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Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Brooke, and I hope that your foot is feeling a lot better. May I also take this opportunity to thank Mr Speaker for allowing me to secure this debate? I have been trying to secure a debate on unemployment in the north-east for some time, because it is the most important and pressing social, political and economic issue facing my constituency and the wider region. I would therefore be grateful, Mrs Brooke, if you passed on my sincere thanks to Mr Speaker.
I welcome the Whip, who will be responding to the debate. I do not doubt the integrity and commitment of the hon. Member for Preseli Pembrokeshire (Stephen Crabb) in any way, shape or form, but it is deeply contemptuous to the people of the north-east for the Department for Work and Pensions not to have deigned to provide a Minister to respond to my concerns and those of my hon. Friends.
The Whip may expect me to unleash a torrent of negativity and pessimism about the situation—notwithstanding what I have just said—and to come with a begging bowl, asking for help and handouts on behalf of a declining and failed region. That is far from the case, because the north-east is far from being a failed region. It is true that we have struggled to adapt to the changing economic and industrial fortunes of the past 30 years or so, particularly in finding a new economic role following the closure of many heavy industries. I have to say that that task was not helped by the Administrations of the 1980s. Indeed, it was made much worse by the decisions they made and the priorities they set.
However, the north-east, the region that was the centrepiece of the workshop of the world in the 19th century, has the capacity, capability and ambition to become one of the major contributors to a modern global economy, and we have the work force to match. If the Government are serious—I hope that they are—about rebalancing the economy in terms of sectors and geography to make us less reliant on a few sectors and on London and the south-east, they have to see the north-east as a growth area and make us a priority.
There are sectors that have the scope to take advantage of Britain’s current competitive advantage and lead the world in the next few years—advanced manufacturing, chemicals, pharmaceuticals, automotives, higher education, renewables and the low-carbon economy, energy and tech companies. If we also think about the firms in the supply chain that will assist those industries, particularly such vital industries as the steel industry and the construction industry, the north-east must have a key role to play.
Alex Cunningham (Stockton North) (Lab)
My constituency enjoys some of the best industrial riverside frontage in the country. It was once home to a thriving shipbuilding industry, and then North sea-related activity. There is now the potential for real jobs and growth in the green industries, building monopiles and other components for wind farms. Does my hon. Friend agree that it is time for the Government to clarify their position on support for wind farms, and encourage developers of wind farms to buy their gear in the north-east, rather than from somewhere in Europe?
Mr Wright
My hon. Friend is absolutely right. Just further up the coast in Hartlepool, we have a thriving renewable energy industry with great firms, such as JDR Cable Systems and Heerema Hartlepool, which can supply a lot of offshore wind turbine components. However, investors are crying out for certainty from the Government. They need policy certainty to allow them to invest for the long term. The Government are failing spectacularly on that.
Mr Campbell
Of course, we have Narec. One of the things that disappointed me was that companies coming to the north-east to look at the Tyne and the port of Blyth—I am sure Hartlepool and the Tees, too—have moved up to Scotland because they were getting more encouragement, more money and more funding. That is no good to us, because we need them to come to the north-east. That policy needs to change.
Mr Wright
I absolutely agree with my hon. Friend. I mentioned the fantastic facilities and the great companies we have in my constituency. Gamesa, a Spanish wind farm manufacturer, was hoping to relocate to the UK. It looked at Hartlepool, but chose to go to a Scottish port precisely for the reasons set out by my hon. Friend. We need to come to terms with that and ensure that we have a Government who are fighting our corner in the north-east. I am not convinced that we have that at the moment. We do not even have a Minister to respond to the debate. That is deeply worrying and shows contempt for the people of the north-east.
Despite the huge potential in my constituency and the wider north-east, the unemployment situation is bleak. I know that in his response, the Whip will cling to the argument, like a dying man to a life raft, that today’s statistics show that employment in the north-east has increased by 3,000 on the previous quarter, and that unemployment in my constituency is down by 15, month-on-month. That is welcome news, but I would never say, as the Secretary of State for Energy and Climate Change did on a recent visit to Newcastle, that the unemployment rate was not as bad as it could be, or as it seemed. Again, that is deeply insulting to everyone in the north-east who has lost a job and is desperately looking for work. It shows a Government who are grossly out of touch with what the people of the north-east want and need.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend think that that is in stark contrast to 2009 and 2010, when, because of the economic stimulus introduced by the Labour Government following the economic crash, employment in the region actually rose by 24,000 in one year?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I congratulate my hon. Friend on securing this debate on an issue of such great importance to the north-east, even if it is of less importance to the Government. Newcastle has seen its unemployment rate go up by approximately 20% in the past year. In addition, its national unemployment ranking has gone up by 30 places. A year ago, it had the 76th highest unemployment rate in the country; now it has the 47th highest. Does that not suggest that the Government’s measures are feeble and are leaving the north-east and Newcastle behind?
Mr Wright
I absolutely agree with my hon. Friend, and I will go on to mention some job losses that her constituency is facing. The region still, and by a considerable margin, has the highest unemployment rate in the country at 11.3%. The figures published today show that unemployment has increased by 8,000 in the past quarter, to 145,000 in the north-east. The number of people claiming jobseeker’s allowance has increased by 900 on the previous month. In Hartlepool, the number of people unemployed stands at 4,612, a rate of 11.6% and the 30th highest of all the UK constituencies. That jobless figure of 4,612 is more than 10% higher—503 higher—than it was a year ago.
Today’s statistics also show that the number of people who are economically active in the north-east has gone down, from 75.4% to 75.2%, as has the proportion of the adult population in employment, from 66.6% to 66.5%, whereas the national rate for England is 70.8%. On unemployment and economic prospects, the gap between the north-east and the rest of the country is getting wider and should be a huge cause of concern for the Government. From their actions—or rather, the lack of them—and from the priorities we have seen today in their not sending a Minister, I do not get the sense that that is the case at all.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
I congratulate my hon. Friend on securing this important debate. Does he share my concern about the rising level of female worklessness in the north-east? Many women have been forced out of work because of Government cuts and cuts to tax credits. My concern is that the evidence shows that stronger economic growth is associated with higher levels of female employment—growth that we desperately need in the north-east and in the wider economy.
Mr Wright
My hon. Friend is absolutely right. She has been a strong champion in this regard, both in this House and beforehand, standing up to make sure that women have the rights they require to fulfil a vital economic role. In our region we certainly need female, and part-time, workers.
I want to mention the loss of jobs in recent months. Between June 2010 and December 2011, the latest period for which figures are available, the north-east lost 7,000 manufacturing jobs and 84,000 construction jobs. According to statistics obtained by the TUC, in the north-east nine jobseekers are chasing each job vacancy. In contrast, in Oxfordshire there are just 1.8 jobseekers for every vacancy. It is therefore more than five times more difficult to find work in my constituency than in Oxfordshire. It is not that the people do not want to find employment or are workshy. There are no jobs to fill.
I could mention statistics until I am blue—or red—in the face. Many people will gain some comfort from statistics, large numbers or percentages. However, behind every statistic lies a human story of a person who is made redundant and is worried about how they will pay the bills and put food on the table, or of someone rejected after making their umpteenth job application and fast losing hope and sense of self-worth, or of a parent worried about how their son or daughter will get a job or career without any experience.
Mr Stephen Hepburn (Jarrow) (Lab)
My hon. Friend has made some telling points. Is it not important to stress that unemployment, especially among young people, is not an easy option? The unemployment benefit for people under 24—their dole—amounts to £8 a day. Without parental support or friends, they have to feed and clothe themselves and pay their utilities from that sum. It is not an easy option.
My hon. Friend rightly mentioned the serious issues in south Tyneside. In Jarrow, an extra 200 young people went on to the dole last year. With 15 people chasing every job, there is little or no prospect of their getting one.
Mr Wright
My hon. Friend is right. I will come to the terrible issue of youth unemployment in a moment. Let me just mention further unwanted, gloomy news on the jobs front in recent months.
The closure of the Rio Tinto Alcan plant, with the loss of 515 jobs directly and the threat to 3,000 jobs in the supply chain, is a major blow to the economy of south-east Northumberland. My hon. Friend the Member for Blyth Valley (Mr Campbell) is in attendance and I have spoken to my hon. Friend the Member for Wansbeck (Ian Lavery) today, who wanted to attend, but is hoping to catch Mr Speaker’s eye in the debate on Remploy.
The closure of the BAe factory on Scotswood road in the constituency of my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) brings to an end a century of remarkable industrial innovation on the banks of the Tyne. The factory was started by that astonishing, underrated Victorian entrepreneur, William Armstrong. However, far from looking to the past, the closure undermines the vital links between British military capability and manufacturing and industrial capacity.
The growth in long-term unemployment and youth unemployment is of particular concern. I have mentioned that to hon. Friends. The north-east has far too often been permanently scarred by people being on the dole for many months and years, or by young people leaving school or college unable to find work. That was so in the 1980s, when the closure of the steelworks, shipyards and coal mines left an unwanted and enduring legacy of poor health, lower life expectancy, poverty and family breakdown, making it more difficult for the economy to bounce back into prosperity once the recovery starts.
The longer a person is out of work, the easier it is for them to lose skills and experience, and the more difficult it is to get back into work. That is especially true when more and more people have more recently lost their jobs, and therefore have more recent experience in the job market.
In Hartlepool, the number of people who have been claiming JSA for more than 12 months has risen in the past year by more than 245%. One in four young men under the age of 24 are out of work in Hartlepool. Such figures are not sustainable economically, socially or ethically. I fear that we are repeating the policies and mistakes of the 1980s and that there will, once again, be a lost generation of young people unable to fulfil their massive potential, believing that the only way they can get a proper career is by leaving the north-east altogether.
We have had good news. Only this week a new retailer announced the creation of 150 jobs in Hartlepool, but overall the job situation is gloomy and set to get worse. The Centre for Economics and Business Research forecasts that unemployment in the north-east will rise to 12% this year and to 13% by 2016, largely as a result of further and deeper public sector redundancies.
Government policy is making the unemployment situation in the north-east much worse. The Government’s insistence that public sector redundancies are necessary and that private sector employment will somehow bloom in the face of these cuts is naive and economically ignorant at best, or is cynically and deliberately driven for ideological and political purposes. If Ministers—or Whips—genuinely believe that the public and private sectors are separate and distinct entities, and never the twain shall meet, that shows a profound misunderstanding of how the modern economy works.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
My hon. Friend makes a compelling argument. In my area of the north-east, in Teesside and East Cleveland, three areas worry me: cuts in Army, Navy and Royal Air Force troop numbers—mine is a big recruitment area for them—the three-year zenith in the contraction of manufacturing, which affects the north-east more than other regions, and public sector cuts.
As my hon. Friend just mentioned, the Government’s ideological view that there is a private sector and a public sector goes against every piece of economics since Galbraith in the 1960s and undermines any economic recovery that we have desperately fought for.
Mr Wright
My hon. Friend is right. I know that he remembers Galbraith in the ’60s.
Some 84,000 jobs have been lost in the construction industry, in part due to stopping the schools building programme, road schemes and social housing, which were all socially and economically necessary, because they boost productivity, efficiency and economic capability in the long term and, in the short term, in the worst and most severe global financial crisis ever, help to provide skills and capacity in the construction sector.
The Government fail to accept the basic economic point that, for every £1 of public money spent on construction activities, almost £3 of private sector money is generated back into the local economy, in terms of jobs, the supply chain and construction.
Phil Wilson (Sedgefield) (Lab)
My hon. Friend has made a compelling argument for a Labour Government. I congratulate him on securing the debate. Does he agree that there is one task that the Government ignore all the time? The only way that we can secure real growth is by the public and private sectors working together in partnership.
Mr Wright
I pay tribute to my hon. Friend, who does not get enough recognition for the enormous amount of work that he has done on two fronts: securing the work for Hitachi trains in our area and ensuring that Durham Tees Valley airport can be a catalyst for economic growth and connectivity—a word that I cannot stand—so that we can compete and sell our goods and services and get them to the rest of the world.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
I have a certain amount of sympathy with what the hon. Gentleman is saying. He mentioned schools. The Duchess community high school in my constituency was constantly excluded from Labour’s school rebuilding programme. Now, three high schools in Northumberland will be rebuilt under this Government’s programme.
Mr Wright
There seems to be no connect between public and private sector and no connect or coherence between Departments. The Department for Communities and Local Government demands local authority cuts of 20%, which is having a profound impact on unemployment, not just directly in terms of council jobs.
Hartlepool borough council cut its bus subsidy, so Stagecoach has stopped operating bus services early in the morning and late at night. People are unable to travel to early shifts or late periods of work in the night-time economy. They are less likely to go out for a meal or to the town hall theatre or the borough hall, or to the pub for a few pints, so there is less economic activity and fewer jobs. The reality is stark: a lack of joined-up thinking in the Government is increasing unemployment in my area. What can the Whip do about it?
Mr Kevan Jones
Does my hon. Friend agree that there is also a great disconnect between what Liberal Democrats say at Westminster and what they are saying in the north-east? In the House, they are quite happy to vote with the Conservatives for some of the most drastic cuts that we have seen for generations in the north-east; but in the regions, they are somehow trying to explain to or convince the public that that has nothing to do with them.
Mr Wright
I am sure that we will see a “Focus” leaflet in due course saying that everything in the garden is rosy and that the Liberal Democrats are fighting hard. The reality—my hon. Friend is right—is that where they can make a difference by going through the right Division Lobby, they are failing to stand up for the north-east and for the people who need jobs and investment in our area.
The Government’s determination to depress demand before the economy has had a chance to recover from the global financial crisis is wrong. The effects of such a policy are a double-dip recession made in Downing street and an increase in unemployment. The Federation of Small Businesses in the north-east told me that the ability of small business to offer jobs is suffering directly because of falling sales, as the public sector reduces investment, confidence collapses and firms sit on cash. It is clear, as businesses recognise, that the Government’s policies are making matters worse. Does the Whip not understand that? Can he not see that if the Government pursued a more active role on jobs and growth, there would be more people in work, paying taxes, more companies paying corporation tax, a reduced benefits bill and the deficit being paid down faster. By sticking to an economic plan that is not working—that is clear to all and sundry—the Government must borrow £150 billion more than originally anticipated.
Helen Goodman (Bishop Auckland) (Lab)
We have commented on the position of Liberal Democrat Members from the north-east, but has my hon. Friend noticed that Tory Members from the north-east have not even come to the debate?
Mr Wright
I am grateful to my hon. Friend for highlighting that point. I had noticed that the hon. Members for Stockton South (James Wharton) and for Hexham (Guy Opperman) have not bothered to turn up for the debate, which shows the importance that they attach to economic enterprise, growth, jobs and unemployment.
Alex Cunningham
My hon. Friend is one neighbour, but if my Conservative neighbour, the hon. Member for Stockton South, was in his place today, he would point to our enterprise zone and our local enterprise partnership, which have been introduced by the Government. Yet despite their best efforts, unemployment in my constituency is nearly 4,200, up 400 on last year. Does my hon. Friend not lament, as I do, the loss of real investment that we had in the days of One North East?
Mr Wright
I should declare an interest: One North East used to employ me—that is one of the reasons why the Government wanted to get rid of the regional development agencies. I absolutely agree that a compelling economic vision helped by an RDA that can set strategic priorities is vital. My hon. Friend mentions the hon. Member for Stockton South who is, as far as I am aware, although I might be corrected, one of the only people in north-east and Cumbria not to have come out against the ludicrous proposal on regional pay, which is what I want to turn to.
The House is considering regional pay this afternoon. At a time of depressed demand, eroding confidence and rising unemployment, it seems economically ludicrous for the Government even to contemplate such a policy. The TUC rightly estimates that regional pay could take £500 million from the north-east’s economy precisely when we want consumer confidence to increase to allow people to start buying things and creating jobs. Does the Whip think that taking £500 million from the north-east will increase the number of businesses and employment?
Instead of continuing with failed economic policies that are increasing unemployment in the north-east, the Government should listen to regional businesses, which are asking for a cut in national insurance contributions to incentivise them to take on extra workers. The Government should consider a temporary cut in VAT to allow confidence to emerge. They should use the power of the Government’s buying position to use procurement to invest in the regional supply chain, to increase the number of apprenticeships and to give a chance to local firms. They should reintroduce the future jobs fund, which helped many hundreds of young people in Hartlepool and throughout the north-east during the worst times of the global financial crisis. Most of all, the Government should be pursuing an active industrial strategy, working with productive businesses to embrace the competitive sectors of the future. They have done that to some extent with Nissan and the automotive industry, by carrying out what the previous Labour Government were doing, but they should step up a gear with the low-carbon economy—as my hon. Friend the Member for Blyth Valley said—chemicals and advanced manufacturing.
If the north-east is given the tools by the Government, it will deliver for its people, its communities, its businesses and the rest of the country. I ask the Whip to help us to unlock the huge potential and end the human, economic and social waste of unemployment in the north-east.
Annette Brooke (in the Chair)
Order. At this stage, I shall not introduce a time limit, but I ask Members to be aware of the number of others who want to speak.
Ian Swales (Redcar) (LD)
It is a pleasure to serve under you today, Mrs Brooke, and to see you back in the House, almost fighting fit.
I congratulate the hon. Member for Hartlepool (Mr Wright) on securing the debate and on the 150 new jobs in his constituency announced this week. Unemployment remains my No. 1 priority. The north-east is indeed bottom of the unemployment league and has been for many years, including in 1997 and 2010. With £1 in every £4 of public spending being borrowed, we sadly inherited an economy built on sand. Clearly a lot had to change.
Ian Swales
I have hardly started. I will give way in a moment, when I have got further into my speech.
Solutions to the problem have to be bottom-up and top-down. My local council—before an Opposition Member points it out, it is a Labour council—deserves praise for its infrastructure work, adding new seafront work and leisure investment to the huge Environment Agency spend on flood defences, as well as the Government investment in MySpace, which is going on in Redcar. It was good to see the Association of North East Councils visiting Redcar a few weeks ago to see what is happening. However, it is disturbing how many of the construction jobs are not going to local people. I have raised that with the council, because it is important for the north-east to help itself as much as possible and not to have such jobs going to people who travel into the area. My local council is taking a high risk, however, because the Audit Commission says that at the end of the work it will have the highest debts in the country for the size of the council, but at least it is doing something.
I praise the Government for investment in local infrastructure, in the Teesside railway system and, in particular, the recently announced refurbishment of stations, including all six in my constituency. House building is obviously a good option, but in areas such the one I represent the population is static or declining. We need to upgrade our housing stock. That is true throughout the north-east, but as I keep reminding my council, if we do not plan for the overall stock we get market failure. That has already happened in three parts of my constituency: South Bank, Grangetown and West Dormanstown.
We need a lot more focus on enterprise by our councils. I cannot speak for other areas, but my local council of Redcar and Cleveland often proves to be difficult to deal with. We recently lost 200 jobs when a potential new investor simply gave up and went somewhere else. I welcome the new enterprise zones, including three in my constituency, which are already attracting interest. I hope that we will prove to be easy to deal with and get companies into those zones.
These debates always lead to a lament for the RDA at some point, and the hon. Member for Hartlepool has already touched on that. It is interesting to note that, in a sense, RDAs were not a regional policy; they covered the entire country and all got large sums of money. I salute the bravery of the present Government in supporting only projects in hard-pressed areas such as the north-east with the regional growth fund. That is one reason why the north-east is getting a large share of the regional growth fund money.
Chi Onwurah
The hon. Gentleman says because all the RDAs were abolished, the abolition of One North East was not a regional policy. As a member of the Liberal Democratic party, however, does he not agree that his party stated specifically that One North East would be saved, because it was admired by both public and private sectors? Its demise has been regretted ever since its abolition.
Ian Swales
That was never party policy, but it was a remark made by the Business Secretary. I think everyone recognises that One North East was the best of the regional development agencies. My point was that giving money to every region will not rebalance the economy. I salute the bravery of our Government in not giving money to regions that do not need help.
A month or two ago, I said in this Chamber that in the two years before the general election, the RDA approved 96 projects, worth £148 million, in which One North East directors had to declare an interest. Of those, only eight projects and £6 million related to the Tees valley. The Tees valley got a poor deal from One North East. Experian assessments place Hartlepool, Middlesbrough, Redcar and Cleveland in the weakest 10 economic areas of the country, so I welcome the local enterprise partnership and its work.
The LEP is doing a lot of good work, part of which is defining clusters—we have process industries and automotive clusters, and we are now developing a steel cluster. The welcome news is that Sahaviriya Steel Industries has bought the Redcar steelworks, and is now producing; Tata is still in the area, and opened a new research centre just two weeks ago, which had some Government support; Siemens has its worldwide centre for steel processing development in Stockton; and Teesside university is opening up a new department, so a good cluster is developing there. We also have clusters in green technology, and I welcome new initiatives in renewables, with the industry forming the Energi Coast group—20 companies getting together to exploit the new market jointly—and Narec has been included in the new technology innovation centre for renewables. Clusters attract like-minded companies. Global Marine Systems has just relocated from Essex to Middlesbrough, and last month it hired the Riverside stadium to recruit people.
Manufacturing is having some success in the area. International trade is booming with record exports— the best ever—from the region during the 12 months to March, including 20% growth in exports outside the EU. Jonathan Greenaway, a partner at PricewaterhouseCoopers in Newcastle, recently reported those successes and said:
“This is a great time of opportunity for manufacturers, and…UK companies are really rising to the challenge.”
We have some problems with the public sector, to say the least, with job losses and so on. I believe that taxpayers expect efficiency in public services and that they do not see them as job creation exercises, but there has been a worrying trend of relocation of jobs, certainly out of the Tees valley. Under the previous Government, the ambulance service was lost—it still baffles me that an area of 750,000 people is not deemed capable of running its own ambulance service, but that was moved out of the area. We also lost the office of Her Majesty’s Revenue and Customs in Middlesbrough, and thus 400 jobs. There are other potential problems, such as the Insolvency Service office in Stockton. I urge the Whip to reverse that trend and to move jobs to hard-pressed areas in the north-east such as Teesside.
I note that some agencies are looking at Yorkshire and the north-east as a region. I point out to them that the Tees valley is exactly the midpoint—I measured it this morning—and an ideal location for headquarters. The regions are massive, however: Sheffield in South Yorkshire is as close to Southampton as it is to the constituency of my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith).
For 13 years, the north-east had a Labour Government—almost all MPs and councils were Labour—but between 1997 and 2010, the number of unemployed people in the region went up by 7,000, and the rate remained approximately the same, despite the unprecedented amount—
Mr Kevan Jones
The hon. Gentleman is being selective. I was going to say that it is a pleasure to hear him speak, but he seems to be saying that everything in the garden is rosy. In fact, between 2009 and 2010, 24,000 extra jobs were created in the north-east, and over the longer period from 1997, unemployment went down, not up.
Ian Swales
I checked the figures with the Library this morning, and 7,000 more people were unemployed in 2010 than in 1997, despite the unprecedented amount of grants and unsustainable borrowing that were pumped into the area.
Big problems remain. Unemployment is way too high, especially in constituencies such as Redcar, and it remains my No. 1 priority. The hon. Member for Hartlepool said that the north-east was once the workshop of Britain. It can be again, and in fact already is to some extent—even today, it is the only region with a positive trade balance—but a lot more can be done. I agree with the hon. Gentleman that we need a clearer industrial policy. We also need consistency on renewables and public procurement. There are opportunities for further investment in infrastructure—I do not want to steal the thunder of my right hon. Friend the Member for Berwick-upon-Tweed, because I am sure that he is about to give an example.
I welcome the Government’s attention to the north-east. We have a regular troop of Ministers coming through, and it is good to hear that the Employment Minister will be meeting the Teesside business community on 10 July. I look forward to hearing the response from the Whip today.
Annette Brooke (in the Chair
The wind-ups will start at 3.40. I remind hon. Members that I have not put a time limit into operation, and it is entirely up to them whether that becomes necessary.
Grahame M. Morris (Easington) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Brooke. I congratulate my neighbour, my hon. Friend the Member for Hartlepool (Mr Wright), on securing this debate, whose importance is illustrated by the number of Labour Members who are present. I was going to try to be good and not lampoon—sorry, lambast—the coalition Government, but I cannot allow some of the comments made by the hon. Member for Redcar (Ian Swales) to pass with no response.
The hon. Gentleman’s suggestion that the regional growth fund is an improvement in regional policy is completely incorrect. Any region can apply for funds, not just the most disadvantaged regions. I cannot understand why Easington, with an unemployment rate of 11.3%, is denied an enterprise zone and support from the regional growth fund, when affluent areas such as Oxford, Cambridge and Kent have enterprise zones and their companies are supported by the regional growth fund. Surely if the Government’s policy is to address regional imbalances, that is a good starting point.
Grahame M. Morris
The hon. Gentleman would not afford me that courtesy, but in the spirit of debate I will give way to him.
Ian Swales
I apologise to the hon. Gentleman for not giving way. Perhaps I was in full flight, and did not see him seeking to intervene. Does he know how many projects in London and the south-east have been awarded regional growth fund money?
Grahame M. Morris
I do not, but I know that in my area I have lobbied hard on behalf of a number of companies that could bring substantial benefits to a hard-pressed area, and we are still waiting for decisions. That aspect of Government policy needs to be addressed.
The other issue that I am worried and upset about is that a Liberal Democrat occupies one of the highest offices of state, and the hon. Gentleman mentioned that Ministers often visit the area. They do not afford me the courtesy of saying when they are coming. When the Secretary of State visited my constituency, I was not advised in advance and I was not in a position to lobby him with bids from my area. However, I have taken that up separately. I will now try to make progress because I know that many hon. Members want to contribute.
I remind hon. Members that unemployment in my region is up by 8,000 to 145,000—a rate of 11.3%, which is higher than the national average. Under the Labour Government, the gap between the economy of the north-east and those of other regions was closing, with private sector business growth and employment. The Member for Redcar quoted some figures. In fact, after 10 years of Labour Government, the unemployment rate in the north-east was 5.7%—Labour came to power in 1997, and in November 2007 to January 2008 it was 5.7%—which was only 0.5% higher than the UK average. Now, though, it is 11.3%, which is 3.3% higher than the national average.
I did want to start on a positive note—[Laughter.] I am sorry about this, Mrs Brooke. I wanted to welcome the invaluable contribution that Nissan has made to our regional economy. Nissan is located in the constituency neighbouring mine to the north, represented by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson). Nissan’s presence has some benefits for the supply chain in east Durham. I commend Nissan for its tremendous commitment to our area. It is a shining example of what the north-east is capable of achieving with the right support from local and national Government. As hon. Members will be aware, the two new car models that are to be built will create more than 3,000 jobs across the UK over two years. Some 600 of those will be at Nissan’s Sunderland factory, with the remainder in the supply chain. I do not wish to criticise that success story.
I am looking to the Minister—[Hon. Members: “The Whip.”] Well, I will afford him the courtesy of calling him Minister. Welcome though they are, those new jobs do not come close to countering the job losses in my constituency. Over the past few weeks, I have referred to the haemorrhaging of private sector jobs in east Durham. That should be a real concern—it certainly is for me and all those who are affected. I cannot remember so many job losses in my constituency since the pit closure programmes, which is indicative of the desperate situation faced by many constituencies such as mine.
The Government’s Work programme does nothing to address the fact that unemployment is often focused in communities with the weakest local economies. The problem in the north-east is not so much one of joblessness as one of worklessness. My hon. Friend the Member for Hartlepool mentioned the ratio of the number of people out of work and the number of vacancies, which is limited. I refer the Minister to an excellent report on that subject published by Sheffield university, which makes some positive suggestions about what could be done.
The Work programme has been in operation for one year, during which time the number of people in Easington claiming jobseeker’s allowance has risen by 20%. About 1,000 job losses have been announced in the past month, and that will affect my constituency, where 3,195 people are out of work. Companies closing down include Cumbrian Seafoods, JD Sports, Dewhirsts, Reckitt Benckiser and Robertson Timber. Some of those companies—all private sector—are closing as a consequence of the decline in the building and construction industry, but mostly it is a consequence of a reduction in demand.
There is yet another side to the story. Easington has a strong manufacturing tradition, with companies such as NSK, Caterpillar, GT Group, Actem UK and Seaward Electronic. Those companies are looking to the RDA replacement bodies and the Government for signs of support that will enable them to take on more workers. There are some large-scale private sector regeneration projects in the offing, but again we need leadership and support from the Government, because many of those programmes are suffering unjustifiable delays.
I will not embarrass the Government by mentioning the centre of creative excellence that could have created 500 jobs south of Seaham, but I will mention retail developments such as a new Tesco supermarket on the former site of East Durham college. That would create 400 new jobs and a new library—a much needed community facility at a time of spending restraint in the public sector.
Dalton Park phase 2 also offers a glimmer of hope for my constituency. Once the development is complete, it will support more than 100 construction jobs and 450 new retail jobs. It will provide new facilities that will greatly benefit the local community such as a new supermarket, hotel, cinema, and associated leisure facilities. Such planning applications are often controversial, but—incredibly—this one received the unanimous support of the local authority, as well as massive support from the local community and other county MPs, and I am thankful for that support. The development was also passed by the Secretary of State for Communities and Local Government. It is a rare phenomenon in that everybody seems to support it, but it is being delayed as the result of an application for a judicial review by Salford Estates, which owns Peterlee town centre. As I understand it, the founder of Salford Estates is a tax exile based in the tax haven of Monaco.
My point is that the communities in the north-east continue to be hit the hardest by Government policies that are driving down demand across the region. The promised private-sector led recovery has simply failed to materialise in our region, and the austerity and cuts agenda is taking money out of our local economies and making any potential recovery harder to realise. A decade of progress made under Labour to reduce the north-south divide is being reversed.
Mrs Jenny Chapman (Darlington) (Lab)
Is my hon. Friend alluding—perhaps not this explicitly—to the fact that problems of entrenched unemployment are very hard and take an awfully long time to fix? The north-east probably knows that better than any other region. The problem is not only worklessness but crime, mental ill health, homelessness and all the other associated problems that we know occur when there are high levels of unemployment.
Grahame M. Morris
Absolutely. My hon. Friend makes an excellent point much more forcefully and directly than I could, and I completely agree with her.
It is up to this Government to learn lessons from those things that worked in terms of regeneration and growth and saw our region prosper in sectors such as exports over the past decade. I find it quite offensive when members of the governing coalition denigrate Labour’s efforts over the past decade, as if that Government produced no overall success.
I did not intend to quote statistics, but I shall put a couple on the record. Based on gross value added per head, the rate of growth in the north-east went from being the lowest of all regions during the 1990s to the second highest during the past decade. Let me also put to bed another myth propagated by the Tory party which claims that our public sector was squeezing out the private sector. That is just not true. As other hon. Members have indicated, in our view the public and private sectors are not mutually exclusive but mutually supportive. Between 2003 and 2008, private sector employment rose by 9.2% in our region, while at the same time public sector employment grew by only 4.1%. Between 1999 and 2007, the number of businesses in the north-east rose by 18.7%—a huge increase that compares favourably with London’s business growth of about 19.6% over the same period.
Bridget Phillipson
May I give one example from my constituency to illustrate the link between public sector investment and private sector job creation? A local electrical company, Alex Scullion Electrical Contractors, carried out a lot of work with contracts to renovate social housing, apply the decent homes standard and build new social housing through labour investment. Now, however, times are difficult because that investment has dried up. That company played an important role in securing private sector jobs and supporting apprentices, and there are clear linkages between money that the Government spend and the creation of jobs in the private sector.
Grahame M. Morris
Absolutely. That is a terrific point and there are many similar examples. In my constituency, Carillion was involved in infrastructure projects including Building Schools for the Future and hospital building programmes. I did not mention it earlier but that company has announced 130 redundancies.
There is no doubt that the north-east was hard hit by the global downturn of 2008, but the policies of this Government are entrenching a north-south divide. To quote a Nobel prize-winning economist, Paul Krugman:
“The urge to declare our unemployment problem ‘structural’—a supply-side problem of some kind, not solvable by the ‘simplistic Keynesian’ notion of just increasing demand—has been quite something to behold. It’s rapidly entering the category of a zombie idea, which just keeps shambling forward no matter how many times it has been killed.”
The problem is that demand has been depressed. We need to stimulate demand in the economy. Quite simply, communities and areas such as mine throughout the region cannot pull themselves out of the mire without Government support. Targeted support and intervention are what we need.
Annette Brooke (in the Chair)
Order. I propose a time limit on the remaining speeches, initially of five minutes. Each of the first two interventions accepted will stop the clock and give the hon. Member who gives way another minute; but clearly there will be reductions in the time limit if that happens. The Clerk will ring a bell when a Member has one minute left.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
I am glad to follow the hon. Member for Easington (Grahame M. Morris), who always manages to sound a little more cheerful than some of his colleagues in his constructive contributions. I congratulate the hon. Member for Hartlepool (Mr Wright) on introducing this timely and necessary debate. I have a lot of regard for him, but he and his colleagues must face the fact that if they were in power now they would be making substantial public sector cuts. Their own spending plans demonstrate that. We would all be facing the same problem of a shrinking public sector, which has a particular impact in an area with high public sector employment.
The Berwick constituency is a large one, and includes the area around the Lynemouth smelter, whose closure has already been mentioned, as well as what were in my time four working pits. We have lost a lot of jobs in the mining industry. Yet the constituency is 404th for unemployment levels. That still represents more than 1,300 unemployed claimants, but the fact that the constituency has managed not to be among the worst hit owes something to the current stability of agriculture and the associated trades, and also to the fact that we have a large proportion of economically inactive—retired—people. Among the economically active, unemployment is hitting significantly.
We were hit, of course, by the Alcan closure, which had a direct impact on my constituency. Following that I worked a great deal with my right hon. Friend the Chief Secretary to the Treasury on the extension of enterprise zones. The area identified was in the constituency of the hon. Member for Blyth Valley (Mr Campbell), because there are sites around the port of Blyth that are potentially attractive. Getting the enterprise zone extended was part of the strategy. We need the capital allowances that must go with it, and that is partly a decision for the local enterprise partnership. If projects come along that need those capital allowances, and they are not in the original LEP area, I want the LEP to make sure that they go to any good new business that comes into the extended area. If that means that the amounts are used up, we will get some more out of the Treasury; I am confident that we shall be able to do so.
The north-east region is enjoying significant business success—the highest value ever in exports. However, it is heavily dependent on public sector jobs. A good friend of many of us, John Mowbray, who is currently chairman of the chamber of commerce—incidentally, he was recognised in the honours list last week, which we are delighted about; we look forward to congratulating him, probably this evening—said:
“The onus has been placed on the business community to pick up the slack from these cutbacks and while we have had a great deal of success across the private sector in the past 12 months, it is almost impossible to keep pace with the impact of what has been happening across public organisations”.
There is a major task to undertake. If I ask business men in Northumberland what the obstacles are to their creating more jobs—what three things that are somewhere in the grasp of Government, because, obviously, they will mention the international economic situation, which is beyond Government’s control—they will refer to the difficulty in getting capital from banks, the infrastructure problems in our area, and skills shortages.
Grahame M. Morris
All Members have had discussions with companies and industrialists, and the issue that comes through to me is lack of demand and consumer confidence. It is not so much the impact of the eurozone, and so on—it is lack of domestic demand. Government policy is exacerbating that.
Sir Alan Beith
That is partly true, particularly in retail and parts of the construction industry. It is not true in some of our exporting industries, which are still finding demand and achieving sales in many parts of the world. Clearly, we want to increase demand. What we cannot do is simply pump more and more money—because we do not have it—into the economy.
I want to refer to some of the ways in which we must tackle the three weaknesses I mentioned. One, of course, is bank lending. My right hon. Friend the Business Secretary has devoted a lot of effort to trying to get banks to lend to small business. However, he has met resistance and difficulty, and the Governor of the Bank of England has announced new measures, which I hope will take us further. The regional growth fund supplements the availability of capital, and I particularly welcome the efforts of the Newcastle Journal to bring together smaller businesses to create a bid to become eligible for the regional growth fund. It was successful the first time round, and I hope it will be a second time. The banks need to lend to small businesses on reasonable terms that recognise the viability of the projects that are being brought forward.
We have a pretty obvious candidate for infrastructure spending, where we can clearly show that there would be a benefit to the economy, and that is investment in the A1. It is seen as a handicap by many businesses when they are trying to attract other businesses into the area. If we think that Scotland and the UK benefit from being in the Union, surely we must link up effectively with Scotland.
Finally, for the development of skills we are very dependent on Northumberland college, which serves my area as well as those of neighbouring MPs. It has had something of a crisis of governance lately and gone through a difficult period. I am glad that the Further Education Minister has shown a willingness to help the college. We need it to expand its activities generally out into the areas that are closer to the homes of young people, who cannot be expected to travel 30 or even 50 miles each way to get further education. The Government are doing practical things—and they need to do more of them—to tackle those problems, which we all agree need to be addressed.
Phil Wilson (Sedgefield) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Brooke. I congratulate my hon. Friend the Member for Hartlepool (Mr Wright) on securing an important debate. I welcome the Liberal Democrat Members for north-east constituencies. It is a disgrace that the Conservative Members are not here to speak up for the north-east on the issue.
I want to be quick, and make some general points. In Sedgefield, unemployment has gone up by nearly 25% in the past 12 months. The number of people who have been out of work for six months or more has gone up 100% over the same period. There is something I would like the Government to do; I do not know whether the Whip is also the Whip at the Department for Transport, but areas such as County Durham and Darlington have a big issue with buses. People might wonder what that has to do with unemployment, but it is about getting to work. The cutting of subsidies from public bus services means that I have constituents who cannot get to work, and who must consider packing in their jobs. Secondly, Jobcentre Plus says it has funds set aside to buy bicycles for people, so that they can get to work. A bit of joined-up thinking is required between Departments.
The question of demand in the economy, to grow the private sector, has been touched on in the debate. The average wage in County Durham is £418, whereas the national average is £503. Cuts in benefits—and we know that welfare benefits are going to be reformed—will affect 120,000 households in County Durham. That is half the households in the county. About £150 million will be taken out of the local economy. That is something to bear in mind if we want the private sector to grow.
I want to refer to the same speech that the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) quoted, by John Mowbray. I congratulate John, as well, on being made an OBE in the honours list. In the same speech he went on to say that the public sector has been hit incredibly hard by the Government’s austerity purge. We must say that is true.
The way to get the private sector to grow is through the private and public sectors working together. I want to draw hon. Members’ attention to two initiatives in my constituency. One is the Hitachi factory, which will create 500 jobs, with thousands in the supply chain, the vast majority of which will be in the private sector, obviously. However, that would not have come about if it were not for public sector procurement.
The other initiative involves Durham Tees Valley airport. As Tees valley Members of Parliament will know, things have been difficult for the airport in recent years. The number of passengers using it has gone down from just under 1 million to about 200,000. Peel Airports has gone to the regional growth fund in the new round for a grant of some £60 million. It wants to invest over time some £60 million in developing the airport. It wants to develop the freight and logistics side of it, to the south of the airport. That requires the input of some £60 million of taxpayers’ money. That is the public and private sectors working together.
I want to quote from the assessment that Durham Tees Valley airport has pulled together of the impact that the development could have. The impact assessment states:
“Once fully developed and occupied, alongside the current operation of the airport, the whole DTVA site has the potential to support around 3,650 gross FTE jobs, supporting approximately £220m of gross direct GVA for Tees Valley each year…2,420 of these are net FTE jobs and these could be taken by Tees Valley residents.”
That is very good news for the Tees valley. All MPs in the north-east should get together to ensure that the project works.
The final thing that I want to mention is regional pay. As I said, the average wage in County Durham is £418. I ask the Whip this: how low does he think that pay should be in County Durham? I keep asking that question, but I never get an answer. Regional pay will suppress the economy in areas such as the north-east of England. The hon. Member for Redcar (Ian Swales) and I agree on regional pay; we have both signed early-day motion 55.
Annette Brooke (in the Chair)
Order. I call Mr Kevan Jones, with a time limit of four minutes.
Mr Kevan Jones (North Durham) (Lab)
I congratulate my hon. Friend the Member for Hartlepool (Mr Wright) on securing the debate. I would like to pick up on a point that the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) made about the lending by banks. The Government’s approach is somehow to reduce the size of the public sector and to grow regional businesses, but as has already been said eloquently by many hon. Members, the two are interlinked.
I will give a specific example from my constituency. A company called Ambic is based in Chester-le-Street, on the Stella Gill industrial estate. It is run by a very dynamic and clever individual, David Potter, who is an engineer by trade. The company produces very high-quality furniture for schools. Clearly, with the downturn in the budgets of schools, it has seen demand drop. It had been a profitable business until the downturn in 2009. In the following year, it made a loss. By changing the way in which the business is marketed and run, it has slowly increased its profitability again.
Three years ago, just before the recession, the company moved into a brand-new factory. It took out a loan from the Bank of Scotland/NatWest for the expansion of the business. It has been successful, in that it has employed some 40 people locally, including apprentices; it is run by an individual who is strongly committed to the local community. But, lo and behold, two weeks ago it received a letter from the bank saying that, because it had revalued the property, which it says now is worth not £1.2 million but £750,000, the company’s borrowing rates will now be between 6% and 15%. That means that any profit that it makes will be wiped out overnight.
I have written to the Secretary of State to raise the matter. It is a good example: if someone wants to kill off a business, that is the way to do it. The company owner is quite angry about the situation. Like me and others, he thinks that this is a bank that has received billions of pounds of public money. If he has to, he will just shut up shop, but that will be 40 jobs gone from the local community, which will cost the taxpayer a hell of a lot more and ruin a very successful business. It has never been late in paying for any of its borrowings and, as I said, is committed to the local community.
I ask the Whip to respond to what I have said. I have not had a response yet from the Secretary of State. I have raised the problem with him personally in the Tea Room and asked him to look at it. If it is not sorted out soon, the business will have to close, which will cost the taxpayer more and is not in line with the Chancellor of the Exchequer’s argument that we are trying to grow and support local businesses. That is an example of a bank that will cripple and close a very successful local business. That would be a shame not just for the individuals involved, but for Mr Potter, who is committed not just to Chester-le-Street but to the region and to developing a small business and employing local people.
Helen Goodman (Bishop Auckland) (Lab)
It is a pleasure to see you in the Chair, Mrs Brooke.
I congratulate my hon. Friend the Member for Hartlepool (Mr Wright) on securing this extremely important debate. I am beginning to think that this Government have adopted a Marxist attitude to the unemployed. They are the reserve army to be marched on to the pitch at a moment that is convenient and off at a moment that is inconvenient. They seem to subscribe to the lump-of-labour theory: this is the lumpen proletariat, there to be used and abused. What that demonstrates is a moral failure and an economic failure.
It is a moral failure because no account is taken of the individuals who are unemployed—the level of unhappiness, the level of stress, the level of anxiety. A young man came to my surgery recently. He used to hold down perfectly good jobs. He has now been unemployed for 12 months. He is being driven crazy—literally crazy. He is suffering from mental illness. He shouts at everybody—he shouts at my staff; he shouts at the jobcentre staff—and who can blame him? He is 30, living at home on £56 a week and the vacancy to worker ratio is 1:9. He does not have a realistic chance of getting a job.
It is an economic failure because we are wasting people and wasting people’s skills. One of the worst things is the constant denigration of unemployed people—not just cutting benefits, but treating unemployed people as though they are workshy. Nothing could be further from the truth. In my constituency, 2,920 people are on jobseeker’s allowance, but the statistics show that there are 6,400 people who want a job. That tells us that there is a huge need and a mismatch.
We have to ask ourselves: who are the people who are unemployed? They are not a great lump. Not only are they individuals, but they fall into particular categories. One thousand of them are young people; they do not have experience, so it is very difficult for them to get jobs that require experience. Five hundred of them are over 50; where are they supposed to gain new skills when we see the increases in tuition fees and the cuts to adult education? There has also been a massive increase in the number of women who are unemployed—up by 25% in the past year.
That has come about because the Government are putting cuts before everything else. When they do that, it leads not just to spin-off problems for the private sector, but to a complete skills mismatch. Someone who has been working in the public sector in a service job cannot simply be shoved into a manufacturing job and the assumption made that they can do it. Of course they are not qualified to do it.
We need a strategic approach from the Government in both skills and finance, as my hon. Friend the Member for North Durham (Mr Jones) said. When we had a regional development agency, we had not only a strategy, but a source of finance. I think we need some new sources of finance. When we have a Labour Government again, it would be fantastic if we had an RDA that did not just provide grant financing, which is what we had under the previous Government; there should also be some loan financing. Then, small firms like the one described by my hon. Friend could be confident of getting reasonable treatment.
Stephen Timms (East Ham) (Lab)
I, too, congratulate my hon. Friend the Member for Hartlepool (Mr Wright) on securing this important debate. I also congratulate the hon. Member for Preseli Pembrokeshire (Stephen Crabb) on being hauled in to answer it. Having heard the speeches that my hon. Friends and, indeed, Lib Dem Members have made, I can well understand why the Minister responsible for employment has chosen to leave the country rather than answer the debate.
There has been some effort today to derive optimism from the unemployment figures, but the fact is that according to the figures published today, the claimant count nationally and the number of people who are long-term unemployed have gone up. My hon. Friend the Member for Sedgefield (Phil Wilson) rightly made those particularly important points. The number of people working part-time who want to work full-time is at a record level—it has never been as high as the number announced today. Youth unemployment remains above 1 million, and, as we were reminded, unemployment in the north-east has risen.
There are not many grounds for optimism in today’s figures, except that they are slightly less bad than the figures we have seen in the past few months. I am afraid the picture will not change until the Government’s economic policies change and they think again about the strategy that they have been pursuing, which has choked off demand, crushed confidence and sent us into a double-dip recession. My hon. Friend the Member for Hartlepool set out Labour’s alternative plan, and there is growing recognition—not in the Government yet, but certainly elsewhere—that we need to change course if we are to change the bleak picture of unemployment that we have heard about this afternoon.
In 1999, the unemployment rate in the north-east had risen to more than 10%, but successful initiatives reduced it to 6% in January 2008, before the global financial crisis hit. After the election, we were told by the Government that their policies would renew private sector confidence and that aggressively tackling the deficit would cause a surge in confidence, investments and new jobs. Instead, since the election confidence has collapsed and the number of unemployed in the north-east has risen by almost a quarter to 145,000. The unemployment rate is now 11.3%, including an increase of 0.5% in the past three months alone.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I apologise for not being here for the beginning of the debate, but I was in the meeting with the Dalai Lama, which was an excellent experience.
According to National Audit Office figures, the number of young people in my constituency who have been unemployed for over a year has gone up by 950% since last year. The hon. Member for Preseli Pembrokeshire (Stephen Crabb) looks confused, but the number has gone up from 20 to 210 in a year. Does my right hon. Friend not agree that that shows how damaging the double-dip recession created in Downing street is and why we need action from Ministers to create jobs and growth in the north-east?
Stephen Timms
Yes, I agree completely. It is long-term youth unemployment that will have the most damaging long-term effects on the economy. We know from the last time we had a lost generation how damaging it is for the life chances of the individuals affected, and now we see it happening again. We need a change of policy and a change of course to avoid the frightening figures on the rate of growth of long-term youth unemployment to which my hon. Friend draws attention.
I imagine that the hon. Member for Preseli Pembrokeshire will tell us about the Work programme and present it to us as the panacea for the problems. It struck me that the Work programme did not get a mention in either of the speeches from coalition Back Benchers, the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) and the hon. Member for Redcar (Ian Swales). I suspect that that reflects the reality of the Work programme’s impact.
The hon. Member for Preseli Pembrokeshire will not be able to tell us a great deal about the Work programme, because it is a secret. Members who have been to see the Work programme prime providers in the north-east, Avanta and Ingeus, will have found out from them that they are not allowed to provide any data at all on how they are getting on—no data or numbers about their performance. The Minister responsible for employment, who we understand has left the country, imposed a contractual ban on the publication of any data on the Work programme. He said in January, under pressure in the Chamber, that he would lift the ban and would in future allow prime providers to publish some data about their own performance, as of course they all used to do—under the flexible new deal, they published the numbers on how they were doing, because they wanted to compare how they and others were getting on.
Since then, however, the Minister of State has got cold feet, so the ban remains in place. One is bound to ask: what exactly are Ministers trying to hide? Why do they not want anybody to know what is going on in the Work programme? One consequence is that Jobcentre Plus managers do not know what is going on. If one speaks to one’s Jobcentre Plus district manager, one finds that they do not have a clue what is happening in the Work programme. Nobody has told them how many people have got jobs through it. We understand that Ministers want to avoid potentially embarrassing questions being put to them, but the consequence of the ban has been a destruction of the trust on which such initiatives depend, and a reduction in performance.
We have managed to glean very limited data from the providers’ trade association, the Employment Related Services Association, and it is no surprise that the numbers suggest that the Work programme is performing no better than the flexible new deal that went before it. That is after the Government spent more than £60 million buying out all the flexible new deal contracts to introduce it. They had not tried their programme out anywhere; they just launched into it in June last year, with no piloting or testing at all. We have seen a very disappointing performance, which we will eventually get some figures on, but we should have heard about it long before now.
Youth unemployment has been an important feature of the debate. The Government’s answer to the problem has been the youth contract, but that is smaller than the future jobs fund, to which my hon. Friend the Member for Hartlepool referred, and is dependent on take-up. Given the effect on regions that suffer particularly high unemployment, I again ask the Government to reconsider their decision to put all the funding into a national pot, available on a first-come, first-served basis to those Work programme providers that ask for it. If a Work programme prime provider in an area with relatively low unemployment sees a way of getting a subsidy to push a young person who might have found a job in that area anyway into a subsidised role, it can do so, but that will be done at the expense of young people in areas such as the north-east, for whom the case for support is much stronger. Work programme providers agree. It would make much more sense to ring-fence the available youth contract funding, to ensure that it is used where it is needed, rather than squandered elsewhere.
As we have heard, we need a more active industrial strategy. That is key to reducing the problem of unemployment in the north-east. I very much agree with the tributes paid to One North East, which co-ordinated such an industrial strategy before the election. We see the benefits of it now in the announcements, which hon. Members have mentioned, on the car industry, the progress with electric vehicles and so on. That is all being lost. The RDA was scrapped in favour of the fragmented, piecemeal local enterprise partnership.
It was pleasing to hear the hon. Member for Redcar say something positive about the regional growth fund—a rare event indeed. The NAO pointed out that so far under the regional growth fund, the cost per job is more than it was with the RDAs. The whole point of the changes was supposed to be to save money; it is not working. The regional growth fund is proving to be very expensive. It is ironic that the Government accused the RDAs of being too centralised and bureaucratic, but have replaced them with one fragmented and divided scheme that does not have enough clout and another run from Whitehall, and not run very well at that.
We heard about the proposed move to regional pay bargaining, and will discuss it in on the Floor of the House this afternoon. It will certainly threaten the economy of the north-east. There have been hints of a U-turn here, and the people of the north-east would very much welcome that, if it were to be the outcome.
We need a change of course on economic policy. My hon. Friend the Member for Hartlepool set out a compelling five-point plan. We need the problems in the Work programme sorted out—frankly, we need some daylight in the Work programme. It has been secretive so far and has had a blanket thrown over it. My fear is that we will not get those changes from the Government; we need a different Government to make the changes required.
Stephen Crabb (Preseli Pembrokeshire) (Con)
I pay tribute to the hon. Member for Hartlepool (Mr Wright) for securing this debate; we do not get enough opportunities in the House to debate regional issues. As a Member of Parliament for Wales, I do get such opportunities when the Welsh Grand Committee meets, which it is doing this afternoon. Unfortunately, other regions of England do not have the same opportunities.
I was disappointed that the hon. Gentleman started off on a slightly discordant note, by mentioning the absence of the Minister.
Stephen Crabb
No, it is not a fair point. What the hon. Gentleman did not say was that his Front-Bench team, in a rather cack-handed way, managed to timetable a debate in the main Chamber, requiring a Department of Work and Pensions Minister at exactly the same time as his own important debate this afternoon. If he does not think that the presence of the Employment Minister at the European employment summit this afternoon is critical given everything that is going on in Europe, I do not know what is—perhaps spending time with the Dalai Lama.
Stephen Crabb
As the ministerial Whip for the Department, it is entirely appropriate that I respond to this debate, given that the other Ministers are tied up in other debates in the House.
The hon. Gentleman spoke well about the impact of unemployment on families and communities; that was one of the best parts of his speech. Like me, he comes from a part of the country where, historically, unemployment has been a blight on the community. He and I both have the privilege of representing constituencies in which we have grown up, and we understand the issues well. He powerfully explained the negative effect that unemployment has on communities.
Let me assure the hon. Gentleman and all colleagues in the Chamber this afternoon that the ministerial team at the DWP shares a passion and commitment for tackling unemployment. There is absolutely no complacency whatever within the departmental team about this issue. We recognise that unemployment, especially youth unemployment, is one of the biggest challenges that faces the Government.
Ian Mearns (Gateshead) (Lab)
I apologise for turning up late to this debate. I have been meeting a construction company from my constituency that is considering laying off 200 to 300 members of its work force—something that would be catastrophic. The hon. Gentleman correctly mentions the fact that there is little regional consideration of this whole matter. Therefore, there is no differentiation in approach across England in dealing with it, so while unemployment across England goes down, it goes up in the north-east.
Stephen Crabb
I dispute that. The Government are trying to move away from the one-size-fits-all policies of the previous Administration. We are looking at locally and regionally tailored solutions, where appropriate.
Several hon. Members mentioned today’s labour market figures. I am not as gloomy as the shadow Minister about them. There are reasons for a measure of optimism. Nationally, employment is up by more than 400,000 since 2010. Private sector employment has gone up by 843,000, since 2010, and it has gone up again in the past month. In the past 12 months, in the north-east region, employment overall has gone up by 10,000 and private sector employment has increased by 17,000, which more than offsets the drop in public sector employment. That counters the point that the Opposition made about the drop in public sector employment being a driver of overall unemployment in the north-east region.
Those are encouraging signs, but we recognise that unemployment remains too high. It is true that unemployment in the north-east remains higher than in other parts of the country. Several Members have referred to the fact that it has the highest unemployment figures of all the UK regions.
Long-term unemployment affects only a minority of people, but it is a particular concern because it brings with it the risk of detachment from the labour market and people losing the hope of finding work again or finding that the skills that they had are diminished or outdated.
In the north-east, more than 24,000 people have been claiming unemployment benefits for more than 12 months. That figure is much lower than it was 25 years ago—the hon. Member for Hartlepool referred to the 1980s—but it is still too high, and we are not complacent.
One of the groups that has been hardest hit during the last two years of recession is young people. We have seen encouraging signs recently that youth unemployment might be starting to come down. Excluding unemployed students, it fell by 23,000, to just over 700,000 in the most recent quarter. That still leaves almost 50,000 16 to 24-year-olds unemployed in the north-east, so there is clearly much more to be done.
In April, we announced an additional £1 billion package of support for young people through the youth contract. Very few Opposition Members mentioned the action that is taking place and the fact that, in the past year, some 7,000 young people have benefited from the work experience scheme in the north-east. Nor did they mention the fact that there are 30,000 additional apprenticeships in the north-east, more than 1,000 of which are in the constituency of Hartlepool. It is not surprising that they do not want to talk about it. As Labour Members elsewhere have mentioned, one of the big failings of the previous Labour Administration was that they did not recognise fully the importance of apprenticeships and the link between high-value apprenticeships and upskilling in the economy.
Helen Goodman
Surely, the hon. Gentleman is aware that the number of apprenticeships increased tenfold under the Labour Government.
Stephen Crabb
In the last 12 months, 67% more apprenticeships were created than in the last year of the previous Labour Government.
Ian Swales
I support the Government in their hard work on apprenticeships and report that the number has doubled in my constituency and in many other constituencies in the north-east.
Phil Wilson
The hon. Gentleman is right to say that the number of apprenticeships has gone up. The biggest increase is for those over the age of 25. However, the massive increases are not in engineering, where the number has gone up by 29%, but in education and training, which has gone up by 373%, in arts, media and publishing, which has gone up by 134%, and in health, public services and care, which has gone up by 104%. Where we need the growth in high-value jobs, the apprenticeships are not coming through as quickly as they are in other sectors.
Stephen Crabb
The hon. Gentleman seemed to downplay a 29% increase in engineering apprenticeships. More than a third more apprenticeships in engineering have been created, which is quite a success story, and I am grateful to him for highlighting it this afternoon.
We have heard useful contributions from my hon. Friend the Member for Redcar (Ian Swales) who recognised the importance of a sensible regional strategy. He talked about the benefits of the local enterprise partnerships in the north-east and in the Tees valley. He also drew attention to the fact that the north-east has recently achieved record exports. We believe in rebalancing the economy, and we want to see a more balanced export-led recovery. With its record exports, the north-east is well placed to take advantage of that.
Several hon. Members have referred to the excellent John Mowbray, who is the president of the north-east chamber of commerce. Last week, he talked about the importance of the north-east as a potential driver for an export-led recovery. I am really disappointed that Labour Members have not recognised that and are not sharing the ambitious approach of the north-east chambers of commerce. John Mowbray said that what the north-east really needs is a united front. Labour Members have turned up in force this afternoon not to show an ambitious united front or a positive approach—[Interruption.]
Annette Brooke (in the Chair)
Order. May I suggest that Members make a formal intervention, rather than engaging in this rather poor behaviour?
Stephen Crabb
Let me reiterate that the coalition Government have two parties working together to fix the legacy of a broken economy left to us by the Labour party. We are doing it in a way that fully recognises the importance of protecting regions such as the north-east of England, of seeing them reach their potential and of seeing unemployment brought down as quickly as possible.