Unemployment (North-east)

Lord Beith Excerpts

Wednesday 20th June 2012 Westminster Hall

[Mr Wright]

I pay tribute to my hon. Friend, who does not get enough recognition for the enormous amount of work that he has done on two fronts: securing the work for Hitachi trains in our area and ensuring that Durham Tees Valley airport can be a catalyst for economic growth and connectivity—a word that I cannot stand—so that we can compete and sell our goods and services and get them to the rest of the world.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I have a certain amount of sympathy with what the hon. Gentleman is saying. He mentioned schools. The Duchess community high school in my constituency was constantly excluded from Labour’s school rebuilding programme. Now, three high schools in Northumberland will be rebuilt under this Government’s programme.

[Mr Wright]

There seems to be no connect between public and private sector and no connect or coherence between Departments. The Department for Communities and Local Government demands local authority cuts of 20%, which is having a profound impact on unemployment, not just directly in terms of council jobs.

Hartlepool borough council cut its bus subsidy, so Stagecoach has stopped operating bus services early in the morning and late at night. People are unable to travel to early shifts or late periods of work in the night-time economy. They are less likely to go out for a meal or to the town hall theatre or the borough hall, or to the pub for a few pints, so there is less economic activity and fewer jobs. The reality is stark: a lack of joined-up thinking in the Government is increasing unemployment in my area. What can the Whip do about it?

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[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I am glad to follow the hon. Member for Easington (Grahame M. Morris), who always manages to sound a little more cheerful than some of his colleagues in his constructive contributions. I congratulate the hon. Member for Hartlepool (Mr Wright) on introducing this timely and necessary debate. I have a lot of regard for him, but he and his colleagues must face the fact that if they were in power now they would be making substantial public sector cuts. Their own spending plans demonstrate that. We would all be facing the same problem of a shrinking public sector, which has a particular impact in an area with high public sector employment.

The Berwick constituency is a large one, and includes the area around the Lynemouth smelter, whose closure has already been mentioned, as well as what were in my time four working pits. We have lost a lot of jobs in the mining industry. Yet the constituency is 404th for unemployment levels. That still represents more than 1,300 unemployed claimants, but the fact that the constituency has managed not to be among the worst hit owes something to the current stability of agriculture and the associated trades, and also to the fact that we have a large proportion of economically inactive—retired—people. Among the economically active, unemployment is hitting significantly.

We were hit, of course, by the Alcan closure, which had a direct impact on my constituency. Following that I worked a great deal with my right hon. Friend the Chief Secretary to the Treasury on the extension of enterprise zones. The area identified was in the constituency of the hon. Member for Blyth Valley (Mr Campbell), because there are sites around the port of Blyth that are potentially attractive. Getting the enterprise zone extended was part of the strategy. We need the capital allowances that must go with it, and that is partly a decision for the local enterprise partnership. If projects come along that need those capital allowances, and they are not in the original LEP area, I want the LEP to make sure that they go to any good new business that comes into the extended area. If that means that the amounts are used up, we will get some more out of the Treasury; I am confident that we shall be able to do so.

The north-east region is enjoying significant business success—the highest value ever in exports. However, it is heavily dependent on public sector jobs. A good friend of many of us, John Mowbray, who is currently chairman of the chamber of commerce—incidentally, he was recognised in the honours list last week, which we are delighted about; we look forward to congratulating him, probably this evening—said:

“The onus has been placed on the business community to pick up the slack from these cutbacks and while we have had a great deal of success across the private sector in the past 12 months, it is almost impossible to keep pace with the impact of what has been happening across public organisations”.

There is a major task to undertake. If I ask business men in Northumberland what the obstacles are to their creating more jobs—what three things that are somewhere in the grasp of Government, because, obviously, they will mention the international economic situation, which is beyond Government’s control—they will refer to the difficulty in getting capital from banks, the infrastructure problems in our area, and skills shortages.

[Grahame M. Morris]

All Members have had discussions with companies and industrialists, and the issue that comes through to me is lack of demand and consumer confidence. It is not so much the impact of the eurozone, and so on—it is lack of domestic demand. Government policy is exacerbating that.

[Sir Alan Beith]

That is partly true, particularly in retail and parts of the construction industry. It is not true in some of our exporting industries, which are still finding demand and achieving sales in many parts of the world. Clearly, we want to increase demand. What we cannot do is simply pump more and more money—because we do not have it—into the economy.

I want to refer to some of the ways in which we must tackle the three weaknesses I mentioned. One, of course, is bank lending. My right hon. Friend the Business Secretary has devoted a lot of effort to trying to get banks to lend to small business. However, he has met resistance and difficulty, and the Governor of the Bank of England has announced new measures, which I hope will take us further. The regional growth fund supplements the availability of capital, and I particularly welcome the efforts of the Newcastle Journal to bring together smaller businesses to create a bid to become eligible for the regional growth fund. It was successful the first time round, and I hope it will be a second time. The banks need to lend to small businesses on reasonable terms that recognise the viability of the projects that are being brought forward.

We have a pretty obvious candidate for infrastructure spending, where we can clearly show that there would be a benefit to the economy, and that is investment in the A1. It is seen as a handicap by many businesses when they are trying to attract other businesses into the area. If we think that Scotland and the UK benefit from being in the Union, surely we must link up effectively with Scotland.

Finally, for the development of skills we are very dependent on Northumberland college, which serves my area as well as those of neighbouring MPs. It has had something of a crisis of governance lately and gone through a difficult period. I am glad that the Further Education Minister has shown a willingness to help the college. We need it to expand its activities generally out into the areas that are closer to the homes of young people, who cannot be expected to travel 30 or even 50 miles each way to get further education. The Government are doing practical things—and they need to do more of them—to tackle those problems, which we all agree need to be addressed.