Economy (North-East)

Debate between Pat Glass and Julie Elliott

Tuesday 13th November 2012 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my right hon. Friend the Member for South Shields (David Miliband), who has a neighbouring constituency,on securing such an important debate. I will not comment on many of the things I was going to mention, but will instead associate myself with the comments made by Opposition Members and disassociate myself from the comments of the hon. Member for Redcar (Ian Swales), who described a region that I simply do not recognise.

The positives of our region and Sunderland, part of which I represent, are our manufacturing base and industrious nature. Nissan is in the constituency of my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson). It is a world leader—the most productive car manufacturing plant in Europe. High-quality engineering companies such as Rolls-Royce are based in my constituency. We do a lot of things well and we need support to build on that, but we also have a low-wage economy, which creates problems with spending power in the regional economy. We have been severely hit by the cuts that the Government have implemented, particularly to in-work benefits, the removal of education maintenance allowance and the increase in tuition fees, which has a direct impact on our young people going on to higher education.

[Pat Glass (North West Durham) (Lab)]

Does my hon. Friend agree that although we are the smallest region in the country, Ofsted clearly shows that we have the smallest number of failing schools and the highest number of good and outstanding schools? Our young people were going to university in much greater numbers, but that has now collapsed as a result of Government policy.

[Julie Elliott]

I agree with my hon. Friend.

Low wages are a problem. I congratulate one of the excellent schools in my constituency, Southmoor academy, on recently introducing the living wage for all its staff. We do not need regional pay. In a letter from 60 leading academics to The Times last week, Keith Shaw, a professor of politics at the university of Northumbria, said that the policy could lead to “a spiral of decline”. The Government need to listen.

What do we need to move forward? We need to support manufacturing and improve further on our positive balance of exports to increase the productivity not only of our region but of the country. Infrastructure needs to be improved and, as previously outlined, transport taxes need to be addressed. We need to deal with the skills gap. The Government must look at that seriously and implement some recommendations in the report on apprenticeships that the Select Committee on Business, Innovation and Skills published last week. The report defines the difference between good apprenticeships and in-work training, and particularly identifies high-level apprenticeships that lead to level 4 and level 5 qualifications. I hope that the Government look carefully at the report.

Youth unemployment is one of the biggest problems in the north-east. The Government’s youth contract is simply not working there. Youth unemployment is still rising and long-term youth unemployment is growing every month. We do not want a generation of young people who are simply left behind, as was the case in the 1980s under Prime Minister Thatcher. Our regional economy and our young people do not need that again. The Government must look at the problem.

We need better, simpler support for business, and local enterprise partnerships should be given the power and funding to do their job. The Government have said that the question of whether we get a fourth regional growth fund round is iffy. I would like the money that has already been promised to be delivered. Due to the lack of time, I will end my remarks there.

Business Rates (North-East)

Debate between Pat Glass and Julie Elliott

Tuesday 25th October 2011 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

It is a pleasure to speak under your chairmanship, Mr Amess. I am grateful for the opportunity to initiate this debate on an issue that will have a big impact on the north-east, as is evident from the number of my fellow north-east MPs who are present. The whole country is being affected by the difficulties in the economy, but it is fair to say that the north-east is suffering. Economic growth is stalling and unemployment rising. In the period from May to July of this year, the north-east had the highest unemployment level in the country at 11.3%.

Unfortunately, that is not altogether a new experience for our region. For decades, the north-east was undermined and overlooked as a place of economic growth. In the 1980s in my constituency of Sunderland Central, we saw the shipyards that had defined our city and been a source of pride for generations, employing entire families, almost disappear from the banks of the River Wear. At its peak, ours was the biggest shipbuilding town in the world. When it came to our efforts in world war two, we produced more than a quarter of the nation’s total tonnage of merchant and naval ships. However, in 1988, British Shipbuilders shut up shop. That was followed five years later by the closure, by a Tory Government, of our last coal mine, putting many thousands of people on the dole.

The economic history and future of the north-east is one of manufacturing and production. We are intensely proud of that. Sunderland is now world-famous for building cars. I applied for the debate as a result of the submission by the Association of North East Councils of its response to the consultation on the review of local government finance. That laid out a clear case of concerns about the Government’s proposals. It is worth mentioning that the response had cross-party support from across the region.

Despite our rich heritage, the north-east has not been able to keep up with the economic growth of other regions in our country, and we are still rebalancing our economy after the decline of our traditional industries. That is why the formula grant has been crucial to councils across the region, allowing them to provide the services needed for their residents, while trying to address growth in their areas. For Sunderland city council, the gap between the formula grant that it receives from the Government and the amount in business rates that the city collects is £60 million. In Durham, the figure is £80 million, and across the north-east there is a shortfall of about £400 million. Business rates make up more than 80% of the Government grant to councils, so this really is a critical issue.

No one is arguing that the formula grant could not be improved, but what the Government propose with the localisation of business rates has the potential to make things worse. I am thinking particularly of the lack of information about top-ups and tariffs. The Minister has said that the formula grant method is incomprehensible, far too complex and lacking in transparency and that councils are left at the whim of the formula setter in Whitehall. I agree that the formula grant system is not perfect and it is certainly complicated. However, it does attempt to be fair, redistributing centrally pooled funds to councils according to their needs.

Under localisation of business rates, the system will change completely. The proposed system takes no account of councils’ ability to raise council tax, no account of differing abilities to generate business, no account of future needs and no account of a council’s ability to service the needs of its residents.

Let us examine the differences in council tax yields. In the north-east, most authorities have more than 50% of their properties in council tax band A, compared with Surrey, where the figure is just 2%. In Sunderland, only 9% of the housing is in band D, compared with Surrey, where the figure is 75%. People can see the unequalness in the ability of local authorities to raise revenue. In real terms, that means that an area such as South Tyneside can raise £427 per person, whereas Kensington and Chelsea can raise £795 per person—a huge difference. The system of equalisation under the formula grant worked so that the actual difference was just £3 per person. That enabled local authorities to provide the services needed by their residents, regardless of the economic base of their area. It is a question of fairness, equality and need. If the Government are serious about making the proposed system fair, they need to deal with that issue.

Deprivation levels in the north-east are high: 33% of our population live in the 20% most deprived areas in the country; Sunderland has 34 neighbourhoods in the 10% most deprived areas nationally. That level of deprivation leads to a much greater demand on the services provided by local authorities. I am referring to more people receiving the home care service, more looked-after children and supported adults, more children on free school meals—the list is endless. As the ANEC report states, any system has to ensure that it does not create a spiral of decline in poorer areas, with an impact on health and social care.

The north-east has an ageing population. It is expected that by 2030, 23% of the population will be over 65, leading to an even greater pull on resources. It is right that any new system should take that into account. At the moment, I cannot see how the Government’s proposals will do that. I hope that the Government’s plans for top-ups and tariffs, of which we have yet to see the details, will fully respond to that situation. The gap between the north and south of England is already stark; I am concerned that with these plans, it will only grow larger.

[Pat Glass (North West Durham) (Lab)]

I congratulate my hon. Friend on obtaining the debate. Does she agree that the Government’s proposals would result in exactly what happened in America in the 1980s? Cities such as New Orleans and Detroit became derelict, with anyone who could move out of them doing so to obtain the services that they needed. What the Government propose would create derelict cities in the north.

[Julie Elliott]

There is a real danger that that could happen, which is why it is important that this debate highlights the issues for our region. The situation that my hon. Friend describes is the last thing we need. I cannot believe that is the Government’s intention, but it is the danger in the system that they propose.