The Economy (North-East)

HC Deb 24 March 1987 vol 113 cc374-93 6.43 am

Mr. Michael Fallon (Darlington)

A debate on the north-east is long overdue. I can recall only one other debate in this Parliament on this region. This is inadequate when one considers the amount of time that is given to Scotland and Wales in both Question Time and debates. It may seem early in the morning, but in the north-east many are going to work. Many start shifts at this time. The only puzzle is the absence of the entire north-east Labour party, whose Members are no doubt slumbering on peacefully in their beds, or perhaps elsewhere—perhaps Mr. Ken Livingstone might investigate.

This is a useful opportunity to draw attention to the importance of the region in our economy and to the background to the region's economic development. Nearly 3 million people live and work in the north-east, which is a region with a proud history and, more important this morning, it is a region with a future. I first spent some time in the north-east on Teesside, back in 1974. It was a region then dominated by the state. Its major industries were nationalised industries, such as coal, steel, rail, engineering and shipbuilding, or they were industries which were heavily dependent upon the state for grants, such as chemicals engineering, and sc. on. At that time, 40 per cent. of the region's housing was public housing of one form or another. Half of all its income taxpayers received some sort of benefit.

In the mid-1970s it might have appeared that the region's economy was in good health. Men were being paid good wages, but those wages were being paid because of inflation and by means of subsidy. A higher proportion of men were in work in the mid-1970s than are in work today, but beneath the surface of that slightly higher level of employment jobs were dangerously concentrated. Almost one third of employment in manufacturing was concentrated in large units employing 1,000 men or more, and too many of those men were doing semi-skilled or relatively unskilled work and were highly vulnerable to technological change.

The commercial culture of the north-east was, I found, fundamentally conservative, risk-shy and anti-entrepreneurial, and so we suffered in our region more than other regions in England when it came to the second oil hike and the world trade recession of 1979–80. We lost jobs more rapidly than other regions and too many of our people became dependent upon welfare and on provision by local government of housing, transport and other services.

Since then, much has changed and my belief is that the north-east is getting back into business. Manufacturing is expanding, not simply in the United Kingdom, but specifically in the north-east. New companies are being established in the north-east: some 6,000 new businesses are being set up every year. Small businesses are growing. The House does not have to take my word for it. Yesterday the Northern Echo published a survey entitled, "North on way back," which said: Business confidence is returning to the North-East, according to top financial specialists. Research carried out this month … in the region has revealed growing optimism. More than 80 per cent. of those asked by the business intelligence section of David Sheppard and Associates … said business confidence had improved over the last three months. Management buy-out activity had increased significantly; profits were up, even in declining traditional industries, and firms were becoming more competitive in overseas markets. Business is back with a vengeance.

Ownership is changing in the north-east. We have sold 40,000 council houses, and hundreds of thousands of people in the north-east have become share owners for the first time. A total of 25,000 people in the north-east have become self-employed. Fifteen years ago ownership was concentrated in the hands of the state or in the hands of the few. People were working in the pits and the shipyards for the Government. Production managers, even in the private sector factories, were working for multinational corporations with their headquarters miles away. More and more people in the north-east are now working for themselves or in businesses in which they have a direct stake.

Employment is improving in the north-east. Redundancies continue, of course, and my hon. Friend the Minister will know of the redundancies in my constituency. However, redundancies now are increasingly being out-numbered by the new jobs that are being created. There are 40,000 more people in work than in 1983. If I had predicted that when I stood for election in Darlington in 1983, I might not have been believed. About 25,000 people left the unemployment register every month last year in the north-east. For the first time in years we have the prospect that this year the north-east will see unemployment dipping below the 200,000 level.

I should like to give a simple example from my own constituency of the way in which that industrial and economic change is taking place. I could refer to the many manufacturing companies in Darlington which have added labour during the past four or five years—for example, Harvey Plating and Magnet and Southerns— but I shall refer to a much smaller company called Konlangaz Ltd. I first visited this company in 1983, when it had one small factory on an industrial estate in Darlington and employed 12 people in the manufacture of coal and log-effect gas fires. It was having great difficulties in persuading British Gas to approve and take on its products.

I returned to Konlangaz Ltd. nearly four years later. It now has four factories, three in Darlington and one in Aycliffe. Instead of employing 12 people, it now employs 72 and hopes to employ more than 100 by the end of this year. The company has benefited, not only from the Government, through assistance under the new regional policy and under the job grant scheme, but from the privatisation of British Gas, because the new enlightened British Gas is now fully marketing its products.

Such expansion shows that small businesses can grow into medium-sized businesses in the north-east and that they do not need the elixir of a development agency or the type of state planning about which we hear from Opposition Members. However, they need steady progress and economic recovery on a national level from the Government, and Government assistance in the form of training and environmental aid. That is the role that the Government should play in the north-east.

First, the Government should get the United Kingdom economy right, because unless they do that they cannot hope to get the north-east economy right. Successive low inflation year after year is of far more benefit to any finance director than any amount of regional development grant. Stable finances make the north-east, as well as the rest of the country, a more attractive location for international investment. I do not believe that Nissan would have come to the north-east, rather than to Belgium, Ireland, Holland or anywhere else if it had not seen the prospect of a sound economy, with low inflation, stretching for years ahead in this country.

Privatisation is vitally important for the north-east. Lower energy costs are important for our industries, but, more than that, we must diversify ownership and the industrial base in the north-east to provide employment for our people.

The environment that the Government have begun to create is also vitally important. In the north-east it is vital, not simply that small businesses start up, but that new businesses start up, because so many of our older businesses have shed labour. The first and primary role of the Government in the north-east is to get the United Kingdom economy right.

Secondly, it is Government's legitimate function to provide the modern industrial environment that we need in the north-east and to clear away the debris of the past and of the last industrial age. Therefore, we should not carp at a small reduction in capital grants under regional development policy. On Teesside those grants seemed to go to those important companies that were shedding, rather than recruiting, labour; for example, ICI and the British Steel Corporation. I am delighted that that small reduction in capital grants and in the grants for modernisation and reinvestment has been more than compensated for by the amount of urban and environmental aid that we receive in our region.

The derelict land clearance scheme is now an important instrument of regional policy and we are seeing direct results in our rail-side revival project in Darlington. I look forward on Teesside to the establishment of the urban development corporation. This is the only way of pulling together the public and private sectors and of revitalising that area of desperate dereliction.

Thirdly, it is the Government's function to train and retrain our work force. In the past 10 or 15 years the northeast has not had the new skills necessary to adapt to the new demands of industry. No Government in my experience have done more than this one to help train and retrain our work force. I note that some 25,000 youngsters will benefit from the youth training scheme in the northeast this year and that same 20,000 adults will receive training. Such is the importance of training to our region that even of the Labour party's programme for 1 million jobs, nearly 400,000 will come through extra training places.

I note, too, that the sums spent on training in the northeast far outweigh those spent in the south-east. In the south-east, £59 per head is spent on training, the British average is £107, and in the north-east we are getting £179 per head. That is the answer to those who carp at the so-called lack of Government support for the north-east.

A fourth, equally important, dimension to the Government's work in the north-east is confidence building. The region has been short of self-confidence for the past 10 years. We need to promote the north-east, and only the Government can assist us to do that. We have much to do ourselves to promote better working practices, new forms of industrial management, a better environment for business, lower rates and more attractive conditions for enterprise, but the Government can assist us to promote the north-east, not as we used to, as a sort of rust bowl and industrial culture ever dependent on grants from London, but as a region of opportunity. It is one of our few regions where there is space for development, room to breathe and a feeling of warmth and community, so often lacking in the rootless suburbia of the south-east and the crowded M4 corridor. It has the attractive countryside of the moors and dales on its doorstep. We must promote a region where we can combine low-cost enterprise with a much higher quality of life than exists elsewhere and above all a region which can produce premium goods and services.

How do we promote the region in that way? After many experiments and much adjustment we are beginning to see the right type of promotional framework. We now have the Northern Development Company, northern investors to attract venture capital into the region, two new urban development corporations almost up and running on Tyneside and Teesside with formidable budgets, and local enterprise agencies hard at work in most of the industrial and commercial centres. We now have the promotional framework to start marketing the north-east as a region of opportunity and I look to my hon. Friend the Minister to encourage us in that task.

There are a few ways in which my hon. Friend the Minister can assist us more directly. He has the power to locate institutions of Government. What happened to the Civil Service dispersal programme of the mid-1970s? Why is it not possible to reconsider the difficulties of recruiting secretarial, clerical and technical staff in the metropolis and see whether that work can be done more easily and more cheaply further north? Why are so many public bodies and quangos still located in the south? What is the Intervention Board for Agricultural Produce doing in Reading? Why is it not at the top of the Vale of York? Why are the headquarters of so many of our nationalised industries in London? Why is the Coal Board in Belgravia? Why is it not in the north-east? What are British Shipbuilders doing in Knightsbridge, and British Steel in Pimlico?

Why do we not reconsider the huge spending power that surrounds defence establishments? So many of these bases, research establishments and regimental headquarters seem to be based in the south and south-west of the country, historically in a region from which the threat has obviously receded. Why are these regiments and defence bases not transferred to the north-east, nearer to the NATO flank, which after all we are committed to defend? Why are we not servicing our Army on the Rhine from the nearest accessible geographical location, the north-east coast, north-east England and eastern Scotland?

What about the Department of Trade and Industry? What can my hon. Friend the Minister do to market the region and its goods and services? There are a number of almost surreptitious organisations; for example, Better Made in Britain. I appreciate the constraints of Community law, but we need to sell the north-east, not only in Europe and overseas, but to ourselves. I wonder sometimes why we do not have a "Great North" exhibition to showcase the industrial and commercial premium products that we produce in the north-east and so encourage the rest of the country to come up and take a look.

The north-east is changing. It has been through a dramatic period of change. I believe that the present Government policies of getting the United Kingdom economy right, of training and retraining our workers, of clearing away the old industrial environment and helping to provide a modern industrial business climate are the right policies. For the first time in 10 or 15 years those policies should allow the north-east to ride industrial change and go with that change, instead of simply being the victim of that change, as has happened so often in the past.

7.3 am

Mr. Piers Merchant (Newcastle upon Tyne, Central)

I start by congratulating my hon. Friend the Member for Darlington (Mr. Fallon) on his success in securing this debate. It is very relevant to the north-east and to the country as a whole that this region of Britain, which has, in the past, been so important in sustaining the growth of Britain's manufacturing industry, should be seen to have a future and not just a past. Over the past few years my hon. Friend has contributed greatly to the debate on the future and economy of the region, because of the effect that it has nationally. He has put forward a consistent line and always produced a most thoughtful and detailed analysis of the region's problems and the way in which they can be tackled.

My hon. Friend's ideas have always been original and thought provoking, and I should like to identify myself with their general trend. There are always specifics with which individuals disagree. I make no secret of the fact that the suggestion that the region would benefit from so-called wage flexibility does not appeal to me. I know, however, that it appeals to many hon. Members. I think that the region needs not wage flexibility, which I interpret as low wages, but rather the reverse. The way to inspire the expansion and growth of the region's economy is to attract talent by giving it a special incentive to come. That is a minor disagreement. There is general agreement about what is needed to secure a sound and growing future for the region.

I should like to draw attention to the need to sell the region as one of hope, opportunity and the future. My hon. Friend has consistently tried to do that, in the face, unfortunately, of negative impressions being created by Opposition Members. In his excellent speech this morning, my hon. Friend has returned to that theme.

What would an unscrupulous competitor say if he wanted to attract something that he feared would go to the north-east? He would portray the north-east as a region of failure. He would say that it is old-fashioned and based on a crumbling industrial structure. He would say that there is no hope of recovery, that there is rampant unemployment, which is bound to get worse, that people live in grinding poverty, have no will to survive and no longer feel that they have anything to contribute to society, that there is no hope of new industry going to the region, that the infrastructure offers nothing to industry, that what is required is more public spending that is locally raised, and that the Government have no interest in the region. It would not be surprising if such comments put people off from going to the region.

Unfortunately, that is precisely what too many politicians in the region are saying. They sum up the gloom-mongering reports that are produced with unremitting consistency by the quasi job promotion agencies which, unfortunately, are prolific in the area. I am not referring to the agencies to which my hon. Friend referred and which do a good job, but to others such as the North-East County Councils Association — I do not know whether it is now defunct — which had an annual funeral to bury the economy of the north-east and tried to make it more ponderous each year.

Is it not time that such reports drew attention to the positive things that the region can offer, many of which my hon. Friend referred to? They could start with the natural resources which give the region an unparalleled advantage. We have a beautiful and extensive landscape. Much wealth still lies below the surface of the soil. Our infrastructure is among the best in Britain. We have a coastline and sea ports. The mighty Tyne and Tees flow through the region. There is rich farmland. There is housing and space for new housing. The skilled and willing work force is still there and available.

There are added advantages that the Government have brought, such as the enterprise zone, which has proved successful on Tyneside, the urban development corporations, which have been promised and which, when they come, will inspire more growth in areas that most need it, and the regional grants that are available to industry. There has been a high level of Government spending since 1979 in all aspects of the region's life. There are positive signs of economic and employment growth, an example of which is the Metro Centre on Tyneside, which, in the enterprise zone, has already created more than 5,000 jobs and promises a further 5,000.

The Nissan car plant at Washington, a few miles from the Tyne, although not yet a great employer, is growing at a fast rate producing Japanese cars in Britain. This country has wanted to do that for decades. The company has made the most optimistic predictions for the future and it has continually brought forward its deadlines for expansion. We will see thousands of jobs at Nissan before many years have passed.

The chemical industry, having gone through hard times, as has every British industry, is now on a clear upward growth pattern. It is a diversified industry in the region, particularly in pharmaceuticals, and that industry was not there 20 or 30 years ago.

My hon. Friend rightly referred to training and retraining. The effort, investment and dedication to such activities in the north-east are not equalled anywhere. This is helping to provide a strong structure for the future as industry and investment in the region pick up, as they will.

I referred earlier to the negative side of the formula, characterising the approach of many local government, particularly Socialist, politicians, and in that context I shall quote from a report that was published earlier this month. I referred to it in the House the day after it was published. The report, aptly entitled "It's Not Really Like That", has been compiled by someone who calls himself an academic, one Fred Robinson of the University of Newcastle upon Tyne. Apparently it was commissioned—I should love to know what it cost—by BBC North-East to help in the production of a programme about unemployment in the area. I have rarely read a more depressing and soul-destroying document, and I am left wondering about the mental health of the compiler once he had completed his task, for only someone with the most sturdy spirit could continue to find life worth while after writing such depressing and dreary words.

As it is only 7.15 in the morning and we have the rest of the day in which to recover, I shall read to the House a few extracts from this report to illustrate how inaccurate and unhelpful they must be to anybody who wants seriously to examine the economic and unemployment problems of the region with a view to doing something about them. The author comes to this conclusion on the front page, before going into the arguments and evidence: The economy of the region is trapped in a spiral of long-term decline. The future prospects appear grim. There is no light at the end of the tunnel and there are no policies currently on offer which are able too make much of an impact on the region's problems and halt the decline. It is significant that he claims that no policies are currently on offer from any party. I hope that the hon. Member for Dunfermline, East (Mr. Brown), who is seated on the Opposition Front Bench, has sufficient faith in his party's policies, if he does not have faith in ours, to reject that statement.

Mr. Robinson continues: the fundamental feature of the region is economic decline"— the definition of the region— which has had an enormous and damaging impact. It will continue to do. He asks whether this part of Britain is going to be left to decline, abandoned by industry and relatively neglected by Government. We are only into the second page of the report when we come to that conclusion. Mr. Robinson then proceeds to the devastating conclusion that 19th century success in the region was "founded on coal-mining". It must have required days of research to ascertain that. He then comes to the equally devastating conclusion: the North East, like other parts of the country, was experiencing considerable economic problems even before 1978–79". I wonder why he chooses that date.

Dealing with recent economic trends, Mr. Robinson writes: there are strong indications that economic and employment decline will continue". Every page of the report is characterised by a further and gloomier statement. On page 10, Mr. Robinson writes: there are few signs that the region is recovering. He then comes to the enterprise zones and the urban development corporations, both of which he dismisses in less than a sentence, with no reference to the successes whch the enterprise zone has had and the true objective of the development corporations. There is no mention of the Metro Centre or of the 5,000 or 6,000 jobs that have been created. When reference is made to Nissan, it is in a dismissive way in one paragraph as though it means nothing for the future economy of the region.

When it comes to self-employment, Mr. Robinson grudgingly admits that there has been some success, although he says that it has been "modest". He suggests that it will not work because of lack of capital, skills and relevant experience. In a rather curious sentence he says: The encouragement of self-employment and small firm growth may be a reasonable component…but it will not do much to reduce unemployment. So he dismisses in a phrase the possibility of self-employment or of small firm growth offering a long-term future for the region. Indeed, Mr. Robinson says: It is clear that existing policy measures do not represent a solution to the region's problems. Mr. Robinson then comes to a very curious conclusion when talking about what is needed. This is one of the few "positive" aspects of the report— "positive", that is, from his point of view, not mine. He suggests that reductions in public expenditure have curtailed employment growth and that the reverse is required, pointing to rate capping as one of the most dangerous aspects of policy for economic growth. He uses the curious sentence: Ameliorative economic development policy measures are indeed modest when compared with the impacts of these other policy actions". I think that he is trying to say that he wants more public spending but does not seem to be able to force his pen to construct those words.

Mr. Robinson comes to the heading "Prospects", summing up with the wonderfully incisive description: The economic prospects for the region are grim…It is…apparent that further major job losses are to be expected". And so it goes on. I can see hon. Members sinking into a slough of total despondency, so perhaps I had better not quote the remaining sentences from that section. They go in exactly the same direction. I shall therefore miss the middle sections of the report, which merely add further substance to what I have said, and will instead come to the conclusion.

Not surprisingly, one finds that exactly the same sorts of conclusions and sentences as in the introduction, which was not supposed to be a conclusion. Mr. Robinson says that it is unlikely that the position will improve at any stage. He says: Pious hopes…are inappropriate and are hardly a serious response to an enormous problem. I have appeared to dwell at great length on all the aspects that Mr. Robinson highlighted in the report, but my point is that he never suggests anything positive. He does not suggest any policies or how the problems should be tackled. It is purely a catalogue of what is wrong and a criticism of everyone involved and of every policy adopted.

There is no suggestion of a positive policy, and that is typical of the approach to the region adopted by those who hold vaguely Socialist or Labour beliefs. The only positive thing that I can find is the rather enigmatic phrase: but the 'bottom line' is the distribution of income". Fred Robinson does not go on to say what he intends to do about that. I take it to mean some sort of vague Marxist interpretation of the economy of the north-east and that he wishes to see some form of redistributional economics. It completely escapes me how that policy will be implemented and how it will represent a realistic answer to the region's problems. It is no surprise that the BBC television programme, "The Smiths"—according to the BBC and Fred Robinson, it is based on that report—is a rather depressing programme. However, I am glad to say that it is not as bad as the report.

Mr. Fallon

Does my hon. Friend agree that one of the most shameful things about the report is that it carries the imprint of the University of Newcastle upon Tyne? It is increasingly difficult to defend the excellence of this center of learning against threats to its existence when shoddy reports such as this are produced by the pseudo-academic unit of that university, the Curds Centre.

Mr. Merchant

I accept my hon. Friend's point and I have also seen his early-day motion. It does not help the excellent academic reputation of the University of Newcastle, nor the many efforts to try to attract help to the university from all sources, to have its name on such a report. This tends to happen from time to time in university departments. Anyone who has any doubts should read this report—I do not wish to consign it all to the wastebin—as it represents an object lesson in what is wrong with those who approach the problems of the north-east with this terrible negative attitude.

The report and the television programme dwell on unemployment, which is a serious, severe problem. In castigating the report and accepting the limitations of the television series I do not, in any sense, wish to play down the severity of unemployment in the region. It is very serious and we will not tackle it by turning our backs on the problem.

I have spent a considerable time investigating, in one way or another, how the problem applies to individuals rather than to statistics—statistics do not tell the whole story. A few months ago I spent a week trying to put myself—admittedly imperfectly and in an artificial situation—in a position where I could understand more about those on Tyneside and in my constituency who must face long-term unemployment. That experience had a profound influence upon me and it changed my views. I am the first to admit to the serious poverty of spirit, hopelessness and hardship that stems from long-term unemployment. There are also severe side-effects. There are problems with energy bills, vandalism, crime and the environmental decay that is focused in areas of high unemployment.

I do not wish to appear to be turning my back on the most severe problem of unemployment—above all else, our policies must tackle that problem—but I have spoken to a great many unemployed people about their needs, and the first thing that they say they want is a job. Therefore, it is right that we should focus our attention on the economy and on industrial regeneration.

In conclusion, I wish to draw attention to those problems that require the implementation of Government policies to try to reach a settlement that will create the jobs that are vital to the region. The impact of local government rates in the highly-rated areas of the northeast, such as Newcastle, cannot be underrated, if you will excuse a pun, Mr. Deputy Speaker. The impact is colossal. I have a wealth of evidence from companies and individuals who have moved from the region, downgraded their activities, planned to move or have failed to invest more because of the high level of the rates.

I am a strong and passionate advocate of the Government's proposal to replace the rating system with a community charge for householders and by an equalised rate system for businesses. When I spoke to my hon. Friend the Minister for Local Government two days ago, he assured me that on the business and industry front in Newcastle there will be a fall of about 40 per cent. in the cost of rates, a saving of about £35 million a year to local business as a result of the rates equalisation that the Government intend to introduce. I welcome the move forward wholeheartedly and believe that it will bring a major change to investment and economic approaches in Newcastle. I hope that the system will be introduced as soon as possible.

I was delighted to learn from the figures that the majority of householders in the city will benefit. We must understand that householders bring businesses and investment into the region and that they will see a reduction in their present rate bills when the community charge is introduced. Many of them will enjoy a major decrease in what is now their rate bill. They will pay about £250 to £300 a head in the form of a community charge, according to my hon. Friend the Minister, and this will clearly benefit those who are paying bills of £600 a year, and there are many of them. There will be a marked saving for many. The Government have the right rates reform policy, and it is one of great significance for industrial investment.

The Government have the right policies, as well as their incentive policies, which include enterprise zones and urban development corporations. I hope that more can be done by the introduction of simple, straightforward taxation. I happen to be one of those who believe that nothing is better tailored to help the development of industries and companies than that. I should like to see regional tax differentials, and these could be applied enthusiastically to the region in which my constituency is situated.

I endorse the remarks of my hon. Friend the Member for Darlington in calling for the greater devolution of state industries, and there is a great prospect of our defence establishments following that course. I regret the decisions that have resulted in the loss of employment in this sector in Newcastle, to the benefit of Leeds. I hope that the Government will look more kindly on the prospects and possibilities of devolution of state jobs.

There is much in the region that could competitively produce and supply essential defence requirements and civil orders, while creating jobs at the same time. It seems only sensible that the Government should be able to fulfil their requirements by providing adequate defences and power stations and all the other requirements of a modern industrialised society, while sustaining jobs in areas where the work force is uniquely capable of producing the goods that are needed. The necessary employees are at hand and I ask my hon. Friend the Minister to consider more vigorously the speeding up of power station orders for Northern Engineering Industries, ship orders for the shipyards on Tyneside and defence orders for Vickers and the Royal Ordnance factory.

I end by complimenting an Opposition Member on his contribution to the process of attracting Government orders to the region. I refer to the hon. Member for Newcastle upon Tyne, East (Mr. Brown), who has shown himself to be acutely aware of the need to look to the future and not the past, which unfortunately many of his colleagues are not. He has led a successful campaign, with which I have tried to identify myself, to being about precisely that approach to orders for NEI, which is situated in his constituency. I congratulate him on that.

There is one point on which I do not entirely see eye to eye with the hon. Gentleman, and that is on the future economic structure of the region. In a recent television programme, he was asked what he would like to see done to encourage the region's economy. He referred to more Government spending and a northern development agency, neither of which is essentially the direction in which the region will prosper in future. At least he had a suggestion which, it could be argued, had some coherence, which is more than can be said for another participant in the programme, the hon. Member for Berwick-upon-Tweed (Mr. Beith). When asked what he considered was the answer to the region's problems, he visibly swallowed a few times and said: Energy conservation and proportional representation. Neither of those shattering policies will being about the major regeneration that the region requires.

The total lack of vision that characterises the traditional Socialist view of the north-east is illustrated only by the backward gaze of the unseeing eye into a nostalgic and fanciful era of full employment. At this time of the day, and earlier, men would crawl in their thousands along 3 ft high seams to hack out their living in the murky, dripping hell of the coalface, or would stream in their masses through the shipyard gates to hover precariously over the Tyne, constructing huge metal edifices in molten metal to eke out their daily existence. Yet those are the days which, strangely, the Labour party still worships. It apparently wishes to recreate that era. We want to consign history firmly to its place. Our vision is not one of the past, but of the future. It is a vision of hope of a newly constructed economy—of new industry based firmly on a locally inspired enterprise culture.

Just as the country has seen no less than an economic miracle of regeneration brought about by the inspired leadership of radical Thatcherism, so must the positive force of economic liberalism burn freely throughout the north-east so that, when we speak of the north-east being great, we shall refer not to the past but to the future.

Mr. Richard Holt (Langbaurgh)

It gives me much pleasure to congratulate my hon. Friends the Members for Darlington (Mr. Fallon) and for Newcastle upon Tyne, Central (Mr. Merchant) on introducing the debate and on highlighting the rather nauseating report by Fred Robinson. It cannot have escaped your notice, Mr. Speaker, that during Question Time earlier today the hon. Member for Middlesbrough (Mr. Bell) probably typified more exactly the attitude of the Labour party in the northeast than anyone could have done by his rather damning question to the Prime Minister about gloom, doom and job losses. He did not mention the fact that, a fortnight ago, ICI announced the creation of 5,000 new jobs in new technology in Cleveland. That will happen within the next two years. That negative attitude, to which my hon. Friend the Member for Newcastle upon Tyne, Central referred, has been prominent in Labour party thinking.

I do not know whether I should consider myself fortunate or unfortunate. My constituency is on the map. It is a permanent fixture, believe it or not. The land, the sea and the coast exist. But county borders move according to the whim of bureaucrats, Governments and diktat. In one way, I shall speak as a Yorkshireman, and in another way I shall speak as a north-easterner because of the vagaries of politicians over the years. The identity of the River Tees area is different from the rest of the north-east of England. That is because it is being run by Conservative-controlled local authorities. The move in that direction is gaining pace.

I am proud to be a frontiers man. All that lies to the south of my constituency is blue, while to the north it is mostly red, apart from a few isolated pockets. However, slowly but surely the people of the north-east are beginning to realise that the Labour party's con trick and the endemic knee-jerk reaction that they must vote Labour because their fathers and grandfathers voted Labour are being challenged. They realise that the whole area is about to undergo a metamorphosis. No less a person that His Royal Highness the Prince of Wales said in my constituency last week that it is time for change and that the people in my region must get used to it. He made that point when launching the Business Youth Enterprise Year in Langbaurgh.

Why is there green-eyed envy of the south-east? I am frequently asked by people in the north-east why there is no difficulty in attracting industry to Buckinghamshire. Frequently I have to tell people—I am rather tired of it, but the tale is worth telling over and over again—that in that area we did not have to ask the union bosses whether we could do this or whether we could do that. In that area trade unions are as relevant as the dodo. They are probably less relevant than the dodo, because in its day the dodo helped to clear the earth of some of its bad things.

There are promising signs and I have already alluded to them. Urban development corporations are coming to Newcastle and to Teesside. I intend to refer to the UDC for Teesside. It is being welcomed by Teesside. Another welcome sign is that, despite all that has been said by the Labour party and its Pavlovian followers against the city technology colleges, the Labour-controlled council of Langbaurgh, to its credit, has accepted the CTC concept. It has made a planning application and designated land for the purpose. It will assist the Government to establish the CTC. It is to that council's credit that it realised that we cannot return to the five year apprenticeship, with lads of 14 or 15 making the tea and learning very little. By means of the CTCs and the technological colleges young people will require the skills that will enable them to obtain the jobs of the future.

While my hon. Friend the Minister of State is reading Fred Robinson's book, which will probably give him nightmares and nausea, he should also read the book entitled "Living at the Fringe." It is a far better study by the University of Durham of the entire region. It is a much more readable and a much truer account of what is happening in the area.

Having given that piece of advice to my hon. Friend, I must now go on to give a little more, though it may be a little harder to swallow. It is time for the Government to wake up and realise where the north-east is. I constantly write to Government Departments telling them that they write and talk about Middlesbrough when they should be talking about Langbaurgh. They use a sort of shorthand for the area of Middlesbrough when they should be talking about Langbaurgh or Stockton. I am disappointed to see that I am the only Cleveland Member of Parliament present for the opportunity, which is so infrequently presented to us, to speak on the region.

We need a major arterial road to run from the southeast of England and not the current deathtrap, the A1 from Doncaster northwards. The number of deaths on that road alone justify the Government's investing to improve that infrastructure. It is not sufficient to say that over the next few years crash barriers will be erected. With the advent of the Euro tunnel it is essential that the northeast of England has an opportunity of direct road access without the bottlenecks and the difficult conditions that exist at the moment.

There is another measure that the Government should be taking for the north-east of England. They should be looking at why we are the only European country that charges light dues for ships. If our ports are to prosper and compete fairly against Rotterdam, Amsterdam, Hamburg and Le Havre, then let us not tie one hand behind our backs to start with by putting an impost on the ship owners for light dues, which should have been abolished in some form over many years.

I can find no economic or justifiable reason why light dues should fall on the limited number of ships that come in. That, while it may seem a loss of revenue to the Treasury, would ultimately be an opportunity for jobs and a work opportunity that we should not miss.

I cannot find any economic logic in continuing with London weighting. That creates the artificial north-south divide that people talk about. Housing problems are created by that, with the consequent lack of fluidity of labour. If someone is being given thousands of pounds a year in addition to his salary for doing exactly the same job, he is able to put a higher proportion of that money into purchasing a house, which pushes up the prices and creates the greater problems that we have in the mobility of labour.

Recently I suggested that the Government should seriously consider giving grants to people in the north-east of England who have been unemployed for a long time so that they can come south, put a deposit on a house and in that way fill the vacancies which exist there. I was condemned by the Labour party in the north-east of England for immoral thinking. What was I doing suggesting that people should be allowed to move from the region? Would I not denude it of all its skills and opportunities? I did not hear those same political parties condemn any Government, including all Labour Governments and the Lib/Lab Government, for allowing people to take inducements to go to Australia, Canada or New Zealand. It seems that it is all right to take money to far-away countries, but it is not all right to be given a grant or assistance for what is now universally recognised as the major problem in job movement—housing and housing costs.

I hope that when we return after the general election one of the Government's first measures will be a new rent Act to do away with that which has been on the statute book for far too long.

I want to refer to a third publication. We have already heard from my hon. Friend the Member for Newcastle upon Tyne, Central, who spoke eloquently on the question of Robinson's book, and I have referred to the Durham university book. There is one other book which has probably had a smaller readership than the other two. Nevertheless, it is an important book because of its authorship. It identifies absolutely and clearly that, in itself, investment destroys jobs. The book is called "Respond" and it was written by the Bishop of Durham, the Bishop of Whitby and the church leaders in Cleveland.

The book says that the more money one puts into major industries, the more one destroys the jobs in those industries. That must be borne in mind when people talk about giving grants for this and for that. We need a review of the type of society that we shall have throughout Britain and not merely in the north-east of England.

My hon. Friend the Member for Newcastle upon Tyne, Central spoke about high rates. I do not blame him for complaining about that, because he lives in Newcastle and has a burden to bear second only to that borne by my constituents in Cleveland and Middlesbrough who have the miserable distinction of being top of the high rates league. It would not be so bad if people could see something good for all that money, but they cannot. Instead, they see depressing situations that are almost out of hand.

A realism is now beginning to appear. The coal industry in the north-east is today in profit. Who would have thought that that was even conceivable 10 years' ago. Certainly, it was not on the mental horizon of anyone 20 years' ago. It was part of the folklore of the area that one continually had to subsidise the coal industry. To have suggested that one day it would be in profit would have been like telling our grandparents that one day a man would land on the moon.

An even greater example of realism is to be found in the steel industry in my constituency which today is profitable and, by every standard, is the stong man of European steel industries. Indeed, it is probably the strong man of the steel industries in the Western world. Everyone who works in those industries take great pride in the fact that all that has been achieved in such a short time. We have a short time in which to make our speeches but I hope that they are significant speeches. It is not the length of a speech that determines its importance, but the content.

I hope that one or two of the markers that I have put down will find a responsive ear in the Government because no area in Britain deserves to have the continuity of a Conservative Government more than the north-east of England. Yesterday in Cleveland I had the pleasure of meeting all the candidates who will join me here shortly as Members of Parliament. When that day comes the northeast of England will be much better.

7.48 am

Mr. Gordon Brown (Dunfermline, East)

We welcome this opportunity to discuss the problems of the economy in the north-east, not least because of the clear division of opinion that was exhibited early in this debate between the hon. Members for Darlington (Mr. Fallon) and for Newcastle upon Tyne, Central (Mr. Merchant) on the issue of regional wage variations and wage costs.

Most of all, we welcome the debate because of the opportunity that it gives us to spell out two days after the publication of our document "New Industrial Strength for Britain" our positive policies for the northern economy. First, these policies would mean an enhancement of training opportunities in the area that would respond to many of the criticisms made by the Manpower Services Commission about the failures in industrial training. Secondly, these policies would mean that more research and development would be carried out in the north and north-east, and they would end the increasing location of research and development in the southern parts of England. Our policies would stimulate industrial investment in the north. One of the figures which the hon. Gentleman did not mention was the catastrophic fall in the real value of manufacturing investment in the north since 1979.

Mr. Don Dixon (Jarrow)

Three weeks ago I asked the Treasury about manufacturing investment in the northern region from 1979 to 1985, that being the period for which that office has figures. The answer was that manufacturing in the northern region had fallen by over 42 per cent, in that period. On the question of research and development, is my hon. Friend aware that the Government have just reduced the amount of money available to Newcastle university, which has had to pay off lecturers and other staff?

Mr. Brown

I am grateful to my hon. Friend for his comments and also to my hon. Friend the Member for Bishop Auckland (Mr. Foster) for being present for this debate. My hon. Friend the Member for Jarrow (Mr. Dixon) is right. The latest figures produced by the Department of Trade and Industry show that the real value of the fall in manufacturing investment since 1979 is about 41 per cent. The fall in manufacturing investment throughout the United Kingdom is about 20 per cent. The northern region has suffered twice as much as the rest of the country.

I am grateful for the comments and concern about Newcastle university. Perhaps the hon. Member for Newcastle upon Tyne, Central, who attacked those who worked at Newcastle university and suggested that that university's case for grants was being diminished, might call on the Government and the University Grants Committee to change their position on that matter.

I am grateful for the opportunity to explain our policy for a Northern Development Agency, which has been criticised during this debate. I understand that some Conservative Members have now reluctantly accepted the setting up of the Northern Development Company, and I applaud that. I also applaud the efforts of local authorities, trades unions and industry in the north for getting under way in difficult circumstances. The only policy that seems to commend itself to Conservative Members in their contributions to this debate is a reduction in rates, despite a Government commissioned study which cast doubt on the impact of rates on levels of employment and regional wage variations.

Our policy is for a Northern Development Agency, not for a central bureaucracy dictating to the north what is in its best interests. The Northern Development Agency will be a local agency for local people, meeting local needs, stimulating local industry and local jobs in the north. The agency will commend itself to a far wider community than only the Labour movement in the north of England.

Mr. Holt

Will the hon. Gentleman tell us why the National Economic Development Council, which had masses of money but wasted it, dominated and controlled as it was by nit-picking local councillors, was such a failure?

Mr. Brown

I do not think that that is the view taken in the north. People there welcome the establishment of the Northern Development Company as an extension of what has been done, but most people would like to see, in time, the creation of a Northern Development Agency. Support for that comes not only from this side of the House but most recently from statements by the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), who is a convert to the concept of a Northern Development Agency, and by the right hon. Member for Henley (Mr. Heseltine), who favours that concept for England.

The reason why that development agency is needed— and why we will set it up immediately on coming to power— is to deal with some of the fundamental problems that have been identified during the course of this Government but not resolved. The hon. Member for Darlington painted a picture of the northern economy that would not be shared by all the residents of the north of England. That picture was then confirmed in the speech of the hon. Member for Newcastle upon Tyne, Central. They seemed to be concentrating on the silver linings and ignoring the dark clouds that dominate the industrial horizon of the north.

If the northern economy is doing so well under this Government—let us remember that they have had seven and a half years to deal with the problems with which they promised to deal— why is it that over those years we have lost 171,000 employee jobs? Even after taking into account what Conservative Members call a "boom" in the numbers of self-employed, but what I would call a small increase, the figure is still 150,000 jobs lost.

More than that, why is it that when the Government made their submission to the ERDF only a few months ago they had to accept that unemployment in the north could hardly be reduced, if at all, under the present policies? Therefore, it is not just a case of a catastrophic fall in the value of manufacturing investment, which has been aided by the deliberate policy to cut the amount of regional assistance available to both incoming and indigenous industry, but a policy that has seen jobs lost in almost every sector in the north. In particular, these jobs have been lost in manufacturing at a time when small losses have been recorded by many of our industrial competitors, while in Japan the numbers of people in construction and manufacturing employment have risen.

In the short time available to me I wish to ask the Minister a number of questions that arise from the theme of the debate. We have heard mention of a number of reports that have been produced recently. The hon. Member for Newcastle upon Tyne, Central, instead of giving us some positive proposals, spent almost all the whole of his speech criticising a report called "It's Not Really Like That". There has been reference to a report by the Bishop of Durham, called "Response", and we have heard of one produced by the university.

The report to which I wish to draw the attention of the Minister is not by the Labour party, or by academics, whom the Conservatives are always criticising, but by the Government. It is their report to the ERDF, which I understand is to be the basis of discussion later this week. One would expect that such a report would give the Government's thinking about the northern economy and what might be done to assist it. We would expect such a report to be honest and fair in its treatment of the evidence.

The report does not identify, as the hon. Member for Langbaurgh (Mr. Holt) did, mass migration as a solution to the problems of the north. He must realise that that will weaken the economy of the north considerably. Even if incentives are given for people to move, the result is a fall in the population, the disappearance of skills and a diminishing of the chances of recovery. The report did not talk about the new fashionable solution, supported by the hon. Member for Darlington, of regional wage variations at a far greater level than we have at the moment.

The report said: The most important problem facing the area of the north is unemployment. The present high levels of unemployment are unacceptable but the situation will not improve until a number of more fundamental problems are solved. These fundamental problems—I hope that the Minister will confirm that I am reading this accurately—are: a weak economic structure, inadequate infrastructure— more investment in particular is needed in communications, water supply and land drainage, gas, waste disposal, telecommunications, industrial land and modern industrial floorspace—an excess of unqualified manual workers and, a shortage of qualified people. Environmental dereliction; particular problems include the unsightly coastal area and the rundown appearance of some inner city areas. Interestingly, the report goes on to say: one of the fundamental problems that needs to be solved before unemployment is going to fall is the social deprivation in the north, which requires more education and training facilities". I hope that the Parliamentary Under-Secretary of State for Health and Social Security will note this: "It needs better health facilities, the absence of which is one reason for poorer standards of health in parts of the northern region."

Those are recommendations from a report that has been prepared by the Government and sent in the Government's name to the European regional development fund. Those recommendations are clear. What is needed is public investment in training and the infrastructure, a stimulation of manufacturing and private investment in the north and a co-ordinated approach by the Government. Those are the problems that need to be solved as a matter of urgency if unemployment is to be substantially reduced in the north.

The Opposition are committed to resolving the problems. That is why we have announced our determination to create the Northern Development Agency to co-ordinate a response on industrial infrastructure and industrial investment. It is also one of the reasons why our jobs programme is pledged to help the areas in greatest need, by providing the opportunity for training places at a far higher standard than that which exists at present. It is why our jobs programme also includes proposals for increasing the quality of community service and why there is our economic enterprise package.

The Opposition have the policies to resolve the problems of the north. The speeches that we have heard this morning from Conservative Members will do nothing but perpetuate the problems of the north. We have given the north a vote of confidence with our policy to create the Northern Development Agency. In my opinion, we have: heard valedictory addresses from Conservative Members What we need is an early general election so that we will have the opportunity to implement the policies that will solve the problems of the north.

8.1 am

The Minister of State, Department of Trade and Industry (Mr. Giles Shaw)

I have to give the hon. Member for Dunfermline, East (Mr. Brown) full marks for rousing the House at 8 o'clock in the morning with his five colleagues alongside him giving a real reception for the new policies that the Labour party has just published. As is so often the case, it is too little, too late. As my hon. Friends the Members for Darlington (Mr. Fallon), for Newcastle upon Tyne, Central (Mr. Merchant) and for Langbaurgh (Mr. Holt) have already said, the position in the northern region, the north-east in particular, has changed dramatically in the lifetime of this Government and there have been significant changes and improvements.

When the hon. Member for Dunfermline, East starts on his track asking why a report went to the European Community, compiled, as he knows, by the local authorities which have strong views on the matter, let me say to him that it is important to obtain sufficient investment from the European Economic Community, in [The Minister of State, Department of Trade and Industry addition to what the Government are already doing, to ensure that we get our share of regional development fund activities. I hope that we shall enjoy his full support in seeing that that happens.

My hon. Friend the Member for Darlington pointed out the important fact that there are already significant changes in the north-east that have to be recognised for what they are. First, there is a major shift in both attitude and action, and, secondly, there are the early signs of recovery in an area that has long been written off, certainly by the Opposition, as something that can no longer sustain its part in a vibrant and growing economy.

The important questions my hon. Friend put were: why do we not have a greater sense of what is possible, and why should there not be more confidence about the prospect of recovery in the north-east? I have to say to my hon. Friends, that the issue of the north-south divide is one of the biggest reasons why it is not easy to talk confidently about the north-east. There has been an overdose of utter gloom, despair and despondency, which has reached a level at which it is difficult to persuade people to take seriously the prospects of increasing life and opportunity in an area that has been allowed to receive the accolade of a desert north of Watford. The facts of the case are entirely the opposite. My hon. Friend the Member for Darlington referred rightly to the fact that the first priority should be to get the national economy right, there is no substitute for providing that background against which any reasonable regional policy can be developed.

The economy is now moving in a direction that will allow substantial growth to occur in all regions. I understand that the facts about manufacturing investment cause great concern to the hon. Member for Dunfermline, East. He is absolutely right to express his concern. However, he will know of the shift that has occurred since 1983 in the rates of manufacturing investment. I am sure that he will be glad that even in the northern regions —the north-east, the north-west and Yorkshire and Humberside — the average increase in manufacturing investment was 20 per cent, in that one year alone. The national trends are still continuing.

The investment made by this Government in the form of assistance to the north-east is substantial. Total Government financial help for the year 1986–87 for the north-east will exceed £1 billion. Expenditure by my Department in the regional aid programme since 1979 has exceeded £800 million and has created or safeguarded over 90,000 jobs. The Department of the Environment has funded economic, social and environmental projects to the value of ?300 million since 1979.

I recall that my hon. Friend the Member for Darlington laid great stress on the importance of improving the environmental aspects of the north-east. Derelict land which has been one of the appalling legacies of industrial manufacturing over many years, has been high on the Department of the Environment's list. About 2,341 hectares of derelict land have been reclaimed since 1979 in that region alone. That is due to the imaginative use of the programme by this Government. About £1.25 million has been added to that programme so that in 1987–88 £14.25 million will be available to do just what my hon. Friends the Members for Darlington and for Newcastle upon Tyne, Central want to see done. When we hear, as we have done from my hon. Friend the Member for Newcastle upon Tyne, Central, about people's attitudes, it is not surprising that we get a bit fed up when we are doing as much as we possibly can to bring increased activity into that region.

When Fred Robinson produces his document, which I assume means that there is not much light at the end of Fred Robinson's tunnel, I do not think that we should give it much room. I am reminded of Stella Gibbons and her famous little book "Cold Comfort Farm", in which the four cows were called Aimless, Graceless, Feckless, and Pointless. That is probably a fair obituary for Fred Robinson's efforts in this matter.

My hon. Friend the Member for Langbaurgh welcomed the development of urban development corporations. I hope that Opposition Members will welcome them because they are an imaginative way to try to get a co-ordinated approach in that area and to bring real resources to bear. I hope that he will maintain close contact with the UDC which will shortly be set up and working in the Teesside area. The one in the Tyneside area is already taking shape under the chairmanship of Mr. Nicholson, and I imagine that that too will be a large generator of activity in the region.

The main problems of the north-east stem from the long decline of structurally-based industries. I have to accept that. The hon. Member for Jarrow (Mr. Dixon) knows very well that the shipyards and heavy engineering which used to be the heart of industry in the north-east has declined over many years and is now in an extremely parlous state.

We must make absolutely certain that we bring new jobs and new investment into that part of the country. The hon. Member for Jarrow will be well aware of the efforts that have been made to bring investment into the country. I welcome the Northern Development Company and the hon. Gentleman's endorsement of it, not just as a more optimistic way of approaching the problem, but because it is a commitment, not just from the local authorities and central Government Departments, but because the private sector is coming in as well to provide a substantial generator. In the programme for the current year, more than £1 million will come from my Department for expenditure on the promotion and development of the north-east of England.

Therefore, I advise my hon. Friend the Member for Darlington that, in relation to confidence and promotion, that new vehicle could not have arrived at a better time. We must look to it to demonstrate beyond doubt that in the north-east of England there is a large and vibrant prospect of further development.

We must contrast the decline in the structural industries which have served the country so well for so long with the massive increase, for example, in retailing and distribution. We must contrast the Metro centre in Gateshead which is the finest shopping centre in Europe with the declining industries with which it is surrounded. Marks and Spencer in Newcastle-upon-Tyne has the highest rates of sale outside the main shop in Baker street. That, too, contrasts sharply with perceptions of the north-east.

Mr. Dixon

Does the Minister accept that the NDC was the initiative, not the Government, but of Tom Burlison, the chairman of the northern TUC?

Mr. Shaw

I am delighted to pay tribute to Tom Burlison, whom I met on several occasions. I regard his participation in the NDC as making a major contribution. The people in the north-east decided collectively that they wished to see an NDC, which is why it is rooted properly.

Clearly, in the north-east there is a major problem of exceptionally high unemployment which must be reduced. The initial fall has started, albeit almost imperceptibly. We now have in place substantial Government assistance for training schemes, derelict land, industrial investment and improved infrastructure. Of all the regions with which I am acquainted, the north-east undoubtedly has the best communications network. I accept that to get there, the Al is the least desirable of all major trunk roads and my hon. Friend the Member for Langbaurgh rightly drew attention to that. But, equally, he will know that there is a major programme of reformation work to be undertaken on the A1 to improve it.

I accept that at present there is still a large gap between the decline of the structural industries and the release of jobs, and the rise of new industries and the creation of new jobs. But there is now sufficient interest in new investment in the north-east, led by the Nissan project, which was a major threshold crossed, which means that with the axles already in place, the policies now being pursued and, above all, with the commitment to the economic development of the United Kingdom as a whole, we shall see better prospects for jobs and industries.

The greatest possible guarantee of that is that, despite all the enormous problems in the north-east, the people have a spirit and capacity to survive which is second to none. I visited Consett when the plant closed; we then spent £4 million clearing that site; and I can scarcely believe that in a relatively few years we have seen 1,250 jobs in new industry working out of the old Consett area. That is a tribute to the people, who at the end of the day will proudly carry their fortunes into the future.