr Hollobone. I am sure that there will be excellent behaviour from all of us. There is no regional Minister any more and, sadly, as yet no Minister from a north-east constituency in the Government, but we welcome the Minister today.
There are two subjects that I feel passionately about, but I will restrain myself and not talk about those today. First, I do not expect the Minister to announce that she is changing the misguided decision to abolish the regional development agency, splitting the region in half. In fact, it would not be sensible to do so, having gone through two years of reorganisation. I hope that my party learns the lesson that unnecessary reorganisation on the not-invented-here principle is not a good basis for policy.
The second thing that I am not going to talk about is the not misguided but masochistic economic policy that the Government are imposing. The contrast between President Obama’s growth path since May 2010 and our own is striking. Equally, it is a bit much to expect the Minister to contradict the Chancellor of the Exchequer in one of her early outings.
It is ironic that I was accused on BBC Newcastle radio today of coming to Parliament just to take part in a talking shop. I asked what was the point of Parliament if not for talking. Hopefully, there will be some practical outcomes from today’s discussion, and at least some greater understanding.
I am sure that I speak for all hon. Members when I say that we regard the north-east economy as an asset for the UK, not as a problem for the UK. The north-east has a consistent trade surplus that is higher than the UK average, faster growth in exports than the UK average, and we have some great companies, from cars to chemicals. We also have world-class universities. Equally, we do not shy away from highlighting some big problems: income per head and education are lower and unemployment and non-employment are higher. Those are the long-term problems, and there are short-term problems too: construction is flat and business confidence is fragile. I was sent the Lloyds purchasing managers index data for the fourth quarter, showing that it is dipping in that quarter. There are cyclical as well as structural problems.
I do not hide my own interest. I want to look at practical issues. The test of this debate, for me, is whether it makes a difference in South Shields to the unemployed youngster seeking work, the small business seeking finance and the shopkeeper seeking renewal of the town centre. In the 10 or 12 minutes that are available to me, I want to highlight five issues that I think successful regions around the world put at the
heart of their economic policy. I want to make some specific points. First, there is not a successful region or city in the world that is not connected to the rest of its nation and the rest of the world. One in seven jobs in the north-east depend on foreign investment, never mind British investment. That puts issues such as transport high up the agenda. Some of my colleagues will speak about transport, especially rail and road. As the Member in whose constituency a large part of the Port of Tyne sits, I know that ports are important. The Port of Tyne need its freight capacity strengthening.
On transport, the figure provided by the Institute for Public Policy Research and the Civil Engineering Contractors Association is striking. I am delighted by the Crossrail investment in London—£2,750 per head being spent on Londoners and their transport—but in the north-east the figure is not £1,000, £500 or £50, but £5 per head. I am not saying that the Minister needs to say that that figure should be £2,750, but honestly, £5 per head is not consistent with our needs. We are not asking to be funded on the same level as the capital city, but we do think that that is a problem.
Colleagues will talk about airports. Newcastle airport provides 7,500 jobs and deals with 4.3 million passengers. For anyone watching, we have airport capacity and we can increase that without much argument. A transatlantic route for the north-east would be welcome. People say that a revenue-neutral tweak in air passenger duty would make a difference, relieving congestion in southern airports.
I want to make a different point, which I do not think will be raised elsewhere. We have five great universities with a large number of fantastic foreign students, and historically those students have created businesses in the north-east. Every university vice-chancellor will tell the Minister that the Government’s policy on student visas is barmy. We are keeping out of the country people who want to learn from and contribute to it. We are reducing the number of students who come here from abroad and we are preventing them from staying here to work, not to claim benefits. I am glad to see, from the honesty in the Minister’s face, that she recognises my point. For the record, I will not claim that she has nodded in agreement, but she certainly nodded in recognition of the point. Hon. Members should not take it from me. My reading of Home Office’s own study—I should like the Minister to confirm this in her response—is that the immigration cap for foreign students will cost the British economy £2.4 billion a year. This self-defeating policy has nothing to do with tackling illegal immigration and it is injurious, not just to the so-called golden triangle of the south-east, but to our region.
Secondly, successful regions around the world make the most of their global links and develop their local assets. Every city and region has its own history. We have great traditions. In my constituency, those traditions include shipbuilding and mining, although shipbuilding is almost reduced to a nugatory level. Other hon. Members will talk about that. I want to make a point about how we build on our manufacturing history in respect of energy policy, which is no longer the responsibility of the Minister’s Department, although I am sure that she will say that there is close co-operation with the Department of Energy and Climate Change.
The energy revolution is potentially transformative for the north-east, and although it does not just include renewables, they will play a significant part. We have strength from Narec in Blyth, right through the Port of Tyne in South Shields, down to Teesside. The north-east chamber of commerce estimates that that could be worth 40,000 jobs and £6 billion in the next 20 years. However, Government energy policy is a complete mess: it is a pushmi-pullyu or hokey cokey. The Minister of State, Department of Energy and Climate Change, Mr Hayessays one thing and the Secretary of State contradicts him.
It is obvious that long-term investment by business needs long-term clarity and certainty from Government. There is fast reaction to clarity from Government. In October 2010, the Government set out an offshore wind strategy and Siemens and others responded quickly with investment, but now they are halting that investment because they do not know what the Government’s game is. The Energy Bill is coming up, so for goodness’ sake let us make it a model of how countries can, on a bi-partisan basis, set long-term strategy for business to invest.
People are saying, “Oh well, we have been in recession. We may be going into a triple-dip recession. We can’t afford to go green.” That argument is nonsense. The argument should be that now is precisely the time to go green, but we cannot do so if the private sector does not know what the public sector is doing and if one bit of the public sector does not know what another bit is doing.
Thirdly, people should stop complaining about public spending draining the private economy—the so-called crowding out of private investment. Government policy so far has been framed on the idea that the more public spending there is, the less private spending there is. That is nonsense: we need only think about Britain’s strength in pharmaceuticals. The integrated purchasing power of the national health service is one reason why Britain has a strong pharmaceuticals industry; one has fed off the other.
I think that all hon. Members agree: no one says that there will be as much public money around as there used to be. We argue about the speed of reduction. What we spend needs to have maximum economic impact. It is not just a social policy, but an economic one. I want to make two points in that regard. One is about the benighted regional growth funds. Honestly, it is one thing to cut the funding by two thirds, from the old regional development agencies to the regional growth fund, but on the figures I have—I would like the Minister to confirm this—of the £1.4 billion announced in rounds 1 and 2 of the regional growth fund, the amount that has left the Department’s bank account is £60 million. Not £600 million—nearly half of the total figure—but £60 million has reached the companies that won the competition. Thirty companies that won in rounds and 1 and 2 have subsequently pulled out because of the delays in Government decision making. Can we have some clarity and determination to get this thing sorted out? We will reach the next election with winners in round 3 still without their money—I do not want to give the Government political advice, but it is deeply
worrying for our economy if we cannot get allocated money out of the Department for Business, Innovation and Skills.
Secondly, connected to that, public decisions have a big private benefit. My hon. Friend Phil Wilson did an extraordinary job in bringing people together for the Hitachi contract to build 600 or 700 carriages in Newton Aycliffe. That was a massive decision by a Japanese company and a massive vote of confidence in the people of Newton Aycliffe, but we must ensure that the supply chain feeds that investment, and that will not happen by the elixir of market forces alone—there is work to be done. In the same way, Nissan is a massive employer in the north-east, but MPs in Sunderland and elsewhere would say that an important part of the benefit comes from the supply chain, and we must get that right for the Hitachi investment as well.
The fourth area, which I feel strongly about, is that successful regions around the world do not allow significant sections of the population to fall behind the rest. They especially do not allow a large group of young long-term unemployed to become a drain on their own livelihood and on the wider economy. The economic inequality of unemployment is a massive issue for the future of our country. The figures are extraordinary: 270,000 young people have not been in work for more than 18 months, with a further 180,000 not in work for more than six months—450,000 youngsters unemployed for more than six months. In my constituency alone the claimant count is 380 and throughout the north-east it is 12,000, and that count underestimates by 35% the number of those who are not in employment, education or training. If I may explain to the Minister, 35% of 18 to 25 year olds do not claim the benefits to which they are entitled—they are unemployed and not in education or training, but they do not claim the benefits, so the claimant count underestimates the total.
David Miliband (South Shields, Labour)
I was not aware of that figure from my hon. Friend’s constituency, but it speaks to the point that I am asking the Minister to address. The Minister’s own party leader has said on behalf of the Government that he wants to abolish long-term youth unemployment. That is excellent, but people who say that they want to abolish long-term youth unemployment have a responsibility to put in place the policies to do so, not least because young people who hear that message from the Government will feel a double betrayal—it is one thing to be long-term unemployed, it is another to be told that the Government will help them out of it, but then do not do so.
I beg the Minister not to read out a script from the Department for Work and Pensions that tells me that 150,000 people are getting a wage subsidy. I promise the hon. Lady that they are not. First, the 150,000 is for a three-year programme; secondly, the level is set at £2,500, which has never in history produced the kind of reaction needed among employers. When Mr Clarke tried that in 1995 or 1996, he got a 3% take-up rate on a scheme of the same size, so I beg the Minister not to tell me that
the Government will achieve that mass take-up of wage subsidies: they will not. I urge her not to tell me that apprenticeships are the answer: we know that less than 40% of apprenticeships are going to the under-25s, because 60% are jobs for adults relabelled as apprenticeships.
I urge the Minister not to tell me that work experience will make up for the lack of a guaranteed job at the end of nine, 12 or 18 months of unemployment. Although we welcome what the previous Employment Minister told us—that I think 35% of those who had had work experience got a job—he killed the future jobs programme on the grounds that only 50% of people coming out of it were getting a job. We welcome the effect of work experience, but let us not kid ourselves that it is the answer. The Under-Secretary can take away a serious message: certainly in my constituency, and more widely throughout the north-east, we want the power and the funds in our own hands, to suit the welfare-to-work programme to our own needs. The hon. Lady has an honourable history of talking about localism, and this area of welfare policy is a classic. The labour market in my constituency is completely different from the labour market in her constituency, and we cannot rely on a national sausage machine of welfare-to-work programmes. We need local flexibility to tackle the existing problems, especially for young people. The issue is economic, not social.
Finally, I think that all 20 of us in the Chamber agree that the future of our economy in the north-east, and of the British economy, is in innovation. I want to raise one issue about innovation, which is finance and how the financial services sector in Britain needs to be a spur for domestic industry and not only a global blood supply for financial services around the world. It is good that we are the global capital for financial services and I welcome the fact that the City of London is the blood supply for global financial services, but I want it to be the blood supply for the north-east’s businesses that want to invest and innovate. There is a problem.
The British Chambers of Commerce now agree that a British investment bank is the way forward, and it has suggested some interesting ideas. We should be thinking about not one, national, statist investment bank that is the whole answer to all our problems, but about how investment coalitions can be brought together—public and private sectors—at the local and regional levels. The experience of the regional growth fund shows the dangers of expecting one national institution to process the information; we need local engagement in finance for industry. As the banking sector shakes out, we have a big job to do to underpin regulation—we do not want to risk another financial crisis—but we cannot afford to strangle the flow of investment from financial services into businesses. That is the danger that I see at the moment.
I will have got my breath back from my run from the tube by the time I finish, but I will do so on the following note. What is interesting, if we look at the statistics, is that 640 businesses have been created in South Tyneside in the past year. That is quite a striking statistic. A figure I received yesterday is that 1,000 more people are self-employed than was the case two years ago. The sad thing is that that is in spite of Government policy, not because of it.
In the end we cannot mandate job creation, we cannot legislate for businesses to start up or for people to become self-employed, but we can support them. In the
five areas that I have set out, we are not looking for handouts, we are looking for support. We are not asking the Minister to contradict the Chancellor’s spending envelope—I do not expect her to do that—but I do expect her to take on board practical, common-sense, innovative ideas that are necessary and that are brought forward with a passion. The Prime Minister last night talked about rebalancing the British economy, but one aspect of rebalancing, which unfortunately he did not talk about, is rebalancing so we get a better regional balance in the country. That is not a new issue—we have had issues of regional imbalance for a long time—but rebalancing the British economy has to mean strengthening the north-east and the northern economies. The interesting point is that such a rebalancing of the British economy can go hand in hand with a transition that is going on in the north-east economy at the moment. We lost our economy in the 1980s, we began rebuilding it in the 2000s and we need to complete the transition now, but if we are going to do so we need the help of Government and not the hindrance.
Philip Hollobone (Kettering, Conservative)
Order. May I ask everyone who wants to speak to stand and to keep standing, because a lot of you want to catch my eye and we want to ensure that we get this right? Thank you. My aim is to get everyone in. I could ask the Deputy Speaker for a formal sanction to impose a time limit but, given the array of talent before me and the fact that you are all extremely sensible, I am sure that you want to allow everyone else to get in. What I am trying to say is that, basically, it will be no more than four minutes each. If it is more than four minutes, I am afraid someone will lose out. After the next speaker, who will be Ian Swales, has spoken, I will announce the running order, so that you all know where you are going to be. The next three speakers are Ian Swales, Tom Blenkinsop and James Wharton. Please, no more than four minutes each.
Ian Swales (Redcar, Liberal Democrat)
It is a pleasure, Mr Hollobone, to serve under your chairmanship. I congratulate David Miliband on securing this debate and on bringing his outstanding talents to the issue. As we all do, I see the difficult economic situation in our area, and it was brought home to me even more last year when I appeared on “Newsnight” to explain why the economy of Redcar and Cleveland was rated by the BBC and Experian as the weakest of 324 areas in the country. Middlesbrough and Hartlepool were 323rd and 322nd. Is that really the legacy that Labour wanted after 13 years of complete freedom to deliver their vision?
An entire sub-region was forgotten and neglected, not just in jobs and growth, but in many other ways. It struggled with an education system that was not delivering what employers wanted. It breaks my heart that the outstanding technical training provider, TTE, at South Bank in my constituency has 57 funded engineering training places for 16 to 18-year-olds that have not been taken up. Those opportunities are available in an area of high youth unemployment, but too many young people have left our education system without basic skills or aspiration.
That legacy came after a period of investment and growth from 1987 to 1997. After Margaret Thatcher’s famous walk in the wilderness at Stockton, the Teesside urban development corporation delivered some important projects. There were issues with the corporation, and I am far from being a Thatcherite, but I welcomed the state intervention that brought Teesside retail and leisure park, Hartlepool marina, the Stockton campus of Durham university, Stockton and Middlesbrough riverside developments, the Tees barrage and the Teesdale business park. The list went on, but suddenly it all stopped, and for 13 years very little happened.
The new Labour Government scrapped the urban development corporation and showed their obsession with regionalisation. Teesside became a fiefdom of Tyne and Wear. The regional referendum made no difference, and on it went. Even the ambulance service was moved. Three quarters of a million people were deemed not capable of running their own ambulances. The ludicrous regional fire control project followed, as did ONE. In the north of the region, it was One North East, but in my area it was known as “only Newcastle exists”. Shortly after being elected, I was at a meeting in the north-east discussing the fate of One North East assets. I was asked how that would affect my area, and I replied, “I don’t think there will be a problem; there aren’t any.”
Teesside is a proud and distinctive area, with a unique heritage, unique problems and unique opportunities. As far back as the 1960s, it was described by Redcliffe-Maud as a “functional economic market area.” That is why, with my hon. Friend James Wharton, I fought for a Tees Valley local enterprise partnership. I am delighted to see how well it is working, and congratulate it on its clarity of purpose, strong local links and powerful advocacy.
Although the north-east is the only UK region with a trade surplus, the Government know that a lot of help is still needed to clear up Labour’s mess. That is why they have done a huge amount since 2010. Enterprise zones throughout the region include three in my constituency alone—at Wilton, Kirkleatham and South Bank. There is a city deal in Newcastle and new offers of deals for Sunderland and Tees valley; ultra-fast broadband for Newcastle; education changes, including the pupil premium; huge growth in apprenticeships, which have doubled in my constituency; investment in rail and buses, enabling Teesport to put modern containers on the rail network; support for innovation with technical innovation centres, including the Centre for Process Innovation in my constituency; chemical and automotive supply chain initiatives; and, above all, the regional growth fund—a total of £284 million and 102 projects in the north-east, with 26,000 direct jobs and 47,000 indirect jobs. That represents the most projects in the country from all three rounds, and one third of the projects in the country from rounds 1 and 2.
Alex Cunningham (Stockton North, Labour)
I am sorry, but I take issue with the hon. Gentleman’s opinion of the regional development agency, which delivered big time for the Tees valley. On the regional growth fund, does he regret, as I do, the Government’s decision not to
back our regional airport in the south of the region to create a new hub that would expand industry throughout the Tees valley?
Ian Swales (Redcar, Liberal Democrat)
Clearly, the regional growth fund could not support every project, and I will be bidding for an extra round. I believe that my hon. Friend the Member for Stockton South will talk about the airport.
Two thirds of rounds 1 and 2 projects have been approved, and the money has already gone out or is ready to go out. The statistics that the right hon. Member for South Shields gave come from the Public Accounts Committee, of which I am member, and date from about nine months ago. Large parts of the country, including London and the south-east, have received virtually nothing from the regional growth fund. It is a serious regional policy to try to repair our manufacturing sector, which was ravaged during the past 13 years.
Ian Swales (Redcar, Liberal Democrat)
I was trying to redress the balance, Mr Hollobone, because I know that many Opposition Members will speak.
There is a huge amount to do, and I hope that the Minister will respond to four issues. Carbon capture and storage could be a game changer for Teesside, not just in energy generation, but in supporting industrial carbon emitters; we have 18 of the top 30 in the UK in Teesside.
Ian Mearns (Gateshead, Labour)
Will the hon. Gentleman reflect on what he said about the plight of his constituency’s economy being blamed on Tyne and Wear? His colleagues in local authorities there will greatly regret those sentiments. Frankly, they are misplaced.
Ian Swales (Redcar, Liberal Democrat)
I want to correct that impression. I am not blaming the people in Tyne and Wear; I am talking about the balance of the regional development agency’s efforts.
The excellent north-east companies in the Energi Coast consortium have invested £400 million to attract offshore energy generation contracts, and we must ensure that that supply chain happens in the UK. I have lived in the north-east for 34 years, and spent 32 years of those in business, from being on the board of a large global business to running my own small business. I have been here for the past two years. I know what the issues are, and the Government are making an excellent attempt to tackle them. I am optimistic. We have a great region, great people, and not just a great past, but a great future.
Philip Hollobone (Kettering, Conservative)
I will call the wind-ups at 10.40. The running order of those who were standing will be as follows: Tom Blenkinsop, James Wharton, Ronnie Campbell, Iain Wright, Sharon Hodgson, Helen Goodman, Ian Lavery, Julie Elliott, Alan Campbell, Phil Wilson and Pat Glass.
Tom Blenkinsop (Middlesbrough South and East Cleveland, Labour)
I congratulate my right hon. Friend David Miliband on securing this timely and important debate. Only the
other day, I told Andy McDonald, the Labour candidate for Middlesbrough, that I was thinking of mentioning skills, employment, youth unemployment, the working neighbourhood fund, welfare changes, One North East, the carbon capture and storage levy and so on, but given the time remaining, I will speak briefly and focus on four main issues.
First, Teesport needs to be fully connected to the rail freight network. Secondly, a high-quality electrified trans-Pennine link to Middlesbrough needs to be in place. Thirdly, the northern rail network needs new rolling stock. Fourthly, the Government should review the proposed high levies on freight, which will indirectly tax industry, and predominantly coke, coal, potash, chemical and steel manufacturers, which are the main primers on Teesside.
Since I was elected, I have battled for improvement and electrification of the rail line to Middlesbrough. Middlesbrough and the surrounding Tees area is the largest UK conurbation with no direct electrified service to London. The nearest railhead is Darlington. Electrification to Thornaby and Middlesbrough would enable commuters and industrialists to be at Teesside plants in under three hours from central London. That is crucial because Durham Tees Valley airport lost its London service some time ago.
Unfortunately, the Government have left Teesside out of the northern hub proposals and concentrated on core trans-Pennine services. As a result, Middlesbrough has been left in the rusty sidings. We know that the Department for Transport is conducting a study on that, but it must engage with industry first and not just perform a desk study. Passengers are crucial, but so is freight.
As well as massive chemical and steel complexes such as Teesside beam mill, which supplies beams for Redcar’s civic improvement scheme, Teesside is home to Teesport. The port covers an area of 200 hectares of land alongside the southern bank of the River Tees. Tees dock is a deep-water facility, some five miles from the sea, and Teesport handles steel, petrochemicals, manufacturing export and import, coal, potash mined from my constituency and retail items. It also handles over 6,000 ships a year, and its facilities include two container quays—one is 965 feet and the other is 1,180 feet—and there are roll-on, roll-off ferry facilities. Teesport handles 56 million tonnes of cargo annually.
We need rail improvement, therefore, to see that as much trade as possible to the midlands, Yorkshire, the north-west and Scotland is kept off the existing road network, which is a crucial point. The key issue is to upgrade the lines from Teesport to the east coast main line at Northallerton and Darlington, so that it can handle more container traffic and allow for piggy-backing of containers to increase capacity.
Given the lack of time, I shall end my speech there, so that other Members can get in.
James Wharton (Stockton South, Conservative)
I congratulate David Miliband on securing this debate on an important issue for hon. Members on both sides of the House.
To respond to a few comments that have been made, I absolutely agree with the right hon. Gentleman that it is vital that the supply chain for Hitachi at Newton Aycliffe is kept in the region and that it delivers the sort of growth that is brought to our area by Nissan, which is a Conservative legacy, with so many companies across the north-east benefiting from the work and investment that that brings to the region.
Teeside airport is a key transport hub, particularly for the south of the region. Although it is in need of a little care and attention, its owners have reiterated time and again their dedication to ensuring that it is a success. The airport was unsuccessful in the regional growth fund bid to develop some of its facilities as a freight hub terminal. However, the owners have thankfully confirmed their intention to go ahead with that investment, which will be welcomed by constituents of many hon. Members who are here this morning.
There are many good things about the north-east. As has been said, its exports have been growing faster than the national average rate. It has a positive balance of trade—some £2.58 billion—thanks in no small part to the chemical and process industry on Teesside. Recently, our region has had a lot of good news. The two LEPs, which better represent the region’s different parts—particularly that in the Tees valley—are off to a flying start. The Tees Valley LEP is working closely with the York and North Yorkshire LEP, and it has helped to deliver more than £100 million in regional growth fund money to our region in the last round of funding, with over 70% coming to the south of the region, which is a nice change. I echo the sentiments of my hon. Friend Ian Swales, who is a champion for the south of the area. He fights hard to ensure that our voice is heard and that we get our fair share of the support that we need to be a success.
We have challenges as a region. Unemployment and youth unemployment are too high. However, unemployment has been decreasing this year, and we should all welcome that. The Government are doing lots of things that will benefit us, not least the increase by £1,100 in the personal allowance threshold for income tax, which will put more money in people’s pockets. Some 35,000 people in our region will benefit in April next year, and that money will be spent in our regional economy.
We have heard talk of the need for more control locally of how money is spent and how things are done, and the city deals present an opportunity for parts of our region to bid for that and secure it from the Government. The north-east has a very positive story to tell. There are challenges to overcome and things that need to be addressed, but I hope that hon. Members on both sides of the House, despite our political disagreements, we will continue to work together and fight for the best possible deal in the north-east and that we will find common ground through which we can put forward a clear, concise message, both to the Government and to those in political parties who are not currently in government, about what we want and need.
I hope that we can deliver a better future and continue to deliver improvements for all our constituents, and I welcome again the foresight of the right hon. Member for South Shields in calling this important debate at such a key time, as we head towards the autumn statement.
Ronnie Campbell (Blyth Valley, Labour)
I congratulate my comrade and right hon. Friend David Miliband on securing the debate. It is well overdue, and I am pleased that it is happening today.
What was the north-east in the past, and where did it come from? Those are easy questions. We had thousands of mines and miners digging coal—Blyth port was one of the biggest exporters of coal in Europe—and we had shipbuilding. We built ships galore; there were aircraft carriers and destroyers—you name it, the north-east built it. There was steel, which we lost, of course, but thank God it has come back again in Redcar. We even won the FA cup now and again—we do not win it now, but we used to. That is the north-east; it had character in those days. Everything was built around it, and we have to try and drive forward manufacturing again today. We cannot rely on the boom and bust of the City any more; we have to rely on manufacturing, which we should have been relying on, and we have to focus on growth all the time. The north-east is ready and waiting for that.
My right hon. Friend mentioned Narec, which I looked around on Friday with industrialists. It is absolutely fantastic. A big shed is being built—we were not allowed in it, because they are still working on it—in which blades of 100 metres in size will be tested. At the moment, the biggest blades are 50 metres. The testing centre will be used and the blades will be put offshore—they will not be put in the countryside because people there, in their rose-tinted cottages, will not allow it. They do not want them on the landscape, but of course, we can put them at sea. I know the sea, because it is very shallow out at our end, and thousands of windmills can be put 60 miles off the shore of Blyth. What annoys me, however, is that the blades that we are testing come from Norway, Germany and China; we are not making them.
That brings me to my second point, on the port of Blyth. Last year, we asked the Chancellor to look into an enterprise zone on the River Blyth. He said he would look at it—fair do’s to him—but what did we get? We put in for 101 hectares, to be exact, which was too big, so we put in again for 66 hectares, which the port of Blyth thought would be a bit more reasonable. Even though all the land is there, lo and behold, when all came to all, the port of Blyth got an enterprise zone of 14 hectares from the Government. As far as I am concerned that is not enough, and we need to drive forward wind farms in our areas. I know that my hon. Friend Ian Lavery was arguing the case for some money for the Alcan site, which obviously needs to be developed, as it was a big development area. I think that giving money to Alcan was why the hectares were dropped in Blyth port, but perhaps he can put me right on that point.
We must drive those economic zones forward. We need to know where the Government are coming from and whether they are in favour of wind farms. We do not know the answer to that; as Narec said, we saw what happened last week, when the Minister of State, Department of Energy and Climate Change, Mr Hayes said one thing, while the Secretary of State for Energy
and Climate Changesaid another. The Government are not putting out the right messages, but we must get this right. We need to know whether or not we have support for wind farms.
Iain Wright (Hartlepool, Labour)
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I congratulate my right hon. Friend David Miliband on securing this important debate.
Like my right hon. Friend, I do not want to dwell on the negatives or the structural weaknesses. I want to focus on the huge assets, potential and opportunities that we have. Following on from my hon. Friend Mr Campbell, I do not think our best days are behind us. We have massive potential and we should not think of the area as some sort of manufacturing theme park. I agree with the CBI in its report, “The UK’s Growth Landscape”, when it stated that we should stop trying to level our regional disparities and maximise the economic potential in all. As the North East chamber of commerce states:
“The North East economy is not a problem that the UK needs to solve. Rather, it is an asset which it needs to develop further to produce a stronger return for UK plc.”
If modern industrial policy is about considering where we have comparative advantage and helping to maintain, enhance and maximise that competitiveness, the north-east is at the forefront of what a rebalanced national economy should be looking at. We can build on existing strengths, such as advanced manufacturing, higher education, chemicals, pharmaceuticals, automotives, renewables and the low-carbon economy in energy—particularly in offshore wind in my constituency and that of my hon. Friend, but also in carbon capture and storage.
I want to ask the Minister three quick questions. First, we have a chronic shortage of engineering skills. There is a real mismatch between the enormous potential we have in our economic area and the huge levels of youth unemployment. What are the Government doing to provide a greater co-ordination between schools, colleges, universities and businesses? As EngineeringUK said in its recent report on the state of engineering in the UK,
“If we don’t address supply issues, such as the numbers of students taking triple GCSE sciences, the numbers of Level 3 engineering apprenticeships, and the numbers of girls studying physics A level and engineering degrees, we risk stalling economic growth.”
That is very true in our region. What is the Minister going to do about it?
My second concern is procurement. I have mentioned before in the House—my hon. Friend picked up on this—the farce in relation to the largest offshore wind farm being created just off the coast of our region. We have fantastic engineering firms and great supply-chain opportunities. We have the steel to provide the fabrics for the turbines. However, most of the contracts are going to firms from Germany and Belgium. No other nation would have that. Given the massive potential that we have, we need an industrial strategy that involves Government working collaboratively with business. How will the Minister deal with the supply-chain and procurement issue?
The third area is co-ordination across Government. This issue is not confined to the north-east, but goes across Whitehall and industrial sectors. Business policy cannot reside solely in the Department for Business, Innovation and Skills. Every Department should be assessing its activities according to the impact that they have on wealth creation and regional and national competiveness, whether it is the Department for Transport for aviation policy and airport capacity, the Department of Energy and Climate Change for opportunities in the energy industry or, as my right hon. Friend the Member for South Shields said, the Home Office for visas for skilled workers. The other points with regard to this area are clarity and certainty. If we can have a combination of good long-term thinking to allow businesses the confidence to invest for the long term, the regional potential will be addressed.
Lord Heseltine recommends in his report a national growth strategy created in consultation with the business community and setting out a “progressive vision”—his words—for wealth creation over the long term. Will the Minister say whether that will be implemented?
We have plenty of potential in the north-east, but we need all partners—central and local government, business, education and the private and public sectors—to pull together to realise that potential and achieve a common and compelling strategic vision. It will be truly lamentable if we do not grasp the fantastic and often unparalleled opportunities on offer for our region in 2012. I hope that the Minister will set out how she will ensure that there is a concerted and co-ordinated Government effort to allow us to do that.
Sharon Hodgson (Washington and Sunderland West, Labour)
It is a pleasure to speak under your chairmanship, Mr Hollobone. I congratulate my right hon. Friend David Miliband on securing this very important debate. The last time that north-east MPs were gathered in Westminster Hall, we were talking about unemployment, and the scourge of unemployment is the main reason for our collective desire to see a proper economic plan from this Government for our region.
In my constituency, long-term youth unemployment has risen by 271% during the past year. The year before that was even worse: the increase was well over 1,000%. It is an absolute tragedy for the young people who cannot find a job. What chance have they of ever being able to contribute to economic recovery in the north-east if and when jobs do arrive, especially if they are the good-quality, high-tech jobs that we want? How can they get their foot on the jobs ladder when the evidence shows the damage that long-term youth unemployment does to a person’s life chances and even their life expectancy?
Like other hon. Members, though, I want to concentrate on some of the positives. Nissan’s factory in my constituency continues to win new business from its parent company. One in three cars made in the UK is made in my constituency. The north-east is leading the UK in electric vehicle manufacture. As a result of that success story, Nissan’s supply-chain companies, such as Gestamp UK, which I visited a few weeks ago, Calsonic Kansei and Vantec, are flourishing and looking to expand. Other companies large and small, such as Rayovac and
Washington Components, which I visited on Friday, are doing very well in creating employment and training opportunities.
All of that is great news, but it is not enough. We cannot rely on a few companies, good as they are, to lead the economic development of an entire region. The north-east has so much potential. We do not want aid; we want investment. All we need is our fair share of help from central Government to get things going, not measly handouts. We certainly deserved more than the 0.03% that we got of the national infrastructure budget. The north-east economy is not a problem that the UK needs to fix. It and its people are a huge asset and, if developed properly, will produce huge returns for UK plc—just ask Nissan.
One particular project that I am keen to see funded is the extension of the metro to Washington, which would open up Tyne and Wear to my constituents looking for work and make the town an even more attractive venue for investment. That would be particularly welcome given that the rate of new business creation in my constituency is half what it is across the region as a whole.
We need what the Secretary of State and latterly the noble Lord Heseltine have described as industrial activism, but what we got from this Government was the abolition of One North East, whose task was exactly that. I know that the North Eastern LEP will do everything that it can to fill the gap that abolishing One North East has left, as will individual councils such as Sunderland, but if they are to achieve the success that we need, they will need the powers and resources to do that. We also need to build houses, not just to provide work and training opportunities for young people, but because we need them.
So far, all we have had from this Government are policies and decisions that will widen the north-south divide, whether that is supporting regional pay or slashing regional development funding. Growing up, I experienced at first hand the unfairness of the north-south divide. That is what drove me into politics, and I do not intend to stand idly by and watch while it devastates—ravages—another generation of north-easterners. We need a one-nation plan for our economy—a plan that will create the jobs that my constituency needs, a plan that will close the divide, a plan for young people and a plan that will ensure that we do not once again spiral into the cycle of deprivation and unemployment that the previous Tory Government created with impunity across the north-east.
Helen Goodman (Bishop Auckland, Labour)
It is a pleasure to see you in the Chair, Mr Hollobone. I congratulate my right hon. Friend David Miliband on securing the debate. It is extremely timely because a review of the north-east economy is being carried out; it is being led by the noble Lord Adonis. The northern group of Labour MPs is keen to engage constructively with that review, and we have today published evidence for the review, setting out our perspective.
I know that the Minister is extremely interested in the aims of economic development and that she understands the importance of well-being. That implies an approach
that gives investment in human capital, place making and a concern for the distribution of success a significant role alongside the infrastructure, science and investment that my hon. Friends have spoken about.
As hon. Members have said, the north-east is home to some world-beating industries. Consequently, it is the only region in the UK with a continuing export surplus. To grow and develop, it needs a region-wide approach; concentration on those clusters where research and development can be translated into innovation; skills and retraining for adults and young people so that those losing their jobs in the public sector can take advantage of the opportunities that require a different skill set in the private sector; a fair share of the Government’s infrastructure spend; and spending on housing and place making.
But what have this Government delivered? They have delivered massive cuts. The scale of the cuts in the north-east is huge—£2.8 billion and 7% of our gross output. That is three times the level of the cuts in the south-east. New analysis undertaken for us by Oxford Economics shows the knock-on effect to the private sector of a further £l billion loss in output. That totals a 10% drop in the size of the regional economy. That is why the shops in our high streets are closing and why construction firms are closing because they are not doing work on public sector buildings. The Chancellor of the Exchequer has taken more than £1,000 from every man, woman and child in the region. If the International Monetary Fund is right, the second-round effect is even greater at £3.5 billion. That would mean a staggering 17% fall in the size of the regional economy.
I mention that not to be negative, but to point out to the Minister that we can have the most marvellous supply-side strategy in the world, but if the plug has been pulled out, we will see a small number of centres of excellence in a sea of deprivation, and the overriding objective of raising the quality of life and improving standards for our region will be lost. It is absolutely clear from the economic modelling that trickle-down does not work. Without a change in policy, Oxford Economics projects total job losses of 68,000, with job creation of 46,000, meaning that even ten years hence, we will have a 20,000 deficit in the number of jobs in our region. It imperative that the Minister goes back to the Treasury and points out the importance of a proper public spending settlement on
Ian Lavery (Wansbeck, Labour)
As ever, it is a pleasure to serve under your chairmanship, Mr Hollobone. Like other hon. Members, I congratulate my right hon. Friend David Miliband on securing such an important debate.
There is persistently negative criticism in my Wansbeck constituency because of what we are experiencing. The outlook for employment can only be described as bleak; the area is still reeling from the loss of heavy industry, mainly coal mining. My constituents feel largely ignored by the Government. We rarely see a Government official or Minister anywhere near Wansbeck, and I am quite sure that they do not have a clue where it is. We are rightly concerned that we appear to have been forgotten.
Why have we been forgotten? Why are our economic figures, although similar to those for the main parts of the north-east, unique and quite different from the figures elsewhere in the country? Why are 21 people applying for each job vacancy in the job centre? Why is there a very low number of business start-ups? Why is Wansbeck the constituency with the highest number of bankruptcies in the UK? Why has there been a 33% increase in the number of job seekers since May 2010? We demand answers, and we deserve a lot better.
On a positive note, Bernicia Group and AkzoNobel have relocated to Ashington, which is great news— 600 jobs, new skills, high technologies and proper apprenticeships, not workfare. It is essential. On another positive note, I am absolutely delighted that Northumberland college is creating strong links with local schools and colleges and our excellent universities in the north-east. That can only benefit the people in our region.
My hon. Friend Mr Campbell mentioned that the area’s economy was largely built on the coal mining industry, and I agree. It has been based on coal, built on coal and has flourished on coal, shipbuilding and other heavy industries, including manufacturing and engineering. There is massive potential in the renewable energy supply chain: marine energy technologies, offshore and onshore wind, and manufacturing the bases and blades. My hon. Friend says that we are bringing in parts by the hundreds and thousands, but it is manufactured across the world, which is unacceptable. We should have inward investment; we should have Government investment, not aid, to provide employment, skills and new technologies for people in our area. I am confident that that is the way forward.
The Energy Bill is crucial. The Government need to ensure that investment policies and the investment market attract energy. We have great belief in the north-east in the future. We do not seek pity or sympathy. We are a region of proud, hard-working individuals and excellent entrepreneurs, with a visionary, vibrant business community that wants the Government to share and match our belief, so that we are better placed to contribute even more than we do now to the UK economy.
Julie Elliott (Sunderland Central, Labour)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my right hon. Friend David Miliband, who has a neighbouring constituency,on securing such an important debate. I will not comment on many of the things I was going to mention, but will instead associate myself with the comments made by Opposition Members and disassociate myself from the comments of Ian Swales, who described a region that I simply do not recognise.
The positives of our region and Sunderland, part of which I represent, are our manufacturing base and industrious nature. Nissan is in the constituency of my hon. Friend Mrs Hodgson. It is a world leader—the most productive car manufacturing plant in Europe. High-quality engineering companies such as Rolls-Royce are based in my constituency. We do a lot of things well and we need
support to build on that, but we also have a low-wage economy, which creates problems with spending power in the regional economy. We have been severely hit by the cuts that the Government have implemented, particularly to in-work benefits, the removal of education maintenance allowance and the increase in tuition fees, which has a direct impact on our young people going on to higher education.
Pat Glass (North West Durham, Labour)
Does my hon. Friend agree that although we are the smallest region in the country, Ofsted clearly shows that we have the smallest number of failing schools and the highest number of good and outstanding schools? Our young people were going to university in much greater numbers, but that has now collapsed as a result of Government policy.
Julie Elliott (Sunderland Central, Labour)
I agree with my hon. Friend.
Low wages are a problem. I congratulate one of the excellent schools in my constituency, Southmoor academy, on recently introducing the living wage for all its staff. We do not need regional pay. In a letter from 60 leading academics to The Times last week, Keith Shaw, a professor of politics at the university of Northumbria, said that the policy could lead to “a spiral of decline”. The Government need to listen.
What do we need to move forward? We need to support manufacturing and improve further on our positive balance of exports to increase the productivity not only of our region but of the country. Infrastructure needs to be improved and, as previously outlined, transport taxes need to be addressed. We need to deal with the skills gap. The Government must look at that seriously and implement some recommendations in the report on apprenticeships that the Select Committee on Business, Innovation and Skills published last week. The report defines the difference between good apprenticeships and in-work training, and particularly identifies high-level apprenticeships that lead to level 4 and level 5 qualifications. I hope that the Government look carefully at the report.
Youth unemployment is one of the biggest problems in the north-east. The Government’s youth contract is simply not working there. Youth unemployment is still rising and long-term youth unemployment is growing every month. We do not want a generation of young people who are simply left behind, as was the case in the 1980s under Prime Minister Thatcher. Our regional economy and our young people do not need that again. The Government must look at the problem.
We need better, simpler support for business, and local enterprise partnerships should be given the power and funding to do their job. The Government have said that the question of whether we get a fourth regional growth fund round is iffy. I would like the money that has already been promised to be delivered. Due to the lack of time, I will end my remarks there.
Alan Campbell (Tynemouth, Labour)
I congratulate my right hon. Friend David Miliband on securing this important and timely debate. Yesterday, Tesco announced a new retail outlet in Cobalt business park in my constituency that will provide nine jobs. There were 660 applicants—more that 70 for every vacancy. These are difficult times for the north-east economy.
As has been said, the contraction of the public sector is only just beginning. I am concerned by attitude of some Government Ministers: public is bad and private is all good. The reality is that there is only one north-east economy and the relationship between public and private is complex. John N. Dunn Group, an excellent family company in my constituency, did a lot of work when schools were being built and social housing was being repaired, but such companies are finding it difficult to survive. When money is tight, and it will be tight into the future, it is important that we ensure that companies in our localities achieve maximum benefit. We need to improve the transport infrastructure, which is why I want to bid again for funding to improve both sides of the road in the Tyne tunnel. It is important that the Government do not just put out another press release to say that it will happen, but actually get on with it.
As we have heard today, we have some of the most advanced manufacturing companies in the country, if not the world. One in three cars made in the UK is made in the north-east and 70% of North sea oil and gas platforms are built in the north-east. When Hitachi comes to the region, which it will thanks to the efforts of my hon. Friend Phil Wilson, there will be huge opportunities. We need to follow the approach of the regional development agency, ensure that we support clusters and get the maximum advantage for the supply chain in that situation.
Furthermore, it is important that small and medium-sized enterprises have access to capital. It is not right that half the companies in the north-east do not know anything about the Government’s four big flagship policies in that regard, and less than one in six takes part. When Weigh-Ahead, an excellent company in my constituency, approached a bank administering one of the Government’s schemes, it was told, “Actually, we can’t support you, but if you set up in London, we definitely could support you.” Such regional imbalances must be addressed. The local enterprise partnerships have a key role to play in that regard. I am concerned about our lack of capacity, especially as Lord Heseltine appears to be saying that it is important that we devolve not only resources but decision-making as well. The Scottish Development Agency still exists, so there are resources on that side of the border. Let us ensure that we have a level playing field.
On the question of capacity, our universities are a crucial part of the regional economy. It is important that our young people do well. North Tyneside has the unenviable reputation of being the area where the number of applications to higher education fell more last year than anywhere else in the country. That decline was the result of the double whammy of the abolition of the education maintenance allowance and the hike in tuition fees. The Government must address that issue quickly.
As has been said, the north-east is not a problem that the UK has to solve but an asset. What we need is a stronger commitment by the Government to a policy that creates the conditions for growth.
Phil Wilson (Sedgefield, Labour)
I, too, thank my right hon. Friend David Miliband for securing this debate. In the short time that I have, I want to discuss the lessons that can be
learned from the Hitachi deal and the investment that is coming to my constituency. It is the biggest private sector investment in the north-east since Nissan. It will create a £60 million to £80 million factory and 720 jobs, and will produce the Intercity Express Programme. We must remember that the deal was an initiative by the Labour Government, and not this Government. The campaign that we pulled together and that the coalition used showed the north-east at its best, with everyone coming together to ensure that the deal went ahead.
My right hon. Friend said that the Government have a masochistic approach to economics, which is correct. The other problem is the mantra that says, “Public sector bad, private sector good.” What the Hitachi project proved was that when the public and private sectors come together, they can achieve great things. I say to Ian Swales that One North East played a great part in bringing Hitachi to the region. The factory is closer to Teesside than it is to Newcastle. I hope that in the not too distant future Teesport will be used to export trains to the rest of Europe.
The other lesson for me is the fact that we are part of Europe, which is one of the reasons that Hitachi came to the UK. It came not just because of the Intercity Express Programme, but because we are part of a market of 300 million-plus people.
Phil Wilson (Sedgefield, Labour)
I stand corrected. It is a market of not just 60 million in our own country, but 500 million people. On the back of the Intercity Express Programme, Hitachi will bid for work in other countries. It is looking for work in Germany and elsewhere in Europe, so that we will not just deal with trains in our own country but become an exporter of trains.
Tom Blenkinsop (Middlesbrough South and East Cleveland, Labour)
One North East was instrumental not only in bringing Hitachi to the region, but in securing Sahaviriya Steel Industries funding for the Teesside Cast Products steelworks at Redcar. As a former union official, I was in constant talks with SSI, Don Cook and other companies that were interested in buying the plant.
Phil Wilson (Sedgefield, Labour)
That is absolutely right. The demise of One North East is a great tragedy for the area, and local enterprise partnerships will be nowhere near as good at attracting business to the region.
I have run out of time, because I want my hon. Friend Pat Glass to be able to speak. Essentially, we need the public and private sectors to work together. There is good and bad in both. What we should do is use the good and reform the bad for the benefit of the whole country.
Pat Glass (North West Durham, Labour)
Thanks to the discipline of my colleagues, I find myself with a bit more time. None the less, I will be quick. We have talked a lot today about the strengths of the north-east, but I want to focus on two specific areas. As our geography means that we are not in that golden triangle of south-east
England, northern France and Germany, our transport infrastructure is important to our development. We have three and four-lane motorways right the way through this country until we get to the north-east, where the road becomes a two-lane motorway. If we go north of Newcastle, the roads are not even dualled. The issue is incredibly important to investors in the region. The fact that the Government have failed to resolve the issue of congestion at the airports in the south-east has a deleterious effect on airports in the north-east.
The problem with west coast main line is nothing compared with what is coming along for the east coast main line because of our failure to invest. The fact that the Government are only prepared to commit to a Bill for High Speed 2 to Birmingham says a lot about the lack of investment in the north-east. Until we sort out those transport issues, we will have real problems with growth.
Ian Mearns (Gateshead, Labour)
The east coast main line is a crucial link to the south-east for the north-east. With the investment going into HS2, a lot of us are worried that the east coast infrastructure will have to last another 30 years without significant investment. This creeping at the edges is a matter of great concern.
Pat Glass (North West Durham, Labour)
I want to concentrate not on the strengths that we currently have but on the strengths of the future. We are the smallest region in the country, and yet, according to Ofsted records, we have proportionately the smallest number of failing schools in the country and the largest number of good and outstanding schools. Our universities are world beaters. They do not just exist in a small enclave as part of a campus. What our universities do in the field of research in partnership with local companies is part of the future of our region. I have worked closely with the school of education at Durham on initial teacher training, which is recognised as a world-beating programme, yet the Government are cutting places in such schools locally. That will not help the growth in investment in the north-east.
The ability to attract foreign students has been mentioned. We get a lot of students from all over the world who come to study, then stay in the region. When they come to Durham in particular, they tend to fall in love with the romance of the city and stay. That is in serious jeopardy now. The money that has been invested by the regional development agency to assist research in our universities has been cut dramatically. We are talking about the skills of our future. As a result of combined Government policy over the education maintenance allowance, tuition fees and cuts in home-to-school and college transport, higher education participation in parts of our region has collapsed by up to 30%, which is devastating for our young people and for the growth of our economy in future.
Catherine McKinnell (Newcastle upon Tyne North, Labour)
It is a pleasure, Mr. Hollobone, to serve under your chairmanship for the first time and I congratulate you on your quite impressive stewardship of such a huge number of Members who wanted to contribute to this debate and who have been able to contribute.
I also congratulate my right hon. Friend David Miliband on securing what I agree is an incredibly timely and important debate for
us to have, because the UK will prosper only when we fully exploit the resources and strengths of every single part of it. The coalition seems somewhat blinkered to the huge value and potential that exist in the north-east. Both my hon. Friends and Government Members have conveyed with huge passion the potential that the north-east has, and it has been a very forward-looking, positive and genuine debate. I hope that the Minister will feed back a lot of the suggestions and contributions that have been made today, not only to the Business Secretary but to the Chancellor, whose Department should have been responding to the debate.
My right hon. Friend set out five main areas on which he feels the north-east region needs to focus in order properly to harness its economic and social potential, and I agree with every point that he made. However, I will try to summarise some of the strength of feeling that has been put across by right hon. and hon. Members today, which can be divided into three main ways in which the Government can support regions such as the north-east and get a grip on our economy as a whole, to harness the potential for growth that we have.
The Prime Minister said in his speech last night at the lord mayor’s banquet that he is not afraid to travel the world in pursuit of selling UK plc, and yet his Government are clearly failing to harness and exploit some very obvious opportunities to foster growth, innovation and world-leading industry. Like my right hon. Friend, I will not conduct a post-mortem on the demise of the regional development agencies, in particular the demise of One North East, although I have to say that I do not agree with the sentiments of Ian Swales, who feels that the RDAs are responsible for a lack of economic growth. That is because One North East undoubtedly brought huge economic benefits to the north-east region and secured a huge amount of inward investment and exports, channelling those in and out of the region and creating a surplus balance of trade.
The figures speak for themselves. Around 82% of all the inward investment that came into the north-east in 2009-10 came through the inward investment team based at One North East—£387 of investment in the region for every £1 spent. One North East was a particularly successful RDA with a solid record of success. Following its creation in 1999, the north-east’s economy experienced greater growth than any other region outside London and it still enjoys a positive balance of trade, which I have already mentioned. We invent, make and export things in the north-east, which is something we would like the Prime Minister to celebrate and support on his international trade tours.
What about the future? The times have changed, and we have experienced a financial crisis and a collapse in our banking system. We recognise that reductions needed to be made, but we also lament the wholesale throwing-out of the RDA baby with all the bathwater. Exports and inward investment support is just one area that demonstrates how losing the RDA is a loss to the region. Where Labour in Government saw the huge potential of regions such as the north-east, delivered bespoke business support and saw record economic growth, we now have a generic UK approach based on the Prime Minister’s “sink or swim” model that risks overlooking some major
opportunities. The risk is that the Government’s one-size-fits-all approach is letting down the regions, which in turn lets down the UK as a whole.
So who are the economic drivers of the future? The local enterprise partnerships are a collaboration of businesses and local authorities. We are more than two years on from their inception and they are starting to form a view of the way ahead. I will not dwell on how much lost opportunity there has been in that time, but I will dwell for a moment on whether the LEPs themselves have the capacity to drive this agenda forward in the way that it needs to be driven forward. Businesses need to be at the forefront of rebuilding our economy, but do they have the capacity or even the will to drive a regional or national strategy? Local authorities are also at the forefront of rebuilding our economy and they absolutely should be part of driving that agenda, but I know that my own local authority and other authorities up and down the country—well, certainly Labour local authorities at least—are being cut right down to the bone and they will barely have the resources to keep their libraries open, never mind the resources to co-ordinate a regional strategy for growth.
There is no shortage of will, but there is potentially a huge shortage of capacity. That was identified by Lord Heseltine in his review on growth, so I would be interested to hear what the Minister has to say on the Government’s intentions to implement any of Lord Heseltine’s recommendations.
The final aspect that I will focus on is the Government and their own approach to economic growth. While dismantling the regional structures and setting people free to pursue growth—where they can locally agree to do so—the Government’s own actions are undermining efforts at every turn. Let us take the new green industries as an example. While other countries are steaming ahead and grasping the massive opportunities and indeed necessities of developing low-carbon technologies, our Government seem to emanate nothing but chaos and confusion, or “hokey-cokey” as my right hon. Friend put it. My hon. Friend Mr Campbell also spoke very passionately about the opportunities that the north-east has to drive growth in renewable sectors in areas such as Blyth; I know that the Minister is now fully aware of where Blyth and Ashington are, because I saw her look them up on a map. Offshore wind and other renewable technologies are a huge potential growth sector for regions such as the north-east. We have local subsea expertise in oil and gas, as well as an excellent strategic location to draw companies in.
Having said that, how can investors feel confident? I have heard from investors that they are very hesitant to come forward to make the necessary investment and to commit to delivering as part of the Government’s flagship green deal because their confidence has been undermined following the feed-in tariff subsidy slashing fiasco and the mixed messages that are coming from the Government. I would like to hear the Minister’s view as to whether stability and certainty are seen as priorities for encouraging investment, and I would also like confirmation of what the Government are doing to get a grip and to improve confidence in their strategy among the members of the business community who have the potential to drive growth in this area.
In conclusion, Members have raised a vast array of concerns about the Government’s strategy but they have also put forward many positive suggestions about how the Government can work with regions such as the north-east to boost growth. There is no doubt that, as a region, the north-east faces particular challenges. We have a disturbingly high unemployment rate. We also have falling university applications, which a number of my hon. Friends have highlighted. In the last 12 months, there has been a 19% fall in university applications in my own constituency and hon. Members have also mentioned the very worrying 23% drop in university applications from the north Tyneside area, which is a huge concern in terms of the future skills gap that hon. Members have also highlighted in the debate.
We also have a proximity to Scotland, which is investing significantly more in its growth and investment strategy than the north-east is able to as a region. We even have Alex Salmond attending a dinner in Newcastle this evening—I believe that it is in my own constituency—and his message is that the north-east needs a voice as strong as the one that Scotland has. So here we are, being that voice today. The region has a proud success story to tell, of innovation, manufacturing, exports and world-class education, not to mention the beautiful surroundings and rich natural resources. So the message to the Government today is that the north-east and other regions up and down the country are a ripe resource that the UK can draw on to power this nation back to prosperity. “Better Together” is a slogan that applies not only to our union with Scotland but to the whole of the UK. What we need from this Government is a clear and vocal recognition that there is more to UK plc than the south-east and London, and I hope that the Minister can feed that message back to the Prime Minister today.
Jo Swinson (East Dunbartonshire, Liberal Democrat)
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I echo others in saying that you have chaired our proceedings expertly, making sure that everyone who wanted to contribute has been able to do so. I commend David Miliband on securing the debate. I am glad he managed to make it here, having run from the tube. There is a great tradition of running in his constituency, which I had the pleasure of running to in 2006 in the great north run.
I thank the right hon. Gentleman and other Members for the constructive approach they have taken to the debate. I really appreciate the richness of the experience we have heard about from both sides, and particularly from Members who are, understandably, passionate about their constituencies and about the north-east as a whole. A wide range of subjects have been touched on, including transport, skills, energy policy, investment, employment, education and regional development—the list goes on. I will endeavour to deal with as many points as possible in the time I have, but I hope Members appreciate that I face something of a challenge, in the nine minutes available, in addressing absolutely every point that has been raised. However, I undertake to write to Members if I am unable to cover any questions.
Jo Swinson (East Dunbartonshire, Liberal Democrat)
I hope the hon. Gentleman will appreciate that I face a challenge in responding to the debate as it is, and giving way to him would just reduce my ability to respond to the points made by him and his hon. Friends.
No one is under any illusions about the scale of the wider economic challenges we face, but the Government have taken the tough decisions needed to tackle the deficit, and we are working hard to make sure that effective action is taken in our economies, not only internationally, but locally.
Far from being all doom and gloom, however, the debate has also been positive, in that it has focused on the real asset the north-east economy is to the wider UK economy. Many of the stories we have heard today are a real sign that a transformation is under way in the north-east and that many businesses are thriving. Members have touched on the fact that various sectors are moving away from the manufacturing of the past, important though that still is to the north-east; there is now a wide range of sectors, including health care, life sciences, petrochemicals and low-carbon technologies, although the area still has a strong base in things such as motor vehicles and steel. There is also a positive story to tell on export levels in the north-east, which increased to £14 billion in the year to June, up 7.8% on the previous 12 months. Indeed, the north-east is the only English region with a significant positive trade balance. We therefore have fantastic assets in the north-east.
The right hon. Gentleman started with the theme of connectedness, and I quite agree about the importance of infrastructure. I represent a constituency in the west of Scotland, so I recognise the importance of rail infrastructure. I also recognise the important points he made about our connectedness internationally, in terms of the movement of human resources between different countries. Students play an important in our universities, and many of them, delighted to experience living in the UK, may continue in highly skilled jobs, if they get one after graduating. It is important to recognise that there is no cap on student numbers; while the Government are committed to reducing net migration, we recognise the important role that workers and students can play across countries. On immigration, I would gently tell the right hon. Gentleman that it was his colleague, Mr Brown, who made a point, as Prime Minister, of speaking about protecting British jobs for British workers, so perhaps the attitude in the Labour party could sometimes be changed to reflect a more positive approach towards the benefits that immigration can be bring to the economy.
The right hon. Member for South Shields also touched on the importance of long-term investment in energy policy. I wholeheartedly agree that clarity and certainty are vital; the Government recognise that the private sector will need about £110 billion of investment, and we are committed to making sure, through the energy Bill, that that certainty is provided. My right hon. Friend the Secretary of State for Energy and Climate Change will obviously lead that work, and I appreciate that the Opposition will want to work constructively on a cross-party basis. As the right hon. Gentleman said, these decisions will ultimately span decades, so it is important that one Government do not make a decision that might be changed after a subsequent election if a different colour of Government are elected.
The right hon. Gentleman talked about public spending crowding out private spending and about the false choice that is often presented to us. We can have a debate about that, and I appreciate that there are differences in our parties’ approaches to the cuts that are needed, or otherwise, to tackle the deficit. I did not come into politics to make cuts, and I do not think anybody enjoys making them, but I recognise that tough fiscal discipline is important to make sure that we have the historically low interest rates needed for economic recovery.
Jo Swinson (East Dunbartonshire, Liberal Democrat)
I have a lot to get through if I am to answer as many points as possible, so I hope the hon. Lady will understand why I want to continue.
The right hon. Gentleman is absolutely right that the partnership between the private and public sectors is important. That is why we are developing an industrial strategy to make sure that businesses, investors and the public can have more clarity about the long-term direction. We are planning for the long term, but initially focusing on five areas: sectors, technologies, skills, access to finance and procurement. Catherine McKinnell mentioned the Heseltine review, which has made 89 recommendations, to which the Government will respond in due course. However, the industrial strategy and the approach the Government are taking go with grain of the overall approach in the Heseltine review.
The regional growth fund has been able to invest a significant amount as part of the partnership between the private and public sectors. It has invested £2.4 billion, of which £280 million has been offered to projects across the north-east. There was some criticism of the speed with which the money has gone out, but it is obviously important that the Government do due diligence, and I think people would recognise that. It is also important to note that certainty of public funding sometimes means that a project can go ahead once the funding has been allocated, even if the funding does not come until a later phase of the project. In addition, there is the Growing Places fund, which will help to unblock stalled local infrastructure projects. North East LEP has received £25 million from it, and Tees Valley has received £8.5 million. It is also important to remember that, in the north of England, £1 billion of European regional development funds were awarded in the most recent finance round.
The right hon. Gentleman and others raised the important issue of youth unemployment, and we all share the absolute desire to make sure that a generation is not left behind. We know the long-term scarring effect that unemployment has when young people are unemployed. I know the right hon. Gentleman has been in discussions with my right hon. Friend the Deputy Prime Minister, and I know the work he has been doing on the issue. He makes various critiques of the Government’s approach in the youth contract, but it is important to recognise that, for example, enabling young people to take up work experience placements without
losing access to benefits, as happened under the previous Labour Government, means that people can get out of the trap of not having experience and therefore not being able to get job, but not being able to get the experience because they would lose their benefits. That is an important part of the youth contract. Although the right hon. Gentleman is rather dismissive of wage subsidies, they will deliver private sector, lasting jobs, in contrast to the schemes that were in place under the Labour Government.
Of course, not all apprenticeships are for young people, but 51% of them were last year, and they are an important part of the solution to youth unemployment. We are not complacent, and we recognise that there is a lot more to be done. Overall youth unemployment figures are coming down, which is good news, but we are absolutely committed to keeping a very close eye on the issue.
The right hon. Gentleman’s fifth point was about finance for innovation. The Technology Strategy Board, and particularly the new network of Catapults—technology and innovation centres—are a really important part of how we can develop technologies for the future and grow our economy.
A wide range of points were made by other Members; I will not get to them all now, but I have made a note of them, and I will endeavour to write to Members about them. I would, however, like to mention the city deals, which my hon. Friend James Wharton referred to. Obviously, the Newcastle city deal is excellent news for the city, and it will unlock £1 billion of extra investment and create 13,000 jobs; indeed, wave 2 could have benefits for other parts of the north-east.
I welcome the comments by Mr Campbell about the fantastic innovation going on at Narec. I appreciate he is unhappy with the 14 hectares of enterprise zone, but he has campaigned hard to get the enterprise zone, and I am glad that he at least acknowledged that the Treasury listened and granted the request.
Mr Wright talked about how we can make sure we get engineering skills, and the employee-owner pilots, which are putting funds in the hands of local employers to work out how best to get the skills they need, are an important part of that. I also welcomed the hon. Gentleman’s comments about girls studying science. That is important, and the Inspiring the Future project, which I would encourage Members to become involved in, will help to build on the links between businesses and schools, and indeed the experience that Members of Parliament may be able to bring to schools.
I appreciate that I will not be able to get round to the rest of the points that have been made, but I welcome hon. Members’ contributions.