Unemployment (North-east)

Ian Swales Excerpts

Wednesday 20th June 2012 Westminster Hall

[Ian Swales (Redcar) (LD)]

It is a pleasure to serve under you today, Mrs Brooke, and to see you back in the House, almost fighting fit.

I congratulate the hon. Member for Hartlepool (Mr Wright) on securing the debate and on the 150 new jobs in his constituency announced this week. Unemployment remains my No. 1 priority. The north-east is indeed bottom of the unemployment league and has been for many years, including in 1997 and 2010. With £1 in every £4 of public spending being borrowed, we sadly inherited an economy built on sand. Clearly a lot had to change.

[Several hon. Members]

rose—

[Ian Swales]

I have hardly started. I will give way in a moment, when I have got further into my speech.

Solutions to the problem have to be bottom-up and top-down. My local council—before an Opposition Member points it out, it is a Labour council—deserves praise for its infrastructure work, adding new seafront work and leisure investment to the huge Environment Agency spend on flood defences, as well as the Government investment in MySpace, which is going on in Redcar. It was good to see the Association of North East Councils visiting Redcar a few weeks ago to see what is happening. However, it is disturbing how many of the construction jobs are not going to local people. I have raised that with the council, because it is important for the north-east to help itself as much as possible and not to have such jobs going to people who travel into the area. My local council is taking a high risk, however, because the Audit Commission says that at the end of the work it will have the highest debts in the country for the size of the council, but at least it is doing something.

I praise the Government for investment in local infrastructure, in the Teesside railway system and, in particular, the recently announced refurbishment of stations, including all six in my constituency. House building is obviously a good option, but in areas such the one I represent the population is static or declining. We need to upgrade our housing stock. That is true throughout the north-east, but as I keep reminding my council, if we do not plan for the overall stock we get market failure. That has already happened in three parts of my constituency: South Bank, Grangetown and West Dormanstown.

We need a lot more focus on enterprise by our councils. I cannot speak for other areas, but my local council of Redcar and Cleveland often proves to be difficult to deal with. We recently lost 200 jobs when a potential new investor simply gave up and went somewhere else. I welcome the new enterprise zones, including three in my constituency, which are already attracting interest. I hope that we will prove to be easy to deal with and get companies into those zones.

These debates always lead to a lament for the RDA at some point, and the hon. Member for Hartlepool has already touched on that. It is interesting to note that, in a sense, RDAs were not a regional policy; they covered the entire country and all got large sums of money. I salute the bravery of the present Government in supporting only projects in hard-pressed areas such as the north-east with the regional growth fund. That is one reason why the north-east is getting a large share of the regional growth fund money.

[Chi Onwurah]

The hon. Gentleman says because all the RDAs were abolished, the abolition of One North East was not a regional policy. As a member of the Liberal Democratic party, however, does he not agree that his party stated specifically that One North East would be saved, because it was admired by both public and private sectors? Its demise has been regretted ever since its abolition.

[Ian Swales]

That was never party policy, but it was a remark made by the Business Secretary. I think everyone recognises that One North East was the best of the regional development agencies. My point was that giving money to every region will not rebalance the economy. I salute the bravery of our Government in not giving money to regions that do not need help.

A month or two ago, I said in this Chamber that in the two years before the general election, the RDA approved 96 projects, worth £148 million, in which One North East directors had to declare an interest. Of those, only eight projects and £6 million related to the Tees valley. The Tees valley got a poor deal from One North East. Experian assessments place Hartlepool, Middlesbrough, Redcar and Cleveland in the weakest 10 economic areas of the country, so I welcome the local enterprise partnership and its work.

The LEP is doing a lot of good work, part of which is defining clusters—we have process industries and automotive clusters, and we are now developing a steel cluster. The welcome news is that Sahaviriya Steel Industries has bought the Redcar steelworks, and is now producing; Tata is still in the area, and opened a new research centre just two weeks ago, which had some Government support; Siemens has its worldwide centre for steel processing development in Stockton; and Teesside university is opening up a new department, so a good cluster is developing there. We also have clusters in green technology, and I welcome new initiatives in renewables, with the industry forming the Energi Coast group—20 companies getting together to exploit the new market jointly—and Narec has been included in the new technology innovation centre for renewables. Clusters attract like-minded companies. Global Marine Systems has just relocated from Essex to Middlesbrough, and last month it hired the Riverside stadium to recruit people.

Manufacturing is having some success in the area. International trade is booming with record exports— the best ever—from the region during the 12 months to March, including 20% growth in exports outside the EU. Jonathan Greenaway, a partner at PricewaterhouseCoopers in Newcastle, recently reported those successes and said:

“This is a great time of opportunity for manufacturers, and…UK companies are really rising to the challenge.”

We have some problems with the public sector, to say the least, with job losses and so on. I believe that taxpayers expect efficiency in public services and that they do not see them as job creation exercises, but there has been a worrying trend of relocation of jobs, certainly out of the Tees valley. Under the previous Government, the ambulance service was lost—it still baffles me that an area of 750,000 people is not deemed capable of running its own ambulance service, but that was moved out of the area. We also lost the office of Her Majesty’s Revenue and Customs in Middlesbrough, and thus 400 jobs. There are other potential problems, such as the Insolvency Service office in Stockton. I urge the Whip to reverse that trend and to move jobs to hard-pressed areas in the north-east such as Teesside.

I note that some agencies are looking at Yorkshire and the north-east as a region. I point out to them that the Tees valley is exactly the midpoint—I measured it this morning—and an ideal location for headquarters. The regions are massive, however: Sheffield in South Yorkshire is as close to Southampton as it is to the constituency of my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith).

For 13 years, the north-east had a Labour Government—almost all MPs and councils were Labour—but between 1997 and 2010, the number of unemployed people in the region went up by 7,000, and the rate remained approximately the same, despite the unprecedented amount—

[Mr Kevan Jones]

The hon. Gentleman is being selective. I was going to say that it is a pleasure to hear him speak, but he seems to be saying that everything in the garden is rosy. In fact, between 2009 and 2010, 24,000 extra jobs were created in the north-east, and over the longer period from 1997, unemployment went down, not up.

[Ian Swales]

I checked the figures with the Library this morning, and 7,000 more people were unemployed in 2010 than in 1997, despite the unprecedented amount of grants and unsustainable borrowing that were pumped into the area.

Big problems remain. Unemployment is way too high, especially in constituencies such as Redcar, and it remains my No. 1 priority. The hon. Member for Hartlepool said that the north-east was once the workshop of Britain. It can be again, and in fact already is to some extent—even today, it is the only region with a positive trade balance—but a lot more can be done. I agree with the hon. Gentleman that we need a clearer industrial policy. We also need consistency on renewables and public procurement. There are opportunities for further investment in infrastructure—I do not want to steal the thunder of my right hon. Friend the Member for Berwick-upon-Tweed, because I am sure that he is about to give an example.

I welcome the Government’s attention to the north-east. We have a regular troop of Ministers coming through, and it is good to hear that the Employment Minister will be meeting the Teesside business community on 10 July. I look forward to hearing the response from the Whip today.

[Annette Brooke (in the Chair]

The wind-ups will start at 3.40. I remind hon. Members that I have not put a time limit into operation, and it is entirely up to them whether that becomes necessary.

[Grahame M. Morris (Easington) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Brooke. I congratulate my neighbour, my hon. Friend the Member for Hartlepool (Mr Wright), on securing this debate, whose importance is illustrated by the number of Labour Members who are present. I was going to try to be good and not lampoon—sorry, lambast—the coalition Government, but I cannot allow some of the comments made by the hon. Member for Redcar (Ian Swales) to pass with no response.

The hon. Gentleman’s suggestion that the regional growth fund is an improvement in regional policy is completely incorrect. Any region can apply for funds, not just the most disadvantaged regions. I cannot understand why Easington, with an unemployment rate of 11.3%, is denied an enterprise zone and support from the regional growth fund, when affluent areas such as Oxford, Cambridge and Kent have enterprise zones and their companies are supported by the regional growth fund. Surely if the Government’s policy is to address regional imbalances, that is a good starting point.

[Ian Swales]

Will the hon. Gentleman give way?

[Grahame M. Morris]

The hon. Gentleman would not afford me that courtesy, but in the spirit of debate I will give way to him.

[Ian Swales]

I apologise to the hon. Gentleman for not giving way. Perhaps I was in full flight, and did not see him seeking to intervene. Does he know how many projects in London and the south-east have been awarded regional growth fund money?

[Grahame M. Morris]

I do not, but I know that in my area I have lobbied hard on behalf of a number of companies that could bring substantial benefits to a hard-pressed area, and we are still waiting for decisions. That aspect of Government policy needs to be addressed.

The other issue that I am worried and upset about is that a Liberal Democrat occupies one of the highest offices of state, and the hon. Gentleman mentioned that Ministers often visit the area. They do not afford me the courtesy of saying when they are coming. When the Secretary of State visited my constituency, I was not advised in advance and I was not in a position to lobby him with bids from my area. However, I have taken that up separately. I will now try to make progress because I know that many hon. Members want to contribute.

I remind hon. Members that unemployment in my region is up by 8,000 to 145,000—a rate of 11.3%, which is higher than the national average. Under the Labour Government, the gap between the economy of the north-east and those of other regions was closing, with private sector business growth and employment. The Member for Redcar quoted some figures. In fact, after 10 years of Labour Government, the unemployment rate in the north-east was 5.7%—Labour came to power in 1997, and in November 2007 to January 2008 it was 5.7%—which was only 0.5% higher than the UK average. Now, though, it is 11.3%, which is 3.3% higher than the national average.

I did want to start on a positive note—[Laughter.] I am sorry about this, Mrs Brooke. I wanted to welcome the invaluable contribution that Nissan has made to our regional economy. Nissan is located in the constituency neighbouring mine to the north, represented by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson). Nissan’s presence has some benefits for the supply chain in east Durham. I commend Nissan for its tremendous commitment to our area. It is a shining example of what the north-east is capable of achieving with the right support from local and national Government. As hon. Members will be aware, the two new car models that are to be built will create more than 3,000 jobs across the UK over two years. Some 600 of those will be at Nissan’s Sunderland factory, with the remainder in the supply chain. I do not wish to criticise that success story.

I am looking to the Minister—[Hon. Members: “The Whip.”] Well, I will afford him the courtesy of calling him Minister. Welcome though they are, those new jobs do not come close to countering the job losses in my constituency. Over the past few weeks, I have referred to the haemorrhaging of private sector jobs in east Durham. That should be a real concern—it certainly is for me and all those who are affected. I cannot remember so many job losses in my constituency since the pit closure programmes, which is indicative of the desperate situation faced by many constituencies such as mine.

The Government’s Work programme does nothing to address the fact that unemployment is often focused in communities with the weakest local economies. The problem in the north-east is not so much one of joblessness as one of worklessness. My hon. Friend the Member for Hartlepool mentioned the ratio of the number of people out of work and the number of vacancies, which is limited. I refer the Minister to an excellent report on that subject published by Sheffield university, which makes some positive suggestions about what could be done.

The Work programme has been in operation for one year, during which time the number of people in Easington claiming jobseeker’s allowance has risen by 20%. About 1,000 job losses have been announced in the past month, and that will affect my constituency, where 3,195 people are out of work. Companies closing down include Cumbrian Seafoods, JD Sports, Dewhirsts, Reckitt Benckiser and Robertson Timber. Some of those companies—all private sector—are closing as a consequence of the decline in the building and construction industry, but mostly it is a consequence of a reduction in demand.

There is yet another side to the story. Easington has a strong manufacturing tradition, with companies such as NSK, Caterpillar, GT Group, Actem UK and Seaward Electronic. Those companies are looking to the RDA replacement bodies and the Government for signs of support that will enable them to take on more workers. There are some large-scale private sector regeneration projects in the offing, but again we need leadership and support from the Government, because many of those programmes are suffering unjustifiable delays.

I will not embarrass the Government by mentioning the centre of creative excellence that could have created 500 jobs south of Seaham, but I will mention retail developments such as a new Tesco supermarket on the former site of East Durham college. That would create 400 new jobs and a new library—a much needed community facility at a time of spending restraint in the public sector.

Dalton Park phase 2 also offers a glimmer of hope for my constituency. Once the development is complete, it will support more than 100 construction jobs and 450 new retail jobs. It will provide new facilities that will greatly benefit the local community such as a new supermarket, hotel, cinema, and associated leisure facilities. Such planning applications are often controversial, but—incredibly—this one received the unanimous support of the local authority, as well as massive support from the local community and other county MPs, and I am thankful for that support. The development was also passed by the Secretary of State for Communities and Local Government. It is a rare phenomenon in that everybody seems to support it, but it is being delayed as the result of an application for a judicial review by Salford Estates, which owns Peterlee town centre. As I understand it, the founder of Salford Estates is a tax exile based in the tax haven of Monaco.

My point is that the communities in the north-east continue to be hit the hardest by Government policies that are driving down demand across the region. The promised private-sector led recovery has simply failed to materialise in our region, and the austerity and cuts agenda is taking money out of our local economies and making any potential recovery harder to realise. A decade of progress made under Labour to reduce the north-south divide is being reversed.

--- Later in debate ---

[Stephen Crabb]

In the last 12 months, 67% more apprenticeships were created than in the last year of the previous Labour Government.

[Ian Swales]

I support the Government in their hard work on apprenticeships and report that the number has doubled in my constituency and in many other constituencies in the north-east.