North-East Independent Economic Review

Nicholas Brown Excerpts

Thursday 5th September 2013 Commons Chamber

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

I beg to move,

That this House has considered the North East Independent Economic Review report.

It is not often we get a chance to discuss English regional affairs, so I am grateful to have the opportunity to do so today and to focus on the north-east economic review, an independent review of the economy in the North Eastern local enterprise partnership area.

The debate is important for two reasons. First, it is about the most important single issue facing the north-east of England. The region, including Teesside, has the highest rate of unemployment of any part of the United Kingdom at more than 10%. That equates to more than 83,000 people, of whom 24,415 are young people. Long-term unemployment has increased by 8.6%, or more than 2,300, in the past year. In my constituency, approximately 3,000 people are looking for work, nearly a third of whom are aged between 18 and 24. Those people want to work, but the jobs are simply not available.

The debate is also important for every English region that has a local enterprise partnership. Although the report that we are considering is not the only one of its kind—I think that Manchester has produced something similar—it is clearly relevant to other UK regions that face similar problems.

There is no sustained political disagreement about the problems facing the north-east of England, which is why I am pleased that our debate has been supported by my hon. Friend the Member for Bishop Auckland (Helen Goodman), the hon. Member for Hexham (Guy Opperman) and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). When I was Minister for the North East under the previous Government, I found that it was possible to get a broad consensus among all those who had the region’s best interests at heart.

The report identifies the key problems that the region faces, but it is weaker on what to do about them. The issue at the heart of all this is what we should be doing to bring down high rates of unemployment and to ensure that the citizens we represent have a chance of a job, a decent wage and a secure future in the north-east of England—including in Teesside, for the avoidance of doubt.

While the report focuses largely on structures, I would have preferred it to focus on outcomes. It could have offered practical ways forward, but it focuses on process and reorganising functions. I think that a better approach was the one adopted by the previous Labour Government, with the regional Minister, local authorities working with that Minister through the Association of North East Councils, and essential economic development input coming from One North East, the independent, business-led development agency. Given the need to reduce public expenditure, it would have been better to refocus the development agency on its core business, rather than abolishing it.

There needs to be single-minded focus on broadening and deepening the region’s private sector employment base. Promising individual projects were in the pipeline when I was regional Minister—I believe that they are still in place—so they should be assessed and pushed forward with a sense of urgency. There should be political leadership from an individual Minister appointed to focus on this issue. The crucial point is that such a Minister will have access to the great Departments of State and can act as an advocate for incoming private sector investment. Other parts of the United Kingdom with similar problems have their own economic development bodies, local political decision-making bodies and ministerial champions at Cabinet level. That is true for Scotland, Wales and Northern Ireland, and the north-east, including Teesside, needs a ministerial champion of its own.

In my time as regional Minister, I was able to intervene effectively at the heart of government. I was able to intervene on the region’s side in crucial debates about Nissan, its battery manufacturing facility and the new electric car assembly line to sit alongside that. I worked behind the scenes—we were not allowed to say anything in public—in the campaign to find a future for what was then the Corus steelworks at Redcar. I worked closely with the North East of England Process Industry Cluster, and secured central Government support for public transport initiatives on Teesside and for the Newcastle metro. I also championed the north bank of the Tyne’s industrial strategy, as well as a partnership between the regional development agency, Newcastle city council and North Tyneside council that brought new industrial jobs to the Tyne. A substantial amount of work was undertaken with small and medium-sized employers and an effective Business Link organisation, which I am sorry to see go.

The principal recommendations of the LEP report involve creating a leadership board that is made up of the leaders of the seven local authorities and that will lead on the three functions of transport, economic development and skills training. I understand that the Government support those recommendations because they are similar to their existing policy, but I note that our ministerial presence has been upgraded so, if I have got that wrong, I am sure that the Minister for Universities and Science will tell us when he says a few words.

The recommendations in the report involve organisational change, with no very clear-sighted view of where there would be an improved outcome following the change. They also strike me as being labour intensive. Each local authority leader, perfectly properly from their point of view, will want their own advisers in each of the three policy areas. Tellingly, the report talks of “capacity building” and “joint teams of officers”, with senior leads

“from each Government Department and Agency”.

[Mr Kevan Jones (North Durham) (Lab)]

Does my right hon. Friend agree that the one thing missing from the report is the fact that many local authorities, including my own in Durham, have had to take £209 million out of their budget during this period? The capacity for officers to take up these tasks will be very difficult.

[Mr Brown]

It would certainly be impossible for local authorities to do what the report suggests. My hon. Friend’s point is correct. If extra resources were to be supplied to enable them to do so, frankly it would not be the first priority for expenditure in local authorities, all of which are very hard-pressed at the moment even without taking on extra functions without the resources to carry them out. Let us remember that the recommendations, which effectively are for extra civil service support, be it central or local government—as I read the report, it is both—come just after the Government have closed the Government office for the region.

Of course there is a case for the seven local government leaders to meet. In effect, this replicates, but for a smaller area, the arrangement that pertained under the last Labour Government through the Association of North East Councils. Local authority leaders already take a close interest in economic development questions in their council areas, and they work with others when there is a common interest. But is not the lead on economic development supposed to lie with the LEP, not the local authority leaders alone? The local authority leaders are already all represented on the board of the LEP. What is the relationship between the two supposed to be?

A better approach to the Tyne and Wear passenger transport authority would be to amend the existing arrangements rather than create a whole new authority. The existing authority has the advantage of involving councillors who are not the leaders of their authority and can give the time to specialise in transport matters. Nexus and the integrated transport authority are already working hard to push ahead with many of the recommendations in the report, including smart ticketing and a consultation on a quality contracts scheme.

Similarly, I do not understand, and the report does not explain, what the specific input of the local authority leaders into skills training is expected to bring. The justification in the report is that the local government leaders know their own areas the best and therefore are best placed to identify skills needs and shortages. I am not sure that this is true. In any event, local authority leaders have a great deal to do already, and to demand that they specialise in skills and training issues as well as economic development and transport policy seems to me unreasonable.

A combined authority does not give the region any more access to Government, and it is Government who have the power and hold the purse-strings, and that is more so now than under the previous Government. We have had the LEP up and running now and that has not enhanced the region’s direct access to Government, where the big decisions are made. The LEP has had the lead on the enterprise zone policy for almost two years now. I am not an advocate of the policy, as I made clear at the time, but if it can be made to work, I want it to be made to work. But there is not much evidence of it working so far.

[Andrew Griffiths (Burton) (Con)]

The right hon. Gentleman talks about there not being much evidence of the policy working, but we should celebrate good news. Will he join me in congratulating Nissan on the great news today of the £250 million investment in its new car line, and the 1,000 jobs that go along with that? Let us celebrate good news for the north-east.

[Mr Brown]

I am happy to join the hon. Gentleman in that. Nissan is one of the great hopes for the region. It has the potential single-handedly to make a substantial impact on the employment issues in east Durham and in the city of Sunderland. When I was the regional Minister, I was a great enthusiast for the potential that was there and a great champion of it, and I was able to take its case to the heart of Government. I hope that that helped to bring about the arrangements that are now in place and the success the company now enjoys, but we should never lose sight of the fact that the principal reason for Nissan’s success is the management and the work force. I think that everyone in public life in the north-east wants it to succeed, will fight its corner and stands ready to help. I hope the issue will never divide us when we look for the way forward for our region.

My principal criticism of the report is that it is all about process, rather than outcomes. It is repetitive and has a scattergun approach to initiatives. For example, there is a flurry of ideas around one of the most pressing issues: the need for venture capital and the continuing difficulty in getting banks to lend. That problem is not unique to the north-east, but it has a particular impact on us because we are trying to develop the private sector in our economy.

The report proposes a range of initiatives, including exploring the potential for a regional business bank, a north-east access-to-finance scheme, an investor readiness programme and a north-east finance and investment board. It also proposes what are described as “new investment plans”, a “front of house system”, “client relationship management”, “re-location” schemes and a “North East International” body. There is a flurry of initiatives, but what does it all mean? Do they overlap? I cannot tell. At least, it is not clear from the report.

The report also restates existing projects as if they were new initiatives. I have already mentioned such cases in relation to transport, but there are other examples, such as the “Open Innovation and Growth Centres”, that are already working or have already been announced.

The report mentions in general terms desirable ideas and principles, such as an increase in apprenticeships, greater foreign direct investment and more young people from the region going to university. All those outcomes are desirable and none of these issues is new but, crucially, while stating that they are desirable, the report gives no indication of how best to achieve them. At the very best, the report’s recommendations would deliver administrative change for our region in a few years’ time. The need for action is now. Yet now the Government are actively sucking demand out of the regional economy by changing the national funding formulae for local government, the national health service, policing, transport and infrastructure investment, to our region’s disadvantage.

What the region needs is a politically led and determined drive, involving everyone who wants to help—this really should not divide us—to develop the private sector economy in the region. We have done a tremendous amount to help ourselves as a region, but the scale of the problem is such that more needs to be done. As well as determinedly driving forward the projects that we know are there, there is a case for a short-term emergency response to the emerging problem of long-term youth unemployment. Only central Government can do that. The Chancellor and the Business Secretary could explore incentivising the region’s small and medium-sized employers to take on an extra young person, or more than one, if only to prevent the corrosive and demoralising effects of worklessness and defeated ambition among the young.

In my view, things were moving in the right direction under the structures and leadership of the previous Labour Government. The report confirms that by setting out the region’s progress in the last growth cycle with 67,000 extra jobs, gross value added increasing by 57%, and tens of thousands of jobs created through greater foreign investment. The north-east was moving in the right direction, with the fastest growth rate of any English region, although admittedly from a more modest start. That was delivered under the former economic development structures, which would have worked well to get us through the economic downturn. The report is quick to offer new structures but gives no assessment of how well the old ones worked. In short, it correctly identifies the issues facing the region but is insufficiently bold in offering a way forward.

[Several hon. Members]

rose—

--- Later in debate ---

[Mr Nicholas Brown]

It is a great pleasure to be able to tell the House that when I was a Minister of the Crown, I made ministerial announcements on points that Lord Adonis has now recommended, and the Minister has been able to make them as ministerial announcements again today. I say gently that some of these things are not new.

[Mr Willetts]

None the worse for that.

[Mr Brown]

Of course.

I thank the hon. Member for Hexham (Guy Opperman) and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) for joining me and my hon. Friend the Member for Bishop Auckland (Helen Goodman) in securing this important debate on matters that concern our constituents. I draw the Minister’s attention to the fact that although the hon. Members for Redcar (Ian Swales) and for Hexham served their parties well in drawing on the positive things in the report, on which I think we all agree, if I had to pick one point that characterised the contributions of Opposition Members, it would be the fear that there will not be much delivery for our constituents on getting them back into work. If the Minister takes away my plea that he and his ministerial colleagues try to do something for the long-term unemployed, and young people in particular, in our constituencies, something will have come from the debate.

Motion lapsed (Standing Order No. 9(3)).