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.