Economic Development (North-East)

Ed Davey Excerpts

Tuesday 15th February 2011 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I, too, congratulate the right hon. Member for Newcastle upon Tyne East (Mr Brown) on securing the debate and on his work when he was a Minister. From his comments, he has shown his detailed knowledge of the region where his constituency lies, and in truth Members from all parts of the House will agree that he did an awful lot of work, with some success, for the region. It is right to pay tribute to that, but I think that his skills as a former Chief Whip enabled him to ensure that his debate took place this evening, so that a larger number of Members could join in. The fact that we have had so many Members in the debate has enriched it, and I have found many contributions insightful and interesting.

I make this observation to the right hon. Gentleman, however. Sometimes, in his initial remarks, he appeared rather over-rosy about what happened under the Labour Government—as if everything was just perfect in the north-east as a result of their policies. That is certainly not how I view the economic statistics. Equally, he was rather over-pessimistic about the future. In general, he, like many of his hon. Friends, failed to admit that this country has a huge problem with a massive deficit.

I am afraid that the deficit deniers were out in force tonight, but, when we in the Department for Business, Innovation and Skills had to grapple with the Budget by making our contribution to deficit reduction, we noticed and learned from some of the previous Government’s plans. This has not been mentioned during tonight’s remarks, but they planned to make similar reductions in the Department’s spending—albeit over a slightly longer time scale, I certainly give the right hon. Gentleman that. The reductions would have been significant, however, and whenever we have debates about the Department, we never hear which programmes the Opposition would have cut if they had been returned to government. That whole issue clouds the debate, and the failure to address it undermines the case that the right hon. Gentleman and his hon. Friends make.

[Grahame M. Morris]

Will the Minister explain the issue of choices in connection with a point that the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) made about the coalition Government choosing to fund the upgrading of the A11 in Cambridge, but not the dualling of the A1 north of Newcastle?

[Mr Davey]

All Governments have to make choices, and my right hon. Friend was saying that the Labour Government failed to choose to upgrade the road that serves his constituency, so again I am afraid that they do not have as good a record as some Opposition Members would like us to believe.

[Tom Blenkinsop]

On choices, can the Minister say how many Liberal Democrat local authority group leaders agree with the Government’s current policies?

[Mr Davey]

I believe that they all do, and I will explain why. They know that this coalition Government are improving the public finances, which is vital for the stability of our economy and for investment in the north -east and other regions, and are prepared to take the tough decisions which, if one were to believe what Labour Members have said, their party would have ducked.

I share the desire of the right hon. Member for Newcastle upon Tyne East to ensure that the north-east can share in sustainable, long-term economic growth. He made that case with passion, and the Government agree that we need to make such growth our overriding priority. We want to forge a new model for growth—one that is based on rebalancing the economy, both geographically and in terms of sectors, and which promotes innovation and boosts exports, not merely relying on consumption that is, in many cases, fuelled by public debt. That is why we have set up the growth review, which is a root-and-branch analysis of the barriers that impede business growth, and the structural reforms that we believe are needed to boost economic growth across the country. The initial phase is focusing on immediate priorities for business by improving the competition regime—on which I am leading—increasing exports, reforming the planning system, and cutting red tape and regulation. That will underpin this year’s Budget. A huge amount of work is going on in that context.

When my right hon. Friend the Business Secretary recently made a statement to the House about the trade and investment White Paper, the hon. Member for Bishop Auckland (Helen Goodman) said that she was worried about where inward investment would come from. I refer her to that White Paper, which talks a great deal about the importance of inward investment for all regions of our country. Many excellent firms in the north-east contribute to this country’s manufacturing exports, and I believe that they will strongly welcome the policies and framework that the White Paper sets out.

In the meantime, we are introducing a range of policies intended to support enterprise so that companies can grow and create new jobs. Let me highlight just a few of those. We are cutting the main rate of corporation tax from 28p to 24p by 2014. We are reducing the small companies rate from 21p to 20p—not increasing it as the previous Administration had intended. We are cutting the unnecessary red tape and bureaucracy that hinders, rather than helps, UK firms. We are boosting adult apprenticeships funding by up to £250 million by the end of the spending review period to create up to 75,000 more places a year. We heard nothing about the apprenticeship scheme from Labour Members. It is a huge success. I do not know whether any of them took part in national apprenticeship week, as I did in my constituency. At many of those events, we noticed the enthusiasm of employers and their potential apprentices, with large numbers of people getting really excited about this new opportunity that the Government have provided.

[Roberta Blackman-Woods]

The Minister’s attention was obviously diverted when I spoke about apprenticeships and the need not only to have apprenticeships but to be able to move people on into employment.

[Mr Davey]

I apologise to the hon. Lady if I did not listen when she was talking about apprenticeships, but I did notice her reliance on strategies for skills. What I found rather odd in several policy areas under the previous Government is that they spent a huge amount of money on forming strategies, and then, a year or two later, they were looking at another strategy. In my view, if we have a strategy, we should stick to it and implement it rather than keep changing it, as happened so often under the previous Government.

We are also striving hard to bring about a renaissance in the UK’s industrial base, which has had some serious problems in recent years. Sectors such as advanced manufacturing are critical in creating a more diverse, resilient economy in future. That sector, among several others, is very much part of the growth review that my right hon. Friend the Chancellor will talk about in the Budget.

[Tom Blenkinsop]

The current GDP figures in Britain are incredibly worrying, although admittedly there has been an increase in manufacturing. However, that increase is down to inventory and raw material spending. At many manufacturing sites, short-time working agreements have been taken away, bringing the work force back to their previous contractual hours, which had been reduced.

--- Later in debate ---

[Mr Davey]

We are seeing the creation of new manufacturing jobs in the north-east. I hope that the hon. Gentleman welcomes that. I am glad that he has noted that manufacturing and manufacturing exports appear to be picking up. We cannot be complacent about that, which is why we are determined to do the things that I am outlining.

[Phil Wilson]

rose—

[Mr Davey]

I will give way, but I do then want to make some progress.

[Phil Wilson]

I thank the Minister for giving way. Does what he said about manufacturing mean that the Government will give the go-ahead for the Hitachi factory at Newton Aycliffe?

[Mr Davey]

That was a good try, but the hon. Gentleman knows that I am not the Minister responsible for that decision. I congratulate him on his attempt. I would have thought that he would welcome much of what the Government are doing on matters such as apprenticeships, which I believe give businesses in the north-east a lot of the backing that they need.

[Mr Iain Wright]

Will the Minister give way?

[Mr Davey]

No, I am going to make some progress.

The area has a proud industrial heritage, and today its firms are establishing a competitive lead in a number of 21st-century industries, as the right hon. Member for Newcastle upon Tyne East said. The north-east has a strong reputation in areas from health care to life sciences, and from micro-electronics to cutting-edge low-carbon technologies. It accounts for more than 50% of the UK’s petrochemical industry and about 35% of the country’s pharmaceutical output. It benefits from a number of other economic assets: world-class universities, good transport links, and entrepreneurial citizens who are launching new businesses in growing numbers.

This Government recognise that Britain cannot rely on one sector in one part of the country for its national prosperity and the resulting policies that we are implementing to rebalance the economy will free the north-east to unleash its full economic potential at last. This Government also understand that if balanced economic growth is to be achieved across the country, policies cannot be dictated from Whitehall. That is why we are encouraging the formation of local enterprise partnerships across the country, which will work with the grain of functioning local economies.

Local enterprise partnerships will bring together local business and civic leaders to power the economic regeneration of their communities by focusing on creating the right local conditions for private sector jobs and growth. That is real power shifting away from central Government and quangos, and towards local communities and local businesses that understand the barriers to growth in their areas. The partnerships are free to focus on infrastructure investment, transport, skills and a host of other issues. I think it is good news that the north-east has two local enterprise partnerships, one covering the Tyne and Wear area and the other the Tees valley. They are busy identifying the economic priorities for their areas. I pay tribute to all business leaders who have risen to this challenge. We have also set up a £1.4 billion regional growth fund, which is open to public-private partnerships such as LEPs, to kick-start economic expansion, especially in areas where private enterprise has not previously flourished.

The right hon. Gentleman made a number of points, and obviously he was particularly concerned about the abolition of One North East. I pay tribute to much of the work that was achieved by One North East. Anyone who analyses its record can see that it did good things in many areas. However, time moves on and we now have a huge budget deficit. We have to cut our cloth according to what we can afford—a fact that seems to be denied by Opposition Members.

Members not just of this Government, but of this whole coalition have been active in working hard with business to ensure that there are jobs in the future. I pay tribute in particular to my hon. Friend the Member for Redcar (Ian Swales) for his work, with the Secretary of State, on the problems of the Corus plant in Redcar. I hope that in due course we will have good news about the work to ensure that that plant continues and that jobs are not only saved, but extended. Much of that will be down to the work of my hon. Friend.

The Government share the right hon. Gentleman’s desire to see the north-east flourish, along with the rest of the country. That is why we are going all out to create a business environment that gives companies the confidence to invest and grow, and why local communities are being freed from central control to determine their own economic future. That is the key to achieving economic regeneration and sustainable growth, both in the north-east and elsewhere.

Question put and agreed to.