Energy Bill [Lords]

Debate between Alex Cunningham and Tom Blenkinsop

Monday 14th March 2016 Commons Chamber

[Tom Blenkinsop]

CCS is vital, because it gives a means by which steel—and other existing energy intensive industries—manufactures the very foundation product that then goes into wind turbines and other mechanisms that we need for renewables. This is absolutely and fundamentally dependent on carbon-intensive technologies, such as virgin steel capacity and oxygen burning intensive processes. If we want a renewable strategy, whether 42% or higher, we need to have steelworks that burn in the traditional sense.

[Alex Cunningham]

My hon. Friend and near neighbour makes the point clear.

Being a leader is critical to our energy-intensive and other industries if we are to overcome the competition threat from across the world. It is no use hanging back when other nations look like stealing a march on us. I have mentioned the Teesside Collective project to develop an industrial CCS project on Teesside, home to some of the country’s most energy-intensive industries. I invite the Minister and the Chancellor to the next meeting of the all-party parliamentary group on 23 March to learn about those ambitious plans. I know the Chancellor will be busy until the night before, but I guarantee that the APPG will be much more focused on the needs of industrial Britain than will his Budget.

The Government have made clear their intention to build a new series of gas-fired power stations and nowhere is better placed than Teesside to build one. Not only does a site exist there, but so does the infrastructure to put the electricity out directly into the national grid. Developers Sembcorp believe it could house a conventional combined cycle gas turbine plant or an integrated gasification combined cycle plant, both of which could incorporate carbon capture. Although Sembcorp could develop its own power station, a potential partner is looking to install a 300 MW gas-fired power plant on the plot.

I know that some may have reservations about the use of fossil fuels, but what an opportunity for the Government to put some meaning into the much abused term “northern powerhouse”—a large-scale power plant, an opportunity to develop it with CCS, but with the immeasurable bonus of doing it with the Teesside Collective and developing an exciting project that could mean boom time for Teesside, with the kind of inward investment that only people in the south believe can be a reality.

Boulby Potash and Teesside Unemployment

Debate between Alex Cunningham and Tom Blenkinsop

Wednesday 2nd December 2015 Westminster Hall

[Tom Blenkinsop]

Thank you, Mr Davies.

The first reason for the different effect is that my constituency, in the borough of Redcar and Cleveland, has the largest population of miners in the UK. It is more than fair to say that the announcement came as a complete surprise to almost everyone—except some members of the management, perhaps. Only two years ago ICL repeated announcements that the mine had 40 years of potash that could be accessed. That has suddenly fallen to two years’ supply. There had been no sign that the business was struggling, whereas, by comparison, debt and coal shortages were routinely reported for SSI. It was undoubtedly weathering the storm that commodity prices have suffered since the beginning of this year. However, there were none of the early indications that one might have expected, given that the potential job losses run to three quarters of current employee levels. The proposals set out that 700 jobs of a workforce just shy of 1,000 are to go by 2018, with half of that happening by the end of this financial year. If anything, the mining industry in my constituency and neighbouring constituencies appeared to be on the rise, with the proposed York potash project.

I cannot proclaim strongly enough how much of a staple Boulby Potash is in the east Cleveland community. Generations of families have forged livelihoods on the back of the mine since the early ’70s, and now for hundreds of them there is the potential for that livelihood to be stolen away from them. In the early days of the mine, relatives of such people lost their lives to create a working mine and provide good, well-paid jobs for the community. The workers have been given this news in the run-up to one of the most stressful periods of the year. Despite what former Ministers may say, there is never a good time for someone to lose their job, but there is something particularly cold about losing it—or at least being informed about losing it—at this point, in the run-up to Christmas.

The latest job figures that I have do not even cover the impact of the collapse of SSI. However, for the record, the sad fact is that in the two boroughs that my constituency covers, Middlesbrough and Redcar and Cleveland, there are now 6,887 jobless adults and 1,610 young people signing on. There is also an impact in County Durham, where Thrislington quarry in Ferryhill is now under threat because of the effect on the requirement for limestone, which is a prerequisite for the production of iron in a blast furnace. The Government decided to announce, on the very same day as the Boulby job losses, that three local tax offices that provide employment for hundreds of people will be relocated to a centralised hub, which is at best an hour’s commute away if traffic is good.

[Alex Cunningham (Stockton North) (Lab)]

It is sad that the Government are contributing to the loss of jobs in our area. In my constituency hundreds of people—probably well over 1,000, and up to 2,000—have lost their contracting jobs related to all the industries that my hon. Friend has been speaking about. I know that it is not in the power of the Minister as an individual, but we need a whole-Government approach and an extension of the help package for the Teesside area, where unemployment is going up in contrast to what is happening in the rest of the country.

[Tom Blenkinsop]

My hon. Friend must have read my speech earlier, because that is one of the things I shall be asking for. The sheer volume of unemployment at private industrial sites in the past two or three months is such that a profound response at Government level is required. I suspect that many people in my constituency do not know whether to laugh or cry at how far removed the Government seem to be, given the position they have taken about the plight of an area that could actually be a part of the northern powerhouse agenda.

To return to the specific matter of Boulby, I seldom sign early-day motions and propose them even more rarely, but in 2010 I proposed early-day motion 1179:

“That this House believes that it makes economic and environmental sense to purchase salt, grit and potash from domestic sources, particularly during periods of increased demand; supports local suppliers such as Boulby Potash mine in Middlesbrough South and East Cleveland constituency; notes the boost this would give to these suppliers; further notes that this would avoid the unnecessary environmental cost of transporting goods from overseas; and therefore calls on the Highways Agency and the Department for Transport to wherever possible purchase from British suppliers.”

I still believe that it would not be unreasonable for any Government to take such action.

I care passionately about the issue, as I do about the steelworks and the UK steel industry, and I have raised it in a range of forums during my time in Parliament. I will give two examples. In June I asked the Secretary of State for Environment, Food and Rural Affairs

“what assessment she has made of the need for security of supply of potash minerals”.

and I received the following response:

“Defra has not made an assessment of the security of supply of potash minerals. The UK currently has one domestic mine for supply and therefore depends on some imports. Import statistics provided to Defra by the Agriculture Industries Confederation show that 135,000 tonnes of straight potash fertilisers and 389,000 tonnes of potash-containing compound fertilisers were imported into the UK from a wide range of EU and non-EU countries in the 12 months to March 2015 making up approximately 40% of UK consumption.”

Well, that domestic mine has indicated that it will no longer produce potash by 2018, and I cannot comprehend why the Government had not made that assessment previously. I asked the same question a few days after the announcement by Cleveland Potash, and I was referred to the Government’s previous response. To me, that sends the signal that the Government are happy to live off imports from foreign companies while our own industry collapses. I appreciate that the response did not come from the Department of the Minister who is present for the debate, but perhaps she will enlighten me and fellow Members as to why there has been no such assessment.

I called for this debate not only to address the devastating news at Boulby Potash but to set out the scale of the unemployment that has befallen Teesside in the past two to three months.

[Alex Cunningham]

Of course, a chance to develop opportunities for people in Teesside has been lost in the past few days with the Government’s ditching of £1 billion of support for carbon capture and storage. A major industry could be developed from that, with major benefits for Teesside. The first industrial CCS project was on the stocks, but now we find out that the Government have withdrawn all funding from it. I hope the Minister will address what the Government’s hopes are for that industry, although that may not be her particular responsibility.

[Tom Blenkinsop]

I thank my hon. Friend for going into that point—I was not going to raise it. Stan Higgins, who works for the North East of England Process Industry Cluster, has said that that project is still on track and private investors are still interested, but when the number of programmes was cut from four to one the Chancellor never gave any budget detail about the capital requirement. There was always £100 million floating around, rather than the £1 billion that was promised. Now we know, because of a statement given to the stock exchange at 3 o’clock during the comprehensive spending review speech last week, that all public funding for CCS has been withdrawn.

I think we are missing a huge opportunity. I do not think that Teesside should have the project—I think we should have more than one. CCS is a clear solution for fossil fuel-intensive energy production, and it is acutely needed for manufacturing. If we are going to compete with our European competitors, as well as at least trying to make a fist of it against Chinese imports in any processing industry, we need to be able to provide cheap energy and remove the problems that green taxes and green costs are applying. Ultimately, the biggest point is that CCS provides the manufacturing industry with a solution to carbon dioxide emissions. The UK as a whole—never mind Teesside—is missing a huge opportunity to take hold of that technology and become a world leader in it.

[Alex Cunningham]

We have the Minister with responsibility for coal here today. There was a meeting on Friday in my constituency about offshore underground coal gasification. I wonder if that could also create high-powered, high-value jobs in our constituencies on Teesside. I would be obliged if the Minister could tell us what her Department’s attitude would be to that sort of project coming forward.

[Tom Blenkinsop]

My hon. Friend must have the password to my laptop, because he is quoting my speech verbatim.

To go back to the issue of unemployment, Teesside has endured a tsunami of job losses recently—I genuinely feel that that statement is proportionate. I mentioned the closure of SSI, which has had an impact on its supply chain and on other related businesses with a link to the steel industry. That does not include the contractors affected, nor the loss of the Caparo steel site in Hartlepool. In Stockton, 700 contractors were left shattered at Air Products as it halted the construction of a second gasification plant. Admittedly that is because of technical issues, not economic ones, but no timeline has been given for when construction will be brought back, so those men and women will have to find alternative employment. Jobs will also inevitably go following the relocation of offices by HMRC, as my hon. Friend highlighted. On top of that, local councils and public services continue to feel an unprecedented squeeze on finances due to reductions in central Government funding, and job losses will inevitably follow.

I have spoken at length about the 700 job losses at Boulby. Hopefully I have made it clear that the labour market across Teesside and east Cleveland is beyond crisis point. Governments are meant to make the lives of their citizens easier and provide support in tough times. I cannot call what the Government are doing inaction, because they made the HMRC decision, but they have somehow made—or endeavoured to make—the situation worse in a difficult period.

[Tom Blenkinsop]

My hon. Friend accurately portrays the difficulty of not only the lack of jobs but the geography of the area.

I have mentioned the high number of private sector industrial jobs being lost, but we cannot forget the impact on well-paid, stable, sustainable public sector jobs, or the follow-on impact on small businesses. People are used to walking into their local tax office or simply picking up the phone to talk to someone there. Admittedly the Government have a reasonable agenda in trying to move towards an online system, but small businesses, in some cases, do not have the know-how, the capital or the time to do use such a system. They need to pick up the phone and get help immediately. I will go into that later.

The fact that we have just under 8,500 people officially registered as unemployed—I hasten to add that that figure is from before the job losses I am talking about today were recorded—shows the sheer degree of human waste and squandering of talent that this Government are presiding over. If those people were in productive work, they could be helping to build a better future and a better economy for Teesside. It is a waste of talent and a waste of human potential, and that is what makes the job losses even more devastating.

As a lot of the industries affected are specialised, finding suitable alternative employment is not straightforward, and the level of pay certainly cannot be matched by other local employers. If we take the example of face workers at Boulby, although their core pay is £28,000 to £29,000 a year, after bonuses they are probably getting somewhere in the region of £40,000 a year. The average income in the Tees valley is more around the £20,000 to £21,000 mark, so we are talking about 700 workers who are on double the area’s average wage. That will have a huge economic impact downstream. We do not have any more of the large-scale heavy industry employers to which there would be a good chance of skills being transferred.

Although welcome, the projects in the pipeline, such as the MGT Power plant, are some time away. If the Government are serious about the northern powerhouse, they must act in the meantime. The future of Skinningrove’s special profiles and the Teesside beam mill near Redcar is still uncertain. Leading figures from across Teesside have argued for a number of years for the need to diversify the economy away from large employers that are highly susceptible to the economic market, while keeping them in place. That continues to be the case, and sadly the fears have become a reality.

We must intervene, knowing that the market fluctuates, and help with the diversification. We cannot simply sit here and say, “This is the market,” again, allowing thousands of people to be shed, because I fear that the skills those people carry will inevitably go to other areas. That will have fiscal implications for our local area and its ability to pay for local services, especially in a political culture where our Government are devolving more and more to our local areas, while the ability of areas to retain their own wealth is being eroded and depleted.

This coming Saturday, I suspect we will all be supporting the Small Business Saturday initiative. It is more vital than ever that small businesses in my constituency are supported, because they need to grow and provide more employment opportunities for my constituents. Creating a mixed economy will require risks to be taken. However, to support and develop our existing process industries on Teesside, we need Government commitment to supporting developing projects such as the Teesside Collective so that it becomes the go-to location for future clean industrial development and Europe’s first CCS-equipped industrial zone. We need our area to be seen and developed as a prime location for the use of Durham coalfield gas—a non-conventional gas that is 50% cheaper than conventional gas—via gasification, so that we can address green costs and taxes for industry and ensure a cheap, indigenous energy supply.

[Alex Cunningham]

Syngas from coal gasification is a high-quality gas with many components, and it is feedstock for some of the industries on Teesside. It could attract other companies to that part of the world, if we were able to provide it.

[Tom Blenkinsop]

My hon. Friend makes the case perfectly, as ever. Furthermore, if we had a CCS plant alongside our own supply of cheaper, higher quality gas, that would be an industrial strategy in and of itself, and private investment would flock there. I hope Lord Heseltine will report that back to higher levels of Government.

The two large-scale measures I have just described would be the basis of reigniting a new emphasis on industry upon the Tees, and I dearly that hope Lord Heseltine will seriously consider pushing and developing them under the Government’s inward investment fund for the Tees industrial conurbation.

In the interim, however, what my area needs is far more profound. We await a proper response to the five industrial asks for the steel industry. The SSI steel taskforce that I sit on with my hon. Friend the Member for Redcar (Anna Turley) needs to be immediately extended to cover the entire Tees Valley Unlimited local enterprise partnership area and to involve other MPs in the area. It is hopelessly unacceptable for the Government to leave that taskforce, with much less financial aid than promised, to deal with the unemployment circumstances of one industrial site and to wholly ignore the plight of workers at Air Products, Caparo, Boulby and their downstream contractor workforces. That has left me and my hon. Friends from the Teesside conurbation in the invidious position of being able to feed back help to ex-SSI workers, but absolutely nothing to others workers affected by job losses. Our job is to serve all our constituents, and having a two-tier system with preferential treatment for some steelworkers and nothing for potash face miners completely undermines our position as democratically elected representatives to this place.

There is another issue for the Government. Apart from Boulby Potash being the UK’s only domestic potash mine, supplying 60% of the British market’s potash, it is also of strategic importance as the UK’s largest domestic supplier of rock salt. A reduction in manpower will severely undermine the mine’s ability to produce, or indeed ramp up, production at critical strategic points in time for required increases of rock salt during heavy winters that the UK may suffer. Will the Minister tell me what assessment the Government have made of rock salt production and what contingency they have in place? Is she willing to meet with me about that strategic civil matter as a matter of urgency, given that the 45-day consultation at the mine began some time ago? The necessity of keeping any skills potentially required for a sudden increase in rock salt production at the mine during a cold winter in the coming months will undoubtedly have an impact on production levels.

Finally, my No. 1 ask, even if there is only one thing we can deliver today, is for those affected by redundancies at Boulby Potash to be included in the support package being provided to those at SSI, with the additional funding required to do so, so that all taxpaying workers in my area get the Government support they deserve.

Cleveland Fire Authority

Debate between Alex Cunningham and Tom Blenkinsop

Monday 13th May 2013 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

First, I thank you, Mr Speaker, for giving me the opportunity to have this important Adjournment debate.

I am sure that hon. and right hon. Members—at least those on the Opposition Benches—are acutely aware of the financial squeeze being applied to their fire and rescue authorities by central Government. Indeed, two years ago, my hon. Friend the Member for Hartlepool (Mr Wright) raised the point that Cleveland’s government settlement was the second worst in the country. However, I fear that many Members and the public might not be aware of this Government’s support, both financial and political, for proposals to take front-line fire and rescue services out of the public sector.

The Minister may say that this is not the case and that these services would remain under local authority control. However, the community interest company in the case of Cleveland fire authority, is already registered at Companies House as a separate entity, and managers are stating that an expansion of the existing CIC is the vehicle they intend to use for the formation of a “public service mutual”.

Recently, fellow Cleveland MPs and I met the Cleveland fire authority. Let me make it clear now that the categorical statement from the chair and other members was that they would do nothing that would lead to the privatisation of the service. However, the chief fire officer said that any contract would be subject to competition after the initial contract awarded to any mutual expired. He said at that meeting that the initial contract could be for anything from three to nine years. My hon. Friend the Member for Stockton North (Alex Cunningham) and I have been greatly concerned about what the chief fire officer—along with, if I may add, firm Government encouragement—had proposed.

[Alex Cunningham (Stockton North) (Lab)]

I congratulate my hon. Friend on securing this important debate. I am sure he agrees that the Cleveland fire chief responsible for the area that probably has the highest fire risk in Europe is ploughing a lone furrow with his proposals, given that other fire chiefs throughout the country are dismissing the mutual model, and firefighters themselves are convinced that competition law would soon open the way for private companies to take them over and put profits—

Community Hospitals (North-East)

Debate between Alex Cunningham and Tom Blenkinsop

Wednesday 20th June 2012 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

I congratulate my hon. Friend and fellow Teesside MP on securing this debate. I know how hard he works on behalf of his constituents to secure access to the services that they need, particularly health services. Is he surprised that there will be more cuts, particularly in the light of the £50 million that it is costing to reorganise the NHS on Teesside?

[Tom Blenkinsop]

I am not surprised, to be honest. A couple of days ago, the Newcastle Journal reported that a freedom of information request had demonstrated that even after the NHS redundancies that we have seen, which I think cost approximately £60 million, a further 1,000 nurses are set to be cut in the north-east region.

The role of community hospitals is as important as ever. Despite the apparent importance of community hospitals, I fear for the future of hospitals such as those in Brotton and Guisborough in my constituency, the five other community hospitals of the South Tees Hospitals NHS Foundation Trust, and the trust’s district general hospital, the Friarage, which is at the heart of the Foreign Secretary’s constituency. All those hospitals are seeing a reduction in services as a consequence of the Government’s health reforms and austerity package—whether the reduction of minor injuries provision, the closure of the Chaloner ward at Guisborough hospital or the downgrading of maternity and paediatric services at the Friarage, which even the Secretary of State has branded “unacceptable”.

Ultimately, communities, patients and employees recognise that only so many services can be cut before the future of the hospitals themselves is brought into question. They are concerned that the Government are failing to do anything whatever to prevent those reductions in services. [Interruption.] I give way to the hon. Member for Redcar (Ian Swales).

Regional Development (North-East)

Debate between Alex Cunningham and Tom Blenkinsop

Tuesday 22nd March 2011 Westminster Hall

[Tom Blenkinsop]

I will come on to discuss the alternatives. We have seen borrowing increase by £2 billion, and certain policies, which I will come on to later, have economic effects on the national economy, and more profoundly on that of the north-east. Those effects will be part and parcel of the package due to inflation, and the retail prices index is currently running at a 20-year high. Such national policies are being put in place to deal with the deficit, but they seem to do only that, rather than presenting a progressive or prospective economic plan.

Turning to industry, chemical firms with major operations on Teesside, as well as our local steel producers Tata, have grave and well-founded concerns about industrial growth policy. I am, of course, talking about carbon floor prices. A consortium of firms, including SABIC, Lucite International and GrowHow, has recently criticised the Government’s energy strategy, justly claiming that it hinders the competitiveness of UK manufacturers more than any employment regulation or tribunal. The implementation of a minimum price for carbon will add a minimum of 20% to energy-intensive users’ energy bills. If the policy is implemented, our nearby EU competitors will no doubt exploit the situation, as will competition further afield. The policy will hinder further inward investment, and might lead to the departure from our region of good companies that provide long-term, well-paid, skilled work. EU competitors have attempted and then pulled away from equivalent policies. Changes to the carbon reduction commitment scheme, which amount to a £1 billion tax, will also delay green investment and hurt small downstream industry that aids steel production in the UK. Ultimately, potential and existing investors will move abroad to less efficient and less green arrangements, which will not benefit our economy either nationally or regionally.

[Alex Cunningham (Stockton North) (Lab)]

Yesterday evening, some other MPs and I met some of the major companies in the energy-intensive industries, many of which are in our constituencies in the north-east. The Government plan to have carbon capture programmes, but none of them takes into account the specific needs of those industries. Does my hon. Friend believe that the Government should think again, and instead of just concentrating on energy plans concentrate on the needs of industries as well?

[Tom Blenkinsop]

My hon. Friend hits the nail right on the head. Whatever policy we have—an agglomeration policy, or a slightly different industrial policy—the energy factor, which I will go into in more detail later, will have a more and more profound impact on industry’s ability to retain and maintain its current position as well as to invest. Teesside is potentially one of the key areas in the country, never mind the region, for that investment, particularly in the chemical and steel sectors. My hon. Friend makes an excellent point.

Of anything that I say today, I beg the Minister to take that message about carbon floor pricing back to the Department for Business, Innovation and Skills, the Treasury and the Department of Energy and Climate Change, to block any moves that will hurt our north-east in general, and Teesside’s industrial core in particular. The announcement of a supposed regional growth strategy for the north-east as part of the comprehensive spending review is at best misleading and at worst a smokescreen to hide the deep cuts that will stunt economic growth in our region. The regional growth fund will also have to finance bids for housing and transport plans, so it is obvious that even a successful LEP bid to the fund will mean only a small slice of a very small cake. The fund was designed to redress the regional imbalance in the economy, so surely providing funds to companies in the affluent south-east will undermine its objectives.

I am also extremely concerned that the Government may well be turning away millions of pounds of EC funding for new economic initiatives and infrastructure projects, because their blunders over the winding-up of the regional development agencies means that they do not have the match funding for those job-creating schemes. On Teesside that is made worse, as the back-up service for a Tees valley LEP will rely on the existing Tees Valley Unlimited agency and its staff. However, that too has had £7 million of its £9 million budget slashed. There will also be a real terms cut of 9% to the science budget, which threatens to leave the UK behind international competitors such as the US and Germany, which are still increasing their science spending despite the economic climate. Even the Minister for Universities and Science said recently that scientific research contributes to long-term growth. If the Chancellor agrees with that, why are we not increasing the science budget like other countries?

The Government announced in the CSR that £1 billion would be provided to fund carbon capture and storage. According to Jeff Chapman, chief executive of the Carbon Capture and Storage Association, that will fund one project,

“but it’s not enough for four”.

I argue that the Wilton site, in the constituency of the hon. Member for Redcar (Ian Swales), is ideal for the project in many respects.

We must be able to capitalise on foreign export opportunities, yet we must not rely wholly on them. As I have said, this Government have given absolute economic primacy to deficit reduction. That has massive implications for a sector-led agglomeration anywhere in England, but it will particularly affect how potential foreign export purchasers view England, especially the north-east.

Chemicals are a major player nationally as well as locally on Teesside, and they make up more than 30% of UK economic exports. Teesside has massive potential, with projects such as Chain Reaction by PD Ports at Teesport and Hartlepool, agrichemicals as a new growth sector, petrochemical developments, SSI and Tata at Teesside Cast Products and many more.

US ambassador Louis Susman has questioned the wisdom of the Chancellor’s massive spending cuts, warning that they risk plunging Britain into a double-dip recession. His remarks echo those of leading economists at the International Monetary Fund, who said last week that the US and EU economies remain too fragile to absorb major deficit cuts, concluding that additional spending and tax breaks would be a much more sensible strategy. In an interview with The Daily Telegraph, Susman praised the Chancellor’s determination to eliminate the deficit within a single Parliament as “very admirable”, but warned:

“But the question is, is it too much, too fast? We worry about double-dip recession and the lack of growth.”

So do I.

China reported a trade deficit in February of £4.5 billion. Exports from China grew by 2.4%, which was less than expected, mainly due to the appreciation in value of China’s currency. However, growth in imports also decreased from an expected 30% to 19.4%. We must remember that under Labour, between January and August 2010, exports to China from the UK rose by 44%, which especially helped manufacturers. Between January and April 2010, manufacturers boosted UK exports by £21.3 billion. The demonstrable reduction in Chinese demand is having huge effects on other international economies that export or rely on exports.

The coalition Government must understand that an export-led growth strategy alone will not suffice. Besides the obvious structural unemployment issues—the skills of redundant public service workers in the north-east will not match the growing sectors, if any grow—manufacturing sector credit squeezes in China, the terrible floods in Australia that have limited coke exports, desperate earthquakes and tsunamis in Japan and ongoing events in Libya, Bahrain, Yemen, Saudi Arabia and the wider middle east and north Africa will affect an overly optimistic and wholly reliant British exports policy. Iron ore, steel, cotton and other commodities are peaking at extraordinarily high levels. More importantly, coal, gas and oil markets are peaking as Japan, China, and Germany re-evaluate their nuclear policies, which is already affecting our access to fossil fuels and their domestic and industrial usage and price. That will undoubtedly affect not just our north-eastern industry but our national export capability.

By betting the house solely on exports, we expose ourselves to a potential backfire. However, public sector investment and an export policy need not be mutually exclusive. Obviously, we can pursue an export policy while retaining our levels of public sector investment in the north-east. Again, however, an export policy with no real investment and no public sector expenditure belies the coalition’s policy of giving economic primacy to deficit reduction. We should not reduce the deficit at the price of our public sector and, in turn, of the small and medium-sized businesses in the north-east that rely on it.

The planned changes implemented so far include a rise in VAT to 20%, which will affect consumer spend. Businesses such as leisure, hotels, restaurants and retail will bear the brunt. Indeed, figures from the Office for Budget Responsibility stated today that the consumer prices index was at 4.4%, double the Tory-led Government’s estimates. I am a traditionalist, and as a former union officer I never dealt in CPI, but always in RPI. The OBR says that the retail prices index has risen from 5.1% to 5.5%, the highest in 20 years. Funnily enough, that was the last time there was a Tory Government. We have had the wrong kind of snow from this Chancellor, and now he claims, as he did on the front page of the Financial Times, that we have the wrong kind of inflation, causing him to have to borrow £11.8 billion, up from £9.5 billion last year. I thought that we were making cuts in order to reduce loans.

The effects of the Government’s policies resonate hugely, and nowhere more than in the north-east. R3, the association of business recovery professionals, regularly contacts me regarding time-to-pay arrangements for small and medium-sized businesses, especially given the impact of oncoming public sector cuts. Time to pay is crucial in the north-east to help the self-employed and small businesses currently in trouble to avoid insolvency and prevent the further private sector redundancies that will be inevitable after public sector cuts.

R3 surveyed 300 small businesses and found that one third relied wholly on public sector spending in one form or another. The survey was nationwide, and things will undoubtedly be more severe in the north-east. The situation will be more acute, of course, if interest rates increase on top of the inflationary figures estimated today by the OBR.

On behalf of small businesses, I welcome the Government’s potential simplification of tax, especially if national insurance and income tax are combined. However, the Government could go further for the north-east and its small businesses. High streets in ancient market towns such as Guisborough, Brotton, Loftus, Skelton, Saltburn and other East Cleveland villages need help. Some great small businesses are developing in my constituency. Coastal View, for example, is a new free monthly paper that advertises other local businesses. In south Middlesbrough, retail is also key at shopping areas such as the Parkway in Coulby Newham, Easterside, Marton, Marton Manor, Hemlington and Park End.

Self-employed women and men in my region need quick assistance. On behalf of small businesses, I ask the Minister this: rather than enterprise zones, could the north-east as a whole pilot a 5% VAT rate for construction? Evidence in France has shown it to have turnover benefits of 7%. The Government must act on VAT and fuel duty, and the consensus on that is cross-party, especially on fuel. The 5% VAT rate could be extended in turn to public houses, restaurants and food service in general, helping struggling small businesses while aiding our region’s burgeoning activity tourism economy. Similarly, VAT exemption rates could be lifted from £60,000 to £90,000 for small businesses and the self-employed, bringing in broadly the same revenues for the Treasury while giving small business a break. Again, that could be piloted in the north-east.

I give the Government credit for relaxing planning regulations to allow some commercial properties to be changed to housing accommodation. It might prove a more viable solution in rural areas of my constituency, particularly on certain high streets in East Cleveland. Even so, small businesses will become increasingly key in the fine economic blend of the north-east region.

I understand that I have raised many sectoral topics and a diverse array of issues, but I look forward to any response that the Minister can give.