North-East Independent Economic Review

Ian Swales Excerpts

Thursday 5th September 2013 Commons Chamber

[Ian Swales (Redcar) (LD)]

I congratulate those who have secured the debate. For a small but beautifully formed part of the country to be discussed in the main Chamber is terrific. I bring apologies from my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who unfortunately cannot be here as he is on Justice Committee business. He certainly wanted to be.

I welcome the high-quality report. I was slightly surprised at some of the critical remarks about it in the opening speech, because I understood it to be a bottom-up initiative by a lot of people in the region, and therefore a good summary of what was happening and what should be done. Lord Adonis said in his report that he had been immensely stimulated by being in the region and meeting various people, and had left “full of optimism”. That is certainly the spirit in which we should see the future.

I welcome the five key aims set out in the report, especially the one about the skills agenda. We saw in the news today that Dyson had said it would employ 2,000 more people if only it could find the technical and engineering staff that it needed. It is frustrating for me, in an area of high unemployment, constantly to meet employers who say that they cannot find the people they need. We also need more entrepreneurs in the north-east. That is not well covered in the report, but we have one of the lowest levels in the country of entrepreneurship and small and medium-sized enterprises. There is plenty of room for growth there.

As a Tees valley MP, I look at the report through the lens of that area, and I would make one observation that is meant to be helpful. The report is quite heavy on structures and low on dynamism and the private sector. I know that there are real issues in the North Eastern local enterprise partnership area, but Tees Valley Unlimited is different in that the local authorities come together in the LEP rather than as a separate group. That leads to cohesion and also gives the LEP a strong mandate for action. It remains to be seen how the north-east’s structures will work in future.

Of course, our region has been hit hard by the decline of traditional industries, but it is recovering. As has been said, it is the only region with a net trade surplus, and we are benefiting from the Government refocusing on manufacturing. Recent figures show growth in manufacturing, and Redcar steelworks had record production just a few weeks ago. The Government are also making more effort on foreign trade, which is benefiting our region, and we can all do our bit. As chair of the all-party group on the chemical industry, I was pleased to lead the north-east process industries trade mission to India in March.

The Government have been working hard on the north-east in many ways. Enterprise zones have been mentioned, and I am delighted that those in the Tees valley have already attracted 10 new companies and more than £400 million of investment. The regional growth fund was derided earlier in the debate, but let us remember that it is genuine regional policy. Only the areas that really need the money are getting it. The north-east is a huge beneficiary—in rounds 1 and 2, the two LEP areas got nearly one third of the entire country’s projects.

[Mr Kevan Jones]

Is it not a fact that in the last year of the regional development agency, it had an annual budget of nearly £250 million? Now the Government have taken that away, which the hon. Gentleman voted for, and there is a bidding game in some areas. Some of the decisions that are being taken are difficult to justify given the deprivation that exists and the support that areas need, but they are perhaps being taken for political reasons. The idea that the regional growth fund somehow replaced what was taken away is complete nonsense.

[Ian Swales]

I accept the hon. Gentleman’s point about the amounts of money concerned, but of course we were left in a situation where the Government were basically bankrupt. It is excellent that instead of spraying money around all the regions of the country, the Government have picked the regions that actually need it. The limited amounts of money are coming to areas such as the north-east. The recent announcements of EU funding are of course welcome, and I congratulate the Government on taking only a small slice of it, as opposed to the 50% slice that I believe the previous Government took. The EU’s recognition of Tees valley and County Durham as areas needing special assistance is welcome, because it will result in large amounts of money. There is more to come from the EU youth unemployment funds, because we qualify on that ground too.

The hon. Member for Burton (Andrew Griffiths) said we should celebrate good news. It was great to see the ground being broken for the Hitachi factory a few weeks ago. It already has its first orders. We have heard about the effect that Nissan has had on the north-east. Hitachi has the potential to be a similar success story, with the supply chain as well as the company itself. We should celebrate that.

As the briefing for hon. Members states, the North Eastern local enterprise partnership is the fourth biggest. It is working on a huge number of activities. Were my right hon. Friend the Member for Berwick-upon-Tweed in the Chamber, he would certainly mention the need to continue with rural broadband investment for Northumberland, and to build on the recent Government announcement on dualling the A1.

The overall region is stronger with two LEPs based on the two main conurbations. I have spoken in previous north-east debates on how I believe that the Tees valley lost out under the old arrangement. The statistics are clear on that. I congratulate Tees Valley Unlimited on its work. As well as enterprise zones and successful regional growth fund bids, it has an economic strategy and a business plan. It is aiming to have 25,000 extra jobs over the next 10 years. It has launched a £20 million contract catalyst fund, giving performance bonds for small and medium-sized enterprises; secured £12 million for a pinch point on the A19; and engaged with more than 750 local businesses.

We are getting much needed improvements to local bus and rail services, including a new rail station at James Cook hospital.

[Andy McDonald (Middlesbrough) (Lab)]

The hon. Gentleman makes an excellent point on transport infrastructure, but, on TVU, does he share my frustration that we are not making the progress we should with the Tees valley metro, which would be a driver for our economy locally?

[Ian Swales]

I share the hon. Gentleman’s frustration—in fact, he has stolen the next sentence of my speech. One way in which we have suffered over the years has been the lack of serious efforts on Tees valley transport, particularly in respect of the metro. It remains a scandal that we have railway line passing within half a mile of the airport but no link to it.

We can see the effects of the improvements in my constituency. Unemployment is down by 8% in the past year and by 15% among the 18 to 24-year-old age group. However, unemployment is still way too high, as is long-term unemployment.

I and the North East LEP welcome pragmatism based on real geography. For example, the area I represent is firmly aligning itself with the Welcome to Yorkshire tourism brand. We are part of the historic county of Yorkshire. We have a race course that is marketed under the Go Racing in Yorkshire brand; a large slice of the Yorkshire coast; and part of the North York Moors national park. It is therefore right that we align with that tourism body. I wish the North East LEP well—it is important for all hon. Members that it succeeds—and welcome the joint meetings that are taking place on matters of common interest such as transport and finance.

The threat from the EU was mentioned. The hon. Member for Stockton South (James Wharton) is well aware of my dismay that he should raise that subject in the House. Even the uncertainty is incredibly damaging to the north-east. I have met business people who say that the uncertainty is not helpful. An exit would be utterly catastrophic for our region.

I hope that the joint meetings take place on a case-by-case basis and that we stop short of creating any new joint bureaucracies in the north-east. We need short steps from ideas to action. We already have successful businesses, great universities and institutions, a tradition of hard work and very strong communities. If we can build on the optimism of Lord Adonis, add more aspiration and talk our region up and not down, I am sure there will be a bright future.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I congratulate my neighbour, my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), and the Backbench Business Committee, on securing this important debate. The focus of my contribution will be on skills.

I grew up in Newcastle in the ’60s and ’70s, a city and a region that valued engineering—making and building things. I remember the late Baroness Thatcher telling the country that engineering and manufacturing were the past. It was that relentless pursuit of a service-led economy that saw the level of employment in the north fall by 1.3 million between 1979 and 1987. The associated devastating impact on our communities is still felt today. It is not good for the north-east, or the UK as a whole, to have a deep and growing divide. A one nation economy needs an innovative and dynamic north-east. The region already has world class institutions, businesses, universities and of course people, not to mention—and they have already been mentioned—countryside and culture. As we have heard, we lead the way in exports and are increasingly becoming a centre for hi-tech and digital businesses. There is no better place to live, work or innovate.

The report found that we need an additional 60,000 private sector jobs to provide a balanced and sustainable economy, and that those jobs must be highly skilled and highly paid if we are to compete and prosper. That is a challenge I know the region is up for, given the right resources. In the decade between 1998 and 2008, as my right hon. Friend mentioned, and with the support of the regional development agency, the region added 67,000 jobs, many of them in the private sector. It is right that the seven north-east councils have come together to form a new combined authority. I look forward to working with it and the LEP to improve the skills landscape across the north-east. I welcome the North East LEP piloting a new skills development funding initiative, which will mean a greater say on skills funding in the region.

The report calls for a doubling of youth apprenticeships. If that is to be achieved, Ministers must allow more power and resources for skills to be devolved. If the Government are serious about localism—the evidence so far is not good—then Ministers have an opportunity to devolve significant power to the combined authority. Building the new economy that we want for our region requires an effective partnership between the public sector, the private sector and higher education, and it is vital that the structures are in place to support them. Unlike London, the devolved nations and even Manchester, the north-east has had no collective voice since the RDA was abolished to shout out our strengths or focus on our weaknesses. I, too, echo the desire of my right hon. Friend for a regional Minister.

The combined authority should have real power, knowledge and legitimacy over those in Whitehall who currently make decisions for our region. It must also have the resources. Structures are not enough—it needs the resources to build the new innovative regional economy that is set out in the report.

[Ian Swales]

Does the hon. Lady feel that extra power and resources should be focused on a group of politicians or on the public-private partnership—in other words, the LEP?

[Chi Onwurah]

The resources should be focused on our region. The partnership between the LEP and the combined authority should take control, as much as is possible under current structures, of our region’s future.

As we have heard, the fact that the Government have taken so much out of the region—£100 million has been taken out of Newcastle city council’s budget alone—does not make the task any easier; rather, it makes it much harder. What would help is control over the valuable European funds that are directed to the north-east, to ensure that they go to where they are needed. One area where the report falls down is in ignoring the importance of culture, inclusion and community. The people of the north-east are the north-east. They are an asset beyond a mere skills base. That is why the European social fund, currently administered by the Department for Work and Pensions, which focuses on extending employment opportunities and developing skills should be devolved. I understand that the DWP will match the fund only if it can control it. If that is the Minister’s idea of localism, it is certainly not mine.

There are too many people in the region who are too far from the jobs market to take advantage of the high-skilled economy that we want to build. Councils and industry in the north-east are showing the kind of leadership that we need, by working together—at long last, one might say—to form a new authority that will work with the LEP, universities, businesses and people.

--- Later in debate ---

[Ian Mearns (Gateshead) (Lab)]

Rather than going through the normal formalities and congratulations, I shall get straight on with my speech.

The north-east is not such a desolate place; in fact, it is a place of good news. We have heard the very good news this afternoon that Durham county cricket club now sits at the top of the county championship after defeating Sussex by 285 runs at the Riverside stadium. I was delighted to attend the fourth test match at the Riverside a few weeks ago when we had a good result and some excellent entertainment.

I am afraid that the north-east independent economic review was a lost opportunity as there appears to have been a lack of imagination and ambition, and of inspired and innovative ideas to build the north-east economy. The report sets out a north-east vision of “making, trading and exporting”, but I fear that it just encourages more of the same solutions that fell short of transforming our economy in the past.

There are many recommendations in the report, but mostly things that we as a region have been striving to achieve for many years. The problem is that it is a bit like extolling the virtues of apple pie without providing the means—the apples, the sugar, the flour, the heat and the rest of ingredients required—to produce the pie. It is all wishful thinking—

[Ian Swales]

Will the hon. Gentleman give way?

[Ian Mearns]

I am afraid that I will not.

There is no targeted support for key sectors such as tourism, advanced manufacturing and green energy, and no clear strategy for growth that recognises the enormous potential of the region and its people. Most importantly, there is no proposal for a co-ordinated strategic authority such as One North East, the former RDA, or for a Minister to lobby at the heart of government.

I completely support the recommendation to encourage foreign students to attend our universities to diversify the region, but it flies in the face of much of the Government’s policy on immigration and learning academies. The Government seem to disregard completely the fact that international students not only attend lectures, write essays and sit exams, but import money into local economies, create new enterprises, support work with local industry, and make vast academic, cultural and financial contributions to regions such as the north-east of England.

Another significant—if not the most significant—aspect of the report is transport. It is essential that the north-east’s links to national and international economies are improved, so I welcome proposals to pool funding from the various authorities to deliver a regional transport strategy, which would hopefully result in improved roads and rail, bus and metro services.

I use the word “hopefully” because funding is essential to achieve those aspirations, but I am not convinced that the Government are willing to put their hands in the coffers for the north-east to the extent that they are for other parts of the country. In response to that assumption, Ministers might say that I am over-sceptical, given the announced improvements to the A1 in my constituency at the Lobley hill pinch point. Although I am delighted by such overdue improvements, the region should not be settling for scraps from the table. We should be demanding the best and most effective transport systems that are on offer for other regions in the country, so let us consider spending per head on transport infrastructure projects by region.

A report published by the Institute for Public Policy Research in June called “Still on the wrong track” highlights the distinct disparities: the north-east receives only £5.01 per head of population whereas Londoners receive £770 a head. When thinking about national funding and taking into account the needs and special requirements of the capital, we might rationally determine that it should get twice, three times or five times the funding of other regions, but should it get 154 times the funding of a region such as the north-east? Such a thing is repeated year on year. If the roles were reversed, the screaming of London Members in the Chamber would be heard in Southend. I wonder how many Ministers have driven up the A1 north of Catterick and realised that it is no longer a motorway because it peters out into a dual carriageway with the occasional crawler lane as part of the motorway system.

Last month we heard about Government proposals to introduce fines for people hogging the middle lane on the motorway—chance would be a fine thing in the north-east of England. There is no middle lane because there are no three-lane roads; it is that bad. North of Newcastle, north of Morpeth, the road peters out into a single lane in each direction between Newcastle and Edinburgh. It is not good enough. The people of the north-east deserve better, not just from this Government, but from every Government.

Then we are being told that we will get investment from High Speed 2. In 20 to 30 years, that will deliver trains that will do the journey from London to Newcastle via Leeds 20 minutes faster than 20 years ago. In 40 to 50 years, we will have achieved a 20-minute decrease in the journey time to London. That is not good enough.

I emphasise that the report lacks ambition. My borough of Gateshead has largely been transformed in economic, environmental, cultural, architectural and educational terms in the last 30 years. How much more could we do if the whole region was given ambition and galvanised to make the sort of improvement that we in Gateshead have made? We need to do more and much more quickly.