North-East Independent Economic Review

Helen Goodman Excerpts

Thursday 5th September 2013 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

It is a great pleasure to follow my hon. Friend the Member for North Durham (Mr Jones). I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on showing the same excellent leadership skills in securing this debate as he showed when he was a first-rate regional Minister. I also want to thank the Backbench Business Committee.

The north-east obviously has considerable economic strengths. My hon. Friend the Member for Sunderland Central (Julie Elliott) pointed out that car production and vehicle manufacture at Nissan is an extremely important facility, and the new Hitachi factory has come to the north-east partly because of Nissan’s success and because of the area’s links with Japanese manufacturers. We have the largest integrated chemical plant in the UK and, up to the last election, we had a very good programme on sustainable energy innovation, offshore wind and renewables. We are consequently the only region in the UK with a trading export surplus on trading goods.

It is also relevant to point out that the north-east is an extremely nice place to live, with great cities and beautiful countryside. I wish to commend the AONB—area of outstanding natural beauty—paper for proposing a partnership between the countryside organisations and the local enterprise partnership.

[Pat Glass (North West Durham) (Lab)]

Does my hon. Friend and parliamentary neighbour agree that in our two constituencies, as well as across the north-east, there are areas of outstanding natural beauty, but our local authorities are no longer in a financial position to support or promote tourism in them because of the massive cuts to their budgets?

[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.