North-East Independent Economic Review

Iain Wright Excerpts

Thursday 5th September 2013 Commons Chamber

[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.]

[Mr Speaker]

Order. I say to the hon. Member for Hexham (Guy Opperman) that he may chunter from a sedentary position on a continuing basis to no evident purpose, but he must bear his burden with stoicism and fortitude, in the best parliamentary tradition.

[Mr Wright]

Thank you, Mr Speaker.

I am conscious of the time, but will the Minister comment on the global competitiveness index, which shows that our infrastructure ranking has moved from fourth in the world to 28th? That will not help productivity and innovation.

It is clear from the remarks of all north-east MPs that the region does not face inevitable and terminal decline. We are not asking for handouts or sympathy as we somehow slide towards obsolescence. The north-east has always been characterised by grit, ingenuity, invention and imagination. It led the world through the industrial revolution and has the potential in the 21st century to be the biggest global player in fields such as low-emission vehicles, renewable technology and high-value engineering.

To achieve that potential, the north-east needs a Government who are on the side of its businesses and its people, supporting it through a long-term industrial policy and giving it the freedoms and flexibilities needed to chart our own destiny, not a Government who prioritise austerity and neglect, as this Government have done over the past three years, and turn a blind eye to high unemployment and low pay.

The Minister has heard today of the potential and ambition of the north-east. We need boldness and action now. Will he and the Government deliver?