Northern England: Opportunity and Productivity

Lord Prescott Excerpts

Thursday 12th January 2017 Lords Chamber

[Lord Prescott (Lab)]

My Lords, I wish to address my remarks to the northern issue, not necessarily the town or the city. I congratulate the noble Baroness, Lady Massey, on securing this debate on the excellent State of the North report. She said at the beginning that basically decentralisation is what she is concerned about, not devolution, but those two things are two sides of the same coin if we are to find a framework, on a spatial basis, to develop the north—not the tribal basis of each of us talking for Hull, for York or wherever. What contribution and framework do we need to meet the real development of the north? It almost takes me back to when Michael Foot, when he was leader of the Opposition, asked me to find an agreement between the Scots and the English regions after the failure of the first Scotland Bill in Parliament. I talked to them all; they all had the same problem. They were concerned about high unemployment and about growth; they were concerned that growth was really in the south and not the north—very similar arguments in Scotland as in the northern regions. I had to find an agreement about that.

I want to concentrate my remarks on the business of devolution, because it is the same framework. The devolution I mean is what we introduced in Scotland, Northern Ireland and Wales; we produced an elected government in London—a regional government—and a cities policy, and all this was part of devolution. It found a role for the local government within a framework; that was what was essential for us and we did it. Tragically, this was opposed all the time by the Tories and scrapped when they came in in 2010. Even with RDAs, which everybody thought were successful, they kept development agencies for Scotland, Wales and Northern Ireland, but took them away from the English regions and gave us these enterprise boards or something—what do you call them? They do not have the resources or the powers and do not compare to an RDA. To that extent, the Tories took the view that they were more concerned with local than regional government. That is an important difference.

When Osborne came along—whatever his full name is—he gave us “northern devolution”. It is not northern, because it does not cover all the north; it certainly does not cover Hull and anything east of the Pennines. It is not devolution; it is local government reform. I quite welcome that, if that is what we are going to have. It lacks the regional dimension, which is absolutely essential if we are to get the northern economy moving and to recognise the disparities between the north and south. There is a similar argument between Scotland and England as within the English regions themselves.

We have to look at what northern devolution was. I note that all the report on northern devolution dismisses the rhetoric of “powerhouse”—it is certainly not that. However, the report says that devolution is waning, and that it is,

“too partial, piecemeal and parochial”.

That is because the Government have always been against the regional dimension. They always want to see it within the local government framework—so do I. However, strategic thinking needs a strategy.

I am glad to see that the Government now recognise two things. First, Mr Clark, the Secretary of State, is now looking at spatial economic development. We have a Minister who represents every centralised issue in government. The department that matters now is the one for energy and industrial strategy. The Government are right to pursue that, but they do not like to use the talk of regions. That is another difficulty. How do we bring that together?

We need to be talking about the places of growth, and not only in each city or small area but in the region of the north. The north runs from Liverpool to Hull. We need a strategy that shows that as a place of growth. We need to use the Humber—the greatest source of energy we have at the moment. It is an energy estuary; it is environmental and developmental in a fundamental way. It is not just about culture—I leave that on the side—it is about economic development, and that is important. But you need a framework for that. The framework is crucial and we do not have it at the moment.

The argument for Brexit in negotiations was really about redistributing power and resources, not back to the centre but to the regions. Let us see where the money goes. That is a constitutional change—a further balance between the north and the south. I believe we should stay in the European Union but, leaving that aside, if there are negotiations and money is to come back, let it go to the regions. Let us have constitutional change.

Scotland wants more powers for devolution, and probably to stay in, as it has said. I have combined with my colleague Gordon Brown to see if Scotland and the north can form a powerhouse together. If you want a real powerhouse, put Scotland and the north together for the same reason: to redistribute the power and resources and begin to develop a northern economy. Find a framework; it is strategic.

Thank goodness the Government are partly there with Transport for the North, which is now looking for a regional solution, because that cannot be done with local government boundaries. This House will very shortly be debating new powers for Transport for the North which are regional. Let us start looking at the north as a region, not tribally representing Liverpool, Manchester, Hull or wherever. Let us get back to thinking strategically.

--- Later in debate ---

[Lord Young of Cookham (Con)]

My Lords, the publication of the IPPR’s annual State of the North report has given us the raw material for a debate on the state of the north, and the noble Baroness, Lady Massey, has provided us with the opportunity. I am grateful to her for her opening contribution, particularly her focus on the way that social mobility has changed over generations. I thank her for setting the scene for the debate, and all noble Lords who have contributed. Having sat through the debate for nearly two and a half hours, I have to say that there is very little with which I disagreed. Indeed, as somebody who for 41 years in another place represented constituencies in London and then Hampshire, I felt a growing sense of guilt at the apparent preferential treatment that my constituents had received for such a long time, compared with those in the north. I hope to try to reassure the House that the Government are determined to see a fair distribution of resources.

The noble Baroness, Lady Massey, quoted from the summary of the IPPR report, as did other noble Lords. It is worth quoting one sentence:

“All this, however, presents new opportunities”.

Maximising the full potential of the economy of the north, which has in many ways lagged behind that of London and the south-east, is vital. The noble Lord, Lord Bragg, in a speech that could have come out of “Henry V”, exhorted us to raise our sights and unlock the potential of the north. As the most reverend Primate the Archbishop of York said, it is important for those who live and work there that we should do this. I found what he said about the human resilience of those who live in the north very moving. It is in the interests of not just the north but the whole of the UK that we should unlock the potential. The point made by the noble Lord, Lord Curry, about the contribution to the balance of payments is well worth making—the fact that there is a major contribution to the balance of payments, which at the moment is in deficit. We should do all we can to unlock that potential.

Noble Lords made many helpful suggestions in the debate about how we can raise our productivity and bring about a sustained rise in wealth, prosperity and opportunity. I hope to respond to as many points as I can in the time available, but where I cannot, I will write to noble Lords and deal with their issues. We have debated this issue a number of times in this Chamber. We had an exchange at Questions on Tuesday. The IPPR report helps us make further progress and I am glad it found favour in the eyes of my noble friend Lord Cavendish, who reminded us of the importance of small and medium-sized enterprises. Along with the noble Lord, Lord Liddle, he made a plea for a reform of governance in Cumbria. I will certainly pass those comments on to the Secretary of State at DCLG. The question of whether Cumbria is going to get the importance it deserves may be answered in the forthcoming by-election up in Copeland, which may focus the minds of all political parties on making sure that that part of the world gets a square deal, but that is beyond my brief.

We are determined to take action to support and strengthen local economies across the north. As noble Lords will be aware, that was an aim pursued with unwavering enthusiasm and dedication by my noble friend Lord O’Neill of Gatley in his work at the Treasury, and I pay tribute to his contribution. In response to the point made by the noble Lord, Lord Monks, I reassure him that colleagues in government will continue to work to realise my noble friend’s vision for a true northern powerhouse—one with a vibrant, resilient and growing economy; a flourishing private sector; modern and efficient transport links; and a more highly skilled population—and to do so, as we move to leave the European Union, with a negotiated outcome that works for all parts of the United Kingdom and shows the world that we are open for business. I hope to say something later about the very forceful points that were made about a voice for the north. The noble Lord, Lord Shipley, reminded us of the importance of the single market and produced a six-point plan, to which he will get a six-point letter in due course.

Reading the IPPR report, I was struck by some of the deeply ingrained challenges that we are trying to overcome; in particular, the productivity gap, which has been the case for decades now and, indeed, was picked out for mention in the Motion before us. Currently, productivity in the north is 13% lower than the UK average and 25% lower than in the south. Clearly, there is a complex range of factors behind that, many of which noble Lords have highlighted previously and did so again today. I will pick up three.

First, connectivity remains a challenge for many people and businesses. To give just one example, congestion on the M62 means that it can take more than two hours to travel the 40 miles between Manchester and Leeds. That is not only frustrating for local people but a barrier to local businesses and the jobs and growth they can bring, and potentially a deterrent to inward investment. I take the point made by the right reverend Prelate the Bishop of Leeds that connectivity is not just linear. What we need is a spider’s web, rather than a telephone wire, to reach out to the communities that are not directly on the main roads or railway lines. I will write to the noble Lord, Lord Alton, about the stations he would like to see reopened. As a former Secretary of State for Transport, I share that enthusiasm.

Secondly, skills have consistently lagged behind the south at all levels. The north has a higher proportion of people with no qualifications than the UK average and a lower proportion of graduates. I will certainly pursue the suggestion made by the noble Lord, Lord Sawyer, about the role of vice-chancellors in making progress in this area.

Thirdly, it is still more difficult to set up and grow a business in the north compared with the south. Connected to that, we find a lower level of entrepreneurialism in this region, although in saying that I take nothing away from all the dynamic and resilient businesses that exist in the north, some of which were referred to in the debate. We were reminded by the noble Lord, Lord Mawson, and others of the history of the great entrepreneurs of the north, particularly those in Bradford.

The IPPR report identifies some excellent examples of successful local economies but, in short, there remain clear areas for improvement, which were highlighted in the debate. The northern powerhouse strategy we published at the Autumn Statement seeks to address these underlying challenges. In saying that, of course I recognise that there are other issues that we need to address—the noble Baroness, Lady Massey, mentioned housing—that are not touched on in the report. We know that lasting changes will not happen overnight, but already we are making substantial progress, as the report acknowledges.

There are signs that our hard work is beginning to pay off. Foreign investors are responding. In 2015-16 the north of England saw inward investment projects increase by nearly a quarter from the previous year, faster than the UK average. In October, the French rail builder Alstom confirmed that it will build a £20 million technology centre in Liverpool, creating up to 600 jobs. In the three months to October 2016, the north saw a record number of people in work—more than 7 million people—and an employment rate of 72.5%, close to its record high. The noble Lord, Lord Liddle, and others mentioned other successful business that either have been established or are growing.

I shall summarise briefly some of the action that we have been taking to support that success, starting with our work to improve the transport networks that businesses and hard-working commuters rely on every day. We are investing £13 billion in transport in the north over the course of this Parliament. Already we have started to take forward important improvements such as upgrading the A1 in North Yorkshire to motorway standard, upgrading the trans-Pennine rail route to take nearly 10 minutes off journey times between Manchester and Leeds and establishing Transport for the North, to which the noble Lord, Lord Prescott, referred. Last night I was reading his intervention in what I think was one of the first debates of this Parliament when he spoke about his work on the Northern Way. I pay tribute to what he did when he was in government to improve infrastructure in the north.

At the recent Autumn Statement we went further, committing to upgrade the A66 to a dual carriageway across the Pennines and to make major improvements to Manchester’s M60 ring road to ease congestion. The noble Lord, Lord Liddle, asked about Cumbria’s coastal railway. The new rail franchise for the northern and trans-Pennine express networks will deliver altogether more than 500 new railway carriages and 2,000 extra services each week. This franchise includes the Cumbrian Coast line to which he referred. Improving connectivity is vital to unleash the north’s economic potential so that the whole can be greater than the sum of its component parts.

As my noble friend Lady Eaton said, better transport links make it easier for people to find jobs, for firms to find workers and for ideas to be shared and developed. That is not just the case domestically within the UK, but in terms of international links as well. In my time as Secretary of State for Transport, one of the things that I took forward was giving the go-ahead to a second runway at Manchester Airport, which is now the UK’s third busiest airport—the busiest outside the south-east.

Skills was a theme that ran through our debate, mentioned by the noble Lord, Lord Beith, the noble Baroness, Lady Pinnock, and others. We have been working to ensure that people have the right skill sets for their chosen career. We have welcomed the findings of Sir Nick Weller’s report into schools performance in the north and committed £70 million to improve outcomes in northern schools. We continue to explore how we can improve everything from careers advice to high quality apprenticeships and world-class teaching. There is more that I would like to say, but time precludes it. However, to respond to the noble Baroness, Lady Warwick, who asked if the Government would consider housing products for the graduate market, in the Northern Powerhouse Strategy we have committed to work with the northern city regions and other local stakeholders to develop innovative proposals for attracting skilled workers. We are funding groundbreaking projects to develop the north’s strengths in science, the arts and sport, including providing £235 million to the Sir Henry Royce Institute for Advanced Materials.

I turn briefly to our responses to the IPPR report. As I have said, a lot of activity is already taking place. The report makes three suggestions as to how we can go further. The Government will work to get the best possible deal for all parts of the United Kingdom as we leave the EU, engaging with businesses up and down the country and continuing to back northern trade. Listening to this debate, I was struck by the number of representations about the potential relative disadvantage of the north in accessing the decision-makers. Without going beyond my brief, that is certainly a point of which my colleagues in government should be aware, given the strength of feeling that has been expressed throughout this debate. That is one of the most important lessons that I have learned.

Our industrial strategy will represent a comprehensive plan for the success of British businesses across all sectors and places, positioning the UK for long-term, sustainable growth as we move towards exiting the EU. A consultation paper will be published shortly.

[Lord Prescott]

Will the Minister explain the difference between—as pointed out in the report—a place growth strategy and the other critical northern house which tends to get debated? Is it the Humber?

[Lord Young of Cookham]

I hope the document on industrial strategy to which I have just referred will shed some light on the important issue that the noble Lord has raised. I hope he will excuse me if I move to my final comments. I am conscious that I have not dealt with a whole range of issues about devolution to local government, about local enterprise partnerships, about employment and wages and about those museums—to which I have an answer that will now have to be converted into a letter.

We are determined to keep up our relentless drive further to enable the sustainable economic success of the north. We are taking action on a number of fronts to tackle the deep-seated structural issues that have held back the economic prosperity of the north for too long. There is more to do. To continue our progress, we will keep working hand in hand with those who know best: local businesses, authorities and other organisations. Together, we can keep seizing the opportunities for growth that benefit not only businesses and individuals in the north, but the UK economy as a whole.