Northern England: Opportunity and Productivity - Motion to Take Note

– in the House of Lords at 11:39 am on 12th January 2017.

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Moved by Baroness Massey of Darwen

That this House takes note of the Institute for Public Policy Research’s annual State of the North report, and the case for equality of opportunity and sustainable productivity.

Photo of Baroness Massey of Darwen Baroness Massey of Darwen Labour

My Lords, I am pleased to introduce this debate as a proud Lancastrian and therefore a northerner. I am someone who also cares about deep divisions, any sort of division, in our society.

The so-called northern powerhouse must not just be a catchy label. Northern regions can be powerful only if they have real power, economically, politically and in their public services. I am not talking about devolution; I am talking about decentralisation. The Institute for Public Policy Research North, whose report we are discussing today, suggests ways of contributing to this power and to releasing the energy of the north. I welcome it strongly.

I am delighted to see colleagues with such a wealth of experience and expertise taking part today. I look forward to their contributions. I am only sorry that time will be so limited. I note that some will talk of great expertise of cuts to local authorities, so I shall leave that to them. They will also discuss many other issues.

I shall explore part of the current story on the state of the north, then look at some possible ways forward. I shall look first at social mobility, a component of power and potential. When I was growing up in the north many years ago, social mobility was a term unheard of. You got on—hopefully, but not always—if you passed the 11-plus. In the working classes, where I came from, if you ended up not going to mills or the mines, then you had succeeded—at least partially. That situation is now much more complex. I hope to examine some of that complexity today. The situation is much more multidimensional, going beyond mills, mines and steel, which are of course mainly gone. A productive and ambitious northern economy needs to have its own potential for social mobility and high productivity. The potential is there; many dynamic things are happening, but times are a-changing.

The IPPR’s report begins by stating that its previous year’s annual report was full of confident projection of northern powerhouse potential, in relation to the economy, jobs growth, attractiveness for foreign investment and educational improvements, but there is a warning that the decision to leave the EU will affect the northern economy in terms of trade, access to skilled labour and EU funding. One worry is that devolution appears to have stalled and that the focus on rebalancing has been overtaken by an initiative to develop the industrial strategy.

We may all speculate on why so much discontent and anger were expressed in the northern regions during the European referendum and, of course, in the result. The areas most at risk from leaving the EU, but which could also benefit from new trade arrangements, voted to leave. Only Manchester, Liverpool, Stockport and Trafford voted to remain. People in the north were dismayed at neglect and disregard, at the perception that decisions were made in the south and that power and money resided in the south. The northern regions are more than three times as dependent on EU trade as London. The director of the IPPR has argued that Brexit negotiations should focus on the needs of the areas that voted strongly to leave. He has a point.

Brexit must not be bad for the north; we must be vigilant. In relation to productivity, the northern regions are growing faster than other regions. The weakening pound may be playing to northern manufacturing strengths, but disruption of trade with Europe is still to be feared.

A recent CBI report states that the most productive area of the UK is now almost three times more productive than the least and that wide geographic differences are the root of much inequality in the UK today. Parts of the north suffer disproportionately.

The State of the North report on social mobility states that many regions, and not just the north, have fallen behind London and the south. For example, more than half the adults in Wales, the north-east, Yorkshire and Humber, the West Midlands and Northern Ireland have less than £100 in savings. Young people who want to get on are moving away from many communities—again, not just in the north. Home ownership among the under-44s has fallen by 17% in the last decade; the gap between housing is accentuating the wealth divide. The average weekly pay of workers in Blackpool of £333 is half of that in Southwark—£639—and several, but not all, of the lowest hourly pay averages in the country are in the north.

I add to these figures concerns for transport, education and the issue of poverty and health. Wherever there is poverty and concerns for health, which occur frequently in the north as reports on equality have shown, a whole population may be damaged from before birth onwards. An OECD report last year pointed out that the UK has the worst performance of intergenerational earnings mobility among OECD countries. The Social Mobility Commission, chaired by Alan Milburn with the noble Baroness, Lady Shephard, as vice-chair, identified four fundamental barriers that are holding back a whole tranche of low and middle-income families in communities in England—again, not just in the north. These factors are: an unfair education system; a two-tier labour market; an imbalanced economy; and an unaffordable housing market. Our education system seems intractable, with more emphasis on passing exams rather than the soft skills, such as communication skills and teamwork, which are required by industry. Not enough emphasis is placed on the early years, although that is improving, and sport and the arts are being neglected. We need to look again at what we are doing to our children.

My noble friend Lady Corston chaired a committee last year which produced a challenging report, Overlooked and Left Behind. It pointed out the inequalities between academic and vocational routes to work for young people and the importance of advice in making transitions and choices. Speaking of young people, I am delighted to learn that the Children’s Commissioner for England is developing a new project to look at childhood in the north of England and the opportunities for children provided by devolution and regeneration. This project will seek to understand the regional differences in children’s experiences and how these impact on outcomes. This will surely be a project to follow. The report of the Commission for Housing in the North, published by the Northern Housing Consortium, points out that a response to housing in the north is local flexibility and the use of public investment, developing new partnerships and revitalising places.

I am highlighting just a few points; I know that other noble Lords will elaborate more. Let me now discuss the possibility for development. The CBI report on regional growth, which I mentioned earlier, identifies four main drivers of regional productivity: ensuring a strong school performance and results at GCSE and—recognising that school is not enough—work training and development; transport links that widen access to labour, also examined by Transport for the North; better management practices; and a higher proportion of firms that export and innovate.

These concerns link with the views of IPPR North. In 2015, it set out four tests for the northern powerhouse: to generate a better type of economic growth that combines rising productivity with more jobs and better wages for all; to liberate the potential of people through improvements to the development of skills, starting with the youngest, including pre-schoolers; to invest in future success, particularly in terms of innovation and building infrastructure for the future; and to rejuvenate local democracy by giving people a genuine involvement in the way that the north of England is run. These tests are still important—I have touched on some of them already—but times and contexts move on. In the 2016 report, IPPR North praises the progress being made in relation to transport, infrastructure, finance, trade and investment, and the schools strategy. But there is a caveat—clouds on the horizon. Wider events, with Brexit a large influence, mean that business confidence is threatened and the prospect of inclusive growth in the north looks distant.

The IPPR makes three recommendations. The first is the formation of a northern Brexit negotiating committee, to enable the north to be heard and to build trade relationships with regions and nations within and beyond the EU. This recognises that the Government’s industrial strategy is an opportunity to take a more proactive approach to structural challenges. The second recommendation calls on the Government to adopt a place-based approach to industrial strategy with the core principles of regional differentiation, co-ordinated investment and devolution. Local economic resilience needs to be fostered and developed. Thirdly, local enterprise partnerships should conduct resilience audits that set out the post-Brexit threats to their economies and develop strategic responses. Government should be asked to back this strategy as part of a new round of devolution deals with each local enterprise area.

As the report also states:

The North has distinct economic assets and interests that present both opportunities and threats as the UK prepares to leave the European Union”.

It warns that the patchy development of combined authorities, metro mayors and devolution deals in the north affect the formulation of a coherent response to Brexit.

I have attempted to give a flavour of this exciting report and touch on some of the issues facing the north in relation to its economy and underlying structures, such as health, education, housing and transport. Much is positive; much shows forward thinking. The importance of local enterprise partnerships and the encouragement of local democracy are at the core of progress in the north. Will the Government heed the warning signs of the IPPR report and consider its recommendations? I beg to move.

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Baroness in Waiting (HM Household) (Whip)

My Lords, I remind the House that there is a five-minute time limit for Back Bench speeches, so if the clock says five, I am afraid that you have gone over.

Photo of Lord Cavendish of Furness Lord Cavendish of Furness Conservative 11:51 am, 12th January 2017

My Lords, first I thank the noble Baroness, Lady Massey, for introducing this timely debate so elegantly. Her view of the dangers of centralisation came across powerfully. My own contribution is from the perspective of small business in my part of the north, especially Cumbria.

Before venturing further, I need to declare my personal interests. I remain on the board of, or am otherwise involved in, my family’s activities in Cumbria. They include farming, forestry, leisure, mineral extraction, housebuilding, aggregates and horseracing.

This is my first encounter with the work of IPPR. I had rather imagined them to be a left-of-centre think tank with rather predictable views. I am very pleased to repent of my ill-conceived prejudice and I commend its website to anyone who has not seen it: they have a treat in store. Nor do I have a problem with many of the IPPR’s recommendations. I like the idea—as does the noble Baroness—of resilience audits. I also support, in principle, the concept of a northern Brexit negotiating committee, subject always to the details of its composition.

With all reports, whether they come from government or think tanks, I find myself asking who the authors have been speaking, and listening, to. I am usually left with the feeling that the conclusions reached, where business is concerned, are garnered from those men and women who are pleased to call themselves “business leaders”. Many of them are in command of large corporatist businesses and dislike risk—and certainly uncertainty—of any kind. By contrast, those of us in the SME sector wake up every morning of our lives to personal risk and uncertainty. We do not complain: it is the life-blood of our very existence. The cohorts of officials advising Ministers have problems understanding the sector. Why would it be otherwise? They have never been near a risk-taking enterprise.

What has become increasingly evident lately, however, is how remote from the business environment the political class has become: witness perhaps the fact that only two of the 23 noble Lords taking part in this debate will be responsible for paying the wages tomorrow morning. My request that a better way be found to hear what the SME sector has to say is not special pleading; it is essential because we represent such a large proportion of the nation’s economy and its growth.

Where I do take issue with the report is where it says that, after such encouraging progress in the north, “dark clouds are gathering” and,

“uncertainty now pervades the northern mood”.

I see no sign of the northern powerhouse flagging. I am old enough to be rather wary of industrial strategies, but whatever the Government are doing in the north—and it amounts to a great deal—it seems to me to have been an enormous success and I thank them for it. Less good is the situation in my own county of Cumbria—what has sometimes been described by noble Lords as “north of the north”. We face the usual challenges of infrastructure needs and connectivity, as well as problems with skills and education—the matters elegantly described by the noble Baroness.

We will not lack opportunities post-Brexit. I believe that there is scope for further development in our traditional strengths of agriculture and tourism. Significant investment is already coming into the county. We have the nuclear coast and major shipbuilding orders, and there is investment in energy and pharmaceuticals, with more besides. However, looking ahead, enduring benefits for Cumbria will not be achieved unless and until the burning issue of local governance is resolved.

For a number of years I sat on Cumbria County Council. I am delighted to see in his place, and due to speak, the noble Lord, Lord Liddle, who serves with great distinction on the council and enjoys a formidable reputation there. I hope that he will throw more light than I am able to on the problem of devolution. I believe it is a fact that our LEP had to accept what amounts to a pitiful settlement through Cumbria’s failure to agree a devo deal.

In Cumbria we have half a million people—there are more sheep than people—and we are governed by 600 elected representatives, plus their support staff. It is small wonder that one civil servant in exasperation told me, “You are over-governed and under-led”.

In conclusion, I look forward to hearing what the noble Lord, Lord Liddle, has to say on this local matter, but I wonder whether the Minister might consider reminding the world how much my county and others like it could stand to gain with a degree of reform, which has worked so well elsewhere.

Photo of Lord Shipley Lord Shipley Liberal Democrat 11:57 am, 12th January 2017

My Lords, I thank the noble Baroness, Lady Massey of Darwen, for initiating this debate. I add to her list of places in the north that voted to remain my own city of Newcastle upon Tyne.

I congratulate IPPR North on its incisive report. Its recommendations urging local enterprise partnership resilience audits in the face of Brexit and the creation of a northern Brexit negotiating committee to speak for the north in the absence of the devolved structures now available in London, Scotland, Wales and Northern Ireland are critical. IPPR North is also right to identify the adoption of a place-based approach to industrial strategy, encouraging regional differentiation, co-ordinated investment and devolution as its basis and ensuring that all parts of the north and not just the big cities can grow.

A hard Brexit will damage the north’s economy profoundly, with fewer exports and fewer jobs as we exit the single market and the customs union. The north must keep access to the single market and the customs union. Over half of our exports go to the European Union, and the prospect of those exports queuing up at foreign borders because we have left the customs union is too dreadful to contemplate. Leaving the single market will create tariff barriers, which will result in lower exports.

Mention has been made of the northern powerhouse. The Government were right to create it as a flagship policy but it has to date suffered from being more flag than ship. However, the signs are encouraging, not least in the work of Transport for the North, whose role will inevitably relate not just to investment in transport infrastructure but to the wider economic development of the whole of the north.

I want to suggest to the Minister a six-point plan—which is not exclusive—to boost growth and productivity in the north. If there is no plan, the economy of the north risks being squeezed by the economic strength of London and the south-east in one direction and Scotland in the other, which could well see an economic resurgence if its wish to stay in the EU results in a referendum vote that it leaves the UK.

Turning to the six points, first, I want to see the introduction of regional targets for the Department for International Trade for foreign direct investment, which is currently assessed only across the UK as a whole. I draw attention to the fact London got one-third of all new jobs from foreign direct investment in 2015-16.

Secondly, the Government should be encouraging the private sector to invest in the north to boost development. As an example, I pay tribute to Legal & General’s investment in Newcastle, including a £65 million investment in the Science Central site. This is good news, but we need more of it.

Thirdly, we need a major boost to our secondary schools, as there has been in London, which now has a much higher achievement rate than the north—and, of course, much higher funding per capita. The CBI demonstrated in its December report that that is a key factor in driving up productivity and therefore wages.

Fourthly, will the Government look at using of some of the apprenticeship levy from April to promote employment and higher-level skills development in areas that have done less well since the crash?

Fifthly, the north’s universities need to work even more closely together to promote innovation across the whole of their sub-regions so that more people—not just those in the big cities—can benefit from their job creation.

Sixthly, the north needs a bigger share of the country’s communications investment in both transport infrastructure and digital support for SMEs to enable them to grow faster and export more. Its share has been far too low, as I think the Government now acknowledge.

In conclusion, the north has a huge cultural heritage, which we want to protect and promote. Much of that was forged by the Industrial Revolution. We need a new revolution, one that drives a sense of common purpose across the north to invest more, to make a success of devolution and to bridge the productivity divide. Places that feel left behind need new thinking. I hope the Minister will agree that to leave policy simply in the hands of the Treasury, which thinks only in terms of innovation driving growth, does not help the left-behind places. Those places need intervention to address the barriers of skills, poor connectivity and lack of investment.

Photo of The Archbishop of York The Archbishop of York Bishop 12:02 pm, 12th January 2017

My Lords, noble Lords will not be surprised that an Archbishop of York is keen to contribute to this debate on the state of the north of England, but, as I remind myself, one title held by all Archbishops of York is Primate of England and Metropolitan.

In focusing on the north, I want to avoid any suggestion that the north and south of England can be spoken of as if a latter-day Hadrian’s Wall has been built from the Dee to the Humber. We are one nation, and I, for one, want to see the bonds and sympathies between all people of this land strengthened. It is very good that the state of the north is being debated today in your Lordships’ House. The state of the north is important because, unless we get things right in the north, the whole country will be more divided, less prosperous and unhappier. In short, the whole country needs the north to flourish.

The report looks, in very interesting ways, at the variable economic resilience of areas of the north. I want to focus on another sort of resilience that is just as important as economic resilience: human resilience, the resilience of the people of the north. Any plans for greater prosperity and flourishing in the north must build on that vital characteristic, the resilience of the people.

Over more than 30 years, the economy of this nation has shifted from manufacturing industry to services. Successive Governments have seen the City of London as the economic powerhouse. The result has been to suck energy and resources southwards. London has become an exceptional capital city. It is an exception to the ways of life and the economic prospects of the rest of the country, especially in the north.

The report from IPPR North warns us that the uncertainties surrounding the Brexit vote could set the recovery of the north back very badly. But the status quo before 23 June was not serving the north well. If we are, indeed, poised to “take back control”, how will the people of the north be offered the chance to take back control of their own lives and communities? Brexit cannot just be about more control for London.

It is certainly heartening that the Government have understood the need for an industrial strategy. Making things matters. So do good employment practices. Our economic system is supposed to reward risk-takers, but the people who bear the greatest burden of risk these days are being rewarded with zero-hours contracts, fake self-employment and low pay. Much of the resilience of the north and its people stems from the long history of pride in the jobs that our industrial past created. We may not get the old industries back, but we do need jobs in which people can take pride, and which reward their resilience.

The report expresses cautious optimism about the Secretary of State's approach to a place-based industrial strategy. I share that optimism. It is significant that the Secretary of State comes to this role with a background in community policy. If, as I think he does, the Secretary of State “gets” communities—if he gets the way in which the resilience of the people is an asset on which the economy can build—then there are some sparks of hope for a realistic, resilient northern economy to emerge. The people of the north cherish their history, their toughness and their contribution to the well-being of the nation. That is what has made the north resilient for decades, even for centuries. Our economic policies must build on those assets and not undermine them.

We need more devolution from south to north—devolution of powers and of institutions. We need Cabinet-level figures to champion the north—people who know the qualities of the north from their own experience. We need a more diverse economy that draws on the skills of northern people. If Brexit prompts a shift in that direction, it may just be worth the uncertainty that we are currently experiencing. I am grateful to IPPR North for this excellent report and I urge your Lordships to reflect carefully on it.

Photo of Lord Monks Lord Monks Labour 12:07 pm, 12th January 2017

My Lords, I am grateful to my noble friend Lady Massey for initiating this opportunity to shine a spotlight on the north of England. It is always a pleasure to follow the most reverend Primate the Archbishop of York, who talks knowledgeably about his particular archdiocese.

If the reality of the northern powerhouse never quite lived up to the hype generated by its jazzy title, as my noble friend Lady Massey suggested, it is none the less welcome that the Government have injected energy and resource into the future of the north. The policies were not always consistent, with cuts in local authority funding running against the grain of the northern powerhouse. There were some contradictory strategies at work. But as the IPPR reminds us, with George Osborne and the noble Lord, Lord O’Neill, moving on, it is not yet clear that there is an effective champion in the Government for the northern powerhouse. I hope that we will hear something about that today. Indeed, the Prime Minister struck a rather different tone, referring to her interest in all cities and regions—an approach that risks losing the focus and momentum that the north needs. One message from this debate will be to ask the Government, “Where are the top-level champions at the heart of government?”.

There are welcome bright spots in the north. There are vibrant city centres. They are a little too dependent on shopping and drinking, in my opinion, but none the less huge improvements are taking place in some cities. There are well-performing areas such as Warrington, Cheshire and York and North Yorkshire, but in too many other places the dynamism that built the great industries of the north and the accompanying cities and towns has faded along with those industries.

So we have the situation of a rather lop-sided economy in the UK, with—according to the Eurostat figures—the UK having three regions in the EU top 20: London; north-east Scotland; and Berkshire, Buckinghamshire and Oxfordshire. Only the rest of the south of England does better than the EU 28 average. It is not just a northern problem, of course; it is a Welsh problem, it is to some extent a west of England problem and it is a problem for others as well. Regions outside the south-east are struggling to come up to scratch against some European standards.

Now some people who supported leave might claim that the north has been held back by EU membership and that, if we take back control, our natural enterprise and flair—and, no doubt, unleashed animal spirits—will transform matters. This is a fantasy. As the noble Lord, Lord Shipley, said, the north is lagging behind the best on a number of issues, including: education and training standards, which is a point well developed in the IPPR report; higher levels than average of poverty; life expectancy rates below the national average and particularly below the average in the south of England. Productivity needs big improvement, the urban environment needs improvement and transport, too, needs improvement. Where in the great northern cities are the underground railways that so characterise many of our continental counterparts?

These in fact are all national competences. They are not EU competences at all. They are nothing much to do with the EU, although the EU regional funds have been useful contributors. It is important, too, to remember that a lot of the companies that are engines of growth in the north are foreign owned, often European owned, but also Far Eastern owned. They include BASF, Tata and Nissan—and, of course, recently Siemens in Hull, making a huge contribution in this important year for Hull.

I had hoped that our cities would reach this northern European standard. We have still got some way to go and it is important that we continue to make people in the north aware of just what other people are doing. Brexit will not help with that, but it is important that they learn. My father used to say, “What Manchester does today, London does tomorrow”. I am proud of what Manchester has achieved since the 1990s, but let us be honest about it. It is some time since we have been able to say that those remarks of his remain true. We are still some way off the best and have got a long way to go.

Photo of Lord Curry of Kirkharle Lord Curry of Kirkharle Crossbench 12:12 pm, 12th January 2017

My Lords, I declare an interest. I am a partner in a farming business in Northumberland and historically have had involvement in a number of businesses in the north-east. I was also, five years ago, a member of the Adonis review on the economy of the north-east. I, too, appreciate the comprehensive introduction to this debate by the noble Baroness, Lady Massey, and I welcome this report. Recognising that it covers the whole of the north of England, my comments will focus specifically on the north-east.

As a region, the north-east has the most positive balance of payments of any region in England. This is a remarkable achievement and something of which we are proud. However, this means we are even more vulnerable if trading—particularly trading with the European Union—is disrupted by the impact of Brexit. The north-east boasts the second highest gross value added in the UK economy, at 2.8% in 2016 according to House of Commons figures published in December. This performance must be maintained, whatever the world looks like after Brexit. Earlier this week, your Lordships discussed this very issue. During Tuesday’s debate on the economic impact of Brexit, the noble Lord, Lord Beith, highlighted that 58% of the north-east’s exports are to Europe. The IPPR report further highlights this, placing the north-east in the “dynamic but vulnerable” category.

This important region must make sure that its voice is heard throughout the Brexit negotiations so that it can pursue an agenda beneficial to the north, as recommended in the report. As has been mentioned, large companies such as Nissan are very important to the economy of the north-east and it is excellent that it has committed to post-Brexit investment. However, as in every other region, the business community in the north-east consists of tens of thousands of SMEs and their future is crucial to the economy of the north. This being the case, it is vital that they continue to be supported throughout the Brexit negotiation process, as much of the success of the northern economy is tied to theirs. They need encouragement, continued access to capital funding to improve skills and support to access markets here at home but also, importantly for the region, overseas.

Noble Lords will not be surprised that I also refer to the rural economy and its importance to the north. A Newcastle University study in 2013 found that two-thirds of rural businesses in the UK are SMEs and microbusinesses. This is not surprising, but what is not well known is that the rural economy in the north grew in the decade between 2004 and 2014 faster than any other sector in the region, according to the North East local enterprise partnership figures.

The rural economy is vital to the region and makes up approximately 20% of England’s economic activity. It would be remiss of me not to refer to the importance of agriculture in the rural space. The common agricultural policy is a hugely important element of EU membership. The support it provides is currently crucial to the survival of many farm businesses in the north of England. I could go into a lot of detail on this, but I will confine my remarks to the following.

The north of England has a higher proportion of hill and upland farming than any other area of England, from the Peak District, through the Pennines to the Lake District and the Cheviots. They may not be seen as the most obvious drivers of economic growth, but the dependency of other sectors on the uplands of Britain, particularly in the north, is massively important, from tourism, water capture and flood management to the environment and the contribution the uplands make to climate change. Of course, agriculture as a whole is vital, but the uplands are particularly vulnerable in a post-Brexit world if some form of ongoing support is not recognised as essential when the common agricultural policy is demolished. Farmers recognise that change is inevitable post Brexit and they may have to change, but upland farmers have fewer options.

I make these points because we need integrated solutions that bring the rural, the urban and cities together to succeed. The economy of the north-east is dynamic and has huge potential, but it is vulnerable and this needs to be recognised. There has been great work towards this so far, but it must not be derailed by Brexit. We need to ensure that current progress is maintained.

Photo of Baroness Eaton Baroness Eaton Conservative 12:17 pm, 12th January 2017

My Lords, I add my thanks to those of previous speakers to the noble Baroness, Lady Massey, for initiating this very important debate. As usual, I declare my interest as a vice-president of the LGA.

My working life and my involvement in local government for the past 30 years has taken place in the northern metropolitan district of Bradford. People are generally surprised to hear that Bradford is the fifth-largest metropolitan district in the country and that two-thirds of its area is rural. It has a rapidly growing population of 531,200 and is the youngest city in the UK. Some 23% of the population are aged under 16, compared with 18.8% nationally.

Most Governments, of all political colours, have tended to be London-centric in their thinking. The result of the referendum in many parts of the north was certainly in part a reaction to what many regard as the opinions of a Westminster elite. This divide was cemented even more by the sneering tone of some commentators implying that voters in the north lacked the intelligence to vote the right way.

The previous Chancellor of the Exchequer was wise enough to realise that the north has much to offer, much that could be developed, and that the UK could be economically stronger if the potential of the north could be developed. The Northern Powerhouse Strategy in the Autumn Statement showed that the present Government are taking seriously their approach to addressing the key barriers to productivity in the north. The IPPR’s State of the North report helpfully identifies three key issues to build business confidence and economic resilience: securing a northern voice in Brexit; clear principles for a place-based industrial strategy; and a focus on local economic resilience alongside growth and devolution.

Yorkshire currently has no agreed devolution deal in place, so the lack of a unified voice across the north is potentially damaging, particularly to the Leeds city region and to Bradford. It is important for the north to find its own voice and promote itself and its constituent cities, towns and communities on the world stage. The IPPR view that an effective national industrial strategy should allow for regional differentiation is particularly relevant to the Leeds city region and to Bradford in particular as they are diverse and the city region does not comprise a single city or solely an urban environment. Creating more jobs and getting people into good jobs is key and inclusive growth is central to Leeds city region’s economic strategy.

As a district, Bradford is committed to creating a high-value, high-skilled economy, driven by innovative and productive business that delivers growth, jobs and opportunity for all. Devolution and differentiation offer opportunities to develop local solutions for harder-to-reach unemployed and underemployed people. An example of this is the project Get Bradford Working which addresses the gap in nationally commissioned approaches. Such local initiatives would benefit from more support, as national solutions tend to lead to a focus on people who need help the least. Locally designed and implemented services can respond better to local business need.

IPPR’s call for greater public investment in infrastructure and research and development is an important message. The north receives less government R&D spend than London and the south-east. Public resources could deliver better economic and social outcomes if targeted in areas with greater opportunities for market growth. Key for Bradford is investment in transport infrastructure, including a high-speed northern powerhouse rail stop for the city and other trans-Pennine improvements, including electrification of the Calder Valley line. Delivering inclusive growth across the north will require significant long-term investment in social capital as well as physical infrastructure and the need to see social infrastructure as driving the well-being agenda.

Any industrial strategy for the north must recognise the need for local solutions and genuine devolution, including fiscal powers, which are key to the delivery of those local solutions. Long-term resilience is dependent on physical and social investment to deliver truly inclusive growth.

Photo of Lord Prescott Lord Prescott Labour 12:22 pm, 12th January 2017

My Lords, I wish to address my remarks to the northern issue, not necessarily the town or the city. I congratulate the noble Baroness, Lady Massey, on securing this debate on the excellent State of the North report. She said at the beginning that basically decentralisation is what she is concerned about, not devolution, but those two things are two sides of the same coin if we are to find a framework, on a spatial basis, to develop the north—not the tribal basis of each of us talking for Hull, for York or wherever. What contribution and framework do we need to meet the real development of the north? It almost takes me back to when Michael Foot, when he was leader of the Opposition, asked me to find an agreement between the Scots and the English regions after the failure of the first Scotland Bill in Parliament. I talked to them all; they all had the same problem. They were concerned about high unemployment and about growth; they were concerned that growth was really in the south and not the north—very similar arguments in Scotland as in the northern regions. I had to find an agreement about that.

I want to concentrate my remarks on the business of devolution, because it is the same framework. The devolution I mean is what we introduced in Scotland, Northern Ireland and Wales; we produced an elected government in London—a regional government—and a cities policy, and all this was part of devolution. It found a role for the local government within a framework; that was what was essential for us and we did it. Tragically, this was opposed all the time by the Tories and scrapped when they came in in 2010. Even with RDAs, which everybody thought were successful, they kept development agencies for Scotland, Wales and Northern Ireland, but took them away from the English regions and gave us these enterprise boards or something—what do you call them? They do not have the resources or the powers and do not compare to an RDA. To that extent, the Tories took the view that they were more concerned with local than regional government. That is an important difference.

When Osborne came along—whatever his full name is—he gave us “northern devolution”. It is not northern, because it does not cover all the north; it certainly does not cover Hull and anything east of the Pennines. It is not devolution; it is local government reform. I quite welcome that, if that is what we are going to have. It lacks the regional dimension, which is absolutely essential if we are to get the northern economy moving and to recognise the disparities between the north and south. There is a similar argument between Scotland and England as within the English regions themselves.

We have to look at what northern devolution was. I note that all the report on northern devolution dismisses the rhetoric of “powerhouse”—it is certainly not that. However, the report says that devolution is waning, and that it is,

“too partial, piecemeal and parochial”.

That is because the Government have always been against the regional dimension. They always want to see it within the local government framework—so do I. However, strategic thinking needs a strategy.

I am glad to see that the Government now recognise two things. First, Mr Clark, the Secretary of State, is now looking at spatial economic development. We have a Minister who represents every centralised issue in government. The department that matters now is the one for energy and industrial strategy. The Government are right to pursue that, but they do not like to use the talk of regions. That is another difficulty. How do we bring that together?

We need to be talking about the places of growth, and not only in each city or small area but in the region of the north. The north runs from Liverpool to Hull. We need a strategy that shows that as a place of growth. We need to use the Humber—the greatest source of energy we have at the moment. It is an energy estuary; it is environmental and developmental in a fundamental way. It is not just about culture—I leave that on the side—it is about economic development, and that is important. But you need a framework for that. The framework is crucial and we do not have it at the moment.

The argument for Brexit in negotiations was really about redistributing power and resources, not back to the centre but to the regions. Let us see where the money goes. That is a constitutional change—a further balance between the north and the south. I believe we should stay in the European Union but, leaving that aside, if there are negotiations and money is to come back, let it go to the regions. Let us have constitutional change.

Scotland wants more powers for devolution, and probably to stay in, as it has said. I have combined with my colleague Gordon Brown to see if Scotland and the north can form a powerhouse together. If you want a real powerhouse, put Scotland and the north together for the same reason: to redistribute the power and resources and begin to develop a northern economy. Find a framework; it is strategic.

Thank goodness the Government are partly there with Transport for the North, which is now looking for a regional solution, because that cannot be done with local government boundaries. This House will very shortly be debating new powers for Transport for the North which are regional. Let us start looking at the north as a region, not tribally representing Liverpool, Manchester, Hull or wherever. Let us get back to thinking strategically.

Photo of Baroness Pinnock Baroness Pinnock Liberal Democrat Lords Spokesperson (Communities and Local Government) 12:28 pm, 12th January 2017

My Lords, I am glad to be following the noble Lord, Lord Prescott, and agree considerably with his remarks. I will not be as demonstrative in what I have to say and will limit my remarks to the part of the region which I know best, Yorkshire. I declare three interests. First, I love living in Yorkshire and have a very personal interest in the debate as a resident. Secondly, I am an elected representative for one of its towns. Thirdly, like the noble Baroness, Lady Eaton, I am a vice-president of the Local Government Association—and, I suppose, fourthly, I intend to be unremitting in making the case for the north.

The picture painted in the IPPR report, The State of the North, is one I recognise. The analysis reflects much of what was done by the regional development agency, Yorkshire Forward, 10 years ago. The analysis then, as now, is that the challenges for Yorkshire are poor connectivity, relatively low skills and inadequate investment in new businesses to transform the region from its 19th-century industrial past. The sad fact is that since the demise of Yorkshire Forward, there has been no significant progress in addressing those challenges. The consequence is that that the lives of 5 million people in Yorkshire and the 15 million in the north as a whole have been blighted. The challenges are clear. Poor connectivity within the region and to the rest of the country is a drag on investment. Major transport investment is part of the solution, and the comparators with London are stark. In London, the Government have invested £1,870 per head on major transport projects, whereas in Yorkshire and the Humber region it is a mere £247 per head. The figures for infrastructure investment are even more stark, with London getting £5,426 per person, while in Yorkshire the equivalent figure is £581.

The relatively low skills in the north are cited as one of the factors discouraging inward investment. Educators at all levels are taking up the challenge, but people need to have some expectation that developing skills will lead to a better job and therefore income. Encouraging adults to acquire new skills can be challenging when the job opportunities are not obvious. It is a bit of a vicious circle.

Areas such as Yorkshire have been, literally, the powerhouses of the country for a century or more. Yorkshire still plays a massive role in generating the nation’s electricity but the transformation from the industries of an earlier era—coal, textiles, steel—needs major and sustained investment, and a vision shared and agreed with those communities.

Despite warm words from the Government, none of this has happened. The northern powerhouse has apparently run out of steam. Improved connectivity priorities agreed across the north in the Northern Way group a decade ago are still waiting implementation. To make matters worse, the Government have systematically and deliberately divested many of these same areas of the north of the resources to tackle these challenges.

Being starved of resources leads to a lack of capacity to deal with the big issues beyond the day-to-day. The Government’s own figures show that Leeds City Council for example will this year have £l,555 per household to spend on local services, which should include investment in encouraging new business and regenerating derelict areas. Meanwhile in Surrey, residents will have £1,993 per household of expenditure. If the spending power for Leeds, which is typical of many of the northern industrial towns and cities, was at the same level as it is for Surrey, Leeds residents and the council would have an additional £140 million every year to invest in making a difference.

What The State of the North demonstrates, and the Government’s own information illustrates, is that the 15 million residents of the north have had a poor deal. We do not want to be patronised. We do not intend to bring a begging bowl. But we insist that we be given the tools so that we can get on with the job, and that means the Government being bold enough to let go of the reins and let those of us who live in the north work together to release the talents, creativity and determination of northern folk.

Photo of The Bishop of Leeds The Bishop of Leeds Bishop 12:34 pm, 12th January 2017

My Lords, many of the points I wanted to make have already been made, and I will not repeat them, but I do want to emphasise one or two points. When we talk about the north, I sometimes think it is a bit like the way we talk about Africa, as if it was one monolithic place. The north is not. It is very diverse, differentiated and complex. For example, we have heard about Bradford having a very young population, 23.6% being under the age of 16. Where are the jobs for them? It is all very well to have a thriving city of Leeds, which has a large manufacturing base; but if that is not integrated and if the success of Leeds means that its environs have vulnerabilities, there is a potential problem. In the rural areas of north Yorkshire and parts of west Yorkshire there is low productivity in the farming and tourism industries, low-wage economies, and problems with housing and house prices, particularly with second homes or those living in the metropolitan areas wanting to live outside those areas. House prices rise and there is a problem with the continuity of community and with families being able to stay where they are. I mention that because we often talk about industry or industrial strategy as if it were an end in itself. The purpose of wealth creation, the purpose of industry and work is to create a good society. That is why I was pleased to hear earlier the call for an integrated approach. Industry is not an end in itself.

There are two elements in the report that are worth paying attention to. Much has been said about devolution, so I will leave that out. The first is resilience. We need to remember that in the wake of Brexit, however particular communities voted, the split is pretty even in most places. Leeds voted to remain; Bradford voted to leave. We still have to pay attention, not just to those who won the referendum, but to those who are very concerned about the future. For example, what will happen if the European subsidies to the farming industry are removed? Are the Government really going to compensate within the United Kingdom for what is going to be lost? That is creating an uncertain future. I gather that £350 million has already been committed to the NHS every week. We keep hearing figures cited, but there is a finite pot of money—so what is going to give? We need honesty and realism as that is taken forward. The resilience largely depends on the nature of the people and the tools they are given to shape their own future. Local leadership has to be established, or continued, that is inspirational and dynamic. I want to pay tribute to some of the leaders of our local authorities, who are expected to do more and more with less and less. There are excellent examples in some of the authorities that my diocese covers.

Connectivity is, in the end, where resilience will lie. I speak as someone who comes originally from Liverpool. I once went to Hull, although I am sure I will head back in the coming year. I am now in Leeds; I have lived in Bradford and studied there as well. When we talk about the northern powerhouse, too often we speak in terms of east-west connectivity, purely in terms of the M62 corridor. That is what we mean by the trans-Pennine route. What happens to places such as Harrogate? What happens to the post-industrial towns of Halifax, Huddersfield, Kirklees and Calderdale, which do not seem to figure too well in the ruminations about connectivity? There is no point linking up Liverpool, Manchester, Leeds and Hull if we are not addressing certain questions, which I have raised in this House before. For example, Bradford has two stations but they are not joined up, so one cannot come off the north-south route and get across, unless something is done within Bradford to join it up. If we do not do that, we are militating against the possible thriving, not only of some of the northern Yorkshire towns and communities but also the west Yorkshire towns.

I have run out of time, so will leave it there. Integration and connectivity are essential.

Photo of Lord Bragg Lord Bragg Labour 12:39 pm, 12th January 2017

My Lords, I congratulate the noble Baroness, Lady Massey of Darwen, on bringing this debate to the House. In my view, nothing is more important for the future economic well-being of this country than the wholesale energising of the proven and potential power in the north of England. As Brexit draws ever nearer, it is urgent that the IPPR’s well-thought-through and detailed report be taken seriously and urgently, by which I mean it should lead to action. As in all other regions, the north is vulnerable to Brexit. Luck will play a part in its future, and so will grit. However, policies, structures and history are the chief themes of this report, and the response to those by some in the north itself and by some down here in London—the Great Wen, as it used to be called, and the name seems ripe for revival—will define the future.

On the face of it, the north is a powerful beast—an economy of £300 billion, more than Scotland, Ireland and Wales lumped together. Were it to be an independent federated part of this country, which in my view would be very desirable, it would be the 10th largest economy in Europe. In 2015 the north grew faster than anywhere else in the UK, including London.

Against this, there is the history of the north, a walk on the dark side, which, save for one glorious world-defining era, does not promise well in its relations with the Great Wen of power in Whitehall. It has been a punishment block. William the Conqueror harrowed it and destroyed it as much as he could, while Henry VIII followed his example and had his usual go at blundering away at it. It became a vast, largely empty landscape of castles, cathedrals, monasteries and small settlements, with many sheep and few people.

The people of that area rose to the challenge, their genius providing the cradle for the greatest revolution in history, the Industrial Revolution, and the north came back. It is astonishing that we had 35% of the world trade at the end of the 19th century, yet by the middle of the 20th we had all but frittered it away. The coup de grace was delivered by the Conservative Government of the 1980s, and over a period of about a dozen years almost 3 million skilled jobs and some great world industries were laid to waste. As an act of national self-harm, it defies comparison.

There was no follow-up plan, nor, I am sorry to say, did the Labour Party provide one. The north was left to die—closed shipyards, empty factories, lost skills, empty towns, subsidence, subsidy and sorrow. But it has slowly, albeit patchily, built itself up again by its own initiatives. Now it is ready for a great leap forward, if only this Government would have the foresight and the nerve to give it the investment that it needs in education, business and communications, where the north has been left behind. We are faced by a Brexit that could badly threaten the north’s recent steady increase in prosperity and confidence. Threats and bullying words from Europe—including, surprisingly, from Germany, which I have admired over the last half-century—seem designed to stall any continued prosperity. However, over the centuries we have had a habit of responding well to threats from bullies, and now we have to get ourselves organised.

Infrastructure is the key, as many have said. It is shameful and ridiculous that there are no first-rate transport links between Liverpool across to Hull and from Hull up to Newcastle. Local infrastructure is far behind the European best. There is a skills shortage that could be remedied by the immediate expansion of technical departments in schools and colleges, instead of this faffing around with pointless new grammar schools and wasting energy on destroying the autonomy of universities. We have spent £40 million on a garden bridge in London without a brick being laid. That would have gone a long way in Hull and secured many of the scores of arts institutions that have been decimated in the north over the last year or so.

Why is there no vision for the wealth-making skills in the north when we are in clear danger? Vision led us to fast-build aeroplanes when the Second World War seemed imminent, for instance, and they were utterly vital. Who is defending the country now with anything like that foresight? We are throwing £50 billion to £60 billion at a railway line from London to Birmingham. Such a sum could bring riches to Liverpool, Manchester and Leeds. What better way to shore up this country against the projected ruins of Brexit than to attempt with all our might to turn the north once more into a system of fortresses, this time of glitteringly contemporary business, high-tech manufacture and trade? Brexit is an opportunity for the north but confident commitment is what we need.

The north is well prepared for the impact of major change, but it needs to happen very quickly. How wonderful it would be if we could cut the deadly dither and exhilarate ourselves in a brave new world of decisions and action. A hundred years ago in the trenches, the British Army sang a song that went:

“We’re here because we’re here because we’re here”.

Great lyrics. Those men went on being there, and won through. So, you Brexiteers, “We’re here”, thanks to you—now get on with it. Have a vision. Take the opportunity in the north and stop moaning about how difficult it is. You got us here. Redeem your fibs. Turn your bluster into blast-off. The north, like Barkis, is willing. It can be the salvation of this country, but only if those inside the Great Wen would lift up their eyes to the northern hills, which is where they could find all the strength they need if only they had the guts to seize the moment.

Photo of Lord Beith Lord Beith Liberal Democrat 12:45 pm, 12th January 2017

My Lords, it is a pleasure to follow the noble Lord, Lord Bragg, not least because only a few hours ago I was listening to him on the radio asking searching questions about the philosophy of Nietzsche. I thought it was going to be a sharp change of gear but actually he brought some of the same broad perspective to his very enjoyable speech today.

I welcome this report and the suggestions it makes. I want to look at it alongside another valuable report—the North East Chamber of Commerce’s manifesto for the year ahead. I pick out one thing initially from the latter report: dismay at the failure to make progress on the devolution deal for the north-east of England. You might think that where every local authority in the region has Labour leadership they would manage to agree with each other and make progress, but no such thing has happened. They disagree with each other and the Government have not been helpful either. I would like to see the Labour Party get its act together and start to reach agreement on the devolution process and the Government to stop making as a precondition of progress on devolution the creation of an elected mayor, which is not a relevant concept for this kind of region. The two sides should now get together and start making some progress.

However, there is a lot more we need in the north-east of England. Sometimes when people from my part of the world hear debates about the north feel they that quite a lot of it is about the Midlands, rather than areas which are to the north of much of Scotland and feel that sense of remoteness as well. We have a superb higher education sector in the north-east of England but there is also a large skill shortage, which the IPPR report points out. We therefore need to strengthen both our further education sector and access to it, which is very difficult given the large distances involved in much of our region. In my home town of Berwick, for example, it is no longer possible—because the Labour council would not agree to it—to have support for young people going to further education colleges in Newcastle. The only feasible way to do that is to go by train. Lots of people are denied the access that would improve their skills and give them opportunities in the labour market. As the IPPR report identifies, partly as a consequence of this we are short on the knowledge-based industries and the rate of progress and expansion of knowledge-based industries is slower in the north-east than nationally and the skill shortage must be part of that.

Of course, there are infrastructure improvements we want to see. I spent a lot of my time in the Commons arguing for dualling of the A1 and I am still arguing for it because progress even on what was agreed under the coalition is still slow. When we hear talk of HS2 we are actually more interested in what happens to the east coast main line and increased capacity and improved reliability on it. There are many infrastructure decisions which, as other noble Lords have pointed out, would make a huge difference to our potential in the region.

Brexit features in both reports and both sound loud warning bells about the dangers in a region where 58% of exports are to European Union countries. There is a particular fear about a potential period in which we may have left the European Union—and the Prime Minister has not shown herself interested in staying in the single market or the customs union so it may be on this basis—and still do not have new trade deals with other countries to fill any of the potential losses when exporters to Europe will find themselves faced with tariff barriers and non-tariff barriers, which are sometimes more significant than the tariff barriers for being able to export into a country or a whole region such as Europe. We really need a different approach.

Photo of Lord Spicer Lord Spicer Conservative

I am terribly sorry that I did not hear the beginning of the noble Lord’s speech, but he is on about Brexit and the north-east.

Photo of Lord Beith Lord Beith Liberal Democrat

I apologise to the noble Lord, but he is depriving me of the opportunity to make a very important point, with which I want to conclude.

The process of dealing with Brexit requires communication between the Government and the north-east of England. In November, I read in the Evening Standard that the Secretary of State for Exiting the European Union, David Davis, had agreed with the London mayor, Sadiq Khan, that he would have a monthly face-to-face meeting both before and after the triggering of Article 50, so that the position of London could be understood at every stage of the negotiation. As far as I know, there is no such arrangement for the north-east of England. The IPPR report suggests a resilience committee to deal with that and open up that communication. In some way or other, the Government have to listen to the north-east’s special concerns and set up a mechanism to ensure that it is listened to throughout this process.

Photo of Lord Alton of Liverpool Lord Alton of Liverpool Crossbench 12:50 pm, 12th January 2017

My Lords, along with 1 million private sector businesses, some 15 million people call the north of England their home. Compare those 15 million with the populations of sovereign countries: 11 million in Belgium, 5 million in Denmark or the 6 million combined population of the three Baltic countries. However, as we have heard, despite its significant population, and in the absence of devolution, the north does not punch its weight and many, especially those living in deindustrialised rustbelt towns, feel both disaffected and alienated.

Since 1855, when Elizabeth Gaskell published her famous social novel, North and South, the phrase has pointed to disparity, but in our own time austerity cuts have accentuated poverty, exclusion, educational failure, crime and lower life expectancy. It is a fact that a baby girl born in Manchester can expect to live for 15 fewer years in good health than a baby girl born in the London borough of Richmond. Consider that Londoners currently benefit at the rate of more than £65 per head from investment in cultural infrastructure, compared with less than £5 per head for the populations based outside the capital. Or take employment. UK employment rates are at an historic high: almost 2.4 million jobs were created between 2006 and 2015, but during the same period, across the north of England just 360,000 jobs were created. For too many workers in the north, wages have failed to increase in line with the national average.

Remedies might include the creation of a northern wealth fund, using new money saved or generated in the north for the north; a pan-northern digital platform; more innovative regeneration; and housing policies determined in the north, where Manchester, Leeds, Newcastle, Liverpool and Sheffield will face a shortage of 86,000 homes by 2030.

For me, two leading priorities are transport infrastructure, which has been referred to, and education. I should like to hear from the Government what progress is being made not only on the direct high-speed east to west line but on reopening and renewing local lines and dealing with gridlocked roads feeding our northern motorways. Last Sunday, it was reported that two more of the most senior managers of HS2—which is now said to cost some £56 billion—have quit their jobs. Andrew Tyrie MP, chairman of the Commons Treasury Select Committee, questioning its credibility, saying that it risks being “scarcely worth the candle”. It is an argument I set out in this House in October 2015. Compare that £56 billion, which the noble Lord, Lord Beith, mentioned, with infrastructure investment in the north.

Turning to education, my other priority, I am the first from either side of my family to have had the opportunity of higher education, in Liverpool, and I draw the House’s attention to my registered interests. Sadly, significant numbers of bright young people in cities such as Liverpool still do not get the same opportunity that I, and others who were beneficiaries of the post-war education legislation, had. We urgently need to improve life outcomes for children and young people in the north. Sir Michael Wilshaw, the head of Ofsted, said that the northern powerhouse will “splutter and die” if more is not done to improve performance in the region’s schools. He points out that four in 10 secondary schools in Liverpool are rated as inadequate, and that the number of teenagers gaining good grades is falling. He also said that “politicians need to act” and that,

“We cannot fight for social mobility with political immobility”.

A northern teaching premium to help schools struggling to recruit the highest-calibre teachers, and perhaps a “teach later” programme, might help.

The region’s 23 universities, six of which rank in the top 20 for research excellence nationally, should be empowered to become the drivers for transforming our region’s schools. The wonderful university of Liverpool John Moores, with its 21,000 students and 2,500 staff, has generated an estimated 2,493 jobs in industries across the north-west of England. By spending £186 million per year, it significantly contributes to the region’s economic and civic life. Manchester University has its own venture capital fund and has attracted £300 million of private funding to university spin-outs—crucial in creating jobs and leading-edge technology. The excellent annual Educate North & UK Leadership Awards and their conference celebrate these achievements. The whole sector is desperate not to see that success compromised by Brexit or by the Government’s higher education legislation. The Government must listen carefully to concerns that a dead hand is being placed on those crucial institutions.

I welcome today’s debate and am grateful to the noble Baroness, Lady Massey, for giving us parliamentary time to discuss these important questions.

Photo of Viscount Eccles Viscount Eccles Conservative 12:56 pm, 12th January 2017

My Lords, I, too, am very grateful to the noble Baroness, Lady Massey, for this debate. I want to concentrate on the north-east.

In 1954, I went to live and work in the north-east. I lodged at 195 Durham Road, Stockton-on-Tees, with a Mrs Aucutt. Mrs Aucutt was a very significant figure. She worked for the council and controlled coal rationing. There is a certain irony in that when we think about the state of the coal industry in County Durham and along the coast of the north-east. There is not a single deep mine left. Much the same has happened in our part of the country to shipbuilding and to those firms that participated in the nuclear power industry in the days when we were building gas-cooled reactors. Global economics and political decisions have changed the scenery dramatically. Even steel is in trouble.

At that time, there were many headquarters of companies operating in that part of the north-east. Of course, they had with them many professionals who lived in the area. At much the same time, I bought myself a bicycle and bicycled across the wilderness between north Stockton and Middlesbrough. The visibility was not always very good and there was a strong smell of burnt cheese most mornings. To the left was ICI Billingham. What has happened to ICI was then unthinkable.

When we think about these things, we should remember—because it is much more important to think about the future than about the past—the huge changes that have taken place and consider the legacy. Middlesbrough is the third-largest port in the country. The chemical industry, which is born of companies such as ICI and Billingham Synthonia and so on, is going ahead strongly. There is the North East of England Process Industry Cluster, with a fantastic website which I recommend. It is doing extremely well both domestically and in exports, with very good success in building its supply chains effectively. One member of the cluster is an American corporation called Huntsman, valued at $5 billion on the New York Stock Exchange. It has among its subsidiaries a business that was called in my day British Titan Products. That was a very sound, steady British business bought in the late 1970s by Huntsman, which is a truly global corporation with subsidiaries all over the world. It still has a manufacturing plant on Teesside and an innovation centre. We should work even harder than we do to attract inward investment from such corporations which have had a successful time in the north-east of England. So not all is gloom.

The north-east also has iconic places; this is important because, if you want international business to come with middle-sized enterprises into the north-east, it must be attractive. There is Durham; Shakespeare and the opera come to Newcastle; there is the Beamish museum; there are Jonathan Ruffer’s great efforts in Bishop Auckland; and there is the Bowes Museum. Why is the Bowes Museum not a national one? The idea has been about for a long time; it meets every standard. Is it just because it is in the north that it has never been made a national museum? Such recognition would be a great boost—a psychological move maybe, but that is not to be despised. We all need confidence, and recognition helps.

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 1:00 pm, 12th January 2017

My Lords, I thank my noble friend Lady Massey for securing this debate, which has engaged so many excellent speakers. Like many speaking today, I was born and bred in the north of England and, although my working life has been spent elsewhere, my ties to the north are still very strong. In my home town of Bradford in Yorkshire, I have seen over the years both the decline in its traditional industries and the determination to recover its economic potential. So I read the IPPR’s annual health check on the northern economy with great interest. It contains some nuggets of good news, such as the latest GVA stats, which show that, in 2015, the north’s economy grew faster than any other part of the UK. It has now passed the £300 billion mark and is worth more than those of Scotland, Wales and Northern Ireland combined; apparently it is the 10th largest economy in Europe. There is no doubt, therefore, of the enormous economic potential of the northern powerhouse.

However, last year’s optimism has been replaced by the shadow cast over the region by the Brexit vote. Given the north’s dependence on EU trade—which is greater than that of anywhere else in the country—and the legacy of its industrial decline, the report argues that the north has the most to gain or lose from Britain’s exit from the European Union. One thing that I found most telling was that the northern areas most vulnerable to the economic turbulence caused by Brexit are those that voted most strongly to leave the EU. The report argues strongly that Brexit negotiations should focus on the needs of the areas that voted overwhelmingly to leave and that the Brexit vote in the north makes the Government’s northern powerhouse more important than ever. I agree: you have only to contrast areas such as Humber, Tees Valley and the Sheffield city region, which had the highest percentage of leave votes in the north, and the city of Manchester, which has benefited from economic development and where 61% voted to remain, to realise that the benefits of the northern powerhouse have been felt only in certain parts of the north so far.

As I have seen in visits to various parts of the north in my role as chair of the National Housing Federation, the,

“patchy development of combined authorities, metro mayors and devolution”, mean it cannot as yet match the response of the devolved Administrations for Northern Ireland, Scotland or Wales, or even that of the Mayor of London. So I echo other speakers today in asking the Minister to recognise the IPPR’s call for a northern Brexit negotiating committee to determine the type of Brexit that would best suit the north and to unite the northern voice in negotiations. Does the Minister agree that to ensure sustainable productivity in the north there is a need to build direct relationships with regions and nations within and beyond the EU, to develop and enhance the north’s particular trade interests?

The author of the report calls the Brexit vote,

“a cry of community outrage at the imbalances of wealth and power, played out … within and between the regions”.

It is a reminder that many areas in the north, particularly those post-industrial communities outside the city centres, have not shared in northern economic growth, and are vulnerable, for example, to any post-Brexit restrictions on trade. I am therefore anxious, like my noble friend Lord Monks, that the Government’s new economic and industrial cabinet committee’s focus on,

“delivering an economy that works for everyone”, to ensure that the,

“benefits of growth are shared across cities and regions up and down the country”, could dilute our focus on the north. I fear that this would be a mistake. We must not allow support for the northern powerhouse to falter. The announced investment in infrastructure, culture, housing and the quality of life in the north, the devolution deals in Sheffield, Greater Manchester, the north-east, Tees Valley and Liverpool, and the work to raise education and skills levels, must be supported. Yes, this is important for the success of the north, but it is also important for the success of the UK as a whole.

My final point is that the two key issues of high-level skills and housing are inextricably linked. In the past 10 years, 75,000 highly qualified British residents have been lost from the northern powerhouse regions, which seems to have been masked by highly qualified workers coming in from outside the UK. In a poll of 2,000 graduates by an alliance of the north’s largest housing providers, 55% said that the quality of housing would be a key factor in deciding where to live if they were to move. Cost of housing was a very close second. Affordability and availability of housing is a unique selling point in the north. The alliance argues that if local authorities, housing providers, employers and universities came together, they could develop joined-up strategies to attract and retain many more highly qualified people. Does Minister agree that the Government could be instrumental in assisting them in developing innovative new products to buy or rent, specifically aimed at the graduate market, to attract the very graduates that the north so clearly needs?

Photo of Lord Shutt of Greetland Lord Shutt of Greetland Liberal Democrat 1:06 pm, 12th January 2017

My Lords, I too congratulate the noble Baroness, Lady Massey, on securing this timely debate. Of course, the anchor for our debate is the IPPR The State of the North report, which was published on 9 December. It is quite instructive, however, to go back 16 days to 23 November, because that was when Her Majesty’s Government produced a document, the Northern Powerhouse Strategy. It is a 30-page document—well, there are 10 pages blank—with a splendid foreword by the Chancellor of the Exchequer. It helpfully sets out in a table that the north of England has a GDP greater than 22 European Union states. But the document does not tell us about the democratic deficit. It does not tell us that the north of England is on a totally separate footing to Scotland, Wales, Northern Ireland or London. There are 20 pages of commentary about the northern powerhouse with barely a reference to the European Union, save for a couple of paragraphs on page 18 indicating a UK government guarantee on certain EU-funded investments signed up to prior to the Autumn Statement last year. There is neither a note of doubt about the issue of Brexit, nor any exuberance about any opportunity—silence.

The IPPR document published 16 days later attempts to plug the gap. It is a wide-ranging report on the north of England economy and its pages set out the Brexit concerns. Its number 1 recommendation is that there should be a northern voice at the Brexit negotiating table. It calls for,

“the formation of a Northern Brexit Negotiating Committee to determine the type of Brexit that would best suit the North, to speak with one voice”.

For me, a further striking point of the IPPR paper was its cover. In showing a map of the north of England, it showed it as what many of us have often thought of as three regions—to come back the point made by the noble Lord, Lord Prescott. If those three regions existed, it would pretty simple for them to co-operate, to talk for the north and to become a power base for the north. The diversity of cash-strapped and debilitated local government, ill-fitting combined authorities, mixed devolution and several LEPs does not easily convert into northern clout.

I want to talk about two further things. Can the Minister provide any further insight into the prospect of devolution in Yorkshire? Yorkshire is an understandable brand; I have lived there all my life—nowhere else. The efforts of the Yorkshire tourist board, the Yorkshire County Cricket Club and the Yorkshire Post make it clear what Yorkshire means. The cricketers say that if you get a strong Yorkshire, you get a strong England. I say that if we get a strong Yorkshire, we will get a stronger north. Does the Minister have something to say on whether he can see daylight with regard to devolution for Yorkshire?

My final point is that the ever-helpful House of Lords Library paper includes copies of the Hansard report from 17 June 2015—19 months ago—when the House discussed transport in the north. We heard a day or two before that of the indefinite delay in the electrification of the trans-Pennine railway, while there was nothing at all about the Calder Valley line, which the noble Baroness, Lady Eaton, referred to and which greatly concerns me. That is the line from Manchester to Leeds and York via Huddersfield. Is there any news of a start date for that?

Photo of Lord Mawson Lord Mawson Crossbench 1:11 pm, 12th January 2017

My Lords, as a northerner gone south I welcome this report and its focus and am thankful to the noble Baroness, Lady Massey, for introducing this important debate.

I have spent a great deal of my life trying to stimulate integrated local economies in what appear from the outside to be unpromising contexts. In doing so, one has learned quite a bit over the past 30-plus years about how the world can look from Whitehall and the desks of researchers who are overconfident about the value of the papers they read by other researchers, and talkers in the press who often live at 60,000 feet above all the action. I am interested in what the world looks like through the eyes of practitioners engaged in the detailed work on the ground of rebuilding local economies. What is valued by the research community, who are chasing grants and their next funding, and what counts on the ground in practice may be very different. This is a helpful report but, like many other similar reports, it is overconfident about the role of the public sector—its structures, frameworks, policies and the like—and does not pay enough attention to the details of the business and social entrepreneurs actually doing the job on the ground.

I have been involved in the Olympic project in east London for over 17 years, in thousands of practical details on the ground that are generating quite a legacy. I have discovered that today there is still one story at 60,000 feet in Whitehall—about how we have successfully used this event to regenerate the east London economy—and quite another story to be told, on the ground, about what made the fine words and statements deliver in practice.

I will repeat my well-worn mantra: the way into understanding macro changes—in this case in the northern economy—is in the micro and the local community. The economies of the north are made up of thousands of local economies that need to thrive. The question is, as always, about the practical detail: this is where the devil sits. Real economies, in the north and in east London, are built by entrepreneurial people who take problems and turn them into opportunities. They are not built by government structures, frameworks and all the other clutter that this report is in danger of relying on too much. The public sector has an important role, yes—not in swamping those of us who rebuild these local economies in politics and red tape, but in creating the conditions within which business and social entrepreneurs can thrive.

Reference is often made to the history of the northern economies. My own city of Bradford’s economy was built not by the public sector and government paraphernalia but by wool entrepreneurs such as Samuel Cunliffe Lister and Sir Titus Salt, among others. How much time have these researchers spent with these northern entrepreneurs in our own day, looking at what the world looks like through the eyes of these practitioners? This is where the rich grain of gold is to be found—not in generalities but in detailed practicalities.

As I engage today in 10 towns and cities across the north, in areas with great social and economic challenges, I am coming across some fantastic opportunities to rebuild our economies in the north. However, to do this the traditional siloed thinking and overreliance on reports like this will have to go. We live in a digital age; everything has changed. The job of the state is to create the conditions within which entrepreneurs can thrive, not to research and measure them to death with little purpose other than to feed the beast which is government.

I shall illustrate briefly one such opportunity in one northern community, a place where I am working. I have worked in west Cumbria on and off over the last 15 years. Successive Governments have poured billions of pounds of taxpayers’ money into the nuclear industry there and into the local economy. We have been right to do so: the nuclear industry really matters. However, the way successive Governments have done this has created a profound dependency culture in local communities—what the local MP described at one recent meeting I attended as “basket-case government structures”. Have we learned any lessons from all this previous activity? No: I learned many years ago that government is not a learning organisation. It too easily repeats old formulas and past mistakes, despite all the millions we spend on research keeping our universities in business.

An opportunity to work with the people of west Cumbria—particularly the next generation of young people, who I am already engaging with—is emerging, an opportunity to innovate and do things differently as new investment makes its way up the M6. I am already working with key business leaders in the nuclear industry there, and local entrepreneurs, to explore what an entrepreneurial culture might look like for a new generation. My interests are in the register. Later this summer, on 28 September, Professor Brian Cox will join me and my colleagues as we replicate a very successful science summer school there which we have been pioneering together over the last five years in east London, exploring how Britain can become the best place to do science and engineering in the world. Cumbria desperately needs a new narrative that takes it out of 1970s and puts it and its important industry firmly on the global map as a place of nuclear excellence. Who better to explore that modern narrative than Professor Brian Cox?

The question for the Government in this important piece of the northern economy is whether they will allow my colleagues and me to innovate. Will they allow us to move beyond the traditional silos and create a truly entrepreneurial and—yes—safe and responsible community, or will a thousand little pieces of legislation and a lack of continuity and bold leadership miss the moment and leave the next generation wondering whether it has a future in the north? I hope it does. Look at the health data in Cumbria: the effects of a dependency culture are in plain sight.

Photo of Lord Liddle Lord Liddle Labour 1:17 pm, 12th January 2017

My Lords, I congratulate the noble Baroness, Lady Massey, on obtaining this debate and I declare an interest in my role as a Cumbria county councillor, about which the noble Lord, Lord Cavendish, was far too generous.

For us in Cumbria, the northern powerhouse came as a beacon of hope. But today the flame has been reduced to a flicker. Why and what can be done about it? Cumbria is a county with enormous economic potential. The national parks stretch continuously from the Cumbria coast right into Yorkshire, and with Hadrian’s Wall and all its cultural history it is one of the great places to visit—and to live—in Europe and the world. If the northern powerhouse could reignite the 19th century dynamism of the great northern cities to its south, and if only the right local infrastructure were in place, Cumbria could become a compelling attraction for small business entrepreneurs, innovators, consultants and the rest.

As for Cumbria’s west coast, which the noble Lord, Lord Mawson, just spoke about, in the 19th century a few made their fortunes out of coal, iron, steel and shipbuilding there. In the 20th century, the workers and families they left behind lived through decades of acute depression and, since the Second World War, a longish industrial decline. Now, however, there is a real prospect of billions of new investment. GSK is putting £350 million into Ulverston, in south Cumbria. The Trident replacement programme in Barrow is taking on highly skilled workers. A £2 billion wind farm is planned off the Barrow coast, and a £20 billion new nuclear power station at Moorside next to Sellafield will generate 7% of Britain’s electricity, with a £2 billion investment by National Grid to carry it to the rest of Britain.

But for those developments to lead to a lasting rebalancing of Britain’s economy, there has to be a coherent economic plan, and they need supporting infrastructure. I shall explain to your Lordships how bad things are. The Cumbria LEP made a bid last July for 12 key projects, to be completed by 2020, to help support this new investment. The cost would have been £165 million, but the Government are offering us £12.6 million—less than a 10th of what we asked for.

In addition, we have argued for government commitment to a £130 million improvement to the Cumbrian coast railway, which connects all these projects and runs from Carlisle to Whitehaven, Barrow and Lancaster. At present, the journey from Carlisle to Lancaster is longer and much bumpier than the Virgin Trains ride from Carlisle to London. The new Northern Rail franchise will improve the rolling stock a bit, but only if we get Network Rail investment in track and signalling can this be transformative in what will be a hugely important area. The £3 billion of extra rail investment that George Osborne promised the north is, frankly, inadequate. Unlike the noble Lord, Lord Alton, I am not arguing that the sums committed to HS2 should be cut; nor am I arguing that London’s Crossrail should be stopped. I feel very strongly that, if we are serious about rebalancing, we have to increase our overall commitment to transport investment.

At the same time, there has to be much more joined-up thinking in Whitehall. I support Greg Clark. I think he is a great Minister who is developing an industrial strategy, but that strategy has to put the nuclear innovation at its heart. Why spend all this money on new nuclear in Cumbria when all we will have is imports by foreign companies if we do not make ourselves a centre of nuclear excellence?

But more than that, we have to develop our universities and have much better schools and higher apprenticeships, and we have to support the vital public services. How can it make sense for the Government to support a plan to build a new nuclear power station in west Cumbria, which will require a workforce of 6,000, at the same time as we are proposing to cut services at the local hospital?

Finally, in Cumbria we need to get our act together, as the noble Lord, Lord Cavendish, said. Our structure of two-tier government is hopeless and, at a time of continuing public austerity, disgracefully costly. However, there is no incentive for reform unless the Government put money on the table and bang heads together, showing a lead. Without that, I am afraid that the remaining flickers of the northern powerhouse will die out.

Photo of Lord Scriven Lord Scriven Liberal Democrat 1:23 pm, 12th January 2017

My Lords, I too thank the noble Baroness, Lady Massey, for instigating this important debate. I also thank IPPR North for a very incisive report, which I think takes the debate on slightly, as I shall explain in a moment.

I never thought that I would say this in a debate, but I agree with the noble Lord, Lord Prescott. If the strategic argument and the strategic framework are not sorted, then in everything we have been talking about we are simply tinkering at the edges. This is a northern issue, but it is not just about our towns, our regions or our cities; there is a northern dimension that needs to be dealt with here.

I am in the middle of reading a great book by an author called Philip McCann. It is called The UK Regional-National Economic Problem and its subtitle is Geography, Globalisation and Governance. It deals with specific regions. He argues that the UK economy is decoupling into three economies. That is brought about not by government policy but by globalisation and the way that different parts of the UK now trade globally. Therefore, there need to be different responses, and policymakers at the centre, through a framework, need to think strategically about what that actually means. I do not believe that there is a policy to deal with this—there is tinkering but no strategic policy.

For example, the London economy acts on agglomeration, which we assume is the be-all and end-all of every economy in the world. However, in Europe, and particularly in some of our regions, including the north, the approach is more polycentric, which is about how the cities and towns work together, how the rural and urban work with each other. That is not based purely on a city region devolution basis; it goes much deeper than that. The northern powerhouse is based predominantly on cities, particularly Manchester, and not on the whole northern area.

The book also shows that there is no trickle-down effect and that the prosperity of the south-east and London is not shared equally across the whole country. Half the UK’s population live in regions where productivity is below that of the poorer regions of the former East Germany. The weak, long-run productivity performance of the UK is largely a result of the fact that productivity benefits do not spread across the country but remain largely located in the south.

Meanwhile, the highly centralised and top-down UK governance system, which is being tinkered with but has not been significantly reformed for our economy, is appropriate only for governing a country whose economy is homogenous. That is not the case in the UK. This mismatch between the UK’s imbalanced internal economic geography and its overcentralised governance system on a regional-national basis is the key issue that has to be addressed if we are to unlock the economic performance of all regions in the UK. It is a deep-seated problem which will not go away, and tinkering with a few quality issues will not solve that. That is why we clearly need to grasp an understanding of how our economy works at the city, town, sub-regional and regional levels. Without that we will not unlock the potential of the north and other regions in this country to deliver the economic performance that they can achieve. The IPPR report, in talking about a plan for the greater north, begins to tackle that strategic policy issue.

Therefore, I ask the Minister: what work is really going on, not just in relation to cities and devolution at a local level but in relation to the conundrum between the regional and national economic problem? That needs to be addressed if we are to achieve total and prosperous economic development. It is so fundamental that not addressing it will mean that all devolution of skills, business development and other issues, which noble Lords have talked about, will not have maximum effect. It is so fundamental that it needs to be addressed. Yes, we need to address the local level and the polycentric at city and town level, and at the level of urban and rural working together, but we also need a policy framework that untaps the potential at the regional level and in the wider north. Again, I agree with the noble Lord, Lord Prescott. Transport for the North starts to address that but it needs to go much deeper and much further.

Photo of Lord Sawyer Lord Sawyer Labour 1:28 pm, 12th January 2017

My Lords, I too thank my noble friend Lady Massey for instigating this debate. I will speak about the Tees Valley. The IPPR report states that the Tees Valley is going through a transition. That may be so but we have well-worked-out ambitions for growth in four major sectors: advanced manufacturing, energy, digital, and health innovation. We also have a highly productive workforce, a strong business and enterprise birth rate, and a good record of high-growth firms. We struggle with relatively low levels of research and development because we are a branch-plant economy, and a new industrial strategy needs to address this.

I will mention our creative economy, because we have bold ambitions there. Middlesbrough Council aims to have a culture thread, which will run right through successful development of the region’s people. Middlesbrough has 90 first languages spoken by the pupils in its schools. There is a new agenda to build confidence and enjoyment in speaking, known as oracy. This helps to build confidence in expression and it also helps higher achievement across the entire curriculum. The Middlesbrough Institute of Modern ArtMIMA—concentrates on building positive change. Its recent exhibitions have addressed migration, immigration, housing and healthcare. Darlington will soon be home to a new theatre, which will incorporate world-class children’s theatre and a centre for creative education. These are distinctive, creative projects in themselves, but we can note from them their dedication to inspiring people in the Tees Valley, who have a real gift for invention and for collaborating with each other.

To look at some of the biggest challenges, the IPPR report notes that the region does not provide enough jobs and that the current economy excludes too many people through unemployment. There is also a problem with the levels of pay. The median level of pay for full-time workers in the Tees Valley is 5% less than the national median level of pay. In too many cases, work is not a route out of poverty. Young people and their families need to see a system where education leads to decent jobs and where jobs lead to decent pay. If they cannot see opportunities, they will not see the point of trying. There is nothing new about this, nothing that we have not seen before, but these challenges still remain in the north of England and have to be met.

Skilled people and organisations across the Tees Valley are doing very creative, ambitious work, and the region is investing strongly in itself, but we need to create more jobs and more routes into jobs. I will make six suggestions that might help in this respect. First, we need to make sure than any structural funding lost in leaving the European Union is replaced; that has already been addressed but it needs to be continued. Secondly, we need to ensure continued access to European markets in our priority investment sectors, including chemicals and advanced manufacturing. Thirdly, we need to develop new trading arrangements and support for Tees Valley firms in helping them to diversify their activities. Fourthly, we need to press on with a new industrial strategy, and that strategy needs to prioritise principle economic growth in regions such as the Tees Valley. Fifthly, we need to help and support the Tees Valley in working with its four prime strengths—advanced manufacturing, energy, digital, and health innovation. In doing so, we will help the region to create 60,000 new jobs, including apprenticeships for young people. Sixthly, we ask that all government departments join fully in the devolution process. There is a chance here for the north, including the Tees Valley, to have a new start. We need those voices to be listened to. The problem in the north-east is that we have not really been able to find the leadership that we should have—a point made by the noble Lord, Lord Shipley. The noble Lord, Lord Beith, said that in some ways that is down to the Labour Party. We definitely have the leaders there but we have not given them the authority to speak for the region, and we need to do more of that in the future.

My final point touches on a point made by the noble Lords, Lord Shipley and Lord Alton, that we have northern powerhouses because we have our universities. In my part of the region, the north-east, we have five universities which employ about 15,000 people. There is great talent, innovation and ability in the universities. If I were the Prime Minister, I would do one thing, which Jim Callaghan used to do when he was Prime Minister: he sent for people to come down and talk to him about the issues. I have done so a couple of times. It is very impressive to be sent for by the Prime Minister to listen to your opinions. The Prime Minister should send for the vice-chancellors of the five north-east universities—maybe more, but that is a different issue—and say to them, “What can you do to help the north? What is your town, what is your culture and what are the things that you’ve got?” Bring them to the table and let us see if we can go forward on that basis.

Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Liberal Democrat 1:33 pm, 12th January 2017

My Lords, this is obviously a debate for praising the noble Lord, Lord Prescott; I thought he said it all. Brexit transfers power from Brussels to London. England is the most centralised area in the whole European Union. The devolution to Scotland, Wales and Northern Ireland has to some extent modified the centralisation of power within the UK, but the regions of England have continued to lose out. Cuts to local authority spending now are making that go further. It is a cultural imbalance as much as an economic one. I agree strongly with the right reverend Prelate the Bishop of Leeds that people in London sometimes talk about Yorkshire as if it is part of Africa. When I first came into this House, I remember a Conservative Peeress saying to me, “I have just been to Yorkshire, and parts of it were quite nice”. The media, as we all know, are also heavily concentrated in north or east London and report things that happen in Islington or Tower Hamlets in ways they would never think of reporting if they happened in north Leeds or east Bradford. That is all part of the problem with which we have to deal.

It is therefore an increasing disadvantage that the north, as a whole, lacks an effective political voice within the UK system of government. Scotland has an effective voice on the Barnett formula, the geographical distribution of public funding, and negotiating with London on the terms of international trade. Wales and Northern Ireland also have good institutionalised positions. But the north lacks anything comparable—certainly not comparable with London government itself. That matters in particular when we have a Conservative Government drawn largely from the Home Counties, with only a handful of Ministers who have any feel for, or sympathy for, the northern counties. Now that George Osborne and William Hague have gone, Greg Clark is the only one among the senior members of the Cabinet who appears to have sympathy and understanding for the industrial towns and cities that contributed so much to Britain’s prosperity over the past 200 years, but which have been left behind since the balance of Britain’s economy shifted, under Margaret Thatcher, from manufacturing to finance. There is a real danger that the north will be squeezed further between London and the devolved national governments as the Conservatives negotiate Brexit.

The State of the North report notes that the English regions, as a number of noble Lords have said, are significantly more dependent on trade with Europe than London itself. Yorkshire trades with the continent. Hull and the other Humber ports depend on handling trade with the continent. Two-thirds of Yorkshire’s food exports go to the European continent, eased by the rules of the single market and protected by the registration of regional denominations by the EU. Some of our producers are just beginning to wake up to the fear that they might lose that. The idea that food can be traded freely without international regulation is absurd. Food goes off, and dirty processes on food spread disease, so there has to be international regulation, and European regulation is some of the best. European regional funding flows into the economically weaker parts of Yorkshire, redistributing funds that a southern-dominated Conservative Government in London might be reluctant to redistribute to the north within a purely national framework.

Previous State of the North reports have detailed the low levels of investment in infrastructure in the north, in transport in particular, as noble Lords have said. I have been using the trains across the Pennines since I first taught in Manchester in 1967, and some of the rolling stock has not changed since then. The speed has hardly improved, either. The previous Labour Government, amazingly, neglected the north’s infrastructure, even cancelling tram networks in Liverpool and Leeds when plans were well advanced. It is not clear from recent announcements whether the east-west rail corridor from Oxford to Cambridge will now carry a higher priority for the Government than northern Crossrail, which is vital to realising the concept of a northern powerhouse.

The concept of a northern powerhouse, as the previous year’s report from IPPR North said, is itself difficult. The 2015 report said:

“The government has excelled in being largely unspecific as to what exactly the northern powerhouse is”.

That represents a lot of the cynicism in the north as to whether the northern powerhouse concept is merely rhetoric or is actually going to lead to money being redistributed. When George Osborne appeared with a number of Chinese investors alongside him, to suggest that perhaps the Chinese could pay for the northern powerhouse rather than the British taxpayer, our cynicism increases.

The north of England has been left behind by successive Governments. The rhetoric of a northern powerhouse was a welcome sign that things might change, but we have not seen the money yet. Canvassing for the referendum in June, I was painfully aware that in the former council estates of West Yorkshire, people planned to vote against London as much as against Brussels, and against politicians as much as against bankers. Head teachers tell me that school budgets are being squeezed. Two head teachers in Bradford told me that they fear they might go bankrupt in the next two or three years, as flat funding comes up against increasing salaries for their teachers.

Councillors tell me that local services are in danger of disappearing as cuts get deeper. Companies recruit directly from eastern Europe because, they say, they cannot find local workers with the skills or the motivation that they are looking for. Extra rounds of spending cuts and the likely downturn that will accompany a hard Brexit will worsen the situation across the north, so I strongly support the message of this IPPR document, which says that we need a more effective voice for the north to rebalance the British economy and rebalance the political system of the UK.

I stress the fiscal redistribution dimension of this because we have not talked much in British politics about the imbalance of funding for local authorities across the UK as a whole. The Scots, Welsh and Northern Irish now bargain with the Government about the balance of income and expenditure. The rest of us do not have a chance to do so. It is extremely important that we now begin to bring into the open the argument about how far rebalancing the economy allows us also to shift funds from the richer areas of the country to the north. The noble Lord, Lord Mawson, talked about a dependency culture, but in the estates of north Bradford, which I know that he knows well, the sense of hopelessness is partly because the local authority cannot do anything for you either. Children’s services, social services and so forth have been cut, so people do not see their local authority and they feel alienated from the entire political system.

Education is also a tremendous problem. I have seen figures that suggest that by the time children enter reception class at school in large parts of Bradford and Leeds they are already a long way behind their counterparts in London. I am conscious that FE colleges in the north are also being cut. As a Latvian cheerfully said to me when I canvassed him during the referendum, “The one good thing about Brexit will be that you will have to go on depending on people like me because you aren’t going to find people to build houses within Britain”. The supply is not there. There are not enough places. Building companies in Yorkshire, I was told some weeks ago, want to carry on recruiting directly from eastern Europe because they do not have the confidence to set up the sort of training schemes to train people who are less well motivated. In Bradford, the one training scheme that I am aware of was oversupplied in terms of applicants for its building apprenticeships by 100% or more.

I have one final comment. Depending entirely on FDI is not the answer for the region. We need local economic leadership, which means encouraging local entrepreneurs and local companies. Allowing those local companies as they grow to be taken over by foreign multinationals does not provide us with local incentives and local leadership—everything that we need. Banks, centralised in London as they are, also need to put money into the region. We need an institutionalised presence for the north in the process of Brexit, but we also need a stronger voice for the north in the British political system as a whole.

Photo of Lord Davies of Oldham Lord Davies of Oldham Shadow Spokesperson (Treasury) 1:43 pm, 12th January 2017

My Lords, I congratulate my noble friend Lady Massey on securing this most interesting debate, and on an introduction that has been a stimulus to all contributors. Two developments dominate the whole issue of the north at the present time. One is obviously Brexit, on which this Government are inspiring little confidence that they have a structure of priorities in place for the negotiations. Several noble Lords in the debate and the IPPR report itself emphasised that it is essential for a negotiating committee to be set up for the north to protect its interests and advance its cause in the negotiations with Europe. The UK as a whole has a considerable dependence on exports to the European Union, which is why these negotiations will be of such significance. The country as a whole exports 44% to the EU, but the north-east exports 58%. That is why it is so important that negotiations take place that safeguard the economic interests of the north.

Developments in relation to Brexit also reflect the fact that the north is a significant part of Europe. After all, its economy is as large as Belgium’s, as was indicated in the debate. It is larger than the majority of countries in the EU European Union. So we cannot disregard the significance of the region in these discussions. That is why the IPPR reached its conclusion, which I am sure this debate has gone a considerable way to broadcasting and endorsing.

The Government have also been riding high on the other development of great significance to the northern economy—the powerhouse of the north. Thus far, we would have to say that there has been great talk but very limited government commitment of resources. The concept had a somewhat weak start when the Chancellor seemed to concentrate on that part of the country of most direct interest to his own constituents. That is not of course to disregard the enormous significance of the city of Manchester, but it is also obligatory on any concept of the powerhouse of the north that other significant cities be included. The right reverend prelate the Bishop of Leeds emphasised that not just the cities need consideration but the smaller towns that are satellites to them and the surrounding countryside, which will also require real consideration if their interests are to be protected.

The fact that the Government’s commitment has concentrated overwhelmingly on transport shows the significance of the link between cities, but that plays only a limited part in the development of the wider northern economy, to say nothing of the fact that thus far very little has been heard of other significant cities. My noble friend Lord Prescott reminded us of the significance of Hull in this debate, but many cities in Yorkshire are important. Leeds has had some prominence in the Government’s considerations, but there is so much more to do. Concentration on transport has had a limited demand in this respect. The Government are promising £13 billion to be spent on these links in the next few years, whereas the IPPR indicated that effective links could be established only if £50 billion—four times that amount—were spent. That is an indication of the challenge that lies before us.

My noble friend Lady Massey and the noble Baroness, Lady Pinnock, commented on the existing local authorities. The Government’s local government settlement still ensured that a great deal of resources went to the wealthier southern parts of the country, and the northern region got its usual poor deal out of that assessment. That is an indication of what needs to be done, not least on the issue of education. I was delighted when my noble friend Lord Bragg raised the issue of further education. He was supported by the noble Lord, Lord Beith, and others. There is no point in our talking about reskilling our nation while at the same time reducing the viability of the further education colleges. In my own former constituency, the Oldham College, which was a significant contributor, has had its resources truncated so much that it is now being linked with two other colleges for provision—a sure sign that this is about constraint on expenditure rather than expansion of provision.

However, unless we address ourselves to the skills of the nation, the resilience of the people that was referred to by the most reverend Primate the Archbishop of York cannot be catalysed into effective activity without the necessary education and training. I hope we will soon see the Government giving some priority to this. That is the only way we will see our economy thrive on the skills of our people, rather than be dependent on the introduction into the economy of plumbers and contract workers from eastern Europe to meet the needs of our employers. We need progress in this area.

Finally—and I am not asking the Minister to reply to this point because it is at a nascent stage—several noble Lords, including my noble friend Lord Liddle, have emphasised the problems in Cumbria. I know of several businessmen who are taking seriously the challenge of improving the position in Cumbria. They are looking, and have been for some time, at what we had such excellent news about yesterday: tidal schemes in Swansea and the fact that the Swansea lagoon can prove viable. We have estuaries off the northern and southern coasts of Cumbria, and it is to be expected and hoped that intelligent business activity will address itself to the possibilities of progress there.

Photo of Lord Young of Cookham Lord Young of Cookham Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Cabinet Office) 1:52 pm, 12th January 2017

My Lords, the publication of the IPPR’s annual State of the North report has given us the raw material for a debate on the state of the north, and the noble Baroness, Lady Massey, has provided us with the opportunity. I am grateful to her for her opening contribution, particularly her focus on the way that social mobility has changed over generations. I thank her for setting the scene for the debate, and all noble Lords who have contributed. Having sat through the debate for nearly two and a half hours, I have to say that there is very little with which I disagreed. Indeed, as somebody who for 41 years in another place represented constituencies in London and then Hampshire, I felt a growing sense of guilt at the apparent preferential treatment that my constituents had received for such a long time, compared with those in the north. I hope to try to reassure the House that the Government are determined to see a fair distribution of resources.

The noble Baroness, Lady Massey, quoted from the summary of the IPPR report, as did other noble Lords. It is worth quoting one sentence:

“All this, however, presents new opportunities”.

Maximising the full potential of the economy of the north, which has in many ways lagged behind that of London and the south-east, is vital. The noble Lord, Lord Bragg, in a speech that could have come out of “Henry V”, exhorted us to raise our sights and unlock the potential of the north. As the most reverend Primate the Archbishop of York said, it is important for those who live and work there that we should do this. I found what he said about the human resilience of those who live in the north very moving. It is in the interests of not just the north but the whole of the UK that we should unlock the potential. The point made by the noble Lord, Lord Curry, about the contribution to the balance of payments is well worth making—the fact that there is a major contribution to the balance of payments which at the moment is in deficit. We should do all we can to unlock that potential.

Noble Lords made many helpful suggestions in the debate about how we can raise our productivity and bring about a sustained rise in wealth, prosperity and opportunity. I hope to respond to as many points as I can in the time available, but where I cannot, I will write to noble Lords and deal with their issues. We have debated this issue a number of times in this Chamber. We had an exchange at Questions on Tuesday. The IPPR report helps us make further progress and I am glad it found favour in the eyes of my noble friend Lord Cavendish, who reminded us of the importance of small and medium-sized enterprise. Along with the noble Lord, Lord Liddle, he made a plea for a reform of governance in Cumbria. I will certainly pass those comments on to the Secretary of State at DCLG. The question of whether Cumbria is going to get the importance it deserves may be answered in the forthcoming by-election up in Copeland, which may focus the minds of all political parties on making sure that that part of the world gets a square deal, but that is beyond my brief.

We are determined to take action to support and strengthen local economies across the north. As noble Lords will be aware, that was an aim pursued with unwavering enthusiasm and dedication by my noble friend Lord O’Neill of Gatley in his work at the Treasury, and I pay tribute to his contribution. In response to the point made by the noble Lord, Lord Monks, I reassure him that colleagues in Government will continue to work to realise my noble friend’s vision for a true northern powerhouse—one with a vibrant, resilient and growing economy; a flourishing private sector; modern and efficient transport links; and a more highly skilled population—and to do so, as we move to leave the European Union, with a negotiated outcome that works for all parts of the United Kingdom and shows the world that we are open for business. I hope to say something later about the very forceful points that were made about a voice for the north. The noble Lord, Lord Shipley, reminded us of the importance of the single market and produced a six-point plan, to which he will get a six-point letter in due course.

Reading the IPPR report, I was struck by some of the deeply ingrained challenges that we are trying to overcome; in particular, the productivity gap, which has been the case for decades now and, indeed, was picked out for mention in the Motion before us. Currently, productivity in the north is 13% lower than the UK average and 25% lower than in the south. Clearly, there is a complex range of factors behind that, many of which noble Lords have highlighted previously and did so again today. I will pick up three.

First, connectivity remains a challenge for many people and businesses. To give just one example, congestion on the M62 means that it can take more than two hours to travel the 40 miles between Manchester and Leeds. That is not only frustrating for local people but is a barrier to local businesses and the jobs and growth they can bring, and potentially a deterrent to inward investment. I take the point made by the right reverend Prelate the Bishop of Leeds that connectivity is not just linear. What we need is a spider’s web, rather than a telephone wire, to reach out to the communities that are not directly on the main roads or railway lines. I will write to the noble Lord, Lord Alton, about the stations he would like to see reopened. As a former Secretary of State for Transport, I share that enthusiasm.

Secondly, skills have consistently lagged behind the south at all levels. The north has a higher proportion of people with no qualifications than the UK average and a lower proportion of graduates. I will certainly pursue the suggestion made by the noble Lord, Lord Sawyer, about the role of vice-chancellors in making progress in this area.

Thirdly, it is still more difficult to set up and grow a business in the north compared with the south. Connected to that, we find a lower level of entrepreneurialism in this region, although in saying that I take nothing away from all the dynamic and resilient businesses that exist in the north, some of which were referred to in the debate. We were reminded by the noble Lord, Lord Mawson, and others of the history of the great entrepreneurs of the north, particularly those in Bradford.

The IPPR report identifies some excellent examples of successful local economies but, in short, there remain clear areas for improvement, which were highlighted in the debate. The northern powerhouse strategy we published at the Autumn Statement seeks to address these underlying challenges. In saying that, of course I recognise that there are other issues that we need to address—the noble Baroness, Lady Massey, mentioned housing—that are not touched on in the report. We know that lasting changes will not happen overnight, but already we are making substantial progress, as the report acknowledges.

There are signs that our hard work is beginning to pay off. Foreign investors are responding. In 2015-16 the north of England saw inward investment projects increase by nearly a quarter from the previous year, faster than the UK average. In October, the French rail builder Alstom confirmed that it will build a £20 million technology centre in Liverpool, creating up to 600 jobs. In the three months to October 2016, the north saw a record number of people in work—more than 7 million people—and an employment rate of 72.5%, close to its record high. The noble Lord, Lord Liddle, and others have mentioned other successful business that either have been established or are growing.

I shall summarise briefly some of the action that we have been taking to support that success, starting with our work to improve the transport networks that businesses and hard-working commuters rely on every day. We are investing £13 billion in transport in the north over the course of this Parliament. Already we have started to take forward important improvements such as upgrading the A1 in North Yorkshire to motorway standard, upgrading the trans-Pennine rail route to take nearly 10 minutes off journey times between Manchester and Leeds and establishing Transport for the North, to which the noble Lord, Lord Prescott, referred. Last night I was reading his intervention in what I think was one of the first debates of this Parliament when he spoke about his work on the Northern Way. I pay tribute to what he did when he was in government to improve infrastructure in the north.

At the recent Autumn Statement we went further, committing to upgrade the A66 to a dual carriageway across the Pennines and to make major improvements to Manchester’s M60 ring road to ease congestion. The noble Lord, Lord Liddle, asked about Cumbria’s coastal railway. The new rail franchise for the northern and trans-Pennine express networks will deliver altogether more than 500 new railway carriages and 2,000 extra services each week. This franchise includes the Cumbrian Coast line to which he referred. Improving connectivity is vital to unleash the north’s economic potential so that the whole can be greater than the sum of its component parts.

As my noble friend Lady Eaton said, better transport links make it easier for people to find jobs, for firms to find workers and for ideas to be shared and developed. That is not just the case domestically within the UK, but in terms of international links as well. In my time as Secretary of State for Transport, one of the things that I took forward was giving the go-ahead to a second runway at Manchester Airport, which is now the UK’s third busiest airport—the busiest outside the south-east.

Skills was a theme that ran through our debate, mentioned by the noble Lord, Lord Beith, the noble Baroness, Lady Pinnock, and others. We have been working to ensure that people have the right skill sets for their chosen career. We have welcomed the findings of Sir Nick Weller’s report into schools performance in the north and committed £70 million to improve outcomes in northern schools. We continue to explore how we can improve everything from careers advice to high quality apprenticeships and world-class teaching. There is more that I would like to say, but time precludes it. However, to respond to the noble Baroness, Lady Warwick, who asked if the Government would consider housing products for the graduate market, in the Northern Powerhouse Strategy we have committed to work with the northern city regions and other local stakeholders to develop innovative proposals for attracting skilled workers. We are funding groundbreaking projects to develop the north’s strengths in science, the arts and sport, including providing £235 million to the Sir Henry Royce Institute for Advanced Materials.

I turn briefly to our responses to the IPPR report. As I have said, a lot of activity is already taking place. The report makes three suggestions as to how we can go further. The Government will work to get the best possible deal for all parts of the United Kingdom as we leave the EU, engaging with businesses up and down the country and continuing to back northern trade. Listening to this debate, I was struck by the number of representations about the potential relative disadvantage of the north in accessing the decision-makers. Without going beyond my brief, that is certainly a point of which my colleagues in government should be aware, given the strength of feeling that has been expressed throughout this debate. That is one of the most important lessons that I have learned.

Our industrial strategy will represent a comprehensive plan for the success of British businesses across all sectors and places, positioning the UK for long-term, sustainable growth as we move towards exiting the EU. A consultation paper will be published shortly.

Photo of Lord Prescott Lord Prescott Labour

Will the Minister explain the difference between—as pointed out in the report—a place growth strategy and the other critical northern house which tends to get debated? Is it the Humber?

Photo of Lord Young of Cookham Lord Young of Cookham Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Cabinet Office)

I hope the document on industrial strategy to which I have just referred will shed some light on the important issue that the noble Lord has raised. I hope he will excuse me if I move to my final comments. I am conscious that I have not dealt with a whole range of issues about devolution to local government, about local enterprise partnerships, about employment and wages and about those museums—to which I have an answer that will now have to be converted into a letter.

We are determined to keep up our relentless drive further to enable the sustainable economic success of the north. We are taking action on a number of fronts to tackle the deep-seated structural issues that have held back the economic prosperity of the north for too long. There is more to do. To continue our progress, we will keep working hand in hand with those who know best: local businesses, authorities and other organisations. Together, we can keep seizing the opportunities for growth that benefit not only businesses and individuals in the north, but the UK economy as a whole.

Photo of Baroness Massey of Darwen Baroness Massey of Darwen Labour 2:06 pm, 12th January 2017

My Lords, I thank the Minister for that thorough, respectful and inclusive response. I am grateful to him for some reassurances. I am glad that he reminded us of the importance of MPs and elections. I hope MPs will read this debate. I thank all noble Lords who have taken part in this thoughtful, wise and sometimes entertaining debate. It has also been challenging, as it was meant to be.

When I came to the Chamber today, I had not realised that so many parts of the north would be represented. I have sympathy with my noble friend Lord Prescott’s concerns about a strategy for the whole region. As many have pointed out, each region has its own characteristics, from population to industries, culture and cricket. I say to the noble Lord, Lord Shutt, that mentioning Yorkshire cricket to a Lancastrian is not the right thing to do. Has he looked at Yorkshire’s record recently?

We have moved between many topics: small business, housing, education, agriculture and so on. We have also heard of initiatives such as Get Bradford Working and the North East England Chamber of Commerce. I do not discard culture as unimportant. Culture is really important. Opera North is one of my favourite companies and the north has many cultural seats of excellence, as it does in sport. They are all important for local pride and local interest.

The most important thing that has emerged for me today is this issue of the urgent need for dialogue between the Government and the north. Many people mentioned this, particularly the noble Lord, Lord Scriven. Investment has also been mentioned many times. The issue of local councils is difficult. As the noble Baroness, Lady Pinnock said, give them the tools. I know they are cash-strapped. I think we would all plead with the Minister and the Government to listen to the north and make Brexit an opportunity. That opportunity will be lost if the north is not encouraged and supported. I stress again the need for a positive dialogue between the Government and the north to achieve our ambitions.

Motion agreed.