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Regional Economy (Tackling the Recession)

I am sure that the hon. Gentleman does not want to be one of those politicians who intend to go into the next election saying, ““Don’t worry, we can find the money; we can spend money on anything.”” Shortly, we will come to a period when we have to have severe restraint on public spending. I prefer ““severe”” to ““savage””. Savage sounds a bit as though one is enjoying it; severe is what it is all about. We cannot sustain the current levels of debt—we will pay too high a price for them. The Government have started to recognise that, and all parties will have to. The problem for us, and I will come to it in a little more detail in a moment, is how we ensure that the north-east does not suffer in the process of trying to get our public spending back under control, and that the timing of decisions about public spending does not lead to decisions being taken too soon. One other party is recommending that we start cutting public spending now, which will be damaging to getting us out of the recession. This recession was not created in the north-east, but north-east families are among those feeling the most severe impact on their jobs and livelihoods, while the bankers who caused the recession go on collecting their enormous bonuses, and the Government that took too little action to rein in the banking industry still leave the bonus culture intact. We saw early symptoms in the run on Northern Rock, which was the direct result of the serious mismanagement of a prized northern institution. Indeed, we told the Government three months before they nationalised the bank that they were going to have to do so, and that there would be no alternative. But it was not the fall of a former regional building society that brought on the worldwide financial and economic crisis, but decisions by bankers in the major financial capitals in the world. They forgot well-tried and trusted banking principles, were greedy and arrogant, and thought that one could invent ways of pretending that debts did not exist—to some extent, they did, and fooled some of the people some of the time, but one cannot fool all the people all the time, and the result was the collapse that started with Lehman Brothers going to the wall. What a price we are paying for that in the region. Unemployment in August 2009 was at 9.4 per cent., against the UK average of 7.9 per cent. Nationally, we have the highest level of unemployment since the mid-1990s, and the number of people unemployed has doubled over the past year—I think the highest level, as far as this region is concerned, is in the Minister’s own constituency. Middlesbrough itself is also an area of particularly high unemployment: 12.8 per cent. overall, but 17.3 per cent. male employment—a 40 per cent. increase on last year. It has hit many rural communities, particularly in County Durham and Northumberland. The job losses are well known—the large losses at Northern Rock and Nissan, the fear of a significant loss from Corus, which we have discussed earlier, and a danger and a threat to the chemical industry in Teesside. It is like a domino effect—if one goes, another will go, because the industries were built up to be interconnected by ICI years ago before being sold off separately. Business reports a more encouraging quarter, but that could be drastically affected by public spending cuts in a region that is highly dependent on the public sector for providing jobs and contracts. Output was down every month for 13 months until June, but it went up for the first time in July, which is an encouraging sign that we may be turning a corner at last. The voluntary sector has asked us to point out the impact on it. We are fortunate in this region in that there are a number of large charitable funds, many built up by successful families over the years, and put into bodies such as the Community Foundation to provide tremendous support for innovation in the region’s social field and for the individuals affected. But they are all significantly affected by the general economic position; they cannot get significant interest on the money that provides the help, and they have seen a significant drop in income. At the same time, the demand for their services, particularly those of charities that work among the most vulnerable people, is increasing sharply, and many groups are forced to use their reserve funds to help in their work. That is one of the hidden impacts of the recession, which I hope the Minister will take from the meeting as something that he needs to be concerned about. A recession does not affect only businesses, but those who are looking after those affected by it, and those whose community projects, such as village hall refurbishments, generate work and economic activity. There are some good things happening. The weak pound is a genuine advantage to the exporting business in the region. It has some adverse impact on the purchase of raw materials, but it is potentially an export opportunity that many businesses are doing their level best to take at this time. As a region, we are industrially more diverse than we used to be. At one time, we were totally dependent on a few heavy industries—particularly coal, steel and shipbuilding. We have had to diversify over recent years, which has reduced the impact of recent events to some extent. As the Minister said, there are also areas of real progress in the region. The energy industries are crucial to our future, and developments include the New and Renewable Energy Centre at Blyth, and Clipper Windpower, which has had Government funding. The growth of other new technologies, such as printable electronics at Sedgefield, is encouraging, and we want them and developments such as the National Industrial Biotechnology Facility at Wilton to be encouraged. They are signs that the north-east is trying to take care of its own future and encourage its own industries, and I welcome the work that One NorthEast has done towards that end. It is well known that my colleagues and I have always had concerns about the accountability of regional development agencies. We are not happy that so much Government money is being spent in our region by people who are only loosely answerable to Ministers nationally and who are not effectively answerable to the region. We are clear that business and local authorities see the regional development agency as having real value and as adding something definite that we need, but that needs to be done on the basis of genuine accountability. As I hinted earlier, the leaders’ board is one way to achieve that, and we as Members of Parliament have a vital role in that respect. One NorthEast recently announced its plans regarding the curiously titled JEREMIE funding scheme—the name stands for the Joint European Resources for Micro to Medium Enterprise Initiative, but the scheme basically provides capital for business at a time when business needs it. That is one of a number of welcome projects. A number of other things work well in the north-east. Objective testing by the Healthcare Commission shows that we have better health services overall than most of the rest of the country, which is a really good thing. There are also absolutely cutting-edge medical developments in our region. Our local government also generally has a good record, which is surprising in a way because it is very unpopular for much of the time. If we objectively compare it with other regions, however, we see that the quality of its work is high. A number of authorities are involved in really valuable schemes. Newcastle city council has extended apprenticeships and created 80 additional apprenticeships, bringing the total to 200. All the region’s authorities have joined an agreement on common procurement standards to ensure that businesses can tender to authorities throughout the region without having to fill in completely different forms and applications. The region’s authorities have also all signed up to the prompt payment code and committed themselves to carbon-reducing initiatives, which is good news. What do we need to add to those good things to help us cope with what, as I said, is a serious situation for the region? First and foremost, I must mention transport. One disadvantage that the region faces is that it is further from many of its markets than are other parts of the United Kingdom, which makes investment in transport more central for us than for at least some other regions. The North East Economic Forum underlined that when it said that it was vital to improve our links with the rest of the north and the wider UK and that access to markets was crucial if we were to increase economic participation. We referred earlier to the A1 and the link between England and Scotland, which is also the link between the east coast ports and many of the industries to which they relate. The A1 is a strategic road, and we cannot carry on with a situation in which parts of it are an inadequate country lane. I think that the Minister realises that, but he needs more weight behind him if we are to achieve progress. I agree with him that progress can probably be achieved only incrementally, but we have to see some of the increments.