Economy: North-East England

Lord Beecham Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Beecham]

My Lords, I begin with a warm welcome to the noble Lord, Lord Popat, who is answering his first debate. It is all the warmer for the fact that the two of us spent an induction day together some two and a half years ago.

To describe a politician as pedestrian is normally regarded as uncomplimentary but in the case of the noble Lord, Lord Bates, the opposite is true. He has raised £25,000 for charity with marathon walks, and last year walked no less than 3,000 miles to echo and highlight the Olympic peace campaign. I do not know whether, reflecting on the coalition, he had in mind the ancient battles between Athens and Sparta, and, if so, which part was Athens and which Sparta; nevertheless, I congratulate him not only on his pedestrian feat—if noble Lords will forgive the homonym—but also on securing this Conservative day debate.

Some 30 years ago at the height of the severe recession during the Thatcher Government, and with the north-east suffering from the effective collapse of the shipbuilding, heavy engineering and mining industries, councils in the region came together at my suggestion, along with Cumbria, to form what was then known as the Northern Regional Councils Association and which now survives, shorn of Cumbria, as the Association of North East Councils. At about the same time, local government and the private sector, with support from the government office in the region, formed the Northern Development Company—a partnership dedicated to working jointly to tackle the region’s economic and industrial problems. In many ways, this presaged the creation by the Labour Government of One North East, the regional development agency.

During its lifetime, One North East helped to secure £2.7 billion for the region’s economy, creating and sustaining 160,000 jobs and helping the formation of 19,000 new businesses. A remarkable transformation took place in the region’s tourist industry, latterly worth £4 billion a year and becoming the second biggest growth tourist area in the country after London, while great strides were made, as we have heard, in the field of renewable energy. Until the global recession struck, the region had the second highest growth rate, after London, in the country. One North East was abolished in a fit of ideological pique by the Tory-led coalition—despite the initial support of Vince Cable—being effectively killed off with all the other regional development agencies, even while the Public Bodies Bill, which laid the groundwork for this deplorable action, was being debated. I described this at the time as pre-legislative implementation, and I am glad that the Constitution Committee is looking into this and other examples of a similar kind.

The noble Lord, Lord Bates, is a passionate advocate for the region. Indeed, I and others from the region share his pride in what the region has managed to achieve, despite all the difficulties, and we join him in believing that there is huge potential for building on that track record. The noble Lord initiated a similar debate in July 2009, when, again, he lauded at some length and with some passion the strengths of the region, and conceded in respect of the then Labour Government that,

“the Government care deeply about the region, and many good things are happening”.

At the same time he correctly pointed out that more needed to be done in the areas of skills, enterprise and capital investment. He referred to,

“a series of abrupt social upheavals, rather than gradual adjustments to the new realities”.—[Official Report, 14/7/09; col. 1114.]

I wonder what the noble Lord makes, or what the Minister makes, of the fact that the north-east—with unemployment at 9.8%, which is the highest of any region in the country—is sustaining the highest level of cuts in local government funding, with dire consequences which will, of course, impact on the local economy.

Young people and women in the region have been particularly hard hit by the recession and the abysmal lack of growth in the national economy in the last two years, and the much vaunted Work Programme, which replaced Labour’s successful Future Jobs Fund, has been as dismal a failure in the north-east as elsewhere, as the National Audit Office has demonstrated.

The regional development agencies have been replaced by the cut-price regional growth fund, with a much truncated budget; and again, as the National Audit Office and the Public Accounts Committee pointed out in September, the regional growth fund has created few jobs at a very high cost. Meanwhile, the Government’s links with the regions have been weakened by the abolition of regional offices, which were originally introduced by a previous Tory Government, and which in their day provided a useful two-way channel of intelligence and communication.

I remember the association of the noble Lord, Lord Patten, with the north-east during that period and the support that he gave us. I will not say that it is unfortunate that there is no Conservative representation in the north-east, but it is unfortunate that there is not at least a link to the north-east from the Government at ministerial level. Perhaps that is something that could be addressed.

In the debate in 2009 the noble Lord, Lord Bates, complained, not unreasonably, that public expenditure—capital expenditure—on transport in the north-east at £577 per head compared poorly with £1,637 per head in London. Again I have to ask what he—though of course he cannot reply—or the Minister makes of the latest figures in the Autumn Statement. They show planned per capita expenditure on transport—which a number of your Lordships have referred to as key; not the only area of investment, but a key one none the less—is now planned as £2,731 in London as against £5 per head for the north-east. That is 0.4% of the total of £1 billion, against 84% for London and the south-east. That will presumably worsen if HS2 goes ahead.

I share some of the concerns expressed by the noble Lord, Lord Patten, about the impact of HS2. I am inclined at least to wonder whether he—as well as other experts such as Professor John Tomaney, late of the north-east—is not right to wonder whether, since trains go in two directions, the principal beneficiaries will in fact be not in the north but in London.

The Autumn Statement announced £1 billion of investment in roads over the next three years, but even this will give small benefit to the north-east. We get 1.2 miles of new carriageway in Gateshead, costing £64 million, out of a three-year programme of £1 billion —which is 6.4%. Dunstable, on the other hand, will benefit from a new link road with 11.2 miles of carriageway, which is 10 times that in the north-east. That, according to a Written Answer given by the noble Earl, Lord Attlee, to a Question of mine, will unlock the potential development of 7,000 houses—which will no doubt attract new homes bonus at the expense of the north-east, by the way—and 4,000 jobs. Good luck to Dunstable, but we are not seeing that kind of investment with that kind of effect in the north-east.

However, it is not just a matter of money. As the Town and Country Planning Association pointed out some time ago, there is no planning framework for England; no coherent view of what is required to redress the imbalance between London and the south-east—both of which, in fairness, of course have their own marginalised communities, such as inner London boroughs or coastal towns—and the rest of the country. The Government’s abject failure to promote renewable energy policies, in which the north-east is a leader, with Northumbria University pioneering work on photovoltaic cells, and what should be a thriving offshore technology industry, illustrates vividly their failure to promote economic growth and ensure that this is diversified.

Other policies will have the no doubt unintended consequence of weakening the region's prospects. Thus the threat of opting out of Europe is hardly likely to be conducive to attracting overseas investment, as the noble Lord, Lord Shipley, commented, where with government and RDA support the region has done well in the past—witness the success of Nissan.

The Government’s immigration policies, again mentioned by the noble Lord, Lord Shipley, in so far as they discourage overseas students from coming to the UK, will threaten the region’s universities, which have been highly successful in attracting students from the Far East and emerging economies with whom the UK needs seriously to engage. The interminable debate about a third terminal for Heathrow ignores the need for regional airports such as Newcastle’s to be connected to the national hub and the growing international networks.

To be fair, there has been some progress. City deals have been agreed or are being negotiated in the region, for example, although the main benefit—the possibility of tax increment financing, a feature of the Newcastle city deal—looks to be both limited and, in any case, amounts only to permission to borrow against anticipated future business rate income. Indeed, the noble Baroness, Lady Hanham, made clear in her Answer to a Parliamentary Question of mine last year that city deals were about devolving powers, not government funding.

In the absence of a proper national growth strategy aimed at rebalancing the economy structurally and geographically, as advocated by the noble Lord, Lord Heseltine, the north-east is in danger of hobbling into the future when it should be striding into a better situation for its business and people. For all the enthusiasm that the noble Lord, Lord Bates, brings and that we all share about the region, and for all the hopes that we have for its prospects, we need a more deliberate policy on behalf of the Government to facilitate the desiderata that he advances and to which we all subscribe.