Economic Development (North-East)

Lord Wharton of Yarm Excerpts

Tuesday 15th February 2011 Commons Chamber

[Mr Brown]

My hon. Friend is absolutely right that Nissan was able to take advantage of the support for industry that was in place under the previous Government. What it is doing is not just manufacture a new motor car, because, as its Leaf advertising says, it is much more than that. It is a completely different form of transport. It is a very exciting development and we all wish it well and are proud to have it in our region. I know that she is proud to be the constituency MP for it.

That project would not have happened had it not been for the active intervention of the then Labour Government in making grant support available. It was actually because of the intervention of the then Secretary of State and his willingness to champion development in the north-east of England. We had rivals and competitors in our friends in continental Europe, who were also bidding for the plant. It speaks really well for the work force at Nissan that they are so highly regarded within the Nissan family of companies that they were a contender for the project. The clincher, however, was the support that the Government gave and their willingness to stand by the region.

My fear is that public sector cuts will affect the north-east disproportionately. As well as the closures of the economic development agency and the regional office, there are redundancies in each of the local authorities and other public bodies and vulnerabilities at the Department for Work and Pensions and Her Majesty’s Revenue and Customs complex at Longbenton in east Newcastle. If the Minister can say something reassuring about that site, which is the largest single concentration of public sector employees in the western world outside the Pentagon, it will be welcome.

Jobcentre Plus does a good job for us in the north-east. It has had to cope with major redundancy rounds at Atmel, Northern Rock, Nissan and Corus, and it has handled those difficult situations as well as anybody could. It is asking a lot of the labour market to absorb those redundancies and the ones brought about by public spending cuts. The effect of those cuts is cumulative, the more so because the people whose jobs are going have similar skill sets and career aspirations. The Government’s response is that an expanding private sector will take up those employees, but those who advocate that policy must say what private sector and where.

[James Wharton (Stockton South) (Con)]

I thank the right hon. Gentleman for kindly allowing me to intervene in his debate. Is he aware that since mid-August, newspapers in the region have announced more than 20,800 new private sector jobs and more than £4 billion of private sector investment? I appreciate that, like any region in these difficult times, we face tough challenges, but there is a good news story to tell as well. As the region’s MPs, we all have an obligation to talk up the north-east, not just to concentrate and focus on the challenges that we face.

[Mr Brown]

Nobody has talked up the private sector economy of the north-east more than I have, not just now but when I was the Minister for the region. My strategy was to broaden and deepen the region’s employment base by broadening and deepening private sector employment opportunities. I have never said that we are over-reliant on the public sector, but the correct way forward for our region is the development of private sector employment opportunities. That is why I said at the outset that there was not much disagreement about questions within the region. There was a consensus about what we were trying to do and how best to proceed. The region’s Members of Parliament, regardless of party politics, found it easy to discuss those issues among ourselves and make common cause on specific projects.

--- Later in debate ---

[Mr Brown]

My hon. Friend is right that we cannot get the match funding, but, worse than that, we cannot start any new projects because of the constraints that the coalition Government have placed on what is left of the development agency. The RDA still has an unallocated sum—I think about £80 million or £90 million—but it is not allowed to spend it on anything new. As time goes on, that is something of a constraint.

My contention is that private sector economic development should be private sector led. It is ironic that I, as a former Labour Minister, advocate the structures that the CBI believes have served the north-east well, and that a Conservative-led Government are arguing that what is left of those functions should be led by local authorities.

Economic development in the north-east now has the wrong departmental lead. The Department for Business, Innovation and Skills should lead, but in fact the Department for Communities and Local Government is leading. The local enterprise partnerships look as if they will be staffed by the wrong people—the correct skill set is professional economic development officers, as employed by One North East, not local government officers. Local enterprise partnership boards have the wrong executive lead. What is needed is representatives of private sector business, not local councillors. The geographical areas covered by LEPs are wrong: there should be one agency for the region, not multiple agencies duplicating effort and overlapping. Multiple agencies could also be too small to be effective.

[James Wharton]

I do not wish to depart too much from the largely consensual nature of this debate, but I disagree with the right hon. Gentleman on LEPs. There was great demand in Teesside for the LEP that we have secured, as is evidenced by the fact that Teesside moved to create the LEP before a regional agreement on the LEP approach was reached. I do not like the term “Tees valley” and prefer to say “Teesside”, and we could argue about the exact boundaries of it, but the Tees valley LEP is a welcome development that will help to grow the economy on Teesside.

[Mr Brown]

I am not going to quarrel with the hon. Gentleman about nomenclature. I understand that the local representatives of communities in Teesside want to do their best for their local communities, and I have no quarrel with that at all. Anytime they need my help or the help of other Members of Parliament for the north-east of England, it will be willingly given. They are our friends, neighbours and colleagues, and we want to help them get through what we understand are some of the most difficult and intractable of problems.

These are not local problems. The whole point of my address is that the big strategic issues that stand to be dealt with are best done so at the regional level, with the region acting as an advocate to national Government, and with national Government taking a direct interest, preferably through a dedicated Minister who has responsibility for standing up for the whole region. I think that that is the best structure. I know that the hon. Member for Stockton South (James Wharton) is advocating the LEP proposition, but even he must see that it is ironic that the approach that I am advocating is the private sector-led regional approach endorsed by the CBI, while the one that he is advocating is led primarily by locally elected Labour councillors. There is a rich irony in that. I hope that he can at least appreciate that point.

[James Wharton]

I will keep it brief. My understanding of LEPs is that their boards will be business-led—they will have a 50:50 ratio of representatives of local authorities and business, with a business chair—so I do not agree with the supposition that they will be local authority-led. LEPs will be business-led, which is one of the reasons I believe that the Tees valley LEP will be such a success.

[Mr Brown]

But the representative business organisations in the north-east are organised on a regional basis. I have no quarrel with local business people and local councillors wanting to do their best for the local communities, but I simply say, on the basis of considerable experience, that it is unfair to ask local representatives to deal on their own with a problem of such scale. They have no money and very little in the way of powers. It is not clear where their advocacy, which is the principal thing they will be doing, will be directed. Who is the responsible Minister? Will it be at Parliamentary Under-Secretary of State level or Minister of State level? Will it go to the Department for Communities and Local Government, the Department for Business, Innovation and Skills or both when this regional office is opened somewhere in Yorkshire—for the paper to rattle around in? There will be a lot of talking, but the ability to do something seems to be receding. That is a very dangerous thing for our region.

Engagement with the private sector in the region by Government is now very weak. This is part of a national problem. Even very large private sector businesses are finding it difficult to know where and how to speak to Government, and I would urge the Minister to take that point back and reflect on it. There must be better ways of dealing with these things than those currently in place. I also think that it is a mistake by the Government to have ended the pre-legislative scrutiny arrangements that we had in place under the previous Labour Government. That was a relatively open process which was widely welcomed, particularly by business, as was the opportunity to express a view before proposals were firmed up as legislation.

The Government have a poor strategy for disposing of One North East’s residual responsibilities. Of course, everyone wants the assets, but there are liabilities and continuing investments that have not yet come to fruition. Default responsibility seems to be ending up in the Department. There is now no integration of economic development with transport strategy, and no forum for discussing port strategy, although, as I mentioned, we have some very exciting developments at Tees port, with a relatively new distribution business, with Tesco and Walmart. There is real potential in the region.