North-East Devolution

Debate between Nicholas Brown and Lord Wharton of Yarm

Thursday 26th November 2015 Westminster Hall

[James Wharton]

The fact is that over the past five years, Durham County Council has added more than £100 million to its reserves, but the rhetoric here is of a council that one might think did not have a penny to spare. It is welcome that local authorities look to find efficiencies and to spend money carefully. I do not deny that difficult spending decisions have to be taken, but it is right to challenge the assertion by some Members that the sky is about to fall in. That assertion has been made in all but those exact words so many times in this place over the past five years. We should put on record the reality and recognise that the spending power per head of Durham and Newcastle remains as it has for the past five years: significantly higher than the average spending power per head of local authorities across England.

Having put those matters on record, I want to focus on some of the devolution issues at the heart of the debate. We started with discussion of the old regional development agency. I agree with the right hon. Member for Newcastle upon Tyne East on some things, so he is clever to find an area on which he knows we do not agree. I was never a great supporter of the old RDA. I felt that it did not give Teesside the recognition it deserved. I accept that we disagree about the work of the old RDA, but I continue to be grateful for and pleased by the changes we saw when the local enterprise partnerships were introduced. Having the Tees Valley LEP allows the area to determine its future and to look to co-ordinate with more close local control on where we want our economy to go and what we want it to do.

I accept that there is disagreement about what the structures should look like, but it is important to put on record my support for the decisions that were taken and my ongoing support, particularly for my LEP. My desire is to see all LEPs, including those in the north-east or the rest of the north-east—however one might want to term it—being successful and contributing to and driving economic growth in the north of England and elsewhere.

[Mr Nicholas Brown]

Just on the narrow point of the performance of the north-east local enterprise partnership, is the Minister wholly satisfied with the progress it has made so far and how it has been conducting itself?

[James Wharton]

The right hon. Gentleman raises an important point. I recognise some of the good work that the north-east LEP has done, and I put on record the Government’s gratitude to those from the private sector, local authorities and the public sector who have, through their joint endeavours and contributions, been able to deliver some of the successes that have been enjoyed in the north-east. However, some genuine concerns are being expressed, not least in the regional media, about how that LEP is working. I want to see those matters resolved and to ensure that the private sector voice is retained, is strong and is recognised for the value it can bring. I also want to see the public sector and local authority representation working with that voice to deliver on the shared agenda to grow the economy of the LEP’s area.

I clearly recognise some of the great things the LEP has achieved and the good work done by many individuals contributing to it—I thank them for that—but I want to see the problems talked about in the media resolved. We know those problems exist, and I want to see real and lasting recognition of the need for that private sector voice and the cross-sector co-operation to drive forward the economy in the interests of the region.

[James Wharton]

I have lost count of the number of debates in which I have had the opportunity to discuss a range of issues to do with the north-east with the hon. Gentleman and he has named and targeted an individual Conservative from the region. We should focus on the bigger issue: how we get the LEP to do the best job it can for the communities that Opposition Members represent and for the area. We all want to see the area realise its significant potential. Some of the more party political or partisan comments do not contribute towards making progress in that direction and securing the sort of economic growth we want to see.

Economic growth, of course, is important. It comes in many ways to the heart of the devolution argument and discussion. We want devolution to drive economic growth. We recognise that the potential across the north of England is significant. If we can unlock that potential, it can make an even greater contribution to the UK’s economy. If between now and 2030 the northern power- house grows its economy at the average rate that the UK economy is predicted to grow, that will add in the region of £40 billion in real terms to our GDP. That will be good for the people who live in the north and good for the UK as a whole. We want to see that delivered. That is something that all parties can agree on. We perhaps differ on some of the detail of how it should be done, but there is agreement to some extent that devolution has a role to play in empowering local decision makers and unlocking economic opportunities.

The economic opportunities in the north-east are significant. We have had mention of Nissan, that great Conservative legacy to the region. We have seen announcement after announcement from Nissan in recent years about its plans for expansion and to extend the new lines that it wants to produce. That has a significant impact not only in Sunderland with the direct jobs that it delivers, but through the supply chain in the region and the whole UK. Our region should be proud that Nissan in Sunderland, in our region, makes more cars than Italy. That is a real achievement that speaks to the quality of the workforce, the dedication of the people of the north-east and the things that can be done if companies choose to invest there. It is a great showcase for what the north-east can do.

Along similar lines, the hon. Member for North Durham mentioned Hitachi at Aycliffe, another good news story and a significant investment in the region of just short of 1,000 direct jobs, with 8,000 or so jobs through the supply chain. We want to secure as many of those jobs as possible for our local economy and secure the value that the supply chain can deliver for the local communities surrounding that investment.

In the spending review yesterday, it was announced that there would be new enterprise zones across the north-east and Tees Valley areas. There will be significant extensions of zones that exist and new areas will be given enterprise zone status and support. There will be new opportunities to drive our economy and unlock the potential about which I have already spoken.

[Mr Nicholas Brown]

I wholly agree with what the Minister says about Nissan and Hitachi; they are very welcome corporate citizens in the region. He is right to give credit for the original Nissan investment to the Government led by Mrs Thatcher, but does he recognise that those great achievements of the private sector working with the Government to invest in the region and create stable and enduring jobs required Mrs Thatcher’s Government to take regional policy seriously and take charge of the negotiations and give a political lead, thus stimulating the eventual outcome? The failure of the Government’s current structures to get us anywhere near their accepting such responsibilities is my core complaint. So the examples that he cites underpin my argument, not his.

[James Wharton]

I will certainly join the right hon. Gentleman in recognising and praising the excellent work done by Mrs Thatcher’s Government in delivering Nissan. The core point that he makes about public and private partnership, with the Government looking at the private sector’s needs and working with it to ensure we deliver and secure the investment we want, is important. I suspect that we perhaps have differences in how that should be delivered, which is what I want to deal with when I talk specifically about the devolution deal in the north-east.

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[James Wharton]

The hon. Gentleman has asked that question many times, and I have answered it many times in the past. No area is compelled to accept devolution and no area will be compelled to have a metro Mayor, but where areas want a package of powers akin to that in Greater Manchester, there is an expectation from Government that a Mayor would come as part of the deal. That is what has happened in the north-east. I have a copy of the deal here. If it was more easily reachable, I would wave it energetically at hon. Members. It has been signed by local authority representatives, because a deal is a two-way thing. It recognises that we have reached a consensus on the powers and the structures that are agreed to deliver our shared objectives.

[Mr Brown]

I do not think we will be waving any document back at him this week.

If the people of Durham—if they are allowed more generally—vote against the mayoral model, and that is their will, will the Minister respect that and go ahead with the rest of the deal anyway?

[James Wharton]

The right hon. Gentleman has generously given me the chance to reach into my little red book and find the document in question, which I will now wave, signed as it is by so many of the great and good of local government in the north-east.

It is for local authorities to agree these deals through their leadership and to pass the resolutions to enact them through their democratic structures. If one local authority decides to remove itself from the deal, we will not allow that to prevent other local authorities from going ahead and delivering it, but, consistent with what I have already said, nor will we compel any area to be part of a devolution deal. If Durham decides not to pass a resolution, or through a council mechanism decides not to be part of a north-east deal, if the other local authorities want to go ahead, we will work with them to deliver it without Durham, should that be their choice. I hope, though, that that is not a choice that they will make—the hon. Member for North Durham and I disagree on that.

With a deal will come a number of areas of control and a number of possible levers with which local authorities will be able to help to drive the economic growth that we want to see.

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[Mr Brown]

Will the Minister say precisely how the elected Mayor will drive up inward investment in the region? What will he add to the work that is already done? Will he confirm that, for skills, what is on offer is a board member in a structure that effectively exists now? Is he saying that the whole of the will of the north-east of England—all the local knowledge and contribution that can be made—will be expressed through the cabinet member of the combined authority who is appointed to the skills group? I say this meaning no disrespect, but as far as I can see that group is composed of departmental officials who are not the elected representatives, or any sort of representatives, of the north-east of England.

[James Wharton]

In his questions, the right hon. Gentleman in some ways gets to the heart of some of what devolution is going to be about. On foreign investment and UKTI, the Government are saying that we want to see additional focus and support from that national body, which has been successful at selling our country abroad with its “Britain is GREAT” campaign, for the north of England to drive the opportunities that exist. With that additional support will come the opportunity to bring in more investment, but it is not for me to tell any future Mayor of the north-east—or of the Tees valley, Greater Manchester or wherever—how to go about doing their job and how to maximise the opportunities that exist. There are different opportunities in different places, which will require different approaches. That is the very essence of why devolution can be a powerful driver of growth. It is about empowering the people who know best what decisions are right.

I want to make a couple of points about the skills budget, because the right hon. Gentleman entered into an interesting area of debate. I know the importance of skills to our regional economies. I recognise the concern that he wants to project, but I do not agree with it. Having more localised control over skills is a significant positive step. The over-19s skills budget is going to be devolved to the north-east through the devolution deal that has been signed, and the north-east combined authority and Mayor will have more say over—and joint work to be delivered over—the 16-plus skills budget, which is to be welcomed.

Even more important than that—which is positive—is what devolution will allow us to do in future. It has started in this debate: we can already see that there are matters on which Members would like things to be a bit different or to go a bit further. There is a debate to be had about that in any devolution settlement. The value of the Cities and Local Government Devolution Bill, which has gone through its Committee stage and will no doubt come back soon to the House on Report and Third Reading, is that it gives us the powers we need to go further when it is appropriate to do so.

Greater Manchester is on its third round of asks for devolution of powers. When it has been given a package and agreement with the Government, it has either identified things that the Government were unable to agree to initially and asked us to work with it to deliver them, or, through the process of thinking about the powers it has, it has identified new opportunities and come back to Government saying, “We want to go further” in this area or that. It is saying, “We want to take the next step,” or, “We want to bring in a policy area that we had not even thought of before.” That remains on the table because of the nature of the devolution we are talking about: it is evolutionary and bespoke; it is custom-made for each area it affects; and it is being delivered along sensible and locally determined economic lines.

Economic Development (North-East)

Debate between Nicholas Brown and Lord Wharton of Yarm

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.

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[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.