Industrial Strategy: North-East of England

Sharon Hodgson Excerpts

Wednesday 5th June 2019 Westminster Hall

[Mary Glindon (North Tyneside) (Lab)]

I beg to move,

That this House has considered industrial strategy in the North East of England.

It is an honour to serve under your chairmanship, Mr Betts. I am delighted to have been granted this debate on such a crucial subject for our region. There are two local enterprise partnerships in the north-east, so we have two local industrial strategies: one for seven north-east local authorities, and one for the Tees valley. My area is covered by the North East LEP, which leads on the creation of the local industrial strategy, as its footprint includes two combined authorities: the newly created North of Tyne combined authority and the North East combined authority. As the North of Tyne combined authority has a devolution deal that specifically refers to the LIS, the picture is a little more complicated than elsewhere, as the Minister will appreciate. However, both combined authorities are working together, and with businesses and partners and through the LEP board, to make sure the local industrial strategy makes sense for residents and businesses in the north-east.

I will not talk about the north-east’s fantastic industrial and inventive past, because we see that backward look too often in the region, and although it is important to recognise that we have been passionate, ambitious and innovative for hundreds of years, looking back does a disservice to the brilliant people and businesses that we have today. It does not highlight the fact that the north-east has proportionally more businesses in manufacturing—10.5% against 7.7% nationally—or the fact that in 2018, the growth in the number of businesses massively outstripped what was happening nationally; we had 14.2% growth, versus a national fall of 0.5%, and we have seen a growth in productivity since 2014. Those are positive things, but that is not to detract from the less positive things happening in the region that I think my colleagues will talk about.

Looking back would not highlight the fact that the north-east is a brilliant place to live; I am sure all of us in this room agree on that. It is way more affordable than significant parts of the country. As of March, our average house price—for a very nice house—was £123,000, whereas the national average was £227,000, so I urge people to look at relocating to our area.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Not too many.

[Mary Glindon]

Perhaps not too many, but all are welcome.

I want to talk about what is strategically important to the north-east today, and what will make a difference to our future. For the north-east, the industrial strategy and the local industrial strategy will be about our ambition, the sectors in which we are strong, and the infrastructure that will lead to growth, and they have to be about turning strategy into action. The LIS is seen as building on the north-east strategic plan, which was agreed with businesses and communities of all shapes and sizes. It has an ambition for more and better jobs—100,000 jobs by 2024, with at least 70% being what are termed better jobs in managerial, professional and technical roles. We have already seen more than 64,000 new jobs created, of which 77% are classed as better jobs, but we need more investment and support from the Government, so that more can be achieved, and we need the right infrastructure put in place.

Yesterday, some of us went to the drop-in held by Highways England. I was pleased to go and congratulate it on the fantastic new Silverlink interchange on the A19, which has massively improved access to the Tyne tunnels. It was done on time, through collaboration between the council, businesses, and Highways England—a great feat for the region.

--- Later in debate ---

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

It is an honour to serve under your chairmanship, Mr Betts. I thank my hon. Friend the Member for North Tyneside (Mary Glindon) for securing this important debate and for her excellent speech. She has laid out why a proper industrial strategy is so important, especially for us in the north-east.

The north-east strategic economic plan has been active for five years. In that time, the region has seen some great change and investment, despite the uncertain times in which we find ourselves. I am proud to be the Member of Parliament for Washington and Sunderland West, which is home—as all Members know, because I bang on about it enough—to Nissan’s UK car plant. There has also been exciting development around the International Advanced Manufacturing Park, known as IAMP, which I am sure Members will become equally sick of hearing me talk about.

Meanwhile, a bid to unlock a potential £33 million in funding is under way with the Centre of Excellence for Sustainable Advanced Manufacturing. That hub will provide advanced manufacturing solutions to many businesses across the market in the region, such as Driving the Electric Revolution, which is based in Sunderland. I am certain that that will attract innovation and investment across the region, to benefit both the local and national economy. Those developments have the potential to transform the north-east.

The north-east strategic economic plan has been successful to a certain extent. It has helped towards the creation of 100,000 more jobs by 2024, as we heard, and the economic gap between the north-east and the rest of the country has narrowed. Some 71,600 jobs have been created so far, of which 70% can be described as “better jobs”. That is an excellent feat for the region and its long-term planning. However, we can be certain that the gap still exists between the north-east and the rest of the UK.

If performance, enabled by investment and infrastructure, had matched that of the rest of England except for London, we would have 93,000 more jobs in the north-east and 25,000 more businesses. The north-east still lags behind in the majority of areas of economic performance, despite, as we heard, securing more foreign investment than any other region. That suggests that the Government’s economic plan is failing us. It has held back the economies and communities of Washington and Sunderland, and those of many other ex-coalfields and post-industrial northern towns.

[Alex Cunningham]

Does my hon. Friend agree that we have two economies in the north-east: an economy with well-paid jobs, which allows people to go on foreign holidays and enjoy their lives, and poverty that afflicts tens of thousands of people in our area? We have done extremely well as a region; if we just had more investment, we could take so many more people out of poverty.

[Mrs Hodgson]

Inequality and the wealth gap still exist, probably in all regions—we see it here in London too. Prosperity has never reached some parts of our region, which has led to disenfranchisement in some of our communities. We are now feeling the brunt of that in how they are voting.

Growth is good, but it is important to know where that growth comes from. The quality of communities and how they are sustained by the economy is an important part of keeping the fabric of society vibrant. The role of the Government in the economy must be more than simply growth and redistribution; they should aim to ensure that the country’s growth is responsible and has a social value, so that everyone lives a better life. That is something that the Labour party is committed to, with the introduction of a Minister for manufacturing.

[Julian Sturdy (York Outer) (Con)]

The hon. Lady makes some really important points, especially on the wealth gap, which I, as a Yorkshire MP, would say is between the north—rather than the north-east—and the south. Skills and education play a key role in improving the lives and opportunities of everyone. Does she welcome the technical education offer, and the announcement of 12 new technical institutions? Two are in the north-east and Yorkshire: one, York College, is in my constituency and the other is New College Durham. Surely we have to grasp that opportunity to ensure that we improve skills and technical education in our region—I say “our region”, as a Yorkshire MP—as the north moves forward.

[Mrs Hodgson]

I am happy to say that I agree with the hon. Gentleman. Skills are so important. We hear from employers all the time that they often cannot find the necessary skills in the local workforce, which is heartbreaking when many young people are desperate to acquire those skills. As my hon. Friend the Member for Stockton North (Alex Cunningham) mentioned, we need to ensure that prosperity is shared among everyone. The rise in the number of apprentices is also welcome, and the technical colleges that the hon. Member for York Outer (Julian Sturdy) mentioned play a huge and important part in that.

The Government often point to low unemployment figures as proof that their approach is working, yet in-work poverty is on the rise. It is at its highest for 20 years, with 4 million people living in poverty despite being in work—it is not just me saying that; the figure comes from Joseph Rowntree Foundation research. One in four workers in the north of England is paid less than the real living wage, after a decade of stagnant wages and the rise of zero-hours contracts. That leads to the two-tier workforce that my hon. Friend the Member for Stockton North mentioned.

Although we are on our way to closing the gap and making businesses in the north-east a more valuable prospect, we are still recovering from the catastrophes that the region has faced in the last 50 years. Those catastrophes have made our communities resilient, but to ensure that we endure, one thing must be at the heart of any strategy: the environment. We must invest sustainably in our economy to ensure that future growth does not come at the expense of our environment. It is essential to confront the climate crisis in every Government strategy, especially an industrial strategy. I am proud that the Labour party has committed to do that, having already forced the Government to declare a climate emergency in May.

Nissan’s investment in battery technology and electric vehicles has put Sunderland at the forefront of the European market. It is the only plant in the UK that makes a purely battery electric vehicle, the LEAF. Nissan’s expansion on the back of the worldwide move to electrification offers the UK the chance to be a leader among European manufacturers, and our local communities will benefit most.

Sustainability should be at the centre of all sides of development. For example, with the expansion of IAMP, which I mentioned, I would like the local transport network to be developed to ensure that in years to come, the staff who work there will have an alternative to private motorised transport when going to work. An excellent way to do that—another opportunity that I never cease to mention—would be to expand the Tyne and Wear metro to Washington and IAMP.

Economic development is another concern in these turbulent times. The ongoing uncertainty of the Brexit process—I have mentioned it as well—may damage investment and businesses in the north-east, as 55% of Nissan’s exports go to the EU. We need a solid and sensible deal for exiting the EU to give businesses certainty. Parliament has made it clear that it rejects the possibility of a no-deal Brexit, yet the idea of reintroducing a no-deal option has been used numerous times by candidates in the Conservative party’s ongoing leadership campaign—I will name no names; I do not want to give anybody more publicity, not that anybody would take any notice of me—in a reckless attempt to bolster themselves. That is worryingly irresponsible and gives no assurance to UK manufacturers, some of whom described the idea of leaving the EU without a deal as “economic lunacy” this week.

The potential for a bright future in the north-east is high. Our region is growing well, and as my hon. Friend the Member for North Tyneside said, it is a great place to live, work and have leisure time, but there are more steps to take to ensure that its development can be sustained and work for everyone, which I hope the Minister will consider.

--- Later in debate ---

[Phil Wilson]

No, no, but I know that Stockton had the first passenger railway in the world. We have a lot to be proud of in our area.

NETPark, a science park just outside Sedgefield village is leading the way in all kinds of technologies, including light-based technology. It produces masks that people with diabetes wear when they are asleep, which helps. It is also a catapult centre for the space industry. It is the home of technology for the future. The park overlooks the site of the old Fishburn coke works and pit, where my dad worked all those years ago. If he could only see the technologies that are now on the doorstep of where he was brought up. I am really proud of it all.

There are 9,000 manufacturing jobs in Sedgefield, which is second only to those in the constituency of my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), where there are 17,000 jobs and tens of thousands in the supply chain. We have a supply chain of about 16,000. Manufacturing is a key industry for the north-east of England. Make UK, the manufacturers’ organisation, is now saying that it is very worried about a no-deal scenario, as it is “economic lunacy”. On this side of the House, we can all agree. Make UK’s key findings are that domestic and export orders are continuing to weaken, the gap between output and orders has increased, export orders remain at their weakest since the referendum, there is growing evidence of European companies abandoning UK supply chains, investment intentions are paralysed, and the manufacturing forecast for growth is just 0.2% in 2018 and 0.8% in 2020. These are dire figures. We need to think about those indicators as we further consider in this House what to do about Brexit.

I have deep concerns about Brexit. The north-east is the only region that exports more than it imports, and more than 60% of our exports go to European markets. Being part of the EU, the single market and the customs union is vital to the north-east of England. If there is a no-deal Brexit, it is estimated that GDP will fall by 16%, which could mean the loss of something like 200,000 jobs. Those are dire figures, and we should be broadcasting them all the time.

Between 2014 and 2020, the European structural investment fund invested £437 million in the north-east economy. The aim of EU structural funds is to rebalance our economy through regional investment allocated according to need. Will the Minister tell us where that money will come from when it stops coming from the EU? The Government’s stronger towns fund, launched in March this year, consists of a £1 billion fund allocated to English regions and £600 million available under competitive bidding after Brexit. That is less than 10% of what UK regions would receive if the UK remained in the EU; the north-east alone was projected to receive £1 billion over seven years. The shared prosperity fund, which was designed to reduce inequalities between communities, has released no details on the level of funding, the funding model, the length of funding periods or the fund’s administration.

Another issue that I want to raise with the Minister, which he might not be responsible for, is the high street fund, which was announced by the Chancellor of the Exchequer a few months ago. We all agree that we need to see improvements to our high streets. Newton Aycliffe in my constituency has a high street that is owned by Freshwater. The environmental area has been vastly improved—something for which the town has won awards—but there is still the problem of empty units and shops closing, which affects not just Newton Aycliffe, but our high streets up and down the country. If the likes of Darlington and Durham are losing their branches of Marks & Spencer, I really worry about the future of high streets in new towns such as Newton Aycliffe. What can we do to remedy that?

I want to make one or two other points. The north-east is one region, but we do not act like one region. If we did, we would become a true powerhouse. The regional development agency, which was abolished by this Government back in 2010-11, was a key asset to the north-east of England. I think it is fair to say that investment was from the public sector to the private sector in the north; in the south-east, it might be from the private sector to the private sector. The regional development agency was therefore a key contributor to bringing investment to the north-east.

[Mrs Hodgson]

My hon. Friend is making a very good point, which I want to reinforce by putting it on record that, from my recollection, the regional development agency in the north-east was the only one that really worked as it should have. For every £1 that the Government invested in the north-east through the One North East RDA, the return was £7. I might have it wrong, but that is the figure from memory. Does he agree that we should have certainly been able to keep One North East, because it worked?

[Phil Wilson]

That is right, and to abolish One North East was an act of economic vandalism. It was a kind of ideology gone mad—“If it is public sector, we should abolish it.” We now see the impact of its loss, to the detriment of the north-east of England. We have got rid of the regional development agency, and we do not act as one region. We have two Mayors and three combined authorities competing with each other, whereas we need to be one region—the north-east of England—talking as one for the benefit of the whole region.

I will finish by discussing the issue of Brexit. I remember when the news came out a few months ago about the manufacturing loss of Nissan models such as the X-Trail. I remember people from the region saying on the television, “Well, if Nissan goes, we’ll be okay. We survived the closure of the pits. We survived the closure of the shipyards.” Well, we might have done—we might be starting to come out of that period—but it has taken years. How did we survive that? Why have we got a big upturn in car manufacturing? How have we as a region been able to attract foreign direct investment in the way that we have, with Nissan and Hitachi in my constituency, and with other manufacturers around the country? How were we able to survive the closures of the pits and the shipyards? The reason is that we were in the single market and the customs union, and we had access to the biggest trading bloc—the biggest economic bloc—in the world. My view is that it is absolutely wrong for the region, and for this country, to close the door on that.

We were able to come round from the closure of the pits. I grew up in a pit village, and I know what happened back in the 1980s. We managed to get through the catastrophe of the closure of the shipyards because we were in the single market and the customs union. If we close the door, what will it do for the future of manufacturing and the economic wellbeing of my region and the country? Should there be a no-deal Brexit, GDP will fall by 16%, which is not in the best interest of the people of the north-east of England. We need to be saying that loud and clear from this day on, until we get a resolution to the issue of Brexit. In my view, there is no deal that is better than the one we have now. I have asked the Prime Minister whether the deal she brought forward is better than the one we have now, but I have yet to receive an answer.