Policy for Growth

Ian Mearns Excerpts

Thursday 11th November 2010 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

We need to put into context the debate on economic growth, or as I might, surprisingly, put it, the new deal programme proposed by the right hon. Member for Wokingham (Mr Redwood), who seemed to be talking about a public sector growth package at the end of his speech, which was very welcome.

The consensus on the Government Benches is that it was a waste of money to use the regional development agencies to put public investment into the regions to stimulate economic growth, revitalise our northern cities and increase wealth, prosperity, enterprise, quality of life and opportunities. It is clear that many Government Members, including many Liberal Democrat Members, think that 13 years of sustained public investment were a complete waste of effort and resources.

Clearly, that must be the coalition’s position, and the position that all Government Members adhere to. Why else would they have abolished the RDAs within days of taking office and replaced them, down the line, with local enterprise partnerships, which have no resources to establish themselves and no fixed agreement as yet on their boundaries, and which, despite the Government mantra that decisions are best made locally, cannot be established without the Secretary of State’s say-so. Once established, they will have little in the way of resources and will have to bid for money from the £1.4 billion regional growth fund, which runs over three years. That is substantially less than the predecessor RDAs had from the previous Government’s coffers to regenerate our regions.

For the many Government Members who have probably never been north of Watford, or who hold the view that regional development agencies were wasteful and ineffective, let me say just a few words about my region, the north-east, and about the regional development agency, One North East.

Thanks to the work of One North East and the efforts of local authorities and other partners in the north-east, we were able to secure a major turnaround in our region’s economic fortunes. The region is still heavily dependent on the public sector, but in the period immediately before the 2007 financial crisis and recession, private sector growth in the region was significant. During that period, the rate of economic growth in the north-east exceeded that of London and the south-east, and was substantially higher than the national average. The proportion of new business survival was higher than it had been for decades, and our business failure rate, in very tough circumstances, was no worse than the national average. The north-east saw year-on-year reductions in unemployment from 2000. Between 2000 and 2005, unemployment in the region fell from 108,000 to 64,000.

The north-east is now recognised across Europe as one of the regions that put science and technology at the very heart of its economic strategy. Science parks such as Knowledge Campus in my constituency and NETpark in the constituency of my hon. Friend the Member for Sedgefield (Phil Wilson) have helped to support that high-tech industry growth as a major investment into the region’s key sectors. Innovative industries such as health science, new and renewable energy and process industries, and creative industries such as content-based businesses, including computer games and video production companies, grew faster in the north-east than in the vast majority of the rest of the country. There are now more than 2,800 creative businesses operating in the north-east, employing 26,000 people.

The RDA, One North East, was pivotal in rejuvenating those industries in the region, and incredibly importantly, our tourism industry. Its highly acclaimed and award-winning “Passionate People, Passionate Places” advertising campaign has brought significant growth and coherence to the region’s tourist industry. In Newcastle and Gateshead alone, 20,000 are employed in the hospitality industry. However, the campaign’s success has gone far beyond the region’s core conurbation of Gateshead-Newcastle—it has brought new life into rural Northumberland, County Durham and Tees valley.

That is not exactly a picture of failure. In fact, it is a great success story, but this Government, because of their blind addiction to a particular economic ideology, now want to jeopardise that success to the point of extinction. That is tragic.