Unemployment (North-east)

Grahame Morris Excerpts

Wednesday 20th June 2012 Westminster Hall

[Grahame M. Morris (Easington) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Brooke. I congratulate my neighbour, my hon. Friend the Member for Hartlepool (Mr Wright), on securing this debate, whose importance is illustrated by the number of Labour Members who are present. I was going to try to be good and not lampoon—sorry, lambast—the coalition Government, but I cannot allow some of the comments made by the hon. Member for Redcar (Ian Swales) to pass with no response.

The hon. Gentleman’s suggestion that the regional growth fund is an improvement in regional policy is completely incorrect. Any region can apply for funds, not just the most disadvantaged regions. I cannot understand why Easington, with an unemployment rate of 11.3%, is denied an enterprise zone and support from the regional growth fund, when affluent areas such as Oxford, Cambridge and Kent have enterprise zones and their companies are supported by the regional growth fund. Surely if the Government’s policy is to address regional imbalances, that is a good starting point.

[Ian Swales]

Will the hon. Gentleman give way?

[Grahame M. Morris]

The hon. Gentleman would not afford me that courtesy, but in the spirit of debate I will give way to him.

[Ian Swales]

I apologise to the hon. Gentleman for not giving way. Perhaps I was in full flight, and did not see him seeking to intervene. Does he know how many projects in London and the south-east have been awarded regional growth fund money?

[Grahame M. Morris]

I do not, but I know that in my area I have lobbied hard on behalf of a number of companies that could bring substantial benefits to a hard-pressed area, and we are still waiting for decisions. That aspect of Government policy needs to be addressed.

The other issue that I am worried and upset about is that a Liberal Democrat occupies one of the highest offices of state, and the hon. Gentleman mentioned that Ministers often visit the area. They do not afford me the courtesy of saying when they are coming. When the Secretary of State visited my constituency, I was not advised in advance and I was not in a position to lobby him with bids from my area. However, I have taken that up separately. I will now try to make progress because I know that many hon. Members want to contribute.

I remind hon. Members that unemployment in my region is up by 8,000 to 145,000—a rate of 11.3%, which is higher than the national average. Under the Labour Government, the gap between the economy of the north-east and those of other regions was closing, with private sector business growth and employment. The Member for Redcar quoted some figures. In fact, after 10 years of Labour Government, the unemployment rate in the north-east was 5.7%—Labour came to power in 1997, and in November 2007 to January 2008 it was 5.7%—which was only 0.5% higher than the UK average. Now, though, it is 11.3%, which is 3.3% higher than the national average.

I did want to start on a positive note—[Laughter.] I am sorry about this, Mrs Brooke. I wanted to welcome the invaluable contribution that Nissan has made to our regional economy. Nissan is located in the constituency neighbouring mine to the north, represented by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson). Nissan’s presence has some benefits for the supply chain in east Durham. I commend Nissan for its tremendous commitment to our area. It is a shining example of what the north-east is capable of achieving with the right support from local and national Government. As hon. Members will be aware, the two new car models that are to be built will create more than 3,000 jobs across the UK over two years. Some 600 of those will be at Nissan’s Sunderland factory, with the remainder in the supply chain. I do not wish to criticise that success story.

I am looking to the Minister—[Hon. Members: “The Whip.”] Well, I will afford him the courtesy of calling him Minister. Welcome though they are, those new jobs do not come close to countering the job losses in my constituency. Over the past few weeks, I have referred to the haemorrhaging of private sector jobs in east Durham. That should be a real concern—it certainly is for me and all those who are affected. I cannot remember so many job losses in my constituency since the pit closure programmes, which is indicative of the desperate situation faced by many constituencies such as mine.

The Government’s Work programme does nothing to address the fact that unemployment is often focused in communities with the weakest local economies. The problem in the north-east is not so much one of joblessness as one of worklessness. My hon. Friend the Member for Hartlepool mentioned the ratio of the number of people out of work and the number of vacancies, which is limited. I refer the Minister to an excellent report on that subject published by Sheffield university, which makes some positive suggestions about what could be done.

The Work programme has been in operation for one year, during which time the number of people in Easington claiming jobseeker’s allowance has risen by 20%. About 1,000 job losses have been announced in the past month, and that will affect my constituency, where 3,195 people are out of work. Companies closing down include Cumbrian Seafoods, JD Sports, Dewhirsts, Reckitt Benckiser and Robertson Timber. Some of those companies—all private sector—are closing as a consequence of the decline in the building and construction industry, but mostly it is a consequence of a reduction in demand.

There is yet another side to the story. Easington has a strong manufacturing tradition, with companies such as NSK, Caterpillar, GT Group, Actem UK and Seaward Electronic. Those companies are looking to the RDA replacement bodies and the Government for signs of support that will enable them to take on more workers. There are some large-scale private sector regeneration projects in the offing, but again we need leadership and support from the Government, because many of those programmes are suffering unjustifiable delays.

I will not embarrass the Government by mentioning the centre of creative excellence that could have created 500 jobs south of Seaham, but I will mention retail developments such as a new Tesco supermarket on the former site of East Durham college. That would create 400 new jobs and a new library—a much needed community facility at a time of spending restraint in the public sector.

Dalton Park phase 2 also offers a glimmer of hope for my constituency. Once the development is complete, it will support more than 100 construction jobs and 450 new retail jobs. It will provide new facilities that will greatly benefit the local community such as a new supermarket, hotel, cinema, and associated leisure facilities. Such planning applications are often controversial, but—incredibly—this one received the unanimous support of the local authority, as well as massive support from the local community and other county MPs, and I am thankful for that support. The development was also passed by the Secretary of State for Communities and Local Government. It is a rare phenomenon in that everybody seems to support it, but it is being delayed as the result of an application for a judicial review by Salford Estates, which owns Peterlee town centre. As I understand it, the founder of Salford Estates is a tax exile based in the tax haven of Monaco.

My point is that the communities in the north-east continue to be hit the hardest by Government policies that are driving down demand across the region. The promised private-sector led recovery has simply failed to materialise in our region, and the austerity and cuts agenda is taking money out of our local economies and making any potential recovery harder to realise. A decade of progress made under Labour to reduce the north-south divide is being reversed.

[Mrs Jenny Chapman (Darlington) (Lab)]

Is my hon. Friend alluding—perhaps not this explicitly—to the fact that problems of entrenched unemployment are very hard and take an awfully long time to fix? The north-east probably knows that better than any other region. The problem is not only worklessness but crime, mental ill health, homelessness and all the other associated problems that we know occur when there are high levels of unemployment.

[Grahame M. Morris]

Absolutely. My hon. Friend makes an excellent point much more forcefully and directly than I could, and I completely agree with her.

It is up to this Government to learn lessons from those things that worked in terms of regeneration and growth and saw our region prosper in sectors such as exports over the past decade. I find it quite offensive when members of the governing coalition denigrate Labour’s efforts over the past decade, as if that Government produced no overall success.

I did not intend to quote statistics, but I shall put a couple on the record. Based on gross value added per head, the rate of growth in the north-east went from being the lowest of all regions during the 1990s to the second highest during the past decade. Let me also put to bed another myth propagated by the Tory party which claims that our public sector was squeezing out the private sector. That is just not true. As other hon. Members have indicated, in our view the public and private sectors are not mutually exclusive but mutually supportive. Between 2003 and 2008, private sector employment rose by 9.2% in our region, while at the same time public sector employment grew by only 4.1%. Between 1999 and 2007, the number of businesses in the north-east rose by 18.7%—a huge increase that compares favourably with London’s business growth of about 19.6% over the same period.

[Bridget Phillipson]

May I give one example from my constituency to illustrate the link between public sector investment and private sector job creation? A local electrical company, Alex Scullion Electrical Contractors, carried out a lot of work with contracts to renovate social housing, apply the decent homes standard and build new social housing through labour investment. Now, however, times are difficult because that investment has dried up. That company played an important role in securing private sector jobs and supporting apprentices, and there are clear linkages between money that the Government spend and the creation of jobs in the private sector.

[Grahame M. Morris]

Absolutely. That is a terrific point and there are many similar examples. In my constituency, Carillion was involved in infrastructure projects including Building Schools for the Future and hospital building programmes. I did not mention it earlier but that company has announced 130 redundancies.

There is no doubt that the north-east was hard hit by the global downturn of 2008, but the policies of this Government are entrenching a north-south divide. To quote a Nobel prize-winning economist, Paul Krugman:

“The urge to declare our unemployment problem ‘structural’—a supply-side problem of some kind, not solvable by the ‘simplistic Keynesian’ notion of just increasing demand—has been quite something to behold. It’s rapidly entering the category of a zombie idea, which just keeps shambling forward no matter how many times it has been killed.”

The problem is that demand has been depressed. We need to stimulate demand in the economy. Quite simply, communities and areas such as mine throughout the region cannot pull themselves out of the mire without Government support. Targeted support and intervention are what we need.

[Annette Brooke (in the Chair)]

Order. I propose a time limit on the remaining speeches, initially of five minutes. Each of the first two interventions accepted will stop the clock and give the hon. Member who gives way another minute; but clearly there will be reductions in the time limit if that happens. The Clerk will ring a bell when a Member has one minute left.

--- Later in debate ---

[Grahame M. Morris]

All Members have had discussions with companies and industrialists, and the issue that comes through to me is lack of demand and consumer confidence. It is not so much the impact of the eurozone, and so on—it is lack of domestic demand. Government policy is exacerbating that.

[Sir Alan Beith]

That is partly true, particularly in retail and parts of the construction industry. It is not true in some of our exporting industries, which are still finding demand and achieving sales in many parts of the world. Clearly, we want to increase demand. What we cannot do is simply pump more and more money—because we do not have it—into the economy.

I want to refer to some of the ways in which we must tackle the three weaknesses I mentioned. One, of course, is bank lending. My right hon. Friend the Business Secretary has devoted a lot of effort to trying to get banks to lend to small business. However, he has met resistance and difficulty, and the Governor of the Bank of England has announced new measures, which I hope will take us further. The regional growth fund supplements the availability of capital, and I particularly welcome the efforts of the Newcastle Journal to bring together smaller businesses to create a bid to become eligible for the regional growth fund. It was successful the first time round, and I hope it will be a second time. The banks need to lend to small businesses on reasonable terms that recognise the viability of the projects that are being brought forward.

We have a pretty obvious candidate for infrastructure spending, where we can clearly show that there would be a benefit to the economy, and that is investment in the A1. It is seen as a handicap by many businesses when they are trying to attract other businesses into the area. If we think that Scotland and the UK benefit from being in the Union, surely we must link up effectively with Scotland.

Finally, for the development of skills we are very dependent on Northumberland college, which serves my area as well as those of neighbouring MPs. It has had something of a crisis of governance lately and gone through a difficult period. I am glad that the Further Education Minister has shown a willingness to help the college. We need it to expand its activities generally out into the areas that are closer to the homes of young people, who cannot be expected to travel 30 or even 50 miles each way to get further education. The Government are doing practical things—and they need to do more of them—to tackle those problems, which we all agree need to be addressed.