Regional Development (North-East)

Catherine McKinnell Excerpts

Tuesday 22nd March 2011 Westminster Hall

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this timely and important debate, and on his excellent overview of the north-east economy. Given the particular challenges faced in a region such as ours, and the already felt and anticipated impact of this Conservative-led Government’s policies, I could touch on so many issues in this debate. However, given that Newcastle airport is based in my constituency, I think it appropriate to address the important role played by aviation in the development of the north-east economy.

With about 3,000 people on site, the airport is the largest employer in Newcastle upon Tyne North. It contributes about £400 million to the north-east economy annually, and it handles more than 5 million passengers a year. The excellent service provided by Newcastle airport to domestic and international passengers has been nationally recognised by its peers, having been voted the best UK airport by the British Air Transport Association for two years running.

Indeed, the service provided by Newcastle airport has become increasingly important to the region’s economy over the years, with the growth of the tourism industry in the past decade or so being one of the real success stories for the north-east. Tourism is now worth nearly £4 billion to the region’s economy and employs more than 65,000 people, while the increase in visitor numbers to north-east England has been outstripped only by London in recent years. To give just one example of the airport’s impact on the north-east economy, the new Emirates route that launched in 2007 saw the region’s first ever scheduled long-haul route. It flies daily from Newcastle to Dubai, and it has opened up onward connections to more than 50 destinations around the world. It has also opened up a whole new tourism market for north-east England, leading to One NorthEast’s award-winning “Passionate People, Passionate Places” campaign heading as far afield as Australia and New Zealand to target those people who were then within easier reach of our region.

The Conservative-led Government’s cuts, however, and their decision to abolish our regional development agency, mean that north-east England no longer has the capacity to promote itself as a tourism destination either nationally or internationally. This situation and the abrupt end to the “Passionate People, Passionate Places” campaign have been rightly and roundly criticised in the region.

As the Minister should be aware, north-east England is also one of the few regions in the UK with a positive balance of payments—recently published figures indicate that the total value of north-east exports was £11.91 billion in 2010. At the same time, inward investment has played an increasingly important role in the north-east economy, creating or safeguarding more than 6,500 jobs in our region in 2009-10 alone, and levering in £720 million in capital. About 82% of the inward investment came as a direct result of One NorthEast. I hope that the Minister will reflect on that serious point.

Newcastle airport plays an important role in supporting the strength of the north-east export market and our foreign trading links, providing the region’s businesses with easy access to key international markets. Direct flights from Newcastle to Stavanger in Norway, for example, have proved crucial in supporting the development of the north-east’s offshore and subsea industries. Moreover, the Emirates link to Dubai, which I have mentioned, now provides easier access to commercial opportunities in China, the far east and India, as well as the middle east.

Another key area vital to the growth of the region’s economy is ensuring that we have the skilled work force of the future. I am a passionate supporter of vocational education and apprenticeships, which is why I tabled my Apprenticeships and Skills (Public Procurement Contracts) Bill. Recently, it was a pleasure to go to the airport and meet one current and one former motor technician apprentice—one at the start of their career, the other at the end—who have both trained and worked at the airport. I also pay tribute to the £3.3million Newcastle Aviation Academy, which was officially launched in 2009 having received investment from Newcastle college, One NorthEast and the Learning and Skills Council. This top-of-the-range facility, based at Newcastle airport, provides a wide range of training in all aspects of the aviation industry, including aircraft engineering, aeronautical engineering, and airport and airline management. It is exactly the sort of thing that the previous Labour Government invested in to support young people, rather than write them off, which is what some of the Government’s policies are doing.

Newcastle airport has, therefore, played an integral part in the north-east’s economic past, and will continue to do so in the future. However, a key, ongoing issue for the airport and north-east businesses has been the impact of air passenger duty and the Government’s proposals to move to a per plane duty. Notwithstanding the importance of ensuring a greener, low-carbon economy and the important part that aviation must play in achieving that, this and any other taxation policy must concentrate not only on increasing revenue for the Treasury and greening our economy, but on rebalancing our economy in a way that will not impact disproportionately on our regions.

The Newcastle Journal’s long-standing campaign, “A Tax Too Far”, has called on Governments, past and present, to recognise the disproportionate impact of APD on regional airports. It urges that APD or PPD be restructured in line with the impact they have on regions, compared with London, and for consideration to be given to reduced rates of APD for new start-up routes in and out of the north-east. The Newcastle Journal’s campaign has clear support from the business community. In January, the Emirates vice president for the UK and Ireland, Laurie Berryman, made it clear that larger airlines would be forced to consider their position at UK regional airports if APD becomes too great and passenger numbers fall. Moreover, earlier this month, the North East chamber of commerce wrote to the Secretary of State for Transport to call for an overhaul of the APD system, stating that it has a disproportionate impact on our region’s businesses. The NECC is calling for differential rates for regional airports, to replace the current blanket duty, in order to ensure that the north-east economy does not suffer and that its export businesses can continue to grow. As the NECC chief executive, James Ramsbotham, has pointed out:

“North East businesses already face heavier costs than their counterparts in other regions in order to access common markets due to high fuel prices, so addressing the anomalies that APD gives rise to will ensure that our exporting businesses have a much better chance of realising their potential.”

Of course, if differential rates of APD or PPD were introduced for regional airports, it would also reduce pressure on Newcastle airport’s already overcrowded south-east counterparts. In the words of Graeme Mason, head of corporate affairs at Newcastle airport:

“By freezing or reducing the rate of APD out of regional airports, the Government could, at a stroke, rebalance the economy, reduce the North-South divide, and take the pressure off the South East.”

An announcement on the issue is expected in the Chancellor’s Budget tomorrow. Will he recognise the regional impact of tax and provide a real stimulus for regional economies like ours in the north-east in his so-called “Budget for growth”? Like Newcastle airport, the North East chamber of commerce and many other north-east businesses, I—and I am sure my colleagues—await the Chancellor’s announcement tomorrow with great anticipation.