My Lords, I refer to my interest as a member of Newcastle City Council. Perhaps I should also declare an interest in the light of the remarks of the noble Lord, Lord Shinkwin, as someone disproportionately benefiting from the Government’s policy towards higher-rate taxpayers.
I congratulate my noble friend Lord Liddle on bringing this debate to your Lordships’ House. He has long experience of local government, as well as other responsibilities. It is fortuitous that the debate occurs just a week after the announcement of a devolution deal for the north of Tyne authorities of Newcastle, North Tyneside and Northumberland. Unfortunately, while this is in many respects welcome, it does not include Gateshead, South Tyneside and Sunderland, which chose not to be involved in the devolution process. That is unfortunate, but I am afraid we have some history of that kind in the area. I recall that in the 1960s, when local radio was about to be implemented, the leader of Gateshead council said that nobody in Gateshead could possibly be interested in anything broadcast from Newcastle. Latterly, in the 1980s, when I produced a paper calling for the formation of a northern regional councils association I did not dare release it under my name—I had it circulated anonymously by the leader of Northumberland, Robin Birley, who is also an eminent archaeologist. Fortunately, nobody noticed the origins of the report and we managed to get the association into being.
The announcement last week was generally welcomed. It has the potential to benefit the area, but we have to look at the financial implications and benefits. The Government have loudly proclaimed that there will be a £600 million investment to improve the economy of the area—but that is over 30 years. That means £20 million a year for three councils with a population of 800,000 people. By my calculation that amounts to £25 a year per head of population. In Newcastle alone we have lost £280 million in cuts to local council services. That is £1,000 per head of our population. There does not seem to be consistency in the Government’s approach to these matters.
While we are thinking about financing local government, the revenue support grant is now disappearing and councils will have to rely much more on business rates. We have yet to understand from the Government how that will work. Perhaps the noble Lord will indicate in his reply, if he is able to, how the new business rates system will work and how there might be transfers between better-off areas to those that are essentially the subject of the debate.
My noble friend Lord Liddle made a very powerful case, but there is one area about which I am somewhat sceptical—high-speed rail and HS2 in particular. As I understand it, it will cost some £403 million per mile and will fall far short of reaching the north-east in any case. We are more interested in improving connections with Yorkshire and the north-west through an improved system of cross-rail. That does not seem to be imminent, whereas this week’s announcement by the Secretary of State for Transport will apply £7 billion to a proposed link between Oxford and Cambridge—hardly the most hard-pressed economic area in the country.
There is another question that I would like clarification on, because it affects Newcastle Airport and other airports in the regions, many of which are regarded as important to their financial and economic future: what is going to happen to air passenger duty? There is always a threat that Scotland may go its own way on that, which would imperil services from airports such as ours.
At the moment in the north-east and in other regions, we still have low wages and higher than average unemployment—although the north-east is the leading region for gross value added to the economy, thanks largely to foreign-owned companies. There, of course, we begin to worry about the future, given Brexit. Like other areas in the region and elsewhere, Newcastle has thriving universities: we very much welcome that, although we are, frankly, educating too few of our local population in those universities. As we have already heard, there is a distinct shortfall in access to higher education from the most hard-pressed regions in the country. We do, however, have a large number of overseas students. We have seen in Newcastle, and I suspect in other places as well, very large developments of new residential accommodation for overseas students. One wonders whether Brexit will have an impact on the number of students and European and other academics. I certainly know of some in Newcastle who are considering their future in the light of what is likely to happen following Brexit.
However, the main issue, surely, is to ensure that our own local population has genuine access to further and higher education. In that respect it would be welcome if we could manage to achieve what was achieved under the London Challenge, which made a huge difference to the educational and other opportunities of people in London. There does not seem to be any sign that that is likely to happen. Of course, we are not unique in the north-east in having these problems. There are too many parts of the country where opportunities are limited and where conditions are, frankly, intolerable for many people. It is certainly true that we have a low rate of unemployment compared to many other times over the years, but we also have the lowest growth in wages and earnings that we have seen for a generation or more. That is a serious outcome for far too many of our people in areas such as the north-east and many others, whose concerns we are debating today.
We have a strange situation in which we are getting some degree of devolution—we are, perhaps, reinventing the Anglo-Saxon Heptarchy, with a number of large areas which will make up a country—although some of us are inclined to revert to Anglo-Saxon terminology in our use of adjective to describe the impact of government policy in those areas. What we need to hear from the Government is that there will be a reallocation of priorities—in investment, in particular—across the regions that are currently lagging behind London and the south-east. We have also become aware recently of something that has not really become apparent—or at least has not been introduced into the public debate—which is that in some areas that look to be thriving and prosperous there are smaller areas displaying perhaps even more acute economic and social needs than regions such as the north-east. What we are seeing—sometimes in prosperous areas, certainly in areas such as the north-east and the north-west—is a widening gap in income, health, well-being and longevity. This is really unacceptable. Whether the Government will begin to address it remains to be seen.
I have another couple of short questions for the Minister. The noble Lord, Lord Shipley, referred to the government regional offices, which were established many years ago and were effectively scrapped by the coalition Government. There is also the question of the regional development agencies—which, again, were scrapped by the coalition Government when the current leader of the Liberal Democrats was the Secretary of State responsible. Will the Government look again at both these areas? If we are going to have an influence on policy, we need close connection with the Government of the day. Certainly, in our experience in the north-east, it was very helpful to have a senior civil servant able to act as an interlocutor between central government and the local and regional authorities. That is something that could serve us—and not only our region—well in the future. It will help improve governance in this country in the long term, as well as help us tackle the immediate problems that we face.