Regional Government (North-West) (Hansard, 1 July 2003)

§ Ann Winterton (Congleton)
I well remember the Secretary of State for the Environment, Transport and the Regions making his statement on 3 December 1997, when the Government published their White Paper in which it was made clear that the Government were committed to moving … to directly elected regional government in England. The right hon. Gentleman asserted that he had been associated with the cause of regional development … for more than 20 years."—[Official Report, 3 December 1997; Vol. 302, c. 359.] and that it was a cause close to his heart. Of course, he had been leader of the Labour party delegation to the European Parliament between 1976 and 1979, and a delegate before that. On that occasion, he did not tell the House that it was a manifesto commitment of the Labour party way back in 1929 to support the creation of separate legislative assemblies in Scotland, Wales and England with autonomised powers of local concern. Between the wars, from 1934 to 1937, regional policy emerged in response to the unemployment of the slump years. South Wales and parts of Durham, Tyneside and west Cumberland, plus Scotland, were designated as assisted areas under special area Acts and administered by appointed commissioners with limited powers to grant subsidies. During world war two, Labour Ministers founded nine civil defence regions that the post-war Labour Government turned into regional boards for industry. So there is nothing new in regionalisation for the Labour party, and the Conservative party has also played a part stretching from the 1970s, under the then Prime Minister, the right hon. Edward Heath, to the more recent Maastricht treaty.
While the concept of regionalisation came from a totally different source and background from the concept of European Union integration, the European Commission was quick to hijack regionalisation to make the single currency work. As a result, the issue involves immense considerations for the United Kingdom as a whole and the north-west in particular.
Pierre Werner, Prime Minister of Luxembourg, wrote in his report of 1970: The realisation of global economic equilibrium may be dangerously threatened by differences of structure. Co-operation between the partners in the Community in the matter of structural and regional policies will help to surmount these difficulties, just as it will make it possible to eliminate the distortion of competition. The solution of the big problem in this field will be facilitated by financial measures of compensation. In an economic and monetary union, structural and regional policies will not be exclusively a matter for national budgets. The following is from the 1975 report of the Prime Minister of Belgium, Leo Tindemans: For an integrated economic and monetary unit to operate harmoniously there must be a substantial regional policy to offset the tendency of the market to concentrate capital and activity in the more competitive areas of the Union. Such a policy will satisfy the clear desire in all our countries to revive the regions. 357 This policy must necessarily involve a net transfer of resources from the most prosperous areas of the community to the less favoured areas. In part these transfers will be made, as now, through national regional development policies. However, a large proportion of the transfer will have to be made through the Community budget, either directly by means of regional aids, or indirectly by the effect on economic structures of the agriculture and industrial policies. Regional policy will therefore have to expand gradually in step with aligning the economic and monetary policies of the member countries. Moreover, the regional policy must be concentrated on the most economically backward areas of the Community. It therefore stands to reason that regionalisation is an integral part of economic and monetary union, and those who support the eurozone will also support the regions of the European Union. For as Tindemans indicated, because the United Kingdom has a successful economy and we have above-average member state GDP, we will be the losers in this new Europe of the regions. So the answer to the question that is often posed—whether there will be more money as a result of regional government for the north-west—is a resounding no. Indeed, there will be less overall.
We have to bear it in mind—a fact that has not been recognised—that we are talking not about regions of the United Kingdom but about regions of the European Union. If the former were the case, it could well be that a United Kingdom Government would be prepared to spend more on the regions, as they do now, particularly in the most needy areas. However, the present Government have made it clear that no more funds will be available than at present for regional assemblies, so the added cost of setting up and running them will top-slice the resources that are available, leaving less overall to spend.
The figures involved are not inconsiderable. My hon. Friend the Member for Tatton (Mr. Osborne), in his excellent debate on regional government in Westminster Hall last Tuesday, stated that the Minister's predecessor had estimated that it would cost up to £30 million to set up the assembly, of which £20 million would be new money. Central Government—in other words, the taxpayer—will pay for that, but most of the running costs of £25 million a year would be met from the assembly's general Government grant. Moreover, the Minister of State for Regeneration and the Regions has said that there will be no new powers and no new money for regional assemblies.
Those areas in the north-west that are at present receiving economic aid of one kind or another should look very carefully at the pig in a poke that they are being sold, and perhaps reflect on whether a regional assembly will be in a position to deliver and to meet their expectations. Certainly, the hon. Member for Manchester, Blackley (Mr. Stringer) was in no doubt when he spoke in last week's debate, for he posed the question whether an elected regional assembly would put right the wrongs caused by the country's huge and growing regional disparities. He asked whether there will be money in it, and went on to make a comparison with the Scottish Parliament, which was guaranteed in its White Paper that the Barnett formula would continue, thereby retaining the levels of money that go to Scotland. No such good fortune for the north-west, I 358 hasten to add; and I will refrain from going over the old ground of the huge and increasing cost of the Scottish Parliament building.
Business is extremely sceptical about regional assemblies. In an excellent document produced recently by the British Chambers of Commerce, it expressed the view that regional assemblies will not be a success unless the concerns of business are addressed and taken into account. It also believes that if regulation and costs are all that regional assemblies are to bring to the regions, as will be the case under the proposals in the White Paper, the assemblies will damage regional competitiveness.
What we are about to experience, if regional government in the north-west gets the go-ahead from the electorate, is the handing over of regional policy in the north-west to the European Union. Further powers will be ceded to Europe and will therefore be lost to the United Kingdom, and the British public will once again not have been told the whole truth. Rather than being of economic benefit to the region, it will be the very opposite, because the UK's GDP of just over £1,000 billion is above the 85 per cent. benchmark of the average GDP of EU member states. Adding to that equation the 10 new countries joining the EU, whose GDP is lower still, will mean that the UK will fall even further behind and will not qualify for assistance. We should remember that EU regional policy must be concentrated on the most backward areas of the Community. That means that deprived areas in the north-west that currently receive assistance—for every pound that is paid to the EU, we receive 50p, which the United Kingdom must match with a further 50p, plus the administration cost—will not do so in future because they will be treated as one region. The overall needs of the whole region, not parts of it, will be the determining factor. Yet those parts may be worthy of extra assistance. If we wanted to deal with the hot spots or the most deprived areas, we would need to revert to what we have had for a long time—a United Kingdom regional policy.
I expect some people who listen to the debate or perhaps read it later in Hansard will express some scepticism. However, rather than taking my word for it, perhaps they should consider what is buried deep in the Chancellor's recent and tedious 246-page document, "Assessment of the Five Economic Tests", not forgetting the 18 supporting studies. Box 2.13 on page 125 in the long chapter on flexibility gives undoubted confirmation that Government plans for an elected regional assembly in the north-west are all to do with the EU. It states: It is also vital to modernise the European dimension of regional policy based on the principles underpinning domestic policy, so that it is locally led and substantially devolved. In this context, the consultation paper A modern regional policy for the United Kingdom", which was printed in March, outlines the Government's commitment to regional flexibility in the UK and the euro area and puts forward a proposed new approach for EU regional policy, an EU Framework for Devolved Regional Policy. Under this Framework, EU Member States would agree common principles but delivery of regional policy would be substantially devolved and decentralised, and offer greater 359 flexibility to Member States and their nations and regions. EU support, both financial and institutional, would be refocused on those poorest Member States that will benefit most from direct EU involvement. There we have it, in black and white.
In other words, the plan has nothing to do with the electorate's desire for regional assemblies. Indeed, to date, the electorate have shown an absence of desire for them. It has everything to do with breaking up nation states to form a Europe of the regions, and with moving money to make the euro work.
I introduced the debate to ensure that such vital matters to the future economic success of the north-west and the United Kingdom at least receive an airing. For far too long, successive Governments have told the people of this country only part of the truth about the implications of the UK's relationship with the European Union. If the people of the north-west are to decide in a referendum whether to have a north-west regional assembly, they must be armed with the true facts. I advise them to read the small print with great care and look before they leap.

§ The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope)
We have had another interesting debate on regional governance in the north-west, following that which the hon. Member for Tatton (Mr. Osborne) secured last week. I shall not recycle all the points that I made in that debate, but I remind hon. Members of one specific point. I make no apologies for repeating it. It is the Government's policy to instigate a far-reaching and radical programme of constitutional change and devolution. It was helpful of the hon. Member for Congleton (Ann Winterton) to say that my right hon. Friend the Deputy Prime Minister has been and continues to be a committed supporter of regional government in England. Indeed, the Labour party has been committed to that in successive manifestos for many years. That is a helpful reminder of this party's commitment to successful regional development.
I regret to inform the hon. Member for Congleton that this history of support for regionalisation rather undermines her phobia, whereby this is some kind of European plot to take over the north-west. That is clearly not the case and it is not a credible argument.

§ Ann Winterton
Will the hon. Gentleman give way?

§ Phil Hope
In a moment. That argument illustrates not only the Conservatives' knee-jerk reaction to all matters affecting Europe and to relationships between this country and the European Union; it undermines the north-west's deserving case for far better representation at regional level for its economic future.

§ Ann Winterton
I was filled with hope—no pun intended—that the hon. Gentleman would not use the argument that he has just expressed to the House. This is no phobia for my party; rather, the Government are seeking not to be truthful with the facts. They are not prepared to tell the British people what the true facts are, so that they can make up their own minds. In fact, the Government are being patronising; they should for 360 once decide that they will be fair and give the full picture, so that the British people can make an informed decision.

§ Phil Hope
Of course, the whole point of a referendum is that it gives people the chance of a choice in these matters—a choice that the hon. Lady and her party would deny people by denying them the opportunity of a referendum. The debate that we have had, are having and will continue to have is a very important one about the future economic development of this country's regions—in this case, the north-west.
We said that we would provide for directly elected regional government in the English regions in which such a demand exists, and where people decided in a referendum to support it. It is fundamentally clear that no region will have an elected assembly imposed on it; it will be a matter of choice. It is that choice that the hon. Lady and her party are denying to the people of the north-west. We are giving the people of the regions the opportunity to make that choice. Perhaps those such as the hon. Lady who oppose that policy could make it clear why they would deny the people of the north-east, the north-west and Yorkshire and the Humber the right to choose through a referendum.
Two fundamental principles underline our proposal for elected regional assemblies. First, it will give the regions the opportunity to establish democratic accountability for activities that are already carried out on a regional basis by central Government, their agencies and quangos. I need not remind the hon. Lady that it was under a previous Conservative Administration that the Government offices for the regions were established. Through this means, we shall provide greater democratic accountability for those offices. Secondly, elected assemblies can use their resources and influence to improve regional economic performance. The Government remain committed to improving regional economies, and elected regional assemblies are a vital part of this framework.

§ Sir Nicholas Winterton (Macclesfield)
Rubbish!

§ Phil Hope
Elected assemblies will have responsibilities for key regional issues such as jobs, skills, planning, housing and economic development, all of which have a fundamental impact on overall economic development.
The way to drive forward the UK economy as a whole is to boost regional economies, getting all of our regions firing on all cylinders. A Treasury report of last year suggested that if all of our regions raised their economic performance to the national average, the average person in the UK would be £1,000 a year better off.
The Government have already done much to boost regional economies. We have strengthened the regional tier in the UK to ensure that there is the capacity to deliver higher productivity and economic growth. Regional development agencies have been set up to promote economic development and regeneration, and regional chambers have been established to contribute to the RDAs' regional economic strategies, and to scrutinise delivery. Perhaps the Conservatives can tell us what their policy is on RDAs. They went into the last general election promising to abolish RDAs; now, we 361 see hints here and there that they would keep them. What is their policy on RDAs, given the huge success that those agencies are having, supported by business up and down the country, in developing our regional economies?
We have given more responsibilities to the Government offices, and the role of local authorities has been strengthened, for example through the introduction of business planning zones, and generally through the Government's localism agenda.
We have published the communities plan, a regionally focused action programme for tackling imbalances between housing supply and demand. It addresses the lack of housing demand in parts of the north and the lack of supply in parts of the south. The plan seeks to develop policies that are appropriate to each region.
I shall now talk specifically about the north-west. Four of the nine new pathfinder programmes announced in the communities plan are in the northwest. The region will receive some £35 million this year to deal with early interventions.
We are investing more than £1 billion this financial year, along with European programmes and the Northwest Development Agency, on a range of regeneration initiatives. The agency currently invests more than £220 million per year to facilitate the economic, social, physical and environmental regeneration of key areas in the region.

§ Sir Nicholas Winterton
That is not new money.

§ Phil Hope
Those are facts that the Opposition seem to want to deny. They clearly illustrate the Government's commitment to effective economic regeneration in both rural and urban parts of the regions of this country. It was this Government who set up the country's first urban regeneration companies—Liverpool Vision and New East Manchester. They are sparkling examples of what partnerships between the private, public and voluntary sectors can achieve, when they have the right delivery vehicles. We are also developing programmes for Cumbria and Furness, East Lancashire and selected coastal and market towns.
The RDAs also manage 140 local regeneration partnerships, and are developing 600 land and property development schemes and rural regeneration programmes. In addition, the north-west region has been allocated £108 million for 21 neighbourhood renewal fund areas to tackle deprivation. We are also making £325 million available to six new deal for communities partnerships in the region over the next 10 years.
I want to show that there has been a range of important initiatives at a local level, addressing issues such as housing, skills, enterprise and crime. The Government's existing policies are beginning to give regions the economic levers that they need to develop their full economic potential. The Government will continue to work to identify where these can be enhanced, or where there are factors affecting economic performance that are not currently addressed in the most effective way.
362 The Government have set themselves the challenging task of increasing economic growth in all regions. In the long term, that means reducing the disparities in rates of growth between the historically more successful regions and the rest of the country. That will not happen overnight; trends are long established, and may take time to change. However, I do not subscribe to the view often held in other parts of the Chamber that central Government have all the answers. There is only so much that the centre can do. We need strategic decision-making and accountability at regional and local levels, as well as at national level. Scotland, Wales and London have been given new powers to take decisions that are relevant to them and promote their own regional strategies. The Opposition opposed those institutions tooth and nail, but now that they are established, they support them. I dare say that we will see a similar reversal of policy when the new regional assemblies are established and have proved their success.

§ Sir Nicholas Winterton
Rubbish.

§ Phil Hope
The Government want there to be elected English regional assemblies, where there is a demand for them. The assemblies will take decisions that bring to hear their knowledge of regional needs and circumstances. There is scope for a much greater role for strategic action at a regional level that can address regional priorities.
To pick up on a specific point made by the hon. Member for Congleton, the majority of business in the north-west consulted in the sounding exercise support a referendum for an elected regional assembly.

§ Sir Nicholas Winterton
Not an assembly.

§ Phil Hope
Elected regional assemblies, with their ears closer to the ground, can be on the spot to deal with specific issues that affect regional economies. An elected assembly in the north-west would have direct spending power, or influence, over funding amounting to some £2.1 billion. That is not loose change. It can make a considerable difference to the regional economy.

§ Sir Nicholas Winterton
There is no extra money.

§ Mr. Deputy Speaker (Sir Michael Lord)
Order. The hon. Gentleman must not keep up a running commentary from a sedentary position when the Minister is replying to the debate.

§ Sir Nicholas Winterton
I believe in the truth.

§ Mr. Deputy Speaker
Order. The hon. Gentleman must do as the Chair tells him.

§ Sir Nicholas Winterton
I shall tell the truth.

§ Phil Hope
The hon. Member for Congleton was right to say that we had a full debate last week in Westminster Hall, where a number of important points were made that she has repeated here. We have been very frank on costs, which were set out clearly in our regional governance White Paper. Setting-up costs will vary from region to region, obviously because of the different sizes 363 of their electorates, but we can expect the cost to be around £30 million in each region. The estimate includes all costs necessary to establish an assembly, including the cost of local government reviews, referendums and the first elections.
It is important to provide support for the referendums and the campaigns that will take place, which will be governed by the Electoral Commission, so that they can take place properly, transparently and fairly, allowing the electors to understand all the issues before them.
To conclude, we trust the people to make their own choice.

§ Ann Winterton
The Under-Secretary is certainly reading out his speech magnificently and repeating many of the points that were made in the debate last week, which I did not raise tonight. It is a shame that he does not respond to some of the more important points that I made, which he has not addressed at all. Is he not capable of doing that?

§ Phil Hope
I directly addressed many of the points raised by the hon. Lady, specifically in relation to Europe. I understand that the hon. Lady and many members of the Conservative party have an attitude to Europe; not only are they opposed to the euro, but they are fundamentally opposed, in reality, to being part of the European Union at all. They take every opportunity they find to exhibit their anti-Europeanism. We see this 364 regularly in this Chamber, and it is matter of regret that rather than taking a mature attitude to Britain's relationship with the European Union, we see a phobia and an endeavour—

§ Ann Winterton
This is laughable.

§ Phil Hope
The hon. Lady makes remarks from a sedentary position. She said that I had failed to address the points that she made in her speech. I am now addressing those points about Europe and it is with great regret that I say that she clearly does not like the answers.
As we draw towards the end of this debate, I want to make it clear that the debate about the future of elected regional assemblies is a matter of choice, involving a referendum. We have had a sounding exercise that proved that there is interest in the north-west, the northeast and in Yorkshire and Humberside. Now we are offering a chance for the people to make a choice through a referendum. Labour trusts the people to make their own choice about whether they want an elected regional assembly in the north-west. That is the fundamental difference between Labour and our opponents. We are prepared to trust the people.