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.