Budget Resolutions and Economic Situation

Chi Onwurah Excerpts

Friday 20th March 2015 Commons Chamber

[Mr Pickles]

Absolutely. My hon. Friend was a distinguished Minister in my Department. Right from the very beginning, all this was envisaged under the Localism Act 2011. Rather than trying to move all local government at the same speed, we will of course devolve this power to those councils that are capable of managing larger budgets and delivering a deal. I envisage that within the next five years most local authorities will use such a system. For those that do not, the Prime Minister made it clear in a speech a couple of weeks ago that it will be our intention to get the retention up to 66%. I shall be disappointed if we cannot exceed that, but for most local authorities self-sufficiency and being able to raise their own finance locally and to spend Government money sensibly, and so on, is the future. I have great hopes for what is happening in Greater Manchester, and it shows that people of good will right across the political spectrum can work together.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Can the Secretary of State clarify whether all new business rates will be retained, or whether it will be all incremental business rates in addition to those currently predicted?

[Mr Pickles]

It is very straightforward; it is the same scheme that has existed since the retention scheme was introduced. It is the growth in the business rates. If a council goes out of its way to bring in new investment, it is only right that it should not be penalised for doing so, as it would have been under Labour. It should reap the benefits. I know that Opposition Members have difficulty with the idea that people should be rewarded for creating wealth and working for the common good, but that is how it is going to be. The Government are helping to expand local economies, and we also want to expand powers for local areas. As I have said, we have already devolved significant powers to the Greater Manchester combined authority.

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[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is an honour to follow the right hon. Member for Uxbridge and South Ruislip (Sir John Randall). I hope that he has many more contributions to make.

Yesterday we were treated to the spectacle of the Chief Secretary to the Treasury delivering an alternative Budget less than 24 hours after the actual Budget, and then promoting it with a yellow Budget box outside the Treasury. Given that in the next Parliament there are likely to be more MPs from the north-east than Liberal Democrats from the entire country, perhaps I should ask your permission, Mr Deputy Speaker, to present a north-east Budget, and then I could parade up and down Whitehall with a black and white Budget box in the colours of the Northumbrian tartan, and of Newcastle United. My hon. Friends from Sunderland and Middlesbrough might object, so it is just as well that I am not seriously considering such a stunt. The Labour party is a one-nation Opposition and will be a one-nation Government for everybody, not just for the few. A Labour Government will recognise how essential it is that all our regions prosper.

The north-east has many economic successes to shout about. We are the only region outside London that has a positive trade balance. Our export surplus is now £2.5 billion a year. One in three cars made in the UK comes out of Nissan in Sunderland, making the north-east the country’s No. 1 car producing region. The Tees valley is home to the UK’s largest integrated chemicals complex, which is the second largest in the European Union. Over 1,400 companies operate in the sector, exporting more than £12 billion of goods a year. More than 70% of the oil and gas platforms operating in the North sea were built in the north-east. We have world-class businesses and world-class institutions, such as our universities. Newcastle university’s achievements in mitochondrial DNA were debated only recently in this Chamber. Of course, we have fantastic people, not to mention our outstanding countryside and culture, and what is perhaps beyond price—a collective identity.

I grew up in Newcastle in the 1960s and ’70s. It was a city and a region that valued engineering and was proud of making and building things. We still lead the way in exports, and we are increasingly becoming a centre for hi-tech and digital businesses. There are few better places to live, work or innovate. However, I am not under any illusion as to the scale of the challenges we face. Unfortunately, we heard little this week in the Budget about how we might face those challenges. As the headline in our excellent local newspaper, The Journal, put it: “What about the North East, George?” The region has suffered a disproportionate level of cuts, and, as a result, has seen its economy shrink by 10% in recent years. The north-east has the highest rate of unemployment in the UK.

It is therefore not surprising that few of my constituents will recognise the unbridled good news that the Chancellor was trying to spin this week. Under this Government, everyday working people in my constituency and across the region are feeling the pain of the longest cost of living crisis in a century. They are £1,800 per year less well-off. Too many people are trapped in low-wage, insecure jobs where they work hard but do not see the benefits of that work. Inequality is continuing to rise. It is not good for the north-east or the country as a whole to have a deep and growing divide. A one-nation economy needs an innovative and dynamic north-east.

I know that the region is up for this challenge. In the decade between 1998 and 2008, with the support of the regional development agency, One North East, the region added 67,000 new jobs, many of these in the private sector, and saw growth of 10%. The new combined authority and the local enterprise partnership, working with their partners across the region, can play a crucial part in building a more innovative economy. Since the regional development agency was abolished by this Government, as my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said earlier, the north-east, unlike London and the devolved nations, has had no collective voice to shout about its strengths and focus on its weaknesses. That is why I was pleased when the combined authority proposals came to fruition last year. However, the authority and local councils need real powers if they are to be able to make a difference.

This week the combined authority told us what some of those powers might be. They include a north-east investment fund made up of a range of current short-term funds combined into one and allocated by the authority as part of a long-term investment plan. We need more regional involvement in how European Union funding is invested. It is a scandal that this Government have allowed much needed EU funding to be lost. We also need the devolution of skills funding, the Work programme, and tourism and culture powers. We heard nothing about that in the Budget, and we heard very little about the future of our regional infrastructure. The combined authority has called for investment in transport networks and the creation of a new body to work on integrated transport delivery across the region for passengers and for freight.

The Chancellor seems to have managed to recognise the existence of the north in as much as he often talks of a northern powerhouse. It does not seem to spread as far as the north-east, but I guess it is a step forward that he can at least say the word “northern” on a regular basis. A real northern powerhouse that included the north-east would have had many of the powers announced in the Budget, or at least a movement in the right direction.

The Government talk about a northern powerhouse at the same time as imposing crippling council funding cuts. Councils are currently being forced to make almost impossible cuts, to a point at which some are questioning whether they can do anything other than deliver the services that they are obliged to deliver by law. Furthermore, the cuts imposed on the northern metropolitan councils have been much greater per head than those imposed on councils in other parts of the country which are, in many instances, represented by Tory Members.

My hon. Friends and I believe that, rather than being simply local delivery vehicles, councils and local and regional structures should have real power: power to bring about the positive changes that our constituents deserve, and power to bring about those changes in areas where they know the need exists. That is why we have said that we will pass an English devolution Act to reverse a century of centralisation. The Act will secure devolution to the people of England’s cities and county regions and transfer £30 billion of funding over five years, thus giving local communities more power to address local priorities and grow their local economies.

We will put economic power into the hands of those who know what their areas need, rather than leaving it in Whitehall. We will give city and county regions more power over their public transport networks, so they can set the right bus routes and operate fairer fares, as well as integrating their transport services to help working people and businesses to succeed in their areas. Unlike the present Government, we will support bus quality contracts.

Central to the future of the north-east is a fair funding system. Analysis by Oxford Economics found that the knock-on effect of the unfair distribution of cuts meant a further £1 billion loss of private sector investment in the region, a loss that we can ill afford. A Labour Government will end the bias against our poorest areas by ensuring that the funds that we have are distributed more fairly, and in a way that will allow councils to plan for the long term.

During the industrial revolution, the north-east powered the economy. When the Labour Government who will come to office in May are prioritising investment in the green industrial revolution and devolving powers to our councils and communities, the north-east will once again be able to power the nation’s economic success.