Sharon Hodgson
Main Page: Sharon Hodgson (Labour - Washington and Gateshead South)(13 years, 9 months ago)
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Ian Lucas (Wrexham) (Lab)
It is a pleasure to address colleagues under your chairmanship, Mr Leigh, for the first time, I believe. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate, and hon. Members on their interesting contributions. I wish we had more time, because I am sure that more could be added to the debate. I shall not deal with each of the speeches now but will refer to them in my comments.
It is imperative that the north-east has a strong voice in Parliament. The new generation of MPs who came into Parliament in the last general election are a powerful group who have contributed hugely to the voice of that region being heard in Parliament, and I am sure that they will continue to do that. That is enormously important when we know that regional assemblies have gone away for a while and that the Government’s focus is on local government.
The north-east is a powerful region. I was born there, and I am proud of the fact that I come from there. It has a distinct identity within England, and Ministers have to understand that. The voices that we have heard included that of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), who spoke about Newcastle airport. She told us how important its development has been to the region and how it has introduced so many more tourists to the area. People are able to see what a beautiful region it is and what a superb place it is to invest in.
We heard from my hon. Friend the Member for Middlesbrough South and East Cleveland about the varied industries in the north-east, from the chemicals sector, which is long established on Teesside, through, of course, to coal, steel and shipbuilding, which, I am afraid is long gone. The demise of those industries under the previous Conservative Government largely forged my identity in politics. The concern of Opposition Members is that the policies that are being pursued by this Government are a rerun of policies in the 1980s. We profoundly disagreed with what happened and think that it is a mistake to repeat it.
The hon. Member for Wrexham—I am sorry, the hon. Member for Hexham (Guy Opperman)—made some succinct comments about the deficit. Labour Members accept that it needs to be reduced, but we remember that 3.5 million people were unemployed in the United Kingdom under the previous Conservative Government, as opposed to the 2.5 million who are unemployed now. All those people received benefits that were paid from taxpayers’ money, and largely funded by the benefits the Conservatives received from the North sea oil revenues that were available at the time. That waste and spending of public money will be repeated if this Government continue with their policies, which will create a lack of confidence in the economy and business community, and less demand in the economy, less consumption by people and a smaller market. All that will lead to increased unemployment, increased burdens on the state and the type of long-standing depression that we had in the ’80s and again in the ’90s, when unemployment reached 3.5 million again.
Fortunately, the north-east has developed its economy since the 1980s. There has been development in the constituency of my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) at the Clipper site, which is a magnificent site on the banks of the Tyne, and development of the low-carbon industry in the north-east with companies such as Romag, which brings so much benefit and forward thinking to industry.
I should mention at this juncture the appalling decision by the Government to bring forward the review on feed-in tariffs, which is hugely damaging for companies such as Romag. The Government purport to know something about business, but that review will result in a lack of long-term stability for decision making. Business complains so much about that. The Government are changing a successful scheme, bringing forward a review, creating instability and creating difficulties for successful businesses that are benefiting not from state support but from direct investment, often from outside the UK. The whole industry would welcome the Government’s looking at that again.
It is important that we accept that regional development agencies are no more. I have attended several debates, and know about the success of One NorthEast. The hon. Member for Redcar (Ian Swales) recognised it in an interesting speech. However, we are moving on. The Government, as they are entitled to, are talking about local enterprise partnerships now, and we need to ensure that they work for the benefit of the north-east region. We need to address what I consider to be some of the failings of LEPs.
The first failing is the lack of resources. LEPs cannot sensibly contribute to driving the region forward if they do not have the resources to set up and develop businesses in their area. It is important that the partnerships should have resources. Of course they need to work with other LEPs in the region, but it is interesting that the Government themselves are showing a lack of confidence in LEPs; for example, on the hugely important issue of broadband. The authority that will contract for the provision of broadband services in the north-east and other areas of England will not be the LEP but the local authorities in individual regions. Having so many contracting bodies trying to formulate an infrastructure for a communications industry will be complex and difficult, and relying on delivery by individual local authorities which may or may not decide to take forward applications to develop broadband services in their area is a big mistake. LEPs, which cover larger areas and which more closely involve business than some local authorities do, should have a role in formulating a policy to take that forward.
The instruments that need to be used by LEPs must be made available to them by the Government. That must include, to some extent, financing, and it must also include the ability at least to be involved in securing funding.
We have heard references to the regional growth fund. There is general agreement in this room that there should be a rebalancing of the economy. The irony of the regional growth fund is that it is not regional at all. Its approach is entirely centralising. It is based not on localities but on a small group of people in a centralised area making decisions for areas about which they know little. That is the tragedy of the operation of the regional growth fund.
We all know that the fund is too small. The number of bids that have been made to it do not correspond in any way to the money that was available through RDAs, and we all know, as the hon. Member for Redcar pointed out, that the limits on the application of money by the regional growth fund are such that many of the grants and support that were given to small businesses in the regions will no longer be available to them. That is an urgent issue that needs to be addressed by the Government.
The other urgent issue that needs to be addressed is the lack of investment by banks and regional bodies in business and industry. We heard a massive amount about that from the Government when they were in opposition—day in, day out—but it has largely disappeared from their public pronouncements. I regret that the only thing that this Government have done as far as investment in business is concerned is to extend Labour’s successful enterprise finance guarantee scheme, which was a strong support for business and industry at a time when it was difficult to secure investment and keep businesses going.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Will my hon. Friend give way?
Ian Lucas
I have only a minute left, so I cannot give way.
I remember being criticised by the Minister when I sat where he is sitting now, and I shall criticise him now, although he and I get along very well. I do not recall his criticising me for spending too much money at the time. I remember his criticising me for not getting money out more quickly in support of the car industry. I do not remember the Conservatives or the Liberal Democrats opposing the introduction of the car scrappage scheme, and I do not remember their opposing any of the support that brought fundamental investment to the UK and benefited regions such as the north-east. Only now do we hear their constant mantra. The Government’s problem is that they will not reduce the deficit. They are damaging the economy in the same way as they did in the north-east in the 1980s and again in the 1990s. I hope and pray that they do not make the same mistake again.
Mr Prisk
The hon. Gentleman started well, before coming to a money issue. We are looking not only at the need to deal with public finances, which my hon. Friend the Member for Hexham (Guy Opperman) accurately described, but at how they are organised as we change the landscape for public bodies. We must revisit the regional approach to tourism, allied with the RDAs’ work, which is what VisitEngland will do with local enterprise partnerships and so on. I greatly value the role of tourism, but I want to move on.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) referred to airports, and she will understand that as it is just 24 hours before the Budget, I would be wise not to pre-empt the Chancellor, not least if I hope to continue to be Minister of State, Department for Business, Innovation and Skills.
We all share the wish of the hon. Member for Middlesbrough South and East Cleveland that the north-east enjoys sustainable and long-term economic growth, which is certainly our overriding priority. We are seeking not only to tackle the public finances, as any incoming responsible Government would need to do, but to ensure that we have a new model for growth. In practice, that means not just rebalancing the geography, challenging as that will be—I will come to RDAs and LEPs—but ensuring more sustainable roles in different sectors.
The hon. Member for Wrexham (Ian Lucas) was a Minister, and we jousted when he was, but he and his colleagues were right when they established, for example, the sector skills council, Automotive Skills, so that the Government could be a better partner. We have continued it, and that sectoral role is important. In the Budget tomorrow, we will seek not merely conventional tax and spend, but to set out the detailed work that has been undertaken throughout Whitehall on a growth review looking at manufacturing, construction, retail and other core parts of the economy, so that we have an agenda and a strategy that is the most comprehensive, pro-enterprise and pro-growth Budget for a generation.
The hon. Member for Middlesbrough South and East Cleveland mentioned both at the beginning of his comments and later the role of small and medium-sized enterprises. Before I go into the specifics of the north-east’s economy and LEPs, it might be worth reminding hon. Members of the key changes that will help, and have already been announced, irrespective of what may or may not be said tomorrow. As hon. Members know, we are reducing corporation tax to 20p. We are doubling the threshold for small business rate relief, which is very important for businesses outside the greater south-east, so that for more smaller businesses that fixed overhead will fall instead of remaining as it is. Six months ago, we introduced the national insurance contribution holiday for new firms.
As the hon. Gentleman rightly said, we must encourage more entrepreneurs in the north-east. I have spoken to many SMEs throughout the country, and the shift in relief for entrepreneurs—10% capital gains tax—has given a boost to people who start a business, build a business and create jobs. Taking the limit up to £5 million is an important improvement.
Mr Prisk
With respect to the hon. Lady, other hon. Members have spoken and I should first respond to their points in the five minutes remaining.
The tax changes are important, and I hope that hon. Members recognise that they have been matched with a clear commitment to the Federation of Small Businesses on Friday that, for three years, microbusinesses—those with up to 10 employees—will have a three-year moratorium on all domestic regulation. Many SMEs have told me that the problem is not just one measure, but the fact that the Government constantly provide things to do when they want to get on and grow their business. That moratorium will be important, and it has been warmly welcomed. More will be said about the regulatory issue later.
My opposite number, the hon. Member for Wrexham—for a moment, I thought there had been a geographical shift when he referred to my hon. Friend the Member for Hexham as the hon. Member for Wrexham—talked about finance. He was right to say that there are issues. We have extended the enterprise finance guarantee, which is a scheme that needed to be extended, and we are proud that we have ensured an additional capital opportunity of some £2 billion. That should help about 6,000 additional viable businesses. We have gone further and put another £200 million to one side for capital for equity investment programmes. Those are important plans to help high-growth businesses throughout the UK. In addition, we have managed to secure from the banks a £1.5 billion growth fund to inject into SMEs. I hope that the hon. Gentleman recognises that those are important changes.
Mr Prisk
With respect to the hon. Lady, I have three minutes left. She did not make a contribution to the debate, and I must respond to hon. Members who spoke.
On the balance, there are challenges in the north-east, and no one denies that, but we should recognise that manufacturing there is doing well. A survey by British Chambers of Commerce shows that for the most recent quarter manufacturing grew most quickly in the north-east out of all the regions. Hon. Members have rightly referred to the decision on Tata Steel and Sahaviriya Steel Industries, and we hope that it will progress in the next few days or weeks, so that the agreement that was tragically mothballed a while back will be developed. Some 800 jobs will be created at the site, which will sit alongside the existing 700 jobs, but that is not all. There is a £420 million investment by Nissan, and the Hitachi development in County Durham, which are very welcome and very important.
I turn to RDAs and LEPs, where there may be a difference. No one denies that the RDAs, including One NorthEast, made successful and worthwhile ventures during their time—I accept that—but in 11 years, that agency received £2.7 billion to spend, and the reality is that the gap between the north-east and elsewhere grew. The reality of the gross value added—the measure per person—is that when it started it was approximately 83% of the national average in the north-east. Eleven years later, having spent £2.7 billion, it fell to 78%. It has not only not improved, but gone backwards.
There is a challenge, and the two partnerships that have been created, which I greatly welcome and am looking forward to meeting tomorrow and Thursday, have an opportunity to address their local priorities rather than what we think is best for them, which is an important shift. They can work together, as my hon. Friend the Member for Redcar (Ian Swales) has rightly pointed out, because they do not need Government permission to do so. I have every confidence that the business and civic communities will make that alliance and work together. We will set out the specific actions that they will be able to undertake. I will respond to my hon. Friend the Member for Redcar in writing about the regional growth fund.
The enterprise zones, which my hon. Friend the Member for Stockton South (James Wharton) has campaigned on—