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Regional Economy (Tackling the Recession)

The second Tyne tunnel is a contribution to the regional economy and I am happy that the decision has been made. However, it will not make sense if access to the second tunnel does not feed into the road systems. Part of our objective is to see traffic transferred from road to rail, so we have to look to our rail system to achieve that. There are two aspects to this. First, we have already discussed our concern about high-speed rail. I am generally in favour of it, but my primary concern is that if we get it, as has been put to us by the Conservative party and by the report received by the Government—they did not write it—the projects do not cover the north-east of England. If the north of England is not a part of the high-speed rail project from the beginning, investment will be pulled towards regions where high-speed rail is a certainty. I suspect that all members of the Committee believe that when high-speed rail happens, the north of England needs to be integrated. High-speed rail has tremendous potential and possibilities, and we are way behind not just Japan, but Spain in developing it. In the meantime, while decisions are being made, improvements on the east coast mainline could achieve significant benefits for the region. The Leamside and other rail lines could be improved to open up existing lines into south-east Northumberland. Also, people should be able to board trains that are already there, such as that at Belford station which stops twice a day but nobody can get on it because a platform has not been built for it yet. All sorts of small-scale things can be done to allow more traffic to transfer from road to rail and to increase the east coast main line’s capacity. The Minister must recognise how important transport is. There are a number of other things that I want to mention that are important to our region now. Bank lending to businesses is crucial. The Government now own seven of the major banks. They really have to lean on them to say, ““You need to be lending to business, not in a reckless way but in a properly secured way, and not at penal rates of interest that business cannot accommodate.”” What is crucial to our region—it is already very valuable—is education. Education, including higher education and further education, in particular the former, has been a major factor in the economy of the region for a number of reasons. First, it is a major employer; it is one of the major employers on Tyneside, for example. Within the region, we have an array of excellent universities. They bring people into the region and the synergy between the universities and business in the region is extremely successful and valuable, and it needs to be continued and encouraged. Universities also help to raise skill levels within the region. We need more development in further education in the region. Of course, a number of colleges in the region were hit by the college finance fiasco—the absolute chaos of colleges expecting funding that did not subsequently arrive. Those colleges had committed a great deal of expenditure to projects, even in some cases to preparation of sites, that did not then go ahead. That was a very serious piece of mismanagement of public resources, as the Government themselves recognised. We need our further education. There are parts of the region, particularly in the north of Northumberland, where we have little or no further education. There is almost no further education provided in my constituency. There is a tiny element provided by way of extension at Berwick. Otherwise, it is just too far—50 miles—for many young people to travel to access further education. We need to see development on that front. Again, I think that all the authorities realise that, but they have not delivered yet. We have seen investment in schools. I must say that some of the investment in schools—some of the academy investment—has been in places that felt they were well enough provided with places already. I know that some of the Labour Members, such as the hon. Member for Blyth Valley who is not here today, have been extremely critical of the academy proposal in Blyth, for example, while we could have done with an academy in Alnwick and investment in the high school there. I am glad to say that the Schools Minister is coming to visit Alnwick shortly to look at the desperate state of the school buildings at the Duchess community high school. His predecessor had promised to make the visit but did not make it before getting moved to another job. I hope that this Schools Minister does not move before making the visit to Alnwick. Investment in education is crucial to us. We also have problems in many areas in terms of housing improvement and affordable housing; investment in that sector would be for the region. I also mentioned to the Minister earlier some of the problems about energy efficiency in rural properties. I will talk to him in more detail about that issue outside this Committee. One of the things that could help a lot would be if we were able to develop facilities for the rural businesses. In many of the rural areas – it is true in Northumberland and in the Dales too – broadband crucially opens up opportunities, both for existing businesses and for new businesses to be created, and also for home working. So we need to look at innovative ways to get broadband into those communities. Alston Moor, which is just over the border in Cumbria, has a very exciting scheme doing that, working with local people who would like to see more than that scheme. We want to see initiatives to deal with youth unemployment, both locally and nationally. We were talking at our conference last week about new initiatives for youth unemployment, such as a new and enlarged paid internship scheme, and for more university and college places. Those things seem to us to be a better way of spending money than the VAT cuts. The Labour party has been in power throughout most of the north-east for as long as most people can remember. Although it has now been replaced in power in Newcastle by the Liberal Democrats and in Northumberland by a leadership from the Liberal Democrats, the Labour party has been in a very strong position. We have had a Labour Government for a long period and for most of that period the Prime Minister represented a north-east constituency. However, there have been an awful lot of missed opportunities over that period. Some things that were done were good for this region. Take the minimum wage, for example. I can use that example because I was a bit sceptical about the minimum wage, to be honest; I felt that it might lead to job-shedding. I must say that it was a success story. But what did the Government do? They then took away with one hand what they had given with the other—the abolition of the 10p tax rate. They had gone through an extraordinarily expensive process to restore the money that had been taken away from people. Many parts of this region, including my constituency, are certainly low-wage areas, and such action has had a serious impact. Another missed opportunity for the region was the Lyons review. Where are the jobs that could have been moved out of London to the north-east? We have benefited less from the Lyons review than almost any other region and the supposed process of transferring Government jobs. I accept that Governments have to get a bit tough with the civil service on such matters. People say that it is impossible to operate from other parts of the country, but that is nonsense. The local Department for Children, Schools and Families has carried out much of its work from Darlington for many years. A significantly small part of the local Department for Environment, Food and Rural Affairs operates within my constituency and, with modern technology, much more Government work could be moved out of London to regions such as the north-east. However, apart from the lack of jobs coming to the area, local tax offices are being closed in places such as Alnwick, Morpeth and Hexham and not being replaced. I have put it to Ministers that, even if it were felt necessary to centralise the operation of tax collection inception or other work, why not use those offices and train the staff to carry out those functions. Years ago when the Ministry of Agriculture decided to close its regional offices at Alnwick, I went to the then Minister, Peter Walker, and asked if something else could be done. He actually found a library function and transferred it to Alnwick. That office now does a different job. It deals with the expenses claims of officials at the Department for Environment, Food and Rural Affairs. I am sure that the House of Commons expenses claims would have been dealt with much more strictly and rigorously if such work had been done from an efficient office in Alnwick. Perhaps one of the matters that we ought to deal with and which has been featured in most discussions is the Barnett formula. The Commons has presided over a formula that was created years ago by a Chief Secretary to the Treasury who now says that he had never intended it to last so long. It has determined the balance of spending between England and Scotland, but does not make a similar provision for the north-east region, which has many problems to those experienced by Scotland. That is a huge missed opportunity. Let us also consider the massive waste in central micro-management and directing too much from the centre, such as targets, and thus involving the constant response of all sorts of bodies. The Government calculated that it cost local councils £1.8 million to respond to their 556 performance indicators. We should be devolving decision making and trusting people in the region. We cannot do what Scotland and Wales or even the Isle of Man can do, which is to take the money that is available to that part of the world and decide how best it can be spent and what, from a regional point of view, we think is the best way in which to use it. Those decisions are effectively taken for us and the regional Minister goes to London to persuade his colleagues to make different decisions. Such decisions would be better made and have better outcomes if they were made in this region. It is still my view that this region will cope with the recession and build recovery far more effectively if its own elected representatives are given the opportunity to work with the region’s businesses, public bodies, voluntary organisations and communities on the basis of a fair financial settlement and decide in the region what it needs and how that can be provided. Even if we had what I want, which is much more regional decision making than we have now, there are crucial national decisions to be made about public spending. In dealing with the recession at national level, we have to get the timing right. It is useless to pretend otherwise because we all know that we cannot continue public spending indefinitely at present levels and at present levels of tax income. We will have to reduce debt levels during the years to come, but if we start the retrenchment too soon, this region will suffer and the recession will not be overcome. Governments have to spend during recessions. That is basic Keynesian economics. The key judgment that central Government must make—so far, they have not got it wrong—is that now is not yet the moment to start the retrenchment process. We have to prepare for it and begin looking at what we will need to do to contain levels of public spending, but we are not yet at the point in the cycle when it would make sense to do so. To do it too soon would be severely to the detriment of the north-east of England.