Economy (North-East)

Catherine McKinnell Excerpts

Tuesday 13th November 2012 Westminster Hall

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

It is a pleasure, Mr. Hollobone, to serve under your chairmanship for the first time and I congratulate you on your quite impressive stewardship of such a huge number of Members who wanted to contribute to this debate and who have been able to contribute.

I also congratulate my right hon. Friend the Member for South Shields (David Miliband) on securing what I agree is an incredibly timely and important debate for us to have, because the UK will prosper only when we fully exploit the resources and strengths of every single part of it. The coalition seems somewhat blinkered to the huge value and potential that exist in the north-east. My hon. Friends and Government Members have conveyed with huge passion the potential that the north-east has, and it has been a very forward-looking, positive and genuine debate. I hope that the Minister will feed back a lot of the suggestions and contributions that have been made today, not only to the Business Secretary but to the Chancellor, whose Department should have been responding to the debate.

My right hon. Friend set out five main areas on which he feels the north-east region needs to focus in order properly to harness its economic and social potential, and I agree with every point that he made. However, I will try to summarise some of the strength of feeling that has been put across by right hon. and hon. Members today, which can be divided into three main ways in which the Government can support regions such as the north-east and get a grip on our economy as a whole, to harness the potential for growth that we have.

The Prime Minister said in his speech last night at the lord mayor’s banquet that he is not afraid to travel the world in pursuit of selling UK plc, and yet his Government are clearly failing to harness and exploit some very obvious opportunities to foster growth, innovation and world-leading industry. Like my right hon. Friend, I will not conduct a post-mortem on the demise of the regional development agencies, in particular the demise of One North East, although I have to say that I do not agree with the sentiments of the hon. Member for Redcar (Ian Swales), who feels that the RDAs are responsible for a lack of economic growth. That is because One North East undoubtedly brought huge economic benefits to the north-east region and secured a huge amount of inward investment and exports, channelling those in and out of the region and creating a surplus balance of trade.

The figures speak for themselves. Around 82% of all the inward investment that came into the north-east in 2009-10 came through the inward investment team based at One North East—£387 of investment in the region for every £1 spent. One North East was a particularly successful RDA with a solid record of success. Following its creation in 1999, the north-east’s economy experienced greater growth than any other region outside London and it still enjoys a positive balance of trade, which I have already mentioned. We invent, make and export things in the north-east, which is something we would like the Prime Minister to celebrate and support on his international trade tours.

What about the future? The times have changed, and we have experienced a financial crisis and a collapse in our banking system. We recognise that reductions needed to be made, but we also lament the wholesale throwing-out of the RDA baby with all the bathwater. Exports and inward investment support is just one area that demonstrates how losing the RDA is a loss to the region. Where Labour in Government saw the huge potential of regions such as the north-east, delivered bespoke business support and saw record economic growth, we now have a generic UK approach based on the Prime Minister’s “sink or swim” model that risks overlooking some major opportunities. The risk is that the Government’s one-size-fits-all approach is letting down the regions, which in turn lets down the UK as a whole.

So who are the economic drivers of the future? The local enterprise partnerships are a collaboration of businesses and local authorities. We are more than two years on from their inception and they are starting to form a view of the way ahead. I will not dwell on how much lost opportunity there has been in that time, but I will dwell for a moment on whether the LEPs themselves have the capacity to drive this agenda forward in the way that it needs to be driven forward. Businesses need to be at the forefront of rebuilding our economy, but do they have the capacity or even the will to drive a regional or national strategy? Local authorities are also at the forefront of rebuilding our economy and they absolutely should be part of driving that agenda, but I know that my own local authority and other authorities up and down the country—well, certainly Labour local authorities at least—are being cut right down to the bone and they will barely have the resources to keep their libraries open, never mind the resources to co-ordinate a regional strategy for growth.

There is no shortage of will, but there is potentially a huge shortage of capacity. That was identified by Lord Heseltine in his review on growth, so I would be interested to hear what the Minister has to say on the Government’s intentions to implement any of Lord Heseltine’s recommendations.

The final aspect that I will focus on is the Government and their own approach to economic growth. While dismantling the regional structures and setting people free to pursue growth—where they can locally agree to do so—the Government’s own actions are undermining efforts at every turn. Let us take the new green industries as an example. While other countries are steaming ahead and grasping the massive opportunities and indeed necessities of developing low-carbon technologies, our Government seem to emanate nothing but chaos and confusion, or hokeycokey as my right hon. Friend put it. My hon. Friend the Member for Blyth Valley (Mr Campbell) also spoke very passionately about the opportunities that the north-east has to drive growth in renewable sectors in areas such as Blyth; I know that the Minister is now fully aware of where Blyth and Ashington are, because I saw her look them up on a map. Offshore wind and other renewable technologies are a huge potential growth sector for regions such as the north-east. We have local subsea expertise in oil and gas, as well as an excellent strategic location to draw companies in.

Having said that, how can investors feel confident? I have heard from investors that they are very hesitant to come forward to make the necessary investment and to commit to delivering as part of the Government’s flagship green deal because their confidence has been undermined following the feed-in tariff subsidy slashing fiasco and the mixed messages that are coming from the Government. I would like to hear the Minister’s view as to whether stability and certainty are seen as priorities for encouraging investment, and I would also like confirmation of what the Government are doing to get a grip and to improve confidence in their strategy among the members of the business community who have the potential to drive growth in this area.

In conclusion, Members have raised a vast array of concerns about the Government’s strategy but they have also put forward many positive suggestions about how the Government can work with regions such as the north-east to boost growth. There is no doubt that, as a region, the north-east faces particular challenges. We have a disturbingly high unemployment rate. We also have falling university applications, which a number of my hon. Friends have highlighted. In the last 12 months, there has been a 19% fall in university applications in my own constituency and hon. Members have also mentioned the very worrying 23% drop in university applications from the north Tyneside area, which is a huge concern in terms of the future skills gap that hon. Members have also highlighted in the debate.

We also have a proximity to Scotland, which is investing significantly more in its growth and investment strategy than the north-east is able to as a region. We even have Alex Salmond attending a dinner in Newcastle this evening—I believe that it is in my own constituency—and his message is that the north-east needs a voice as strong as the one that Scotland has. So here we are, being that voice today. The region has a proud success story to tell, of innovation, manufacturing, exports and world-class education, not to mention the beautiful surroundings and rich natural resources. So the message to the Government today is that the north-east and other regions up and down the country are a ripe resource that the UK can draw on to power this nation back to prosperity. “Better Together” is a slogan that applies not only to our union with Scotland but to the whole of the UK. What we need from this Government is a clear and vocal recognition that there is more to UK plc than the south-east and London, and I hope that the Minister can feed that message back to the Prime Minister today.