Leaving the EU: North-East Exports

Debate between Tom Blenkinsop and Phil Wilson

Tuesday 25th October 2016 Westminster Hall

[Phil Wilson (Sedgefield) (Lab)]

I beg to move,

That this House has considered the effect on exports from the North East of the UK leaving the EU.

It is a pleasure to serve under your chairmanship, Mr Hollobone.

We all agree that the British people’s decision on 23 June to leave the EU was the most profound decision to affect this country since the second world war. I, like many in the House, very much wanted the UK to stay part of the EU, but the country, including the north-east of England, voted otherwise. That decision must be implemented, but as my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) has pointed out, the country voted on the principle of leaving, not on the terms. The detail is therefore important.

The referendum result has created much uncertainty about the UK economy’s long-term prospects, not just internationally but in many boardrooms around the country. I wonder how soon it will be before that uncertainty is felt in households in communities from south-east England to Scotland, from County Durham to Northern Ireland, and from Wales to East Anglia, and how soon it will be before that uncertainty spreads from the boardroom to the shop floor.

I want to use this debate to explain the importance of the European single market to the north-east of England, to raise several issues and to probe the Minister on what he and the Government think is the best option for the north-east of England in a post-Brexit Britain. I know the Minister shares the view that remain was the best option for the British people, but in our own ways we have both taken on responsibility for delivering the best deal for the UK under the circumstances, unlike the former—or perhaps the current—leader of the UK Independence party, Nigel Farage, who abandoned the field of play once he got the referendum outcome he wanted. Like all populists, he was ready to pick up the megaphone to let us know what he thought to be wrong, but when the argument went in his favour he was not prepared to hang around and take responsibility for putting right those perceived wrongs.

The Minister has the unenviable task of securing the best deal for Britain. Since he wanted to remain in the EU and the single market, how is he going to convince his colleagues that maintaining access to the single market is the best option? Furthermore, how are the Government going to implement all the promises made by the leave campaign, of which he now has ownership?

“Let’s give our NHS the £350 million the EU takes every week”—

so said Vote Leave’s website. That slogan was emblazoned on the side of the campaign’s battle bus. Vote Leave committed to “hundreds of new schools” in a campaign video on YouTube, and to the abolition of prescription charges. According to a Vote Leave press release from 14 June:

“There is more than enough money to ensure that those who now get funding from the EU...will continue to do so”.

There was a promise of new roads and the expansion of regional airports, and the right hon. Member for Surrey Heath (Michael Gove) even said in a Vote Leave press release from 19 April that there would be enough money for 14 Astute-class submarines. There was to be money for pothole repairs and tax cuts, and wages would be higher and fuel bills cheaper—no doubt, Brexit would be a land of milk and honey, where the sun shines and everyone lives happily ever after. The Minister is on record, in his blog, as saying:

“There was no manifesto for ‘out’”—

but yes, there was, and the people voted for it.

For the people of north-east England, we must get Brexit right, because although my constituents may have voted to leave the EU, I do not believe that they voted to be poorer, to put their jobs at risk or to see their region fall further behind. If I were them, I can imagine how disappointed and betrayed I would feel if, on top of all the uncertainty, which was not there before, all the promises made by those who supported the leave campaign were not met. That disappointment would be deepened by the fact that so many of those who made the pledges not only now sit on the Front Bench, but will sit around the negotiating table to negotiate our exit. The Minister and the Government have a duty to inform the British people of how those promises are to be fulfilled—the Minister might make a start today. If they cannot be fulfilled, perhaps the Minister will be straight with the British people and say so.

The EU single market is essential to the north-east of England: 58% of the region’s trade is with the EU, which is a full 10% higher than the national average; it is the only region that exports more than it imports; more than 100,000 jobs in the region rely on trade with the continent; and, over the past five years, almost 90 European investment projects have created or safeguarded more than 6,000 jobs, and £1.1 billion in inward foreign investment has come to the north-east from EU members.

According to the North East England chamber of commerce and a report by Ernst and Young, the north-east has seen the second highest increase in foreign direct investment—sitting just behind the north-west—with a substantial 83% increase on last year in FDI projects. An EY survey of investors about the link between the EU referendum and FDI asked how important access to the single market was, and 79% of investors cited access to the single market as a key feature of the UK’s attractiveness, a higher figure than last year’s. The same survey found that 52% of investors thought that a “slight change” in access to the single market would affect the attractiveness of the UK as a destination for business; in the event of a “significantly less favourable” change, the figure rose to 55%.

The North East England chamber of commerce has major concerns about future trade deals. Membership of the single market has brought significant benefits to the north-east of England, attracting business and creating jobs. The chamber stated in its EU referendum briefing paper of July 2016:

“There are also major implications for relationships with overseas markets where existing trade deals have been negotiated by the EU and for the future of trade documentation needed by businesses. Due to the complexities of these issues, there is significant concern among businesses about the UK Government’s capacity to address these issues in the required timescale before Britain exits the EU. Many of our members are also concerned about the effective flow of information so businesses are aware of any changes they need to make to their practices. Assurances about this are vital.”

What assurances about that will the Minister give to companies in the north-east?

In the same briefing paper, the chamber also stated:

“There is also....the hope and expectation that the anticipated benefits of Brexit in being able to conclude trade deals more quickly around the world will be realised. The new department headed by the International Trade Secretary...should aim to quickly set out its plans in this regard so businesses can see that Government is seeking to get beyond a damage limitation exercise to exploit new opportunities.”

I offer this opportunity to the Minister to lay out those plans. Business needs certainty, and that would seem to be the one thing in short supply at present.

As I am sure the Minister is aware, Japanese investment is key to the north-east of England. There are about 50 Japanese companies in the region, including Hitachi in my constituency. It provides almost 1,000 direct jobs, with many more in a growing supply chain. Nissan provides 7,000 direct jobs and 30,000 in the supply chain. With 300 automotive companies in the region, the car industry in the north-east produces £11 billion in sales and is responsible for more than £5 billion in exports.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Nissan is the UK steel industry’s largest customer in the automotive trade, purchasing most of its steel from Tata in the UK, largely from Port Talbot and the strip-producing sites. What does my hon. Friend think about the potential barriers to trade if energy imported from the European Union via interconnectors were to carry a World Trade Organisation tariff for the United Kingdom in future? What will happen to large manufacturing plants and energy-intensive industries when they face larger tariffs on energy imports?

[Phil Wilson]

My hon. Friend makes an important point. So much of Brexit has to be sorted out, and I do not know the answers, but I hope that the Minister will enlighten us. There will, however, be major consequences for industry in this country, but especially in the north-east, where a lot of our manufacturing industry is. It employs a lot of people there and provides skills that we need to revitalise the economy in the region.

Throughout the referendum campaign, I was clear about saying that if Britain voted to leave, companies such as Hitachi and Nissan would not immediately cease production, close their factory doors and ship out to the EU. I still believe, though, that if we are not part of the EU single market, the potential for long-term growth must be called into question. Furthermore, what growth there might be could come at a cost to the Exchequer.

Following Britain’s decision to withdraw from the EU, Nissan’s chief executive, Carlos Ghosn, indicated that the company might halt further investment in its Sunderland plant unless the Government agreed to compensate it for any adverse financial impact of Brexit. At the Paris motor show in August, Ghosn warned that

“important investment decisions will not be made in the dark…If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK Government”,

and he suggested:

“You can have commitments of compensation in case you have something negative. If there are tax barriers being established on cars, you have to have a commitment for car-makers who export to Europe that there is some kind of compensation.”

Earlier this month, the Prime Minister met with Mr Ghosn to explore what assurances Nissan was seeking. The Financial Times reported that the meeting came ahead of Nissan’s decision on whether to build its new Qashqai SUV in Sunderland, a decision that might be taken as early as November. After the meeting, Mr Ghosn said:

“Since Mrs May’s appointment, we have maintained a clear dialogue with the UK Government during this challenging time”,

and he stressed:

“We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain.”

He added:

“Following our productive meeting, I am confident the government will continue to ensure the UK remains a competitive place to do business. I look forward to continued positive collaboration between Nissan and the UK Government.”

On the face of it, those are nothing more than warm words, but last weekend The Sun newspaper reported that Nissan is to announce that it will build the Qashqai SUV at its Sunderland plant—I hope so—and that an announcement is imminent. If the new Qashqai model is to be built in the north-east, however, what kind of compensation is Mr Ghosn anticipating? To keep Nissan in Sunderland, what price will Britain need to pay that we did not need to pay before? Don’t get me wrong, I want Nissan to stay, but I believe that it is incumbent on the Government to tell us what the cost is. It seems to me that the much vaunted windfall to the Exchequer from not being in the EU will not be available to spend on the NHS—if ever it was—because it will be needed to subsidise industry in a way we have not needed to before.

The Japanese Government are so concerned about Brexit that they published a 15-page document at the time of the G20 summit in China, pointing out:

“In light of the fact that a number of Japanese businesses, invited by the Government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”

The document also laid out several requests, such as maintenance of

“the current tariff rates and customs clearance procedures”

and the introduction of

“provisions for cumulative rules of origin”.

The Japanese Government gave those two key reasons, and others, for the UK remaining part of the single market and the customs union. I fear the consequences of all this uncertainty for the continued growth of existing foreign direct investment in the north-east of England and the region’s ability to attract FDI in the future. The Japanese, like many businesses in the north-east, have asked for transparency in the Brexit negotiations. It is not only Westminster politicians who are asking for transparency; business and the wider world are too.

The Minister wrote in a blog post on his website on 25 October 2011:

“A vote to come out of the EU would be to try to reverse nearly four decades of economic development…I am convinced that the advantages of membership outweigh the disadvantages.”

I agree. He said to the BBC just last month that

“we must…try to achieve…zero-tariff access to this market of 500 million people in the EU”.

Again, I agree, but it seems to me that in so doing, the Government are setting out in a direction that the Conservative party accused the Labour Government of taking back in the 1970s and upon which it frowned at the time.

The Prime Minister said in her closing speech at the Conservative party conference:

“It’s not about picking winners, propping up failing industries, or bringing old companies back from the dead. It’s about identifying the industries that are of strategic value to our economy and supporting and promoting them”.

That sounds very much like picking winners to me. We should support our industry and develop an innovative industrial strategy, but don’t let’s write off whole industries. Millions of people may have voted for Brexit, but let us not forget the millions who did not. I am of the view that the Brexit negotiations will be complicated and uncertainty will reign for some time to come.

We know that the Minister’s preferred option is access to the single market—if not membership—but in what form? The existing model? The Swiss model? Will we stay part of the customs union? Does he agree with the report by his own Government that said that leaving the customs union could cause a 4.5% fall in British GDP and a reduction in foreign direct investment of as much as £9 billion, with trading falling by as much as 15.6%?

Brexit is the defining issue of our time, and it is more than apparent that the Government did not have any contingency planning in place to deal with the immensity of the task ahead, so I doubt very much that this will be the last Westminster Hall debate on how the issue affects the north-east of England, let alone the rest of the country. The future prosperity of the north-east of England, and indeed our nation, depends on getting this right. In answering the questions that I have asked today, the Minister will have the opportunity to start to allay fears, provide certainty, promote confidence and offer optimism, and to show vision and belief in our country. We must have the right to stand tall in the world while acknowledging our responsibility to others. I look forward to his response.

European Union Referendum Bill

Debate between Tom Blenkinsop and Phil Wilson

Tuesday 9th June 2015 Commons Chamber

[Phil Wilson (Sedgefield) (Lab)]

I thank every Member who has made their maiden speech today, especially the hon. Member for Wealden (Nusrat Ghani), whose excellent speech we have just heard, and, on the Opposition Benches, my hon. Friends the Members for Ellesmere Port and Neston (Justin Madders), for Ilford North (Wes Streeting) and for Halifax (Holly Lynch). If they, and all the others who have made maiden speeches today, continue to speak in the coming months and years as they have done in this debate, I am sure they will be listened to not just in this House but, more importantly, out in the country as well.

I want to say a few things about Europe, because Europe is very important to me and my constituents. The largest industrial estate in the north-east of England is in my constituency. The question of our future in the EU is important not just for my constituents but for the whole of the north-east and the rest of the country.

I agree with the Labour MEPs for the north-east, Paul Brannen and Jude Kirton-Darling, who outlined the five key factors of our membership of the EU: it creates jobs and growth; it means investment in the north-east; it protects our rights; it keeps us safe; and it improves the environment. It has done all these basic, essential things not just in the last two or three years but in the last 40 years, and it will do so well into the future. In addition there is the fact that, according to the North East chamber of commerce, over 63% of businesses in the north-east want us to be part of Europe.

We also gain in net terms from our contributions to Europe in respect of social and economic investment in the north-east. There will be £1 billion of investment in the north-east of England over the next six years for transport infrastructure, small business support, international trade support and digital skills.

The EEF and the North East chamber of commerce have called for less political game-playing, as that is causing greater business and economic uncertainty for firms in the north-east. I think a lot of games are being played in the Conservative party, because this referendum issue is ultimately not about what the people think but about whether it can keep the Conservative party together. The EEF has said:

“British manufacturers remain overwhelmingly of the view that our economic wellbeing is linked to the EU and we must stay in membership. It makes no sense to disengage from our major market where we would still face all the costs of compliance and enjoy none of the influence.”

I want to mention two major firms in the north-east. Everyone has heard of Nissan and of its importance to the economy in the north-east and the rest of Great Britain. Over 37,000 jobs in this country depend on Nissan. It employs 6,500 directly in its factory in Sunderland. Fifty per cent. of what the factory produces goes to Europe, into the EU, and the factory is part-owned by Renault.

Over the next two years or so, major new models will be coming out—the Juke, the Qashqai—and the Washington plant will be in competition with the Nissan plant in Spain for a new model. If it gets that new model, that will sustain the existing jobs and probably lead not only to more jobs in the Sunderland plant, but to other jobs in the north-east of England. That is why it is vital for us to stay in Europe: I do not want to see the factory going to Spain, France or anywhere else. I want it to stay in Europe as one of the most productive car plants in the world.

There is also Hitachi in my constituency, which is bringing train building back to the north-east of England, where the first trains were built 190 years ago. Hitachi, with 730 jobs and thousands in the supply chain, has come to this country because it wants to export trains to the rest of Europe.

For all those reasons, I do not understand how any parliamentarian of any political party in the north-east can be against continuing membership of the EU.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

If any region in the United Kingdom is the perfect example of the necessity for inward investment and a relationship with the European Union, it is the north-east of England. In our area we have three Tata Steel factories and the largest potash mine in Britain, which, incidentally, was protected by European regulations from Russian dumping. Would the north-east not be severely harmed if we left the European Union?

[Phil Wilson]

The north-east of England would be severely harmed, but not only the north-east—it would be the UK and our position in the world, which is the other issue that we need to think about. Are we an outward-looking country that wants to embrace the EU and the rest of the world, or do we want to pull up the drawbridge? Some people want to pull up the drawbridge and to let the world get on and pass us by. Over the next five years one of the major issues for this Parliament will be the Transatlantic Trade and Investment Partnership. It is controversial and could regulate nearly 50% of the world’s GDP. It could lead to better standards for labour, in consumer rights and in trade for, as I say, 50% of GDP in this country.

We would not get that kind of agreement for the UK alone; we can only negotiate something like that if we are part of the EU, part of a marketplace of 500 million people and a union of 28 countries. Yes, we do have to pool some of our sovereignty to achieve better things in this world. We are a member of NATO and could go to war for another country if it is invaded—that is what I call pooling sovereignty. Pooling sovereignty for economic gain is worth while if it benefits this country, which I believe that it will.

We are talking about the future of the UK, our future in the world and where we want to be in the globalised economy. We cannot close the door on the rest of the world. We have to remain part of the world, and being part of the EU is vitally important to us. That is why, when the referendum comes, I will be voting yes and campaigning to stay in the European Union.

Scotland and North-east England Post-2014

Debate between Tom Blenkinsop and Phil Wilson

Tuesday 4th March 2014 Westminster Hall

[Phil Wilson]

The hon. Gentleman has raised the point that I was going to make next with some statistics. At present, more than 23 million vehicles, 15 million tonnes of freight and 7 million rail passengers a year cross the border between England and Scotland in both directions. If Scotland becomes an independent state, the current border will become an international border. Scotland will have to take control of its border and introduce the relevant regulations to manage it. The present UK is a true domestic single market: businesses in Scotland have easy access to customers throughout all parts of the UK, as does the north-east of England. Anyone who has the people and their benefit in mind will surely see that as a key reason why Scotland should not be independent, and why we should work together for the benefit of all the people who live in the UK.

An international border would create a barrier to all that. For example, as I have said, 40,000 people travel each way across the border every day to work. An independent Scotland would not have the membership of the EU or the common travel area that it now enjoys. It would have to renegotiate travel arrangements with the rest of Britain.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

My hon. Friend makes an excellent point. It is also about access to European markets. Currently, steelworks in Scotland such as Dalzell and Clydebridge roll Scunthorpe steel. Every single bit of slab steel that goes to Dalzell and Clydebridge in Scotland is from Scunthorpe. Independence would undermine a crucial, constituent part of the steel industry not just in England but in Scotland. It is a UK steel industry.

[Phil Wilson]

I think there will be a lot of consensus on this side of the argument. We have a lot of common ground among all parts of the UK. Why we would want to disrupt and dismantle that, I do not know. It can only cause additional burdens to the Scottish and English people who currently take for granted the journey across the border. If Scotland managed to renegotiate entry into the EU, it would have to join the Schengen agreement, meaning that passports would have to be shown at border crossings such as Berwick.

Benefits and Food Banks (County Durham)

Debate between Tom Blenkinsop and Phil Wilson

Wednesday 3rd July 2013 Commons Chamber

[Phil Wilson]

My hon. Friend—a fellow Durham MP—and I both know what is happening in our schools now. Children are turning up hungry, and we know of cases where teachers have paid for food for the children out of their own pockets. That is a crucial issue in areas such as ours.

Will the Minister tell the House whether there are problems with benefit claim processing centres hitting their targets? If there are not, why do data from food banks prove there is a problem? There seems to be a huge difference between what independent charities are saying and what the Government are saying. Other worrying statistics show that just under 20% of those using food banks are in work and use them because their income does not cover the cost of electricity, rent and food, and something has to give. More significantly, a third of recipients are children. Food banks now claim that demand is outstripping supply, and the welfare reforms have yet to be implemented.

Durham county council estimates that 119,600 households in County Durham— just over half of all households in the county—will be affected by universal credit when it is introduced. The council also estimates that changes to benefits and tax credits will see each household lose £680 a year, and that £151 million will be taken out of the local economy. Around 8,500 people in so-called under-occupied properties will be affected by the bedroom tax. That is an insidious measure which, anecdotally, is starting to be seen as another reason people are using food banks.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

In Tees Valley, which is partly covered by my hon. Friend’s constituency, we are aware that unemployment for 16 to 24-year-olds is above 32%, long-term claimants of jobseeker’s allowance have more than doubled since mid-2010, and Middlesbrough council estimates that 10,000 children are now living in poverty. We also know today from ITV news in the north-east that £500,000 in rent arrears has not been paid due to the bedroom tax. Does my hon. Friend think that those four factors are contributing to the rising use of food banks?

[Phil Wilson]

Of course they are. Some people say it is an issue of supply and that because there are more food banks, more people are using them, but there is definitely demand out there. The statistics being quoted have massive consequences. No one is denying that welfare provision needs reform, but whatever any Government do in that regard, they must be prepared to face the consequences. When the welfare bill is increased by £20 billion, it is obvious that the reforms are not working. The increase in the number of food banks proves that the holes in the safety net are getting bigger.

The key issue for people using food banks seems to be the delay in the receipt of benefits. Yesterday, in the other place Lord Freud said:

“The Trussell Trust has said that one reason why people have come to it is benefit delays. I checked through the figures and in the period of that increase the number of delays that we had had reduced.”—[Official Report, House of Lords, 2 July 2013; Vol. 746, c. 1072.]

Whoever we talk to in the food bank movement, they say that delays to benefits are the main reason people are referred to their centres. Surely it is not for food banks to be the stop-gap because the system is not working. Will the Minister say what his Department is doing to resolve that issue?

What kind of people attend food banks? They include the mother who lost her job 16 months ago and is distressed that her nine-year-old child has not eaten fresh fruit or vegetables for most of that period. Another young mother did not have any food in the house and was worried about how she would feed her children when they returned home from school that day. There were many more examples from all over Durham and indeed the UK—all harrowing and all tragic.

Olivier De Schutter, the UN special rapporteur on the right to food stated in an article in The Guardian on 27 February:

“Food banks should not be seen as a “normal” part of national safety nets…Food banks depend on donations, and they are often run by volunteers: they are charity-based, not rights-based, and they should not be seen as a substitute for the robust social safety nets to which each individual has a right.”

I agree with him. I also agree with him when he says that although society might not have completely broken down because of the significant increase in the number of food banks, it is fair to say that the increase reveals where society is broken. As I have said, the safety net might be there, but the holes in it are getting bigger, allowing more people to fall through.

In the other place yesterday, in reply to a question from Baroness Howarth of Breckland about the monitoring of food banks, Lord Freud said:

“It is not the job of the DWP to monitor this provision, which is done on a charitable basis.”—[Official Report, House of Lords, 2 July 2013; Vol. 746, c. 1073.]

I would respectfully say to the Minister that, as there are now 500,000 of our fellow citizens using food banks, I believe the time has come to monitor food bank usage. The increase could be down to supply, but it is certainly down to demand. Why is it that the three main reasons for people using food banks are delay in benefit receipt, benefit changes and low incomes? Domestic violence and homelessness are other reasons for usage. Surely a responsible Government would start revising their approach to welfare reform by using the data acquired from food banks to help to close the holes in the welfare safety net that are so obviously opening up.

The Government state that one reason for the increase in the number of food banks is that Jobcentre Plus now refers people on to them. However, the House of Commons Library standard note on food banks and food poverty states, on page 13:

“While increasing awareness of the existence of food banks may well be a factor in explaining recent growth in usage...the role of Jobcentre Plus in this regard is difficult to quantify since it does not collate statistics on food bank referrals.”

In addition, referrals from Jobcentre Plus did not start until September 2011, by which time the number of people being fed by food banks was increasing from about 60,000 in the previous year to 128,000 by the end of 2011.

Perhaps it would be in the Minister’s own interest to start collecting data; it would certainly be in the interest of those being fed by food banks if the Government were to look at what we can do to close the holes in the safety net. It is not only me saying that; the UN special rapporteur on the right to food believes so too. He said in the same article that I quoted earlier:

“The lesson of the current upsurge in soup kitchens and food pantries is not that we need more food banks or fewer food banks, it is everything else—the social safety net above and around it—that needs to change, and the direction of that change can be oriented by the lessons that food banks, and the stories of their clientele, teach us.”

The Government must not be allowed to renege on their responsibilities because charities are left to pick up the pieces. My request of the Minister is to learn from the food bank phenomenon, because it is not going to go away. It is only going to get bigger. If we are not careful, the social safety net built up over the decades will be dismantled and put away somewhere as a memory.

I would also like to hear the Minister’s response to the call from Church Action on Poverty and Oxfam in their report “Walking the breadline” for the Government to set up an inquiry by the House of Commons Work and Pensions Select Committee into any relationship between benefit changes and food poverty. Would the Minister welcome such an inquiry? The report also called for regular publication by the DWP of data on benefit delays, errors and sanctions, for monitoring by the DWP of the effect of universal credit on food poverty, and for the recording and monitoring of food bank referrals made by Government agencies. I know that the Minister will deny this, but I believe that, if we are not careful, food banks will become a part of the welfare system—and that it will happen by default.

Finally, I would like to thank the volunteers who make the food bank network work. They include Peter MacLellan, who co-ordinates the food banks in County Durham for the Durham Christian Partnership, and Ernie Temple who runs the food bank at St Clare’s church in Newton Aycliffe. I also want to thank Rachael Mawston and her team at Excel Local for all the hard work they put into running their food bank, and Councillor Peter Brookes, Michael King and Rev. Michael Gobbett of Sedgefield Churches Together, who run the food banks in the Trimdons and who are looking to expand into Sedgefield, Fishburn and Deaf Hill. I am sure that the Minister will applaud their hard work. There will always be those who fall through the safety net, however well constructed it might be, and we need such people to prevent those most in need from falling through the net on to the ground. I believe that those people now have their hands full.

Economy (North-East)

Debate between Tom Blenkinsop and Phil Wilson

Tuesday 13th November 2012 Westminster Hall

[Phil Wilson]

I stand corrected. It is a market of not just 60 million in our own country, but 500 million people. On the back of the Intercity Express Programme, Hitachi will bid for work in other countries. It is looking for work in Germany and elsewhere in Europe, so that we will not just deal with trains in our own country but become an exporter of trains.

[Tom Blenkinsop]

One North East was instrumental not only in bringing Hitachi to the region, but in securing Sahaviriya Steel Industries funding for the Teesside Cast Products steelworks at Redcar. As a former union official, I was in constant talks with SSI, Don Cook and other companies that were interested in buying the plant.

[Phil Wilson]

That is absolutely right. The demise of One North East is a great tragedy for the area, and local enterprise partnerships will be nowhere near as good at attracting business to the region.

I have run out of time, because I want my hon. Friend the Member for North West Durham (Pat Glass) to be able to speak. Essentially, we need the public and private sectors to work together. There is good and bad in both. What we should do is use the good and reform the bad for the benefit of the whole country.

Budget (North-East)

Debate between Tom Blenkinsop and Phil Wilson

Tuesday 17th April 2012 Westminster Hall

[Phil Wilson (Sedgefield) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing the debate.

People talk about investment in the region, and three examples of investment have been mentioned. GlaxoSmithKline in Cumbria, which also has a plant in the constituency of my hon. Friend the Member for Bishop Auckland (Helen Goodman), SSI in Redcar, and Hitachi in my constituency have one thing in common: they would not be there were it not for a Labour Government. They were the result of initiatives established and settled under a Labour Government and which came to fruition after the general election. From personal experience, I know how much time and effort went in to ensure that Hitachi came to the north-east of England—it was not certain that it would.

I set a “We are all in this together” test for the Budget, and it did not pass that test. Some 57,000 households in the north-east will lose tax credits. I met a young mother at the weekend with twins—two little boys—who will start school in September. She has lost more than £300 in tax credits every month. That is a lot of money for someone with a young family. I know that 940,000 people will be better off under the new tax threshold, but let us not forget that the Institute for Fiscal Studies has said that the changes coming in this month will mean that on average they will be £511 worse off.

[Tom Blenkinsop]

My hon. Friend gave three examples of programmes starting under the Labour Government: SSI, Hitachi and GSK. That is also the case with DigitalCity in Middlesbrough, where public-led investment increased private-led investment. The hon. Member for Redcar (Ian Swales) referred to information from Experian in relation to Middlesbrough, Hartlepool and Redcar being the hardest-hit areas, but those statistics related not to the RDA, but to an investigation post this Government’s autumn statement.

[Phil Wilson]

My hon. Friend is right. That proves how much we have to celebrate what the previous Labour Government did for the north-east of England. The hon. Member for Redcar (Ian Swales) mentioned the minimum wage. The minimum wage has been frozen for people under the age of 21. It has gone up by only 11p this year as a consequence of the decisions made by this Government. At the same time, 4,000 to 5,000 taxpayers on the 50p tax rate in the region will on average receive a tax cut of £10,000 each. If that does not show that we are not all in this together, I do not know what does. The Government put VAT on pasties, but they did not put VAT on caviar.

The 40p tax rate has been ignored by many people. The threshold has been reduced from £42,475 to £41,450, so that 300,000 people will be brought into the 40p tax rate. How many more people will lose a proportion of their child benefit because of the reduction in that threshold? Will the Minister indicate whether she knows that figure? By reducing the threshold, the number of people paying the 40p tax rate in the region has gone up by 8%. There are now nearly 110,000 people paying the 40p tax rate. Little by little, the Government’s fairness agenda is being found out—actually, we are not all in this together.

I am very concerned about regional pay. The hon. Member for Stockton South (James Wharton) mentioned the flexibility in local pay in the court system, but we reduced the number of bands from 40-odd to five; we did not increase the number of bands. The latest survey by the TUC states that 68%—more than two thirds—of Conservative voters do not believe that regional pay in the public sector will boost jobs in the private sector.

The Budget is divisive. It is also complacent. It does nothing for growth, not just in the north-east of England, but in the rest of the country.

Regional Pay (Public Sector)

Debate between Tom Blenkinsop and Phil Wilson

Tuesday 10th January 2012 Westminster Hall

[Phil Wilson (Sedgefield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Chope, and I congratulate the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) on securing the debate. The issue of regional pay is important for people living in Wales, Scotland and Northern Ireland, and in regions such as the north-east of England.

I spoke about regional pay, or the localisation of pay, in a debate on 6 December 2011, and the issue has been on the agenda for Governments since at least the 1980s, when I was a civil servant in Durham. The Megaw report wanted to devolve public sector pay in the civil service on a regional basis, but that proposal did not get anywhere. Introducing local rates of pay is difficult. The previous Government looked at the issue with regard to the public sector, and a Treasury guidance note from 2003 stated:

“At the extreme, local pay in theory could mean devolved pay…to local bodies. In practice, extremely devolved arrangements are not desirable. There are risks of workers being treated differently for no good reason. There could be dangers of leapfrogging and parts of the public sector competing against each other for the best staff.”

That is the basic, fundamental reason why devolution of levels of pay in the public sector has not been introduced.

This is a time of austerity. Public sector pay has been restricted and will not be increased for two years, and then it will increase by just 1% for two years. Let us look at markets in the north-east of England; if we had devolved local pay bargaining, people might say that pay should be frozen in that region for another year because of the difference between the public and private sectors. Do the Government believe that public sector workers in some parts of the country should have a pay rise, while those in other places should not receive one, because, according to Government analysis, the pay difference between the public and private sectors is too big?

We should not look at only one region. The difference in pay in the north-east and in the south-east of England is 10%, and we should try to decrease that. Why is it right for a nurse working at St Thomas’ hospital, across the way from here, to be on a different pay rate from a nurse who works at the university hospital of North Tees in my constituency, or in Bishop Auckland or Hartlepool? I cannot see how that can be right if both nurses are doing the same job. Many private sector companies, especially supermarkets and some banks such as Santander, have national pay agreements. There may be some flexibility within those agreements, but they have national pay systems. To say that some public sector workers should suffer austerity measures for longer than others because of where they live is divisive. How can we encourage a public sector worker to move from south-east England to the north-east to do exactly the same job if the rates of pay in the north-east are completely different from those in London?

[Tom Blenkinsop]

My hon. Friend makes an excellent case. There are institutionalised national bodies that survey and assess prices in supermarkets. How on earth would regionalised public sector pay work in an economy with five or six big supermarkets that are supposed to have national rates for pricing their goods?

[Phil Wilson]

My hon. Friend raises an important point. One reason why the previous Government did not introduce such measures is because the complexity of having different pay bodies, boards and regions would create unnecessary bureaucracy, which any Government should want to keep to a minimum.

In north-east England, average pay is £19,000 per year, but it is only that high because of public sector workers in the area. How low does the Minister want pay in north-east England to be? Public sector workers maintain the average salary at £19,000; without them it would be much lower. The differential in rates of pay is not a reason for cutting pay or suspending pay rises in the public sector. Instead, we should see how we can increase pay in the private sector.

[Tom Blenkinsop]

Again, my hon. Friend makes an excellent point, and it would be good to see the Minister thank and congratulate north-east England: although in the rest of the country the manufacturing economy is in the doldrums, the north-east is bucking that trend. Workers in the steel and chemical processing industries would undoubtedly be affected by any reduction in public sector pay.

[Phil Wilson]

My hon. Friend is absolutely right, and those workers will soon be joined by workers in the train building sector, in the factory in Newton Aycliffe. As I understand, the north-east exports more manufacturing goods than it imports.

The private sector has a major role to play, and we need an increase in private sector jobs. At the moment, however, 67,000 public sector jobs have been lost in north-east England, and unemployment has risen to 11.6%. Where are the private sector jobs? How can we say that the public sector is crowding out private sector jobs when unemployment is rising and there is no growth to make up for the loss of 67,000 public sector jobs? Figures from the third quarter of last year show that the number of private sector jobs in the UK increased by only 5,000. Many regions such as the north-east are losing out.

I am very worried about what will happen. There is a big pay differential between the south-east and the rest of the country. The differential between regions other than the south-east is minor; it is only 1% or 2%, depending on what goods we compare. We talk about social mobility, and about people getting on and wanting to move to different parts of the country; how will that be possible if pay rates are so different across the country?

Also, we will not create regions as we know them; we will create silos. If people work in the public sector in the north-east, that is where they will have to work, because if they want to move to south-east England or somewhere else, they probably will not be able to afford to buy a house there. There is great difficulty with that at the moment. Let us not forget that in London, where there is London weighting, there is a big problem with recruitment in the public sector as well.

The proposal is a knee-jerk reaction that has not been thought through. I know that the Chancellor of the Exchequer has said that this will not be regional pay as perhaps it was outlined in the past, and that it will be based on zones or localities. That may be so, and it may have been tried out in the Courts Service; let us say that it has been tried there. The fundamental point is that the previous Government did not want to implement it anywhere else, because they knew about the inherent contradictions involved in doing that.

North-east England is a great place to live. I have lived there all my life. I see it as a region of the country with a great identity. I do not want it to become a silo, such that if people work there in the public sector, they cannot work anywhere else. I do not want public sector workers in north-east England to have to face extended periods of austerity because they happen to be working in the wrong part of the country.

We need to look at the private sector. I want private sector jobs to come to the north-east of England, and I want those private sector jobs to have good pay rates. This week and over the weekend, every party has been going on about high pay among senior executives. Okay, let us consider that, but let us also consider low pay in the private sector and not just in the public sector, because private sector workers make up the majority of workers in the country. The answer to the problem is not regional pay or localised pay—it is a living wage for all our people.