Guy Opperman
Main Page: Guy Opperman (Conservative - Hexham)North-East Independent Economic Review
Guy Opperman Excerpts(11 years, 2 months ago)
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Guy Opperman (Hexham) (Con)
It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). I suggest that we should be very proud of the report, and very proud in the north-east. As we all agree, it is the most beautiful of regions, and certainly not desolate. It is blessed with a positive balance of payments, as the North East chamber of commerce and the businesses constantly make clear to us.
Not only was the region the cradle of the industrial revolution, but this year we are leading the way. First, in the spring we had the January declaration in the north-east, which made a significant contribution to how we visualise the type of country we wish to be. Secondly, in April we had Lord Adonis’s report, which is fundamentally business-led, with the most pragmatic of Labour politicians at its head; he is someone we can genuinely work with. I am happy to say that I worked with him and supported what he was doing in creating the report. Thirdly, in June, we had the banking conference in Gateshead which a group of us organised to try to facilitate bank lending in a multitude of ways, ranging from a business bank to a local enterprise partnership infrastructure bank to community and local banks—different types of lending and expanding on credit unions that will address the fundamental problem of the lack of bank lending and finance to create the private sector jobs that we all so wish for.
The north-east is leading the way. The right hon. Member for Newcastle upon Tyne East is right that Manchester has produced a derisorily small and not very good report. We have produced a proper report that deals with what all 39 local enterprise partnerships have to do—address specific plans for a strategic economic plan within a particular time scale. Every Member of Parliament and every person in this country will have to address the problems that we are leading the way on. That is very significant. The north-east is not sitting back and accepting the state of things as they are; the north-east is making the case for change.
The strategic economic plan must be submitted by the end of March 2014, and it requires a Government response at a certain stage over the winter. It affects businesses, universities, local authorities and anyone interested in transport, housing, schools or skills—pretty much everybody. I cannot speak to every part of the report in seven minutes, but I can say that I support its broad thrust. The most important part concerns the development that has taken place over the past year-plus with the local authorities all coming together and forming the combined authority. It is absolutely vital that we go on this journey. I take the point about the Association of North East Authorities being a type of combined authority, but it is nothing like what we are going to have in future.
Mr Kevan Jones
That is a structural change, although I am not opposed to it. To be fair to the north-east councils, they have a very good track record, across the political divide, of working together. However, the hon. Gentleman cannot get away from the fact that his Government have already taken some £240 million from the local authorities covered by the LEP area in the past two years, and that is before the next round of cuts. How does he expect those councils to come up to the mark as the Government are asking them to do?
Guy Opperman
The hon. Gentleman need not take my word for it; he can listen to the author of the report and the business men and business women who believe in the north-east being able to cope with those difficulties and strongly make the case that there is optimism to be found there.
The next step as regards the combined north-east local authority is to pick a leader. I would certainly support having a mayor.
Grahame M. Morris (Easington) (Lab)
The hon. Gentleman is talking about a champion—a mayor—to lead the LA7, or strategic authority—[Interruption.] I am not canvassing for the job; I am going to suggest a job for the hon. Gentleman, actually. On that basis, does he support the idea eloquently expressed by my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) that we should have a Minister for the north-east as an advocate who did precisely that job at the heart of Government? Perhaps that would be a good job for the hon. Gentleman.
Guy Opperman
I am delighted by the recommendation for promotion, but as the hon. Gentleman knows, that is way above my pay grade and way beyond my decision-making powers.
Guy Opperman
I am happy to be modest on this occasion.
A mayor is someone working from the bottom up and driving the region forward. A Minister in the Government—I say this with no disrespect to the work of the Minister on the Front Bench or any replacement—is here for at least four days a week and unable to drive things from the bottom up. However much the Member of Parliament who was the Minister would like to be in touch with everything that is going on, it must surely be accepted that someone local needs to be driving it forward. That is certainly the case with the Mayor of London and the mayors of Paris, San Francisco and other regions, and they have been successful. It is, however, a matter for debate, which is what this process is about. A legitimate debate is taking place about how to make progress. Tomorrow I and 400 other delegates will discuss the report’s individual parts at the International Centre for Life in Newcastle. I am not suggesting that anything is set in stone, but one thing is clear: the north-east is leading the debate about where the structures should go.
In the limited time available, I want to endorse the comments made about transport. I recently met staff representatives from Newcastle airport and I welcome the developments there and the attempts to expand transport.
Clearly, future growth must be engineered through education and skills. We cannot plan for the future without more of the brightest and the best getting involved in initiatives such as Teach First and acting as role models for local children. As it stands, the north-east has only a third as many of those dynamic individuals as London. We need to motivate children from all economic backgrounds to apply to Russell Group universities. One of the report’s targets is for 35% of the area’s secondary schools and 40% of its primary schools to reach the top quartile, and it sets out some very good ways, such as Teach First and the north-east schools challenge, to achieve that. It is good that we are encouraging university technical colleges to build links between academia and industry and take advantage of the north-east’s unique characteristics.
On apprenticeships, I am pleased to say that I have made my limited, modest contribution by employing an apprentice—not as an apprentice MP, I hasten to add, but as an office manager. There should be greater incentives to encourage everyone to take on an apprentice, and the report eloquently notes specific measures that could enhance the situation.
On local community banking, at our June conference at the Sage in Gateshead 170 people came together to discuss how they could turn around their local economies and get local communities lending. On larger infrastructure, the local enterprise partnership could run the infrastructure bank. There is no reason why community banks could not be backed by local authorities, universities or the Army, which is looking at them. If we can get regional and local lending to address not just the high-cost credit issues that were discussed in the previous debate, but the issues of bank and mortgage finance, that would be a great deal better than the present, patently insufficient system whereby the big seven banks are remote, London-based and computer-run, and totally unresponsive to and not located in the community.
I cannot finish without raising two particular points. First, I welcome the comments of Northumberland county council on the need for a rural deal so that the report does not just deal with the urban centres. It needs to be for the countryside as much as for the urban centres. Secondly, a survey by Business Quarterly, which is available online, found that there is great confidence that this north-east independent review will address some of the region’s economic needs.
I support the review and will discuss and debate its benefits tomorrow. We must acknowledge that the north-east is leading the way.
Chi Onwurah
I know that many other Members wish to speak, so I shall not say all that I would like about what the Government have done to the apprenticeship programme, by devaluing apprenticeships, as well as not supporting them for older workers.
Chi Onwurah
I will move on to my closing remarks. We need leadership from Ministers and real power—
Helen Goodman
My hon. Friend puts her finger on the issue.
It would be fair to say that the North Eastern LEP’s independent economic review is a useful report. Its analysis of the state of the north-east’s economy is good; it highlights our strengths and weaknesses; and what it says about the supply side seems to reflect the consensus that has existed in the region for some time, particularly about the importance of skills and the need for higher skills if we are to secure more and better jobs. The proposal to increase apprenticeships is positive, but there is a question about whether, given the current state of the labour market, employers will be able to supply the work placements that are needed for them.
The suggestion that we build public-private partnerships between industry and education at every level from school to university is right, as is the point that we need to build on the clusters where centres of excellence already exist. We have been doing that at NETPark—the North East Technology park—in my neighbouring constituency. The report points out that it is important to build on our export links to Scandinavia, the Baltic States and Russia. It also rightly points out that a number of important infrastructure projects could fruitfully be invested in, especially transport projects. We are talking not just about the inadequate road links with Yorkshire, over the Pennines and to Scotland, but about the bus services that have been decimated recently. Something must also be done about connectivity and broadband. The hon. Member for Hexham (Guy Opperman) drew attention to the importance of access to finance. The distances to London and to Leeds are clearly problems for small and medium-sized enterprises in our region.
It is not so much what is in the report as what is not in it that I find problematic. It was commissioned by the Deputy Prime Minister, and the authors seem to have been far too polite to criticise the abolition of the regional development agency and the loss of a regional Minister. The final section, entitled “Re-balancing the economy”, lists the milestones that have been set for the end of the first year. Every one of them relates to the rebuilding of institutional capacity. No one objects to the notion that local authorities should co-operate on transport policy or innovation, but what this actually means is that if all those aims have been achieved by 2014, we shall be back where we were in 2009.
Furthermore, as was pointed out by my hon. Friend the Member for North Durham, the split in the region is completely nonsensical. A person in my constituency is just as likely to commute to Middlesbrough, and work in the chemicals industry, as to commute to Newcastle. The skills strategy needs to be for the whole region, not just for part of it.
The authors have also given little or no consideration to the purpose of economic development, which has a significant impact on the type of change. Another weakness is their failure to say enough about housing, although I was glad to learn earlier this week that the LEP is ignoring the omission and will invest further in housing.
The biggest weakness in the report, however, is surprising. Our noble Friend Lord Adonis has a reputation for intellectual rigour, but it is surely intellectually dishonest to fail to mention the scale of the cuts meted out to our region and their impact on the demand side of the economy. Supply-side measures are fine, but we must pay attention to the demand side as well. The unfair way in which the Government have addressed the fiscal deficit is extremely significant in our region.
Guy Opperman
I accept that the hon. Lady is perfectly entitled to criticise the ultimate author of the report, but there are contributions to it from a large section of the business, technical and other communities, and from a number of other authors including Heidi Mottram, Don Curry, Will Hutton, Bridget Rosewell and Jonathan Ruffer, succeeding the Archbishop of Canterbury. It is not simply Lord Adonis who has produced the report.
Helen Goodman
I agree. In fact, I have spoken to all but one of those people about that weakness in the report, which I think is a very serious problem.
The Chancellor’s switch from current to capital spending sounds brilliant. It sounds like common sense. However, only 1% of the £45 billion involved is coming to our region, although, as the report pointed out, there are plenty of potential projects there. PricewaterhouseCoopers has said that the 2010 round of cuts in our region amounted to £2.8 billion, or 7% of our total gross value added. According to further analysis carried out for us by Oxford Economics, the knock-on effect will be a further £1 billion reduction. If the International Monetary Fund is right, the second-round effect is equal to the amount of the cuts: £2.8 billion. That is totally unfair. The same level of cuts is being imposed on the southern European economies.
The Institute for Fiscal Studies believes that there will be 45,000 job losses, and Oxford Economics believes that there will be 68,000. The creation of 65,000 jobs to which the report refers will merely bring us back to where we were at the start of the process. No wonder we have the highest unemployment in the country. Added to the public service cuts I have just outlined, we have seen significant reductions in incomes to ordinary people in benefits. In my constituency the average working-age adult is losing £560 per year. The Government are taking £310 million out of my constituency. No wonder there are 70 empty shops in my constituency. No wonder 30% of the young people in my constituency have no job. No wonder the citizens advice bureaux, whose resources have been cut, say that debt is the biggest problem that they encounter.
Mr Iain Wright (Hartlepool) (Lab)
I might be slightly biased, but I have to say that the north-east has the best cohort of right hon. and hon. Members anywhere in the country in terms of their passion, commitment and determination for their local area to succeed. We have certainly seen that today. [Interruption.] You should always get them on-side first!
I pay tribute to my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), who was an excellent Minister for the region. It would be wrong to suggest, as has been suggested several times today, that the north-east comprises solely Tyne and Wear, Northumberland and County Durham. The true quality of the region as regards its people, industry and scenery can be seen best of all in Hartlepool—and to some extent, I have to concede, in Middlesbrough, Stockton, Darlington and Redcar.
What has been particularly striking and welcome about the debate is that no speaker has been negative or despairing about our region. It is not a failed region suffering inevitable or irreversible decline. As we heard from my hon. Friends the Members for Sunderland Central (Julie Elliott), for Newcastle upon Tyne Central (Chi Onwurah) and for South Shields (Mrs Lewell-Buck), it has real potential. That is reflected today in the great news that Nissan will be spending £250 million on expanding its factory in Sunderland and increasing its work force by 1,000 in order to become the first Nissan plant in Europe to produce the luxury Infiniti model. The onesies in Wansbeck are also good news.
The biggest single problem facing the north-east is skills and unemployment. Unemployment in our region is 10.3%, and getting worse. The gap between the region and the rest of the country is widening. This needs to be an urgent priority for Government. What is the Minister going to do about it? Will he explain how the abolition of the future jobs fund has helped young people in the north-east to get a foot on the career path? How has the cancellation of the education maintenance allowance helped young people in the north-east to stay on in education or training to get a skill or a trade that will get them a better job? How have savage cuts in the public sector helped demand, economic activity and public sector employment in the region?
Investment and access to finance are essential if businesses in the north are to succeed and grow. Yet the north-east is suffering just as much as other regions, if not more. Notwithstanding the great news from Nissan and Hitachi, the gap in foreign direct investment between London and the regions is widening. The Ernst and Young attractiveness survey for 2013 found that investments in England outside London were 24% below their level in 2010. The north-east secured 26 projects, which represented 4% of the UK market share of FDI—better than the likes of Yorkshire and the east of England but trailing behind comparable regions such as the west midlands, the north-west and, crucially, the devolved nations, and well behind London, which alone captured 45% market share of total FDI. Ernst and Young concludes:
“It appears that the abolition of the RDAs may be starting to undermine not only the regions in which they operated, but also the UK’s ability to sustain its overall leading position for inward investment.”
Will the Minister comment on that? Will he also address a theme that has emerged throughout the debate—that this is not so much about structure or process but about our need for outcomes on employment, innovation and productivity, not at some distant point, but now, to help the people of the north-east immediately?
Very often, the absence of business investment is because firms have no access to finance. Speaking this week to northern MPs, the managing director of the Tees valley local enterprise partnership said that that is the single biggest factor affecting firms and their ability to grow. I mentioned this in a Westminster Hall debate yesterday. Every initiative that the Government have attempted to put in place has failed. Net lending to businesses has contracted in 21 of the past 24 months. That is confirmed on the ground in the north-east. John Anderson, chairman of the North East Business and Innovation Centre, said bluntly in an interview with the Newcastle Journal last month:
“In the North East, Government lending channelled through banks has not been reaching businesses.”
Will the Minister acknowledge that none of the Government’s initiatives have worked? Will he pledge to change policy and come up with schemes that will succeed in securing access to finance for small and medium-sized firms in the north-east that have the potential to grow?
Guy Opperman
Does the hon. Gentleman at least accept the report’s recommendations on the business bank? Specifically, does he now accept—he did not when he voted against them in April 2012—that community banks are the way forward for the north-east?
Mr Wright
Businesses do not have confidence that the Government’s business bank is having any impact whatsoever. It is slow off the mark—[Interruption.] If the hon. Gentleman would stop chuntering and allow me to speak, I will respond to his question. The business bank is not working. It has had no impact in the regions. It is merely a desk in the Minister’s Department in Whitehall. A proper British investment bank would help fast-growing, innovative businesses, working together on proposals for a network of regional banks, to spark activity and economic growth in the north-east as well as other regions.
A number of hon. Members have discussed Government spending and infrastructure. The north-east has been singled out for particularly savage cuts. My hon. Friend the Member for North Durham (Mr Jones) mentioned the more than £200 million-worth of cuts in the local enterprise partnership area over the next two years. Hartlepool and Middlesbrough have been particularly badly hit.
The Institute for Public Policy Research has set out clearly:
“The North…suffers from weak public investment: government spending per capita on science and technology and transport in the North is almost half that spent in London and the south east.”
As my hon. Friend the Member for Gateshead (Ian Mearns) said, that has a long-term cumulative effect: lower spend and investment lead to weaker demand, competitiveness and economic growth, which in turn undermines a justification for additional spending and investment.
As my hon. Friends the Members for Gateshead, for South Shields and for Bishop Auckland (Helen Goodman) have all said, the north-east did not do well in the Government’s announcement in June on infrastructure. That has been exacerbated by the capital spend cuts of northern local authorities. The North East chamber of commerce said at the time:
“One disappointing element of today’s announcement is the lack of investment in projects in the Tees Valley, which requires significant infrastructure upgrades.”
Will the Minister explain why that was the case?
In the three months since the announcement, there has been precious little evidence of work commencing. When will the construction of the A19 Testos flyover start? When will the A19-A1058 coast road improve access to the Port of Tyne? When I used the A19 last week to visit Ford Aerospace in the Port of Tyne in the constituency of my hon. Friend the Member for South Shields, I saw precious little evidence of work on the ground. There seems to be a big lag between Government announcements and actual work starting. Will the Minister display a sense of boldness, priority and urgency and deal with those matters now?
Will the Minister comment on yesterday’s announcement in the World Economic Forum’s global competitiveness report—[Interruption.]