Nicholas Brown
Main Page: Nicholas Brown (Independent - Newcastle upon Tyne East)Economic Development (North-East)
Nicholas Brown Excerpts(13 years, 3 months ago)
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Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
Now is an appropriate time to sound a warning about the changes that are being made to economic development structures in north-east England. The extent to which the coalition Government intend to abandon the Labour Government’s approach to these issues is now clear, as is the outline of their successor strategy, such as it is. It is my contention that the coalition approach is fundamentally wrong on both counts.
The economic development issues facing north-east England are not typical of those facing the United Kingdom as a whole. Of course our region is not sheltered from national and international economic trends. Regional economic development in the north-east is dominated not so much by our unique industrial history as by our transition from it. No region has done more to help itself, and there was a broad consensus in the region on the economic development strategy until the last election.
I had the honour and privilege of being Minister for the North East in the Labour Government. I tried to do the job in a less partisan, party political way, certainly less so than my other ministerial job. My objective was to drive up the prosperity of the region by broadening and diversifying its employment base, with an emphasis on the private sector. That strategy was right for the north-east. It is not for the state to pick private sector winners and losers, but it is for the state to respond at regional level to private sector-led initiatives and to work closely with the private sector in bringing promising projects to fruition.
Our region is essentially two conurbations and a rural hinterland. We make up 4% of the United Kingdom’s population. The single regional structure of the Government Office and, in particular, the development agency worked well for us.
Mr Kevan Jones (North Durham) (Lab)
Does my right hon. Friend agree that the unique thing about the north-east is that there has been support going back many years not just from councils and the public sector, but from the private sector, the TUC and other sectors recognising the need for the region to speak with one voice?
Mr Brown
My hon. Friend is absolutely right. One of the great things about economic development in our region is that it has proceeded with consensus, with buy-in right across the region sector by sector, including the public, private and voluntary sectors. We have understood the need to stick together, to talk to each other and to speak coherently on the issues. The fact that we did so is one of the great successes of our region.
Through the single approach that we took, we were able to avoid the poverty of ambition and the attendant dangers of parochialism. Working relationships across agencies and between the private and public sector were good, and there was a general feeling in the region that we were getting somewhere.
On Teesside, the issues relating to Corus and the process industry have features in common. The way forward has to be private sector-led. The private sector needs dialogue with national Government through the regional development agency. It is not reasonable to ask local government, even neighbouring local authorities acting in concert, to deal with issues of this scale. The same is true for the economic development potential of the underused industrial sites at the east end of the Tees valley.
In our region, there was general enthusiasm for the carbon reduction strategy, and for applying our traditional industrial and manufacturing skills to the challenges of combating climate change. There is excitement about the development of the electric car at Nissan. The region is also host to other electric vehicle manufacturers. The Clipper offshore wind factory at the Walker technology park is the only such factory in the UK so far. The potential for the development of printable electronics at Thorn, the innovative photovoltaic products of Romag glass, and the strong case made by Rio Tinto at BIyth and the mutually compatible bid from Tees Valley to be part of a carbon capture and storage pilot, all show how deep and widespread the region’s enthusiasm for this approach goes. We are, as the hon. Member for Hexham (Guy Opperman) pointed out recently to the House, host to the United Kingdom’s green pub of the year, the outstanding Battlestead’s hotel at Wark.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
There is great enthusiasm not only for green pubs but, as my right hon. Friend said, for the new technologies in the region. Does he agree that as well as being great in the private sector, that enthusiasm needs to be matched by the public sector so that the supply chains and the skills that the new technologies need are provided?
Mr Brown
I strongly agree with all that. In my discussions with individual public sector agencies, as well as with private sector companies, that enthusiasm was matched right across the piece. People understand the importance of it and see the opportunities for the economy of our region. One of my misgivings about the Government’s approach is that the public sector’s ability to respond is financially constrained.
The policy approach that we adopted meant that our region had the fastest growth rates of any English region right up until the banking crisis. The Pricewaterhouse study of One North East found that, over a five-year period, the agency had directly created more than 24,000 jobs, helped to create over 1,000 new businesses, helped a further 1,700 companies improve their business performance, helped more than 6,000 people into employment, and assisted more than 98,000 people to gain new skills. In particular One North East’s work in the area of business competitiveness and development, which covers activities such as overseas investment and enterprise support, realised an overall return of £8 for every £1 spent.
Grahame M. Morris (Easington) (Lab)
I pay tribute to the work that my right hon. Friend did on behalf of the region as Minister for the North East, and in particular to the support that he gave us in Easington. What is his view of the cost of redundancy following the winding up of the regional development agencies, which the Minister has indicated will be £464 million over the four years, including salaries, redundancies and transition costs? The alternative, the local economic partnerships, have no budgets. Does my right hon. Friend think they are an effective vehicle to drive economic growth in the region?
Mr Brown
I am grateful for my hon. Friend’s intervention and for his kind remarks about my involvement as regional Minister. I was tremendously impressed by the work that is going on in Easington district, the exciting film projects that we visited together, the work of the coal board residual authority in his constituency, and the opportunities that there are, working with Durham county council, to bring to an end long-standing and intractable labour market problems in the eastern part of County Durham. I pay tribute to my hon. Friend and his predecessor, our friend John Cummings, for the enormous amount of work that has been done locally to try to give hope where at times it seemed that there was not much room for it. I felt that we were getting there, and it would be very sad if the ideas and projects that I am so enthusiastic about, and that I know my hon. Friend is so enthusiastic about, end up set back because of events in the region.
My key point is that the economic development agency was the principal agent of change and transition in north-east England. Far from being a burden on the taxpayer, it repaid its cost, in the region, several times over.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I echo the warm thanks of my hon. Friend the Member for Easington (Grahame M. Morris) to my right hon. Friend for his work as regional Minister. We all saw the benefits of that.
Will my right hon. Friend join me in congratulating Nissan, which he mentioned earlier, on winning the European car of the year award for 2011, one of many awards that it has won for its Leaf electric vehicle? Does he agree with Nissan, especially in the light of the recent rise in unemployment figures, that that achievement and all the jobs it has created in the north-east would not have been possible without the grant for business investment scheme that the Secretary of State for Business, Innovation and Skills has now scrapped along with the very successful RDA, One North East?
Mr Brown
My hon. Friend is absolutely right that Nissan was able to take advantage of the support for industry that was in place under the previous Government. What it is doing is not just manufacture a new motor car, because, as its Leaf advertising says, it is much more than that. It is a completely different form of transport. It is a very exciting development and we all wish it well and are proud to have it in our region. I know that she is proud to be the constituency MP for it.
That project would not have happened had it not been for the active intervention of the then Labour Government in making grant support available. It was actually because of the intervention of the then Secretary of State and his willingness to champion development in the north-east of England. We had rivals and competitors in our friends in continental Europe, who were also bidding for the plant. It speaks really well for the work force at Nissan that they are so highly regarded within the Nissan family of companies that they were a contender for the project. The clincher, however, was the support that the Government gave and their willingness to stand by the region.
My fear is that public sector cuts will affect the north-east disproportionately. As well as the closures of the economic development agency and the regional office, there are redundancies in each of the local authorities and other public bodies and vulnerabilities at the Department for Work and Pensions and Her Majesty’s Revenue and Customs complex at Longbenton in east Newcastle. If the Minister can say something reassuring about that site, which is the largest single concentration of public sector employees in the western world outside the Pentagon, it will be welcome.
Jobcentre Plus does a good job for us in the north-east. It has had to cope with major redundancy rounds at Atmel, Northern Rock, Nissan and Corus, and it has handled those difficult situations as well as anybody could. It is asking a lot of the labour market to absorb those redundancies and the ones brought about by public spending cuts. The effect of those cuts is cumulative, the more so because the people whose jobs are going have similar skill sets and career aspirations. The Government’s response is that an expanding private sector will take up those employees, but those who advocate that policy must say what private sector and where.
James Wharton (Stockton South) (Con)
I thank the right hon. Gentleman for kindly allowing me to intervene in his debate. Is he aware that since mid-August, newspapers in the region have announced more than 20,800 new private sector jobs and more than £4 billion of private sector investment? I appreciate that, like any region in these difficult times, we face tough challenges, but there is a good news story to tell as well. As the region’s MPs, we all have an obligation to talk up the north-east, not just to concentrate and focus on the challenges that we face.
Mr Brown
Nobody has talked up the private sector economy of the north-east more than I have, not just now but when I was the Minister for the region. My strategy was to broaden and deepen the region’s employment base by broadening and deepening private sector employment opportunities. I have never said that we are over-reliant on the public sector, but the correct way forward for our region is the development of private sector employment opportunities. That is why I said at the outset that there was not much disagreement about questions within the region. There was a consensus about what we were trying to do and how best to proceed. The region’s Members of Parliament, regardless of party politics, found it easy to discuss those issues among ourselves and make common cause on specific projects.
Mr David Anderson (Blaydon) (Lab)
Is not the reality that we have learned from a long history of being cast adrift, when nobody had any plan for the north-east? In the past 10 years, we learned to work together, ably led by my right hon. Friend. The private sector, the public sector—everybody—pulled together. There was no difference between us, and we experienced a renaissance in the north-east, which none of us ever thought possible. It was tremendous, but it is being set back by the Government who have come to office in the past year.
Ian Swales (Redcar) (LD)
Is it not a matter of regret to the right hon. Gentleman that Middlesbrough, Hartlepool and Redcar and Cleveland were recently rated as being in the bottom 10 in economic strength out of 324 areas in the country? Does not that give weight to the Government’s policy of creating Teesside local enterprise partnership?
Mr Brown
We all understand how difficult things are on Teesside, and I have lent my shoulder to tackling those problems, just as other hon. Members across the region have done. However, it is my strong view that we need a single, regional approach rather than allowing our efforts to become fragmented. In particular, it is a terrible mistake to say to those with the most difficult problems—I will say something about the specifics shortly—“You have to sort your own problems out without the help of the rest of us.” The great strength of our region is that we have all stood together, geographically and across party politics, public sector and private sector, including the public sector agencies that are not directly politically led. We have all stood together with the same focus, in an earnest endeavour to work together to give a coherent single voice to government for the good of the region. That is the correct approach.
Mr Iain Wright (Hartlepool) (Lab)
I pay tribute to my right hon. Friend, who, in his time as Minister for the North East was a real friend of Teesside, not just of Tyneside. Following on from the interventions of the hon. Members for Stockton South (James Wharton) and for Redcar (Ian Swales), we have enormous potential in Teesside and Hartlepool, with process industries, the nuclear industry and the potential of renewable energy, but that needs help and support. My constituency has 4,000 unemployed people but only 76 vacancies at the local jobcentre. Does my right hon. Friend agree that there needs to be more marrying up of that enormous potential in the private sector and central Government support, which the current Government are not providing?
Mr Brown
I agree, but, above all, we need to strengthen the employment base in the Tees valley, and that means focusing on the potential of the key employers—Corus, if the transition takes place, the chemical sector, the process sector, the potential in the under-utilised land at the east end of the Tees valley, the exciting opportunities in Teesport and the new distribution agreements with Tesco and Walmart. Those are exciting and significant developments, providing a whole new range of activity for the port. I wish them well, but they must be supported by the region speaking with one voice. The new job opportunities are for the whole of the north-east of England. Indeed, they are for the whole north of England, going right down to the midlands, and covering all points north, including Scotland.
Phil Wilson (Sedgefield) (Lab)
Is not one of the best ways of securing economic growth in the area, and of helping Teesside and Teesport, to ensure that the Government go ahead with the Hitachi project, which will create 800 direct jobs in my constituency? It will create thousands of jobs, not only in the region but throughout the country, and be a great export market for us. It will also ensure that we have growth and an ability to rebalance the economy in the north-east of England. We have waited months for a decision from the Government. Does my right hon. Friend see a new trend developing in the coalition Government of an inability to make decisions?
Mr Brown
It is true that the new Government seem to find difficulty in making decisions and giving clear-cut answers. As Minister for the North East, I met representatives of Hitachi in Downing street and worked closely with my hon. Friend to ensure that the programme was understood right at the heart of the Government. We engaged as fully as we could with the Government office of the region, the development agency and the Department involved, and did everything we could to bring those private sector arrangements to fruition on Hitachi’s preferred site—it was of the company’s choosing, not the Government’s. Getting that programme would be a tremendous win for his constituency, and I urge Ministers to do everything they can to bring this to a conclusion and to bring the Hitachi programme to the north-east. The company has chosen the site, not the politicians, although if my hon. Friend and I were choosing, we would have chosen the same one.
Small and medium-sized enterprises are reliant on their supply chains. When those are public sector supply chains, SMEs will be hit by public expenditure constraints. SMEs are particularly significant to the north-east labour market. The arrangements for the public sector to work with them are being reduced dramatically, and their chances of making successful bids to the regional growth fund are practically non-existent, because the fund will not entertain bids of less than £1 million.
There is now no coherent interface with the private sector in the region. The Government closed its regional office, and the subsequent announcement that the Department for Business, Innovation and Skills will open six new departmental offices for the 10 English planning regions to deal with administration is truly pathetic. No doubt the office covering the north-east will be somewhere in Yorkshire.
Mr Kevan Jones
Does my right hon. Friend agree that the way in which the Government are dealing with European structural funds is an absolute scandal? Some £160 million is sitting there, ready for investment in the north-east, but because of the withdrawal from the region of match funding, it looks as though we might lose it?
Mr Brown
My hon. Friend is right that we cannot get the match funding, but, worse than that, we cannot start any new projects because of the constraints that the coalition Government have placed on what is left of the development agency. The RDA still has an unallocated sum—I think about £80 million or £90 million—but it is not allowed to spend it on anything new. As time goes on, that is something of a constraint.
My contention is that private sector economic development should be private sector led. It is ironic that I, as a former Labour Minister, advocate the structures that the CBI believes have served the north-east well, and that a Conservative-led Government are arguing that what is left of those functions should be led by local authorities.
Economic development in the north-east now has the wrong departmental lead. The Department for Business, Innovation and Skills should lead, but in fact the Department for Communities and Local Government is leading. The local enterprise partnerships look as if they will be staffed by the wrong people—the correct skill set is professional economic development officers, as employed by One North East, not local government officers. Local enterprise partnership boards have the wrong executive lead. What is needed is representatives of private sector business, not local councillors. The geographical areas covered by LEPs are wrong: there should be one agency for the region, not multiple agencies duplicating effort and overlapping. Multiple agencies could also be too small to be effective.
James Wharton
I do not wish to depart too much from the largely consensual nature of this debate, but I disagree with the right hon. Gentleman on LEPs. There was great demand in Teesside for the LEP that we have secured, as is evidenced by the fact that Teesside moved to create the LEP before a regional agreement on the LEP approach was reached. I do not like the term “Tees valley” and prefer to say “Teesside”, and we could argue about the exact boundaries of it, but the Tees valley LEP is a welcome development that will help to grow the economy on Teesside.
Mr Brown
I am not going to quarrel with the hon. Gentleman about nomenclature. I understand that the local representatives of communities in Teesside want to do their best for their local communities, and I have no quarrel with that at all. Anytime they need my help or the help of other Members of Parliament for the north-east of England, it will be willingly given. They are our friends, neighbours and colleagues, and we want to help them get through what we understand are some of the most difficult and intractable of problems.
These are not local problems. The whole point of my address is that the big strategic issues that stand to be dealt with are best done so at the regional level, with the region acting as an advocate to national Government, and with national Government taking a direct interest, preferably through a dedicated Minister who has responsibility for standing up for the whole region. I think that that is the best structure. I know that the hon. Member for Stockton South (James Wharton) is advocating the LEP proposition, but even he must see that it is ironic that the approach that I am advocating is the private sector-led regional approach endorsed by the CBI, while the one that he is advocating is led primarily by locally elected Labour councillors. There is a rich irony in that. I hope that he can at least appreciate that point.
James Wharton
I will keep it brief. My understanding of LEPs is that their boards will be business-led—they will have a 50:50 ratio of representatives of local authorities and business, with a business chair—so I do not agree with the supposition that they will be local authority-led. LEPs will be business-led, which is one of the reasons I believe that the Tees valley LEP will be such a success.
Mr Brown
But the representative business organisations in the north-east are organised on a regional basis. I have no quarrel with local business people and local councillors wanting to do their best for the local communities, but I simply say, on the basis of considerable experience, that it is unfair to ask local representatives to deal on their own with a problem of such scale. They have no money and very little in the way of powers. It is not clear where their advocacy, which is the principal thing they will be doing, will be directed. Who is the responsible Minister? Will it be at Parliamentary Under-Secretary of State level or Minister of State level? Will it go to the Department for Communities and Local Government, the Department for Business, Innovation and Skills or both when this regional office is opened somewhere in Yorkshire—for the paper to rattle around in? There will be a lot of talking, but the ability to do something seems to be receding. That is a very dangerous thing for our region.
Engagement with the private sector in the region by Government is now very weak. This is part of a national problem. Even very large private sector businesses are finding it difficult to know where and how to speak to Government, and I would urge the Minister to take that point back and reflect on it. There must be better ways of dealing with these things than those currently in place. I also think that it is a mistake by the Government to have ended the pre-legislative scrutiny arrangements that we had in place under the previous Labour Government. That was a relatively open process which was widely welcomed, particularly by business, as was the opportunity to express a view before proposals were firmed up as legislation.
The Government have a poor strategy for disposing of One North East’s residual responsibilities. Of course, everyone wants the assets, but there are liabilities and continuing investments that have not yet come to fruition. Default responsibility seems to be ending up in the Department. There is now no integration of economic development with transport strategy, and no forum for discussing port strategy, although, as I mentioned, we have some very exciting developments at Tees port, with a relatively new distribution business, with Tesco and Walmart. There is real potential in the region.
Mr Alan Campbell (Tynemouth) (Lab)
My right hon. Friend mentioned the importance of transport. He knows as well as I do that one of the ways to unlock the economic potential of the eastern part of the region is to upgrade the A19 around the Cobalt business park and to allow the development north of the Tyne. Was he surprised to read in The Journal that the Government’s answer to securing the funding is that half of it should come from local businesses? Is he aware of any businesses in our region that have the £74 million—in small change—that the Government would like them to chip in to allow the upgrade to happen?
Mr Brown
Not immediately. I am more than happy to ask around on behalf of my hon. Friend and the Government, but I suspect that the response that I will get from local businesses is: they pay their taxes and they are entitled to road improvements from those tax payments in just the same way as other parts of the country expect these things. The local authorities and representatives of regional organisations were particularly strong on the importance of the A19 corridor, and they were aware of the potential for a bottleneck in the dualled tunnel under the Tyne and its effects at the Silverlink roundabout, as well as at the roundabout further north. I was able, in the last Labour Government, to secure an agreement with the Secretary of State for Transport that any underspend in what was then our little regional pot could be carried over and spent on the improvements that my hon. Friend has just advocated—perfectly correctly, because they are important to the flow of traffic. All that—local discretion and end-of-year flexibility—has been taken away. The idea that local business men should put their hands in their pockets and pay for that themselves will be met with outrage, if the Government ever get round to asking them.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Will the right hon. Gentleman give way?
Sir Alan Beith
I am grateful to the right hon. Gentleman for giving way, and I recognise the personal efforts that he made as the regional Minister. However, as well as being the regional Minister, he was a senior Minister in a Government who found by the end of their time in office that they had engaged in a massive overspend and had to make severe reductions in capital spending, as well as cuts on a scale comparable to that on which the coalition is now implementing its cuts, albeit on a slightly different time scale. He cannot really talk as if we are in the same financial situation now as we were five years ago.
Mr Brown
I accept that, and I am making two points—perhaps I have not made them very well. I accept that we are in a different economic climate: times have changed and things have moved on. Although I believe that what we put in place—particularly the administrative structures—was cost-effective, efficient and focused, and delivered well for the region, it would be more rational, even for the Conservative-led coalition Government, to do more to preserve the consensus that we used to have in the region. They could do that by appointing a regional Minister to keep the core functions of a perhaps scaled-down One North East; it could then handle its own residual functions, apart from anything else. We could keep a presence from the major Departments in the region, not embark on the LEPs and keep the private sector engagement that is so important to getting the private sector-led job creation that we all seek for the region, rather than the structures now being put in place.
Therefore, as well as defending what we were able to do when we were the Government, I am also—and separately—making a plea for a much more rational use of what few resources are available under the current regime. I do not agree with scaling them back as far as they have been, but even if I did accept that—I did not intend to embark on the broader quarrel that the right hon. Gentleman tempts me to pursue—I would say that whatever resources are available could be spent in a better, more focused way and bring about better outcomes. That is my key point.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I, too, commend my right hon. Friend for securing this debate on such an important issue to all us MPs from the north-east. Does he share my concern that, with the swift and fairly draconian—or should that be Maoist?—manner in which the regional development agency has been dismantled, we run the risk of causing a huge dispersal from the north-east of the talent and expertise that has built up there over the years? He gave the example of European regional development funding and the complexities of how such funding is drawn down. We run the risk of losing €139 million that could be invested in the north-east because we have simply dismantled the procedures for drawing down that structural funding without putting anything in their place.
Mr Brown
My hon. Friend is absolutely right, but it is worse than that: we also risk losing the talents and the accumulated wisdom of some 245 employees. They have not yet been made redundant, but it is declared that they will be made redundant. All the evidence is that they are not being picked up by the local economic partnerships, which I think is a terrible mistake, but that is the way that things seem to be going. Their talents will be lost within the region as they seek alternative employment as best they can, competing with other people with similar skill sets, or they will be drawn to other parts of the country where there are jobs in the economy and a stronger labour market. That will be a real loss to our region and a real tragedy, and I regret it very much.
I want to draw my remarks to a conclusion now, because, fortunately, there is still time for other Members to take part in the debate, the previous business having come to a conclusion slightly earlier than usual—
Mr Campbell
I am sick of hearing the argument that there is no money. Does my right hon. Friend not agree that, if all the multinational companies, including the banks, paid the tax on their profits instead of avoiding doing so by hiding their money in tax havens such as the Cayman islands, we would not have this problem? We would have bags of money—billions of pounds.
Mr Alan Campbell
On the issue of the alleged overspend, does my right hon. Friend recall ever being lobbied, in his time as a very good regional Minister, by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) for more money to be spent to upgrade the A1?
Mr Brown
I do; I recall our regional debate in Middlesbrough town hall, at which the right hon. Gentleman spoke long and persuasively about the importance of upgrading the A1 north of Newcastle. Indeed, I have a press release from the Conservative Government in 1994 announcing that it was going to take place, so perhaps there is just a delay between the announcement of the policy and its undertaking. The right hon. Gentleman would have been slightly more credible in his request had his party not been committed even before the election to cancelling all our motorway infrastructure plans—and, indeed, all our major highway investments. Such a cancellation would present a bit of an obstacle if he wanted to advocate the greater connectivity of the great constituency of Berwick-upon-Tweed with the rest of the northern region and, indeed, the rest of the United Kingdom.
I thought that we had a way forward, which would have been to try to meet the Department for Transport halfway by taking money from the discretionary regional transport fund and trying to upgrade the A1 incrementally, starting with the accident black spots, and by cutting a deal with the Department that if we paid our half, it would pay its half. That would have taken longer, but the sums of money involved would have been relatively small, year on year, and we would have got the work done. We could then have built on that, and met the right hon. Gentleman in his constituency—indeed, we would have been able to drive up there—in a timely way. So I did have a plan for taking that forward. I accept that it was not ideal, but most people thought that it was the best way to set about dealing with the problem. In less constrained times, it might be the way forward.
I want to draw my remarks to a conclusion now, because I know that other hon. Members have a few points to make. It is my view that the direct involvement of a regional Minister worked well for our region. The Prime Minister has said that he wants to appoint area-based Ministers from among his team, and I urge him to get on and do that. The structure that would work best for our region would involve a regional Minister, a single private sector-led development agency, some regional presence by large UK Government Departments, strong private sector engagement and collaborative working across the agencies. This would preserve what we had before the general election. The focus should be on private sector priorities. I urge the Government to look again at the poor use they are making of scarce resources in the north-east, and even at this late stage to consider different structures more appropriate to the particular economic development needs of the north-east of England.