Unemployment (North-east)

Iain Wright Excerpts

Wednesday 20th June 2012 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Brooke, and I hope that your foot is feeling a lot better. May I also take this opportunity to thank Mr Speaker for allowing me to secure this debate? I have been trying to secure a debate on unemployment in the north-east for some time, because it is the most important and pressing social, political and economic issue facing my constituency and the wider region. I would therefore be grateful, Mrs Brooke, if you passed on my sincere thanks to Mr Speaker.

I welcome the Whip, who will be responding to the debate. I do not doubt the integrity and commitment of the hon. Member for Preseli Pembrokeshire (Stephen Crabb) in any way, shape or form, but it is deeply contemptuous to the people of the north-east for the Department for Work and Pensions not to have deigned to provide a Minister to respond to my concerns and those of my hon. Friends.

The Whip may expect me to unleash a torrent of negativity and pessimism about the situation—notwithstanding what I have just said—and to come with a begging bowl, asking for help and handouts on behalf of a declining and failed region. That is far from the case, because the north-east is far from being a failed region. It is true that we have struggled to adapt to the changing economic and industrial fortunes of the past 30 years or so, particularly in finding a new economic role following the closure of many heavy industries. I have to say that that task was not helped by the Administrations of the 1980s. Indeed, it was made much worse by the decisions they made and the priorities they set.

However, the north-east, the region that was the centrepiece of the workshop of the world in the 19th century, has the capacity, capability and ambition to become one of the major contributors to a modern global economy, and we have the work force to match. If the Government are serious—I hope that they are—about rebalancing the economy in terms of sectors and geography to make us less reliant on a few sectors and on London and the south-east, they have to see the north-east as a growth area and make us a priority.

There are sectors that have the scope to take advantage of Britain’s current competitive advantage and lead the world in the next few years—advanced manufacturing, chemicals, pharmaceuticals, automotives, higher education, renewables and the low-carbon economy, energy and tech companies. If we also think about the firms in the supply chain that will assist those industries, particularly such vital industries as the steel industry and the construction industry, the north-east must have a key role to play.

[Alex Cunningham (Stockton North) (Lab)]

My constituency enjoys some of the best industrial riverside frontage in the country. It was once home to a thriving shipbuilding industry, and then North sea-related activity. There is now the potential for real jobs and growth in the green industries, building monopiles and other components for wind farms. Does my hon. Friend agree that it is time for the Government to clarify their position on support for wind farms, and encourage developers of wind farms to buy their gear in the north-east, rather than from somewhere in Europe?

[Mr Wright]

My hon. Friend is absolutely right. Just further up the coast in Hartlepool, we have a thriving renewable energy industry with great firms, such as JDR Cable Systems and Heerema Hartlepool, which can supply a lot of offshore wind turbine components. However, investors are crying out for certainty from the Government. They need policy certainty to allow them to invest for the long term. The Government are failing spectacularly on that.

[Mr Ronnie Campbell (Blyth Valley) (Lab)]

Will my hon. Friend give way?

[Mr Wright]

I will certainly give way to my hon. Friend, because I know he has a particular interest in renewable energy in his constituency.

[Mr Campbell]

Of course, we have Narec. One of the things that disappointed me was that companies coming to the north-east to look at the Tyne and the port of Blyth—I am sure Hartlepool and the Tees, too—have moved up to Scotland because they were getting more encouragement, more money and more funding. That is no good to us, because we need them to come to the north-east. That policy needs to change.

[Mr Wright]

I absolutely agree with my hon. Friend. I mentioned the fantastic facilities and the great companies we have in my constituency. Gamesa, a Spanish wind farm manufacturer, was hoping to relocate to the UK. It looked at Hartlepool, but chose to go to a Scottish port precisely for the reasons set out by my hon. Friend. We need to come to terms with that and ensure that we have a Government who are fighting our corner in the north-east. I am not convinced that we have that at the moment. We do not even have a Minister to respond to the debate. That is deeply worrying and shows contempt for the people of the north-east.

Despite the huge potential in my constituency and the wider north-east, the unemployment situation is bleak. I know that in his response, the Whip will cling to the argument, like a dying man to a life raft, that today’s statistics show that employment in the north-east has increased by 3,000 on the previous quarter, and that unemployment in my constituency is down by 15, month-on-month. That is welcome news, but I would never say, as the Secretary of State for Energy and Climate Change did on a recent visit to Newcastle, that the unemployment rate was not as bad as it could be, or as it seemed. Again, that is deeply insulting to everyone in the north-east who has lost a job and is desperately looking for work. It shows a Government who are grossly out of touch with what the people of the north-east want and need.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend think that that is in stark contrast to 2009 and 2010, when, because of the economic stimulus introduced by the Labour Government following the economic crash, employment in the region actually rose by 24,000 in one year?

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[Mr Wright]

I absolutely agree with my hon. Friend. Some of the measures the previous Labour Government put in place, against the most severe global financial crisis the world has seen for at least a century, did to some extent mitigate the savage effects of unemployment.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I congratulate my hon. Friend on securing this debate on an issue of such great importance to the north-east, even if it is of less importance to the Government. Newcastle has seen its unemployment rate go up by approximately 20% in the past year. In addition, its national unemployment ranking has gone up by 30 places. A year ago, it had the 76th highest unemployment rate in the country; now it has the 47th highest. Does that not suggest that the Government’s measures are feeble and are leaving the north-east and Newcastle behind?

[Mr Wright]

I absolutely agree with my hon. Friend, and I will go on to mention some job losses that her constituency is facing. The region still, and by a considerable margin, has the highest unemployment rate in the country at 11.3%. The figures published today show that unemployment has increased by 8,000 in the past quarter, to 145,000 in the north-east. The number of people claiming jobseeker’s allowance has increased by 900 on the previous month. In Hartlepool, the number of people unemployed stands at 4,612, a rate of 11.6% and the 30th highest of all the UK constituencies. That jobless figure of 4,612 is more than 10% higher—503 higher—than it was a year ago.

Today’s statistics also show that the number of people who are economically active in the north-east has gone down, from 75.4% to 75.2%, as has the proportion of the adult population in employment, from 66.6% to 66.5%, whereas the national rate for England is 70.8%. On unemployment and economic prospects, the gap between the north-east and the rest of the country is getting wider and should be a huge cause of concern for the Government. From their actions—or rather, the lack of them—and from the priorities we have seen today in their not sending a Minister, I do not get the sense that that is the case at all.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he share my concern about the rising level of female worklessness in the north-east? Many women have been forced out of work because of Government cuts and cuts to tax credits. My concern is that the evidence shows that stronger economic growth is associated with higher levels of female employment—growth that we desperately need in the north-east and in the wider economy.

[Mr Wright]

My hon. Friend is absolutely right. She has been a strong champion in this regard, both in this House and beforehand, standing up to make sure that women have the rights they require to fulfil a vital economic role. In our region we certainly need female, and part-time, workers.

I want to mention the loss of jobs in recent months. Between June 2010 and December 2011, the latest period for which figures are available, the north-east lost 7,000 manufacturing jobs and 84,000 construction jobs. According to statistics obtained by the TUC, in the north-east nine jobseekers are chasing each job vacancy. In contrast, in Oxfordshire there are just 1.8 jobseekers for every vacancy. It is therefore more than five times more difficult to find work in my constituency than in Oxfordshire. It is not that the people do not want to find employment or are workshy. There are no jobs to fill.

I could mention statistics until I am blue—or red—in the face. Many people will gain some comfort from statistics, large numbers or percentages. However, behind every statistic lies a human story of a person who is made redundant and is worried about how they will pay the bills and put food on the table, or of someone rejected after making their umpteenth job application and fast losing hope and sense of self-worth, or of a parent worried about how their son or daughter will get a job or career without any experience.

[Mr Stephen Hepburn (Jarrow) (Lab)]

My hon. Friend has made some telling points. Is it not important to stress that unemployment, especially among young people, is not an easy option? The unemployment benefit for people under 24—their dole—amounts to £8 a day. Without parental support or friends, they have to feed and clothe themselves and pay their utilities from that sum. It is not an easy option.

My hon. Friend rightly mentioned the serious issues in south Tyneside. In Jarrow, an extra 200 young people went on to the dole last year. With 15 people chasing every job, there is little or no prospect of their getting one.

[Mr Wright]

My hon. Friend is right. I will come to the terrible issue of youth unemployment in a moment. Let me just mention further unwanted, gloomy news on the jobs front in recent months.

The closure of the Rio Tinto Alcan plant, with the loss of 515 jobs directly and the threat to 3,000 jobs in the supply chain, is a major blow to the economy of south-east Northumberland. My hon. Friend the Member for Blyth Valley (Mr Campbell) is in attendance and I have spoken to my hon. Friend the Member for Wansbeck (Ian Lavery) today, who wanted to attend, but is hoping to catch Mr Speaker’s eye in the debate on Remploy.

The closure of the BAe factory on Scotswood road in the constituency of my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) brings to an end a century of remarkable industrial innovation on the banks of the Tyne. The factory was started by that astonishing, underrated Victorian entrepreneur, William Armstrong. However, far from looking to the past, the closure undermines the vital links between British military capability and manufacturing and industrial capacity.

The growth in long-term unemployment and youth unemployment is of particular concern. I have mentioned that to hon. Friends. The north-east has far too often been permanently scarred by people being on the dole for many months and years, or by young people leaving school or college unable to find work. That was so in the 1980s, when the closure of the steelworks, shipyards and coal mines left an unwanted and enduring legacy of poor health, lower life expectancy, poverty and family breakdown, making it more difficult for the economy to bounce back into prosperity once the recovery starts.

The longer a person is out of work, the easier it is for them to lose skills and experience, and the more difficult it is to get back into work. That is especially true when more and more people have more recently lost their jobs, and therefore have more recent experience in the job market.

In Hartlepool, the number of people who have been claiming JSA for more than 12 months has risen in the past year by more than 245%. One in four young men under the age of 24 are out of work in Hartlepool. Such figures are not sustainable economically, socially or ethically. I fear that we are repeating the policies and mistakes of the 1980s and that there will, once again, be a lost generation of young people unable to fulfil their massive potential, believing that the only way they can get a proper career is by leaving the north-east altogether.

We have had good news. Only this week a new retailer announced the creation of 150 jobs in Hartlepool, but overall the job situation is gloomy and set to get worse. The Centre for Economics and Business Research forecasts that unemployment in the north-east will rise to 12% this year and to 13% by 2016, largely as a result of further and deeper public sector redundancies.

Government policy is making the unemployment situation in the north-east much worse. The Government’s insistence that public sector redundancies are necessary and that private sector employment will somehow bloom in the face of these cuts is naive and economically ignorant at best, or is cynically and deliberately driven for ideological and political purposes. If Ministers—or Whips—genuinely believe that the public and private sectors are separate and distinct entities, and never the twain shall meet, that shows a profound misunderstanding of how the modern economy works.

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

My hon. Friend makes a compelling argument. In my area of the north-east, in Teesside and East Cleveland, three areas worry me: cuts in Army, Navy and Royal Air Force troop numbers—mine is a big recruitment area for them—the three-year zenith in the contraction of manufacturing, which affects the north-east more than other regions, and public sector cuts.

As my hon. Friend just mentioned, the Government’s ideological view that there is a private sector and a public sector goes against every piece of economics since Galbraith in the 1960s and undermines any economic recovery that we have desperately fought for.

[Mr Wright]

My hon. Friend is right. I know that he remembers Galbraith in the ’60s.

Some 84,000 jobs have been lost in the construction industry, in part due to stopping the schools building programme, road schemes and social housing, which were all socially and economically necessary, because they boost productivity, efficiency and economic capability in the long term and, in the short term, in the worst and most severe global financial crisis ever, help to provide skills and capacity in the construction sector.

The Government fail to accept the basic economic point that, for every £1 of public money spent on construction activities, almost £3 of private sector money is generated back into the local economy, in terms of jobs, the supply chain and construction.

[Phil Wilson (Sedgefield) (Lab)]

My hon. Friend has made a compelling argument for a Labour Government. I congratulate him on securing the debate. Does he agree that there is one task that the Government ignore all the time? The only way that we can secure real growth is by the public and private sectors working together in partnership.

[Mr Wright]

I pay tribute to my hon. Friend, who does not get enough recognition for the enormous amount of work that he has done on two fronts: securing the work for Hitachi trains in our area and ensuring that Durham Tees Valley airport can be a catalyst for economic growth and connectivity—a word that I cannot stand—so that we can compete and sell our goods and services and get them to the rest of the world.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I have a certain amount of sympathy with what the hon. Gentleman is saying. He mentioned schools. The Duchess community high school in my constituency was constantly excluded from Labour’s school rebuilding programme. Now, three high schools in Northumberland will be rebuilt under this Government’s programme.

[Mr Wright]

There seems to be no connect between public and private sector and no connect or coherence between Departments. The Department for Communities and Local Government demands local authority cuts of 20%, which is having a profound impact on unemployment, not just directly in terms of council jobs.

Hartlepool borough council cut its bus subsidy, so Stagecoach has stopped operating bus services early in the morning and late at night. People are unable to travel to early shifts or late periods of work in the night-time economy. They are less likely to go out for a meal or to the town hall theatre or the borough hall, or to the pub for a few pints, so there is less economic activity and fewer jobs. The reality is stark: a lack of joined-up thinking in the Government is increasing unemployment in my area. What can the Whip do about it?

[Mr Kevan Jones]

Does my hon. Friend agree that there is also a great disconnect between what Liberal Democrats say at Westminster and what they are saying in the north-east? In the House, they are quite happy to vote with the Conservatives for some of the most drastic cuts that we have seen for generations in the north-east; but in the regions, they are somehow trying to explain to or convince the public that that has nothing to do with them.

[Mr Wright]

I am sure that we will see a “Focus” leaflet in due course saying that everything in the garden is rosy and that the Liberal Democrats are fighting hard. The reality—my hon. Friend is right—is that where they can make a difference by going through the right Division Lobby, they are failing to stand up for the north-east and for the people who need jobs and investment in our area.

The Government’s determination to depress demand before the economy has had a chance to recover from the global financial crisis is wrong. The effects of such a policy are a double-dip recession made in Downing street and an increase in unemployment. The Federation of Small Businesses in the north-east told me that the ability of small business to offer jobs is suffering directly because of falling sales, as the public sector reduces investment, confidence collapses and firms sit on cash. It is clear, as businesses recognise, that the Government’s policies are making matters worse. Does the Whip not understand that? Can he not see that if the Government pursued a more active role on jobs and growth, there would be more people in work, paying taxes, more companies paying corporation tax, a reduced benefits bill and the deficit being paid down faster. By sticking to an economic plan that is not working—that is clear to all and sundry—the Government must borrow £150 billion more than originally anticipated.

[Helen Goodman (Bishop Auckland) (Lab)]

We have commented on the position of Liberal Democrat Members from the north-east, but has my hon. Friend noticed that Tory Members from the north-east have not even come to the debate?

[Mr Wright]

I am grateful to my hon. Friend for highlighting that point. I had noticed that the hon. Members for Stockton South (James Wharton) and for Hexham (Guy Opperman) have not bothered to turn up for the debate, which shows the importance that they attach to economic enterprise, growth, jobs and unemployment.

[Alex Cunningham]

My hon. Friend is one neighbour, but if my Conservative neighbour, the hon. Member for Stockton South, was in his place today, he would point to our enterprise zone and our local enterprise partnership, which have been introduced by the Government. Yet despite their best efforts, unemployment in my constituency is nearly 4,200, up 400 on last year. Does my hon. Friend not lament, as I do, the loss of real investment that we had in the days of One North East?

[Mr Wright]

I should declare an interest: One North East used to employ me—that is one of the reasons why the Government wanted to get rid of the regional development agencies. I absolutely agree that a compelling economic vision helped by an RDA that can set strategic priorities is vital. My hon. Friend mentions the hon. Member for Stockton South who is, as far as I am aware, although I might be corrected, one of the only people in north-east and Cumbria not to have come out against the ludicrous proposal on regional pay, which is what I want to turn to.

The House is considering regional pay this afternoon. At a time of depressed demand, eroding confidence and rising unemployment, it seems economically ludicrous for the Government even to contemplate such a policy. The TUC rightly estimates that regional pay could take £500 million from the north-east’s economy precisely when we want consumer confidence to increase to allow people to start buying things and creating jobs. Does the Whip think that taking £500 million from the north-east will increase the number of businesses and employment?

Instead of continuing with failed economic policies that are increasing unemployment in the north-east, the Government should listen to regional businesses, which are asking for a cut in national insurance contributions to incentivise them to take on extra workers. The Government should consider a temporary cut in VAT to allow confidence to emerge. They should use the power of the Government’s buying position to use procurement to invest in the regional supply chain, to increase the number of apprenticeships and to give a chance to local firms. They should reintroduce the future jobs fund, which helped many hundreds of young people in Hartlepool and throughout the north-east during the worst times of the global financial crisis. Most of all, the Government should be pursuing an active industrial strategy, working with productive businesses to embrace the competitive sectors of the future. They have done that to some extent with Nissan and the automotive industry, by carrying out what the previous Labour Government were doing, but they should step up a gear with the low-carbon economy—as my hon. Friend the Member for Blyth Valley said—chemicals and advanced manufacturing.

If the north-east is given the tools by the Government, it will deliver for its people, its communities, its businesses and the rest of the country. I ask the Whip to help us to unlock the huge potential and end the human, economic and social waste of unemployment in the north-east.

[Several hon. Members]

rose—

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[Stephen Crabb (Preseli Pembrokeshire) (Con)]

I pay tribute to the hon. Member for Hartlepool (Mr Wright) for securing this debate; we do not get enough opportunities in the House to debate regional issues. As a Member of Parliament for Wales, I do get such opportunities when the Welsh Grand Committee meets, which it is doing this afternoon. Unfortunately, other regions of England do not have the same opportunities.

I was disappointed that the hon. Gentleman started off on a slightly discordant note, by mentioning the absence of the Minister.

[Mr Iain Wright]

It is a fair point.

[Stephen Crabb]

No, it is not a fair point. What the hon. Gentleman did not say was that his Front-Bench team, in a rather cack-handed way, managed to timetable a debate in the main Chamber, requiring a Department of Work and Pensions Minister at exactly the same time as his own important debate this afternoon. If he does not think that the presence of the Employment Minister at the European employment summit this afternoon is critical given everything that is going on in Europe, I do not know what is—perhaps spending time with the Dalai Lama.

[Mr Wright]

How many Ministers are there in the Department for Work and Pensions? What about a Minister from the Treasury or from the Department for Business, Innovation and Skills attending this debate?

[Stephen Crabb]

As the ministerial Whip for the Department, it is entirely appropriate that I respond to this debate, given that the other Ministers are tied up in other debates in the House.

The hon. Gentleman spoke well about the impact of unemployment on families and communities; that was one of the best parts of his speech. Like me, he comes from a part of the country where, historically, unemployment has been a blight on the community. He and I both have the privilege of representing constituencies in which we have grown up, and we understand the issues well. He powerfully explained the negative effect that unemployment has on communities.

Let me assure the hon. Gentleman and all colleagues in the Chamber this afternoon that the ministerial team at the DWP shares a passion and commitment for tackling unemployment. There is absolutely no complacency whatever within the departmental team about this issue. We recognise that unemployment, especially youth unemployment, is one of the biggest challenges that faces the Government.