Economic Growth and Employment

Roberta Blackman-Woods Excerpts

Wednesday 23rd November 2011 Commons Chamber

[Roberta Blackman-Woods (City of Durham) (Lab)]

The audacity and complacency of Government Members is truly extraordinary, given the present state of the economy. The headline figures for UK economic growth are deeply worrying. Growth is flatlining, and it is becoming increasingly obvious to anyone with any sense that the Government’s decision to cut too far and too fast is choking it off. We also know that growth began to stall before the effect of the eurozone crisis kicked in, and that even now the full impact of that crisis has not yet been felt.

[Bill Esterson]

The figures show that consumer and business confidence began to decline when the coalition Government were formed, at the time when the Prime Minister started talking about Britain being bankrupt. Was not the Prime Minister very unwise to make such comments?

[Roberta Blackman-Woods]

Indeed. We also know that as a consequence of Government policies—and according to independent forecasts—it is very likely that borrowing will have to increase. That is having devastating consequences. Unemployment is rising, particularly among the young, although women are also being disproportionately affected.

The headline figures should concern us, but what should also trouble us greatly is the uneven way in which the consequences of the Government’s disastrous economic policies are being felt across the country. Once again the north-east seems to be bearing the brunt of the Conservatives’ economic policies, but this time—and I hope that this point is not lost on the voters of the north-east—they have the collusion of the Liberal Democrats.

The current unemployment rate is 11.6% in the north-east, but only 6.3% in the south-east. Similarly, the claimant count is highest in the north-east and lowest in the south-east. As I have said, the situation is even worse for young people. In the north-east, unemployment among young people increased by 106.3% between January and October 2011, prompting real fears that the region would return to the economic dark times of the 1980s. Yet this dire situation is so unnecessary.

Contrary to what the Secretary of State said—it is unfortunate that he is not present, because I wanted him to hear this—in the north-east gross value added actually grew between 1989 and 2008, as did GVA per head of population. That was primarily because money channelled through the regional development agency One North East levered in £9 for every pound spent—much more than the national average—and skills levels also improved year on year.

[Angela Smith]

The first technology innovation centre, Sheffield’s advanced manufacturing park, was established by a Labour Government through a regional development agency working with the private sector. Such arrangements have been criticised by Government Members, particularly Liberal Democrats.

[Roberta Blackman-Woods]

My hon. Friend has made an excellent point. It is interesting to note that before the general election, in my region at least, the Liberal Democrats were apparently in favour of regional development agencies.

[David Mowat (Warrington South) (Con)]

Will the hon. Lady give way?

[Roberta Blackman-Woods]

I am sorry; I am running out of time.

We know that the RDA helped to invest in a new generation of advanced technologies with expanding markets around the world, which greatly helped growth in the north-east. Through industry, Government and university collaborations, a number of sectors were identified in which growth should be prioritised, including the processing and chemical industries, automotive and advanced manufacturing, and printable electronics. Those sectors, critically, were underpinned by centres of excellence supported by the regional development agency.

Did the incoming Government seek to build on that? No. What they did instead was get rid of One North East, although it had extensive support from businesses and the community in the north-east, and what we have in its place is the regional growth fund, about which I shall say more in a moment. The loss of the regional development agency led to a loss of expertise in regard to the sectors that needed to be developed in the north-east, and a loss of what was necessary to support that development. In great contrast, the regional growth fund not only has less money but is not strategic at all. I am very pleased that a number of north-east companies have benefited from the RGF, although the Secretary of State must address the fact that getting the money through to the companies is taking a long time.

[Andrew Bridgen]

Will the hon. Lady give way?

[Roberta Blackman-Woods]

No; I am sorry, but I am running out of time.

The RGF along with local enterprise partnerships and enterprise zones do not by any stretch of the imagination add up to an economic policy for growth for the north-east, or for anywhere else for that matter, because they are fragmented initiatives with no local coherence. The RGF will not help to narrow the north-south divide, either. As I have acknowledged, a number of companies in the north-east have benefited from the RGF, and according to the Government’s own figures that will secure about 8,500 jobs, but in the same RGF round money went to the south-east to secure 30,000 jobs.

The north-east’s problems are compounded by the fact that the RGF money is not a sufficient injection to the private sector to enable it to make up for the jobs that are being lost in the public sector. To put the figure of 8,500 jobs in context, last month alone unemployment in the north-east rose by 19,000. The Government must do more, therefore. In the past couple of weeks a number of independent commentators, including the North East chamber of commerce and PricewaterhouseCoopers, have said that the Government need to do more to support private sector development in the north-east, and our five-point plan for growth sets out a clear way for them to start supporting the economy.