Budget (North-East)

Debate between Ian Mearns and David Anderson

Tuesday 17th April 2012 Westminster Hall

[Ian Mearns]

That would be the case if it had not been for the hikes in VAT, which as an indirect tax particularly disbenefits the very poor in regions such as the north-east. There are significant figures showing the genuine disbenefits of that for poor people.

When William I sought to quell the north following the Norman conquest, he developed a slash-and-burn policy to subjugate the unruly barons and the Saxon citizenry, and the people of the north-east could be forgiven for thinking that the Government had developed exactly the same approach—a 21st-century scorched-earth policy for the north. In just two years, they have abolished our Minister for the north, our local authorities have had to deal with massively disproportionate cuts, our regional development agency has been eradicated and there has been a miserly investment in transport and infrastructure projects, at the same time as disposable income has been sucked out of our pockets and our high streets. My local Gateshead authority has had to cut £70 million from its budget—equivalent to £88 per head of population—losing 1,500 staff into the bargain. The average cut for the 12 north-east councils was £84 per head of population, while the 12 least-deprived local authorities in England, including Windsor and Maidenhead, Richmond upon Thames, West Berkshire and West Sussex, each lost an average of less than £20 per head of population, so we are clearly not all in this together.

Almost every aspect of the Budget looks as if it was designed to have a negative impact on the north—on our people and on our businesses. VAT on takeaway food not only most affects people with the lowest incomes but has reduced the value of Tyneside businesses, including Greggs plc, which saw £20 million to £30 million wiped off its share value when the “pasty tax” was announced. I have no doubt that the measure will also have a negative impact on the work of the Greggs Foundation, which last year donated £1.4 million to support breakfast clubs for 65 north-east primary schools, at least four of which are in my constituency. The foundation also supports youth groups in some of the most deprived communities of the north-east, and also in Scotland and Wales. So much for the big society.

In addition, the Government’s welfare benefit changes will have a massively disproportionate impact on regions such as the north-east. Currently, 11,000 people in Gateshead claim incapacity benefit and, together with the numbers on jobseeker’s allowance, almost 24,000 people are claiming out-of-work benefits. National figures show that of those people undergoing the work capability assessment, 37% have been found fit for work and 34% have been placed in the work-related activity group of employment and support allowance, but for the vast majority of them in the north-east there is no real prospect of work in the near future. If the national figures are mirrored in Gateshead, almost 8,000 people will be moved off incapacity benefit and receive lesser benefits, if anything at all.

I am told by Gateshead council that the introduction of universal credit will result in 14,500 tenants having to manage a larger personal contribution each week, which will increase demand for budgeting and money management skills, and risk more tenants being unable to manage their household budgets and resorting to expensive borrowing, including legal and illegal loan sharking. The risk of non-payment of rent, based on a calculation rate for sums not covered by housing benefit, could result in an additional £20 million not being there to be collected by local authorities, which are already struggling to cope with the punitive cuts they have endured.

Benefit reductions for under-occupancy will affect 3,478 of our current tenants in Gateshead—18% of all those with the Gateshead Housing Company. Of those, nearly 3,000 have an extra bedroom and could therefore face a 10% to 15% reduction in their benefit, and the 815 who have an extra two bedrooms could face a 20% to 25% reduction. If we magnify those numbers across the region, we could be dealing with a widespread social crisis.

[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend on securing the debate. Is the bedroom tax not an example of how much the Government are out of touch with real people? It is not just about the costs. People who have lived in a community for decades will be forced to move because they will be unable to afford to live there, and everything they have built up over many years will be thrown away as if it means nothing.

[Ian Mearns]

My hon. Friend hits on an appropriate point. Regarding how out of touch the coalition is with the vast majority of people in regions such as the north-east, its lack of understanding of how the housing market works in such places is absolutely spot on.

I am a north-east Labour MP, so I suppose that no one will be surprised to discover that I am not impressed by the Chancellor’s support, or lack of it, for the region. However, the north-east’s business community is equally unimpressed. The North East chamber of commerce has said:

“The extra cut in corporation tax is welcome and will help stimulate investment in the UK. However, relatively few North East firms will benefit from this, and we would have preferred to see a greater focus on strengthening investment allowances and cutting employment taxes, to address the two key weaknesses in the North East economy.”

Although it does not deal specifically with the north-east, the Federation of Small Businesses wrote to me when it found out that I had secured this debate, asking that I highlight its concerns. The FSB said:

“We asked for a Budget with long-term measures to help to instil confidence, rather than a barrage of micro-measures that have a limited impact on the ground. We are pleased with some of the actions to cut the burden of red tape, help to get our young workers into employment, and measures to improve access to finance…However, petrol prices remain a major concern for small businesses and we would have liked some further action on reducing the level of fuel duty to help struggling small firms.”

The cost of fuel, although important to all UK businesses, is crucial to maintaining competitiveness in regions such as the north-east. One local business that makes plastic milk bottles informed me that its biggest cost is the cost of fuel. Let us face it: in effect, that business’s biggest cost is transporting its product, which is 90% fresh air, around the UK. Given the geographical location of the north-east and the vital importance of manufacturing employment, was it too much to ask that the Government reduce fuel costs for businesses and maintain jobs in the regions?

The Federation also commented that it welcomed the enterprise finance guarantee scheme, but said that recent figures clearly show that lending under the scheme is falling rather than rising, and that the Chancellor must do a lot more to encourage banks to increase their lending to small firms without requiring the excessive personal guarantees that deter small businesses, particularly in areas such as the north-east.

The Association of North East Councils, which represents the 12 north-east authorities, was also unimpressed, reporting that almost 50% of businesses in the region have no plans to increase staff numbers in the coming months but are hanging on before deciding on reductions. Weakening sales and poor service sector performance are still preventing much-needed growth to offset public sector employment cuts. Job loss in the north-east as a whole is four times deeper than in the rest of the country. None of that has been helped by the complete lack of recognition or action in the Chancellor’s Budget.

This Government are now doing to public services in the north what they did so successfully in the 1980s to our traditional industries of mining, shipbuilding and heavy engineering: bringing them to ruin and laying them waste. If the Government’s plan to replace those jobs is to build the private sector, why are they doing virtually nothing for the north-east? The main problem is not that they are doing nothing but that they are making things worse. For the young in particular, they are removing hope.

The Government have not recognised that for a region such as the north-east, geography and the new politics of the United Kingdom are realities that must be considered. Scotland is just over the border. The Scots at Holyrood still have economic development and tourism strategies and are still offering inward investment incentives, all important determinants whether a company invests in Scotland or the north-east, but the Chancellor and the Secretary of State for Business, Innovation and Skills seem oblivious. For example, Amazon, despite considering a site in the north-east, has located in Edinburgh, purely on the basis of the grants available. Given the existing imbalance in Edinburgh’s favour, the decision to locate the Green investment bank there seems like a political and economic knee in the groin for regions such as the north-east of England.

In last year’s autumn statement, the Chancellor made much of the Government’s plans for our national infrastructure, emphasising the importance of capital spending on infrastructure to support the UK’s long-term growth prospects. He outlined £30 billion in spending, including an immediate increase of £5 billion in Government spending. As one of their central economic priorities, the Government have defined a number of ways in which they wish to rebalance the economy away from over-reliance on public sector jobs and towards private sector employment; away from over-reliance on financial services and towards manufacturing and export industries; away from over-reliance on the south-east and towards more balanced economic growth across the UK.

The Chancellor’s statement emphasised that every region in England will benefit from that infrastructure spending. He even listed a host of road and rail projects in England in his speech. However, research by the Institute for Public Policy Research on the detail behind the Chancellor’s statement paints a different picture. Behind the empty rhetoric and claims of rebalancing, we find that 11 of the 20 largest infrastructure projects will benefit London and the south-east, only five will benefit the three northern regions and more than half of regional transport projects involving public funding will benefit London.

Considered together, London and the south-east account for 84% of planned spending, compared with only 6% for the three northern regions and an unbelievably minuscule 0.04% for the north-east. That equates to £2,731 per head of population for London and the south-east, more than all the other regions combined, compared with £201 in Yorkshire and Humber, £134 in the north-west and just £5 in the north-east of England. A fiver is what we are worth, in comparative terms, in the UK of today. For each £1,000 of gross value added generated in 2009, £81 is being spent on transport projects in London, £38 in the south-east, £12 in Yorkshire and Humber, £8 in the north-west and less than 50p in the north-east.

This Chancellor and this Government have spoken in duplicitous terms, but I now wonder whether they have given up even trying to talk a good fight when it comes to rebalancing the economy. They have clearly been saying one thing and doing another, looking after their home patch while slashing and burning the regions of England. To make matters even worse, they prefer to exemplify the north-east as a basket case. Before this bunch came to office, nothing could have been further from the truth. Thanks to the support of its 12 local authorities and the regional development agency, the north-east had developed an economy that was strong, dynamic and diversified compared with when a Conservative Government last laid waste to it in the 1980s.

However, in a typically knee-jerk, ideological and spiteful reaction, this Government have abolished our RDA, despite the fact that during the last three months of 2011, the north-east enjoyed record high growth in exports. Goods worth £13.5 billion were sold overseas from the north-east, up from £12 billion the previous year. If every other region in the United Kingdom were performing as well in those terms as the north-east, we would be doing rather well indeed.

Only yesterday, I received e-mail confirmation from the largest private sector employer in my constituency—AkzoNobel, known locally as International Paints—that last year it received an essential grant from One North East to support the establishment of its fire protection research and development facility. Recently produced documentation on the legacy of One North East showed that during the past 10 years, the north-east enjoyed the greatest level of economic growth outside London, and that during the last Government, the development agency helped to increase the region’s employment massively and its number of businesses and GVA to among the highest in the country.

Before the RDA’s inception, our regional economy was falling further behind other English regions. Since it was established in 1999, only London has experienced greater economic growth, but this Government have replaced the RDAs with local enterprise partnerships, which have no powers and little or no funding, and the much-heralded regional growth fund, which has delivered only modest amounts of direct aid to companies in the north-east.

From 1999 onwards, employment in the north-east rose at the third highest rate in the country after London and Yorkshire and Humber, and 116,000 jobs were created, representing growth of 11.2%. We also had the highest growth in new businesses, 18.7%, and the highest growth outside London in GVA per head of population. Tourism, conferencing and inward investment were all significantly boosted by the RDA’s “Passionate people, passionate places” campaign. The agency’s work on low-carbon vehicle production and green energy generation are legacies on which we could build if only the Government had a credible policy for the economy.

We had a credible policy for growth in the region, a credible policy for jobs and a credible policy to rebalance England’s economy, which included the idea that the north-east is a place to do business. Sadly, this Government have none of those, and prospects for my region remain bleak. Disposable income is being sucked out of our communities through public sector job losses, wage freezes and benefit cuts.

Before the recess, the Newcastle Journal published an editorial headlined “Never mind a Heathrow runway”, which stated:

“It would be a terrible shame if the row over party funding deafened the Government to the findings of the OECD. Its report makes grim reading for the region, but not simply because it highlights the problems caused by rotten infrastructure, poor connectivity and the lack of continuity in government. No, what really hurts is that a Paris-based organisation has been able to recognise basic, obvious, well-known facts that should not have been possible to ignore. Yet successive administrations in London have managed that feat damagingly well. Never mind arguing about a third runway at Heathrow, how about helping the North East instead?”

What are the Chancellor’s answers to these regional conundrums—a brain wave, a stroke of genius, an innovative investment package? No, what we got was the concept of regional pay. If that is the direction that he wants to take, perhaps we could also ask him to consider regionally reduced utility bills for gas, electricity, water and telephones, and while we are at it, cheaper council tax and grocery bills. If the Chancellor or the Prime Minister fancy paying £250,000 for the privilege of dinner with the chief executives of Tesco, Sainsbury’s, Asda and Morrisons, they could ask them, “Could the supermarkets reduce the cost of shopping in the regions, please?” They could also ask representatives of the east coast main line to charge regionally reduced fares for journeys to London.

NHS (Public Satisfaction)

Debate between Ian Mearns and David Anderson

Wednesday 30th March 2011 Westminster Hall

[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend the Member for Leyton and Wanstead (John Cryer) on getting this debate. Like the hon. Member for Banbury (Tony Baldry), I stand here as the son of a nurse, though she stopped work before the NHS was created. Through her lifetime she saw the improvements in the NHS. I also stand as a man whose niece is fighting for her life in intensive care in the Royal Victoria Infirmary, Newcastle. She is a young girl of 40 years old. I call her a girl because from the day she was born she has been hit by muscular dystrophy. She has needed the NHS from the first minute of her life. It has been there for every moment, as it was for one of my sisters, who sadly died at 53 of the same disease. The NHS was always there for them, never perfect, but second to none when compared with health services around the world. Those of us fortunate to have better health have always been prepared to pay to ensure that those who need help were able to get it.

Due to my experience with muscular dystrophy, I have the privilege of being the chairman of the all-party parliamentary group on the subject. That group has shown what we as parliamentarians can do together. We have come together, across the parties, and made huge improvements in the past few years in ensuring that specialist commissioning groups have worked with the all-party group here and with PCTs on the ground, making real improvements in the lives of people suffering from muscular dystrophy. We had a meeting about a month ago in this House. People came from across the country and across the political spectrum, and there were also professionals in the health service. They were all concerned about the direction of travel on which the Government are bent. Their concerns are: will they still be able to access the things they need? Will specialised commissioning groups still be able to work together to deliver the services they want? They have genuine concerns that the all-party group will take forward with the Minister as the debate continues.

This debate is about satisfaction. Why is satisfaction up? There are a number of reasons. Although I have some issues with the hon. Member for Banbury, I agree with him in that I have campaigned against the private finance initiative since before the previous Government took office, since the early 1990s, when the idea was first floated by the former Secretary of State for Health and now Lord Chancellor and Secretary of State for Justice, the right hon. and learned Member for Rushcliffe (Mr Clarke). I opposed it back then, and I have thought it the wrong direction for my Government to take over the past 13 years. The truth is that my Government had to do something.

The hon. Member for Banbury hit the nail on the head when he said that spending on health was 3% of GDP in the 1980s. We know it was 3% because people were being looked after in Victorian hospitals. As my hon. Friend the Member for North Durham (Mr Jones) regularly says, in his area people were being looked after in an old workhouse. That was not good enough for the Labour party, and it was not good enough for the people of this country. That is why we decided that over the period we would increase investment in the NHS, and we increased it by 300%. The people of this country went along with that, including when we put 1% on national insurance contributions. People supported that move because they believed in the service that the NHS delivered. We should never forget that.

During discussions on developing a more capital-intensive NHS, into which a lot of money went, we saw real moves on staff harmonisation, recognising the roles of staff and increasing the responsibilities of people at different levels in the health service. A huge amount of work went into that. While that was happening, other work was being done on improving public health across the board.

The hon. Member for Southport (John Pugh) raised the issue of productivity. It is strange how he defined productivity. I would be interested to read the report from the NAO on defining it, and I am glad that he has brought it to my attention. Productivity used to be measured in the health service by recording when an episode concluded. An episode could be concluded when someone died. A hospital where more people died was more successful in terms of productivity than one where somebody kept coming back and that episode was not concluded. That is a perverse way to look at productivity. The real measure of productivity is that there are twice as many people alive at 85 and over than there were 20 years ago. Should we not celebrate that? Is that not a productivity increase of which we can all be proud? That is the result of the work done.

I am not going to pretend the NHS is perfect. We know it is not perfect; every one of us as constituency MPs will have dealt with issues.

[Ian Mearns (Gateshead) (Lab)]

It is not a question of not thinking that it is perfect, but one of wanting constantly to improve it. The hon. Member for Southport (John Pugh) offered a view, with which I concur, that an individual’s experience of the NHS is different from their broad view, based on what they read in the press. The personal experience of the vast majority of people is either positive or very positive. The broad view is less so, which is hardly surprising, since the vast majority of editors of news journals in this country do not regard good news as news at all. It is also true that many people have a positive view of services they perceive to be under threat. Take the example of a local school. There is always a more positive view if it is under threat. The problem in this country is that millions of people, sadly, believe the NHS to be under threat.

[Mr Anderson]

I thank my hon. Friend and neighbour: I will discuss that with him later.

As a constituency MP, I have had three cases over the past six years of supporting people making complaints against the NHS. We took them as far as we could, trying to raise resolutions. However, none of those people opposed the NHS as an organisation; it was the specific treatment they had received that they were complaining about. There have actually been hugely improved outcomes, as I know from talking to thousands of ordinary folk across the constituency. How happy they are that we built—thankfully, before this Government got in—a new health and leisure centre in Gateshead. Unlike the Building Schools for the Future money, that was not stopped. We got it built before 7 May last year: thank God for that. The real people who matter—the public—are concerned about where we are going.

We should be thankful for the people who work in the NHS. I get really frustrated and annoyed when I hear coalition Members and the Secretary of State, who seems to take real pleasure in denigrating trade unionists, as if trade unionists were removed from this. The vast majority of trade unionists who represent health workers are hands-on professionals. They are not sitting in an office all day; they are at the coal face. They are not just talking about representing people; they are doing it, day in, day out. It is a disgrace that a party pretending to be the party of the big society should denigrate the people who are part of the largest voluntary group in the country. They stand up for people day in and day out. At the same time as standing up for their colleagues, they work in the service, they represent the service and they fight for the people they take care of. Their voice is important; their voice is informed and should not be ignored.

What do we see? We see Ministers refusing to listen to groups within the health service. I just picked up a report of the Second Reading, when I referred to one of those groups, the King’s Fund. Others include the Ministers’ own colleague, the hon. Member for Totnes (Dr Wollaston); the British Medical Association, denigrated here by the hon. Member for Banbury; the Royal College of Physicians; the Royal College of Nursing and the head of Arthritis Care. Every one of those has been ignored by the Government, on the basis of “We know best.”

Most Conservative Members have had a degree of education way beyond mine. However, in this debate, the words of my hon. Friend the Member for Bolsover (Mr Skinner) should be heeded, when he said that a lot of them have been “educated beyond their intelligence”. If this debate does not show that, nothing else does. The truth is that constantly over the past 13 years, health professionals have said to us, “Let us get on with the job.” The promise the Conservative party gave in opposition was that it would do exactly that; it would let them get on with the job, because there has been far too much meddling in the health service. I agree with that but, now, instead of letting them get on with the job, the Government are turning the health service upside down. Not only will it not work, it will make it much worse. It is a disgrace that it is happening.