Economy: North-East England

Lord Sawyer Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Sawyer]

My Lords, I have the honour of being chancellor of Teesside University in which I declare an interest. I am grateful to the noble Lord, Lord Bates, for initiating this important debate. For a long time he has played a serious role in the work of the north-east and was an assiduous Member of Parliament for the old Langbaurgh constituency. I do not know how he feels about catching his breath after his contribution but I am having a job catching mine. He gave us such a whirlwind tour and he is quite right in being optimistic. However, I am sure the noble Lord will agree that within that general picture of optimism there are still lots of problems in the north-east. There are high levels of unemployment, particularly youth unemployment, in the old mining and shipyard areas, and we need to work hard to address those problems.

My interest today is not to take a panicked view, as we have heard from the noble Lord, Lord Bates, but to look at the Tees Valley subregion of the north-east and the boroughs of Middlesbrough, Darlington, Hartlepool, Stockton, and Redcar and Cleveland. This is the area for which I am the chancellor and of which I am also a native, coming from Darlington. It is a subregion served exceptionally well by the Tees Valley local enterprise partnership. It is a new partnership, chaired by a well known local businessman, Mr Sandy Anderson, and it is known as Tees Valley Unlimited.

This is a true private and public sector partnership, with members drawn from companies such as SABIC, which produces chemicals and fertiliser—a bit like the old ICI—and some of the old industries, such as the port authority, which have developed into new businesses. They have got together with Teesside University and representatives of local government to form themselves into an organisation to help to build this subregional economy.

The context is very challenging. There are 259,000 people in jobs but a working-age population of 420,000, so we have a big gap there. Arising from that is the highest level of unemployment of all the local enterprise partnership areas, in particular high youth unemployment. Major reductions in public expenditure are imposing real hardship and distress on an area that has been one of the main contributors to the economic performance of the UK in the past 50 years. I refer the Minister and the noble Lord, Lord Bates, to comments made recently by the elected mayor of Middlesbrough, Mr Ray Mallon, who said:

“The loss of such significant levels of funding over such a short period of time can only lead to further long-term deprivation and serious hardship, issues which will become costly, both in human and financial terms, to redress”.

There are others in the region who, like Mr Mallon, are concerned about the direction of travel. We have to make sure that we listen to them and try to come to terms with some of the issues that they raise.

Teesside is an area where, as with the wider north-east, the decline in traditional heavy industries has led to a big reduction in employment. However, like the noble Lord, Lord Bates, I think that the general attitude there is positive. The Teesside area was often seen to be less positive than the Tyneside area when I lived there, but I think that Teesside people have become far more positive in the past 10 years and stopped depending on the state to solve their problems and started solving them themselves. That is an important and welcome development.

We have seen new companies replacing major employers such as ICI and British Steel. We see great opportunity for growth, built on the legacy of those major industries that transformed the world, in areas such as the process sector, industrial biotechnology and biopharma, renewable and waste-derived energy, and advanced and sub-sea engineering. In that connection, I was very pleased to see the Government last month announce as part of their life sciences strategy a £38 million project for biopharma, to be managed by the Centre for Process Innovation on behalf of the High Value Manufacturing Catapult—a rather unusual name, which is basically a partnership of businesses, public services and universities.

The local enterprise partnership envisages a future in which the Tees Valley builds a critical mass of employment in the new sectors that I have described. It is an aspiration and a direction of travel which I wholly share. I commend to Ministers the Tees Valley City Deal submission made by Tees Valley Unlimited in the past few weeks. The vision for the Tees Valley City Deal is of an area with a thriving and more balanced economy, with integrated supply chains resilient to economic shocks. It will deliver more efficient and effective use of government resources with enhanced inward investment, grow existing global companies and their supply chains, increase exports, and translate research and development into commercial opportunities —all delivering, one hopes, wealth and employment for the region. It is a good vision; it is a good deal; and I hope that it will be carefully considered by the Government.

In order to achieve those ambitions, we must ensure that the skills requirements of present and future employers can be met. The observations of local enterprise partnerships are of particular interest in this regard. They observe very real concerns about the ageing workforce and the sufficiency of understanding among employers about the systems in place to support skills development and they relay a lack of clarity about apprenticeship opportunities. We have talked about these issues in the House previously and we need to give continuous attention to them. I hope that the Minister will keep on talking to colleagues about the need to make sure that we have proper apprenticeships and proper skills enhancement so that these new industries and possibilities can be successful. Some of the skills that I had when I was a young man are no longer the skills required. We need new people and new skills and we have to make sure that the Government play an appropriate role in helping to support that development.

As a result of these concerns, we have to take our own initiatives and not just rely on the Government to step in and do what needs to be done. We have developed a sector action plan for skills in new and advanced manufacturing, looking at logistics, health and social care, digital and chemical processing. Tees Valley Unlimited skills portal has been created to enhance the flow of labour market information and enhanced liaison with careers advisers, teachers, and young employers has been introduced.

Teesside University has business engagement, skills development and support for the local and regional economy as key pillars of its institutional plan. Since 2011, it has created 183 jobs through economic development and it is committed to creating 529 new jobs by the middle of 2014. It is strongly committed to supporting regional SMEs—since August 2012 projects have been started with more than 370 SMEs. In 2011-12 working in partnership with employers some 2,000 regional employees were provided with higher-level skills and qualifications. Some 430 businesses have been set up since 2000 with 590 jobs created; 415 of these since 2008.

I have spoken in the House previously about my university’s partnership with further education colleges as being exemplary in terms of developing ladders of opportunity to enable these things to take place. We were University of the Year in 2010. For Teesside to beat all the Russell Group universities is something we all have to be very proud about. It took some doing but we did it. The noble Lord was quite right to mention it and underscore it because it means that people in the region have confidence in themselves, can do things for themselves and are not relying on other people to lift them out of the unemployment and poverty they have endured for far too long.

These people are making a very real effort. They are working hard and on many occasions putting political differences aside in the interests of economic development. As I have already said, we are working hard to enhance skills by linking employers and education and training providers together to make the best use of government funding. It is very positive case. It is a more localised case than that mentioned by the noble Lord, Lord Bates—it is about Teesside rather than panregion—but I paint a very optimistic scenario as well. The way forward in the north-east of England is to be optimistic. It is to try to help ourselves but at the same time to call on the Government not to put any obstacles in our way and to recognise that public spending in the north-east is probably more important than in the south-east where there is more private enterprise and commercial success.

We need what you might call a pathway. We need a bridge. We cannot do it all straightaway. We need public expenditure not just by universities and colleges but by local councils and all the things that other people do not need as much as we do in the short term. I agree with the noble Lord, Lord Bates, that we are travelling in the right direction and I thank him once again for initiating this debate.