Lord Wharton of Yarm
Main Page: Lord Wharton of Yarm (Conservative - Life peer)North-East Devolution
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The Parliamentary Under-Secretary of State for Communities and Local Government (James Wharton)
It is a pleasure to serve under your chairmanship, Mr Percy. We have had an interesting and wide-ranging debate, and I congratulate the right hon. Member for Newcastle upon Tyne East (Mr Brown) on securing it. I know he has had an interest in regional policy and in regional economic policy in particular for a long time. One way or another, the comments today have covered the past 20 years or so of north-east regional economic policy and the things that Governments of different colours have done to try to support growth in a region that is close to my heart and those of the right hon. Gentleman and the hon. Member for North Durham (Mr Jones).
I will touch on a number of the broader topics that have been raised before talking specifically about the points that have been made on the devolution deal that the north-east has struck. First, I challenge the assertion that I have heard so many times in this place about the deal that the north-east gets and the suggestion that we somehow do not get our fair share and that the north-east is somehow treated unfairly. Public sector spending per head in the north-east is higher than in any other English region outside London, and the difference between London and the north-east is marginal at best.
Over the past five years—that period of austerity Government—Opposition Members have stood so often in this place to bemoan the decisions that the Conservatives and the Liberal Democrats had to take in government to put right the economic mess that we inherited from 13 years of profligate Labour rule. Taking two authorities at random, in that most challenging of periods, Durham doubled its reserves to something in the region of £214 million and Newcastle doubled its reserves to something in the region of £100 million.
Mr Kevan Jones
Because of their unitary status, those councils have been able to save money. The fact of the matter is that the budget has been cut by 40%. The reason for the reserves is that the next round of rationalisation will involve redundancies, which have to be paid for. The idea that there is a magic pot of money lying in County Hall in Durham to pay for future services is complete nonsense.
James Wharton
I have stood in this place many times and had this discussion many times over. I welcome the steps that Durham County Council has taken to drive efficiency, and I welcome the recognition that local authorities have a responsibility to find value for money and that every penny that government spends, whether local or national, is a penny that we take out of the economy and away from taxpayers. I recognise all those things, but none the less it deserves to be stated on the record that across the period of the last Parliament—a period of austerity—Durham managed to double its reserves by saving £20 million a year. Whatever purposes it might choose to use those reserves for, it is important to put that point on the record, because it is rather at odds with the impression that is sometimes given by these debates and the statements that Opposition Members make.
James Wharton
The fact is that over the past five years, Durham County Council has added more than £100 million to its reserves, but the rhetoric here is of a council that one might think did not have a penny to spare. It is welcome that local authorities look to find efficiencies and to spend money carefully. I do not deny that difficult spending decisions have to be taken, but it is right to challenge the assertion by some Members that the sky is about to fall in. That assertion has been made in all but those exact words so many times in this place over the past five years. We should put on record the reality and recognise that the spending power per head of Durham and Newcastle remains as it has for the past five years: significantly higher than the average spending power per head of local authorities across England.
Having put those matters on record, I want to focus on some of the devolution issues at the heart of the debate. We started with discussion of the old regional development agency. I agree with the right hon. Member for Newcastle upon Tyne East on some things, so he is clever to find an area on which he knows we do not agree. I was never a great supporter of the old RDA. I felt that it did not give Teesside the recognition it deserved. I accept that we disagree about the work of the old RDA, but I continue to be grateful for and pleased by the changes we saw when the local enterprise partnerships were introduced. Having the Tees Valley LEP allows the area to determine its future and to look to co-ordinate with more close local control on where we want our economy to go and what we want it to do.
I accept that there is disagreement about what the structures should look like, but it is important to put on record my support for the decisions that were taken and my ongoing support, particularly for my LEP. My desire is to see all LEPs, including those in the north-east or the rest of the north-east—however one might want to term it—being successful and contributing to and driving economic growth in the north of England and elsewhere.
Mr Nicholas Brown
Just on the narrow point of the performance of the north-east local enterprise partnership, is the Minister wholly satisfied with the progress it has made so far and how it has been conducting itself?
James Wharton
The right hon. Gentleman raises an important point. I recognise some of the good work that the north-east LEP has done, and I put on record the Government’s gratitude to those from the private sector, local authorities and the public sector who have, through their joint endeavours and contributions, been able to deliver some of the successes that have been enjoyed in the north-east. However, some genuine concerns are being expressed, not least in the regional media, about how that LEP is working. I want to see those matters resolved and to ensure that the private sector voice is retained, is strong and is recognised for the value it can bring. I also want to see the public sector and local authority representation working with that voice to deliver on the shared agenda to grow the economy of the LEP’s area.
I clearly recognise some of the great things the LEP has achieved and the good work done by many individuals contributing to it—I thank them for that—but I want to see the problems talked about in the media resolved. We know those problems exist, and I want to see real and lasting recognition of the need for that private sector voice and the cross-sector co-operation to drive forward the economy in the interests of the region.
Mr Jones
Does the Minister share my concern that the chair of the north-east LEP has been appointed as the director of another member of the LEP’s company? Even if there is nothing wrong with that in terms of transparency, concerns would be expressed if a local councillor was doing that.
James Wharton
I have lost count of the number of debates in which I have had the opportunity to discuss a range of issues to do with the north-east with the hon. Gentleman and he has named and targeted an individual Conservative from the region. We should focus on the bigger issue: how we get the LEP to do the best job it can for the communities that Opposition Members represent and for the area. We all want to see the area realise its significant potential. Some of the more party political or partisan comments do not contribute towards making progress in that direction and securing the sort of economic growth we want to see.
Economic growth, of course, is important. It comes in many ways to the heart of the devolution argument and discussion. We want devolution to drive economic growth. We recognise that the potential across the north of England is significant. If we can unlock that potential, it can make an even greater contribution to the UK’s economy. If between now and 2030 the northern power- house grows its economy at the average rate that the UK economy is predicted to grow, that will add in the region of £40 billion in real terms to our GDP. That will be good for the people who live in the north and good for the UK as a whole. We want to see that delivered. That is something that all parties can agree on. We perhaps differ on some of the detail of how it should be done, but there is agreement to some extent that devolution has a role to play in empowering local decision makers and unlocking economic opportunities.
The economic opportunities in the north-east are significant. We have had mention of Nissan, that great Conservative legacy to the region. We have seen announcement after announcement from Nissan in recent years about its plans for expansion and to extend the new lines that it wants to produce. That has a significant impact not only in Sunderland with the direct jobs that it delivers, but through the supply chain in the region and the whole UK. Our region should be proud that Nissan in Sunderland, in our region, makes more cars than Italy. That is a real achievement that speaks to the quality of the workforce, the dedication of the people of the north-east and the things that can be done if companies choose to invest there. It is a great showcase for what the north-east can do.
Along similar lines, the hon. Member for North Durham mentioned Hitachi at Aycliffe, another good news story and a significant investment in the region of just short of 1,000 direct jobs, with 8,000 or so jobs through the supply chain. We want to secure as many of those jobs as possible for our local economy and secure the value that the supply chain can deliver for the local communities surrounding that investment.
In the spending review yesterday, it was announced that there would be new enterprise zones across the north-east and Tees Valley areas. There will be significant extensions of zones that exist and new areas will be given enterprise zone status and support. There will be new opportunities to drive our economy and unlock the potential about which I have already spoken.
Mr Nicholas Brown
I wholly agree with what the Minister says about Nissan and Hitachi; they are very welcome corporate citizens in the region. He is right to give credit for the original Nissan investment to the Government led by Mrs Thatcher, but does he recognise that those great achievements of the private sector working with the Government to invest in the region and create stable and enduring jobs required Mrs Thatcher’s Government to take regional policy seriously and take charge of the negotiations and give a political lead, thus stimulating the eventual outcome? The failure of the Government’s current structures to get us anywhere near their accepting such responsibilities is my core complaint. So the examples that he cites underpin my argument, not his.
James Wharton
I will certainly join the right hon. Gentleman in recognising and praising the excellent work done by Mrs Thatcher’s Government in delivering Nissan. The core point that he makes about public and private partnership, with the Government looking at the private sector’s needs and working with it to ensure we deliver and secure the investment we want, is important. I suspect that we perhaps have differences in how that should be delivered, which is what I want to deal with when I talk specifically about the devolution deal in the north-east.
Mr Kevan Jones
On Nissan, will the Minister also pay tribute to the Labour-run council in Sunderland, which plays a key part in working with other agencies to deliver investment? On the most recent development in relation to Hitachi, Durham County Council, a Labour authority, has played a key role in attracting Hitachi to Newton Aycliffe.
James Wharton
The hon. Gentleman’s comments underline the point that I have just made in response to the intervention from the right hon. Member for Newcastle upon Tyne East. Such things are not delivered by a single individual or even a single policy or a single actor, whether national Government, local government or the private sector. It happens occasionally, but they are often delivered by collaboration and the recognition that we can put aside things on which we disagree, so that we can focus on something of broader benefit that we all want to deliver.
Devolution takes us further along the path. It gives the north-east the opportunity to hold closer to it the powers and levers that will enable it to unlock the economic potential. Devolution does not work by taking powers away from local authorities. I have been keen to stress that message during the progress of the Cities and Local Government Devolution Bill, but I am keen also to stress it with specific regard to the deal that local authorities in the north-east have made with the Government. It is not about powers going up and being taken away from local government, which has happened before, particularly when local authority mayors took powers that were held by local councillors, cabinet members and executive officers at a local level, and they moved upwards to become an elected individual.
Instead, the devolution we are proposing is about taking Government powers and moving them down. It is about empowering local decision makers to make decisions over areas of policy that they know best, because they are making those decisions closer to the communities and economies affected by them.
Mr Steve Reed
The hon. Gentleman says that the issue cannot be about taking decision-making powers away from localities and centralising them, but does he recognise that that is precisely what is happening in housing policy? Councils that want to provide more council housing are building it, only to have it sold off by the Government, who force them to do it whether they want to or not. That is the centralisation of decision making that should remain at the local level. It completely contradicts what he has just said.
James Wharton
The hon. Gentleman tempts me to shift the debate into the Housing and Planning Bill, which I do not want to do. I know his colleagues are engaged in detailed discussions about that in Committee at the moment. The Government have ambitious—but right—targets and commitments to deliver on housing. We need to ensure that we put in place the structures that enable us to do that. We need to ensure that we build the right houses in the right places for the people who need them. We need to give as many people as possible in our society the chance to own their own home, whether it is a local authority home or a privately built property.
Devolution is about transferring powers held by central Government down to local decision makers. However, within that, there is the opportunity for powers to be transferred up from local authorities, but only by consent. Local authorities might want to pool such powers and functions because they recognise the positives that can be driven by that; the opportunities for closer collaborative working; and the economic benefits that can then flow from such decision making.
No deals are being imposed. No area is compelled to have a devolution settlement. Areas have been invited to bid. We are having discussions with more than 30 of them about what the package might look like. That bespoke approach looks at the reality and recognises that different areas will need different things if they are to achieve what the policy can deliver. It recognises that what Greater Manchester needs will in some areas be different from what Tees Valley needs, which might be different from what the north-east needs, or different from what rural counties such as Cornwall might want and need from a devolution settlement. That is the right approach to ensuring that we get settlements that not only deliver on the commitments and the potential that we know they can unlock, but that stand the test of time and can actually deliver on a local area’s needs.
Mr Jones
I have asked this question before, in Committee, so I do not expect to get an answer. I accept the point that the Minister is making about areas being different and needing different solutions. However, the north-east was told quite clearly that it could have devolution, but a Mayor was not part of the model. There was no devolution settlement on the table.
James Wharton
The hon. Gentleman has asked that question many times, and I have answered it many times in the past. No area is compelled to accept devolution and no area will be compelled to have a metro Mayor, but where areas want a package of powers akin to that in Greater Manchester, there is an expectation from Government that a Mayor would come as part of the deal. That is what has happened in the north-east. I have a copy of the deal here. If it was more easily reachable, I would wave it energetically at hon. Members. It has been signed by local authority representatives, because a deal is a two-way thing. It recognises that we have reached a consensus on the powers and the structures that are agreed to deliver our shared objectives.
James Wharton
The right hon. Gentleman has generously given me the chance to reach into my little red book and find the document in question, which I will now wave, signed as it is by so many of the great and good of local government in the north-east.
It is for local authorities to agree these deals through their leadership and to pass the resolutions to enact them through their democratic structures. If one local authority decides to remove itself from the deal, we will not allow that to prevent other local authorities from going ahead and delivering it, but, consistent with what I have already said, nor will we compel any area to be part of a devolution deal. If Durham decides not to pass a resolution, or through a council mechanism decides not to be part of a north-east deal, if the other local authorities want to go ahead, we will work with them to deliver it without Durham, should that be their choice. I hope, though, that that is not a choice that they will make—the hon. Member for North Durham and I disagree on that.
With a deal will come a number of areas of control and a number of possible levers with which local authorities will be able to help to drive the economic growth that we want to see.
James Wharton
The hon. Gentleman tries, as always, to nudge the debate back to a slightly more party political platform. Mischievous as he occasionally is, I absolutely recognise that it is for the local members in local authority chambers to vote as they wish and speak on behalf of the residents they represent. I put on record the excellent work done by County Councillor Richard Bell in the Conservative group on Durham County Council. He is a great advocate not only for the area he represents but for our region as a whole.
As I have said on the record quite clearly, I hope that Durham will be part of the north-east devolution deal. At the end of whatever processes Durham County Council decides to go through in its own area, I hope that it will pass a resolution to be part of the deal, because of what I think it could do for the north-east. If Durham chooses not to, and the other areas that have signed up to the deal none the less want to go ahead, we will work with them to deliver that, but I hope that we will not find ourselves in that position.
What comes with the deal? Why do I think that these deals are a good thing? I was interested in the somewhat straw man-esque discussion of artificial boundaries, or the A1 having more than one Mayor along its length—the solution to which, I suppose, would be a very long and winding constituency travelling either way up the full length of the road. When we are driving forward devolution deals, we have to look at all the existing boundaries and try to see through them to what makes sense economically. We are not going to say to areas, “You must follow one geography or the other”; that is exactly the opposite of what we are doing. We are saying to local areas, “Come and tell us the geography on which you want to do a deal. Identify the economic geography that makes sense to you. You know your local economy better than Whitehall and Westminster possibly can. You live and work in it; you understand it. Come to us and show us the area and the package of powers that will best enable you to drive growth in your area.” That is the approach we are taking, and its value has already been demonstrated clearly by the disagreement in this debate about what should happen in the north-east of England and in Tees valley. It is the approach that I think will ultimately stand the test of time and be successful.
With the deals, of course, comes more control over a number of areas. In the north-east, that includes strategic planning controls for the Mayor and closer working with UK Trade & Investment to drive investment. We saw in the spending review the announcement of additional support for UKTI, as well as for northern powerhouse investment work to bring investment to the north of England. That is welcome, not only because it gives us additional power to sell the UK abroad but because additional investment will go not just to London and the south, although we want them to continue to be successful, but further, coming up to the north, the north-east, the north-west, Yorkshire and Humber. We want to see that succeed and we want closer co-operation between local decision makers and the bodies that deliver that support.
Joint responsibility is being agreed for employment and skills to redesign post-16 education across the north-east through its devolution deal. Again, that will recognise that the particular needs of the economy in that area are different from the needs of the economy in the Tees valley or Greater Manchester, or, indeed, in London or the south-east or wherever. We want to ensure that local decision makers have more of a say about and more control over how to target the available funding and ensure that the future needs of the economy are met by the skills of the workforce.
Mr Brown
Will the Minister say precisely how the elected Mayor will drive up inward investment in the region? What will he add to the work that is already done? Will he confirm that, for skills, what is on offer is a board member in a structure that effectively exists now? Is he saying that the whole of the will of the north-east of England—all the local knowledge and contribution that can be made—will be expressed through the cabinet member of the combined authority who is appointed to the skills group? I say this meaning no disrespect, but as far as I can see that group is composed of departmental officials who are not the elected representatives, or any sort of representatives, of the north-east of England.
James Wharton
In his questions, the right hon. Gentleman in some ways gets to the heart of some of what devolution is going to be about. On foreign investment and UKTI, the Government are saying that we want to see additional focus and support from that national body, which has been successful at selling our country abroad with its “Britain is GREAT” campaign, for the north of England to drive the opportunities that exist. With that additional support will come the opportunity to bring in more investment, but it is not for me to tell any future Mayor of the north-east—or of the Tees valley, Greater Manchester or wherever—how to go about doing their job and how to maximise the opportunities that exist. There are different opportunities in different places, which will require different approaches. That is the very essence of why devolution can be a powerful driver of growth. It is about empowering the people who know best what decisions are right.
I want to make a couple of points about the skills budget, because the right hon. Gentleman entered into an interesting area of debate. I know the importance of skills to our regional economies. I recognise the concern that he wants to project, but I do not agree with it. Having more localised control over skills is a significant positive step. The over-19s skills budget is going to be devolved to the north-east through the devolution deal that has been signed, and the north-east combined authority and Mayor will have more say over—and joint work to be delivered over—the 16-plus skills budget, which is to be welcomed.
Even more important than that—which is positive—is what devolution will allow us to do in future. It has started in this debate: we can already see that there are matters on which Members would like things to be a bit different or to go a bit further. There is a debate to be had about that in any devolution settlement. The value of the Cities and Local Government Devolution Bill, which has gone through its Committee stage and will no doubt come back soon to the House on Report and Third Reading, is that it gives us the powers we need to go further when it is appropriate to do so.
Greater Manchester is on its third round of asks for devolution of powers. When it has been given a package and agreement with the Government, it has either identified things that the Government were unable to agree to initially and asked us to work with it to deliver them, or, through the process of thinking about the powers it has, it has identified new opportunities and come back to Government saying, “We want to go further” in this area or that. It is saying, “We want to take the next step,” or, “We want to bring in a policy area that we had not even thought of before.” That remains on the table because of the nature of the devolution we are talking about: it is evolutionary and bespoke; it is custom-made for each area it affects; and it is being delivered along sensible and locally determined economic lines.
James Wharton
As the hon. Gentleman will have seen announced only yesterday, both the Department for Business, Innovation and Skills 19-plus skills budget and the Department for Education 16-to-19 skills budget are protected in cash terms. In a time when we are still having to take difficult spending decisions because of the legacy left to us by the last Labour Government, that was a significant and welcome statement about the money that will be available to deliver on that agenda. Significant sums will remain available in those areas, which are being protected in cash terms because their value is very much recognised by the Government.
The north-east devolution deal will create a north-east land board to bring more public land into use and to look at the assets that exist across the region and how they can best be used to drive economic growth and improve opportunities across the region, tying in with some of the strategic planning work that will be going on through the new Mayor. By co-ordinating across local authorities, there will be the power to deliver that.
The devolution deal for the north-east is an exciting opportunity. Consider the investment fund of £30 million every year for 30 years, with, if that is spent wisely, the scope to increase—not to mention the additional funds that that can leverage in. The nearly £1 billion in that pot alone over the life of that part of the agreement is significant. I hope that a Mayor elected by the people of the north-east will focus that spending on the things that will drive forward the economy of the north-east—on the right things, determined by the local people who know what they are, to grow that economy and generate further growth and investment. That will enable more to be spent and the virtuous circle to continue.
This is an exciting time and an exciting agenda. I am pleased that the region I call home—Tees valley and the north-east, however the boundaries are drawn around it—is at the forefront of this process. I hope that those who have concerns will express them constructively and engage in this process, which can deliver real benefits to the people represented by the Members attending this debate today, with the honourable exception of the hon. Member for Croydon North, although I know that his genuine and deep-seated interest in the process of devolution extends to the north-east, as it does more broadly in the Bill that we have discussed. I hope we can use this process to enable those people to drive real change and bring real benefits to their regions.
I commend the Government’s programme of devolution. I look forward to seeing it through, and I hope that in a few years’ time hon. Members will come here to talk not about their concerns but about where they want it to go next, because it is doing so much already.