The North East: Economy

HL Deb 18 November 1992 vol 540 cc623-58

3.8 p.m.

Lord Redesdale rose to call attention to the economy of the North East; and to move for Papers.

The noble Lord said: My Lords, I wish to thank all noble Lords who are taking part in the debate. I also thank the many noble Lords who wrote to me saying that they would have liked to take part in the debate but were unable to do so. I am pleased in particular that the noble Baroness, Lady Denton of Wakefield, is to reply to the debate because she has a great deal of knowledge of the area.

In the North East during the past decade the transformation from reliance on the industries which were the backbone of the industrial revolution to an economy which has become very diverse is a remarkable achievement. The region is now a leading manufacturer of products ranging from cars and high-technology equipment to food products. Many are known throughout Europe; for example, Newcastle Brown Ale, a product which I can vouch for personally.

The developing industries have proved themselves to be ahead of the competition in many overseas markets. Indeed, the North East is now the leading exporting region in Britain with 40 per cent. of its GDP coming from exports. That basic change in the area's economy can be seen only as a long-term process that requires commitment and support from the Government.

The Government have proved over the past 10 years that they are committed to the growth of the economy in the North East. Indeed, the fact that the area has become a manufacturing success story is in no small part due to policies instituted by the Government; for example, the assisted area programme. Those have proved remarkably successful in drawing overseas companies and investments through organisations such as the Northern Development Company, which is able to market the region throughout the world, and the development corporations of both Tyne and Wear and Teesside which are seen as exceptionally successful in helping companies to establish themselves in the North East. Indeed, it is through the work of the development companies that many of the companies that were originally dependent upon the local market are now actively seeking markets abroad.

The cautious optimism which the second quarterly statement of the Northern Development Company's survey conveyed has been swept away by the NDC survey of the third quarter, which shows that the recession is now clearly beginning to bite in the North East. One area of policy which would be of supreme benefit to the region would be the retention and even the expansion of the assisted area status programme.

The North of England as a whole is faced with a serious unemployment situation. The figure is currently running at 11.5 per cent. which is worse than when the assisted area boundaries were last reviewed. The region has the highest rate of unemployment in Great Britain, a position that it has held for the past 20 years. There are no indications in the medium term that that position will change. At the very least, the North of England needs to retain its present coverage of assisted areas and also needs coverage to be extended to those areas where unemployment is likely to rise significantly over the next year and where that rise in unemployment can clearly be identified as being both long term and structural in nature. It is essential that the North of England retains assisted area status, even in those areas where there have been some relative improvements in unemployment rates compared with the regional average, as it is those areas which typically contain many of the high quality sites and general infrastructure which are likely to attract inward investment.

The areas to which I refer which need development are the intermediate areas of the A.1 corridor, including Durham and Consett and the areas around Amble, Alnwick, Ashington and Morpeth. Their upgrading to development status would make them both eligible for regional selective assistance and EC grants—an enormous boost to these regions because they become immediately more attractive to companies investing.

The North East must continue to rely upon inward investment to provide the bulk of new employment opportunities in the manufacturing sector in the medium term. If the performance of the region over the past five years can be replicated up to 1995, even allowing for a poorer climate for international investment and more intense international competition, the North of England could expect to secure between 15,000 and 20,000 jobs through inward investment. That alone would provide immense benefits to the local business base and would ensure that the significant improvement that has occurred in the regional economy in recent years is not arrested.

To make the assisted areas even more attractive I hope that the Government will consider giving training schemes a higher priority. An important point to note is that one of the primary reasons that industries have established plants in the North East is due to their high opinion of the quality of the workforce and the exceptional record of industrial relations that has led to a very low loss of working days through industrial action.

Although seven years ago 35 per cent. of non-service sector workers in the North were employed in coal, shipbuilding and steel, and this has now fallen to 3 per cent., the heavy industries which remain are more competitive. A prime example is British Steel which is progressing with its £100 million investment on Teesside, having recently installed a new high-tech rolling mill. Although that rolling mill will lead to job losses, it ensures that the plant remains viable.

There are many large-scale successful companies which replaced the mass employers of heavy industry. A good example of that is Derwent Valley Foods. Ten years ago four local people formed that company. It was initially based in a Nissen Hut on the site of the former steel works at Consett in County Durham. Now the company occupies three sites in the town, employs over 250 people and has become the UK's leading producer of adult snacks. The company has earned wide recognition and numerous awards, including the accolade "Food Company of the Year". I particularly wanted to use that company as an example as its amusing and effective advertising stresses as a marketing ploy that the product is from Consett, County Durham.

Without detracting from the achievements of domestic companies, the region is proud of its record of attracting overseas companies. The best known foreign investment in the area is the Nissan car plant, which exhibited such impressive start-up speed. By the end of 1991, Nissan was spending approximately £150 million per annum in the North of England on components, supplies and services. Thirty-six local companies have component or material contracts with Nissan and up to £17 million is spent on local facilities and general service suppliers. In addition, since car production began in Sunderland in July 1986, 19 new automotive suppliers have moved to the region, bringing the current total to 23. Almost 2,000 employees are now in direct supplier companies dedicated to Nissan business.

The experience from Nissan's investment seems to show that inward investment can lead to local business growth and further inward investment. There has been a comparative lack of small firms and self-employed people in the region. I hope that that spin-off will do something to tackle this problem. The importance of inward investment to the region is apparent, and in the light of this I very much hope that both the GATT round is completed and the Maastricht Treaty is ratified with the greatest speed. For as protectionism would damage all regions, it would damage the North East in particular, with such a large percentage of the region's GDP being derived from exports.

Having said that the region is heavily reliant on income from exports, it is logical that the region should be well linked to its markets. The danger in not doing this is that the region will become peripheral within the European single market. The region's connection with the Channel Tunnel is of particular importance, as Germany and France are our two biggest export destinations, being worth £14.7 billion and £11.6 billion respectively.

I hope that the Government will look again at their transport policy concerning rail links. Not only must the links to the markets be upgraded, but they must also be geared to the needs of exporters who are not only centring their attention on the European single market but are also looking for new markets in the area of the northern arc. The Government have emphasised that they are committed to capital spending on roads. The main artery that connects the North East with Europe is the A.1. Considering the importance of this road, it is surprising that it has not already been upgraded to motorway status. I hope that the Minister will be able to give an assurance that the upgrading of the A.1 will be completed by the end of the decade at the very latest, because the scheme will not only improve the speed of passage of exports on the way to Europe, but it will also show the Government's confidence and commitment to the North East as a major developing and manufacturing area. I do not suggest this lightly because I travel the road frequently and I know exactly how much disruption the scheme will cause.

I also hope that the Minister will be able to clarify whether the A.1 north of Newcastle will be upgraded to dual carriageway throughout its length, or at least as far as Alnwick. I have personal experience of the delays that this section of the single carriageway can cause, as well as the dangerous nature of this section of road in its present form.

The north-south flow of traffic throughout the country is seen as the natural route for exports. This is unfortunate as the North East is perfectly positioned to take advantage of the northern arc. The northern arc is a geographical band that spreads from Northern Ireland through the North East on through Denmark, Scandinavia and into Eastern Europe and Russia. The concept is that this northern trading area could, with improved communications, become a valuable trading region. It is wasteful to assume that goods destined for Northern Europe should travel via the Channel Tunnel or Channel ferries and then be transported through Holland, Belgium or France. There is definite interest from northern companies to create new markets in the area of the northern arc. Indeed, a seminar planned to look at this area of developing trade was flooded by inquiries from northern exporters.

The Government could substantially boost this trading area concept by upgrading one of two trans-Pennine routes, namely the A.69 or the A.66. This upgrading would in the long term significantly increase the importance of the North East and help to bring it into the centre of European trade rather than enforce the image that it is an area on the geographical periphery of Europe.

That major investment in infrastructure, which I should like to see the Government undertake as soon as possible, would not only give the region adequate links to markets but would also give the economy an injection of capital which one would hope would lead to recovery from the recession. I hope that the Minister will be able to give some assurance on the status of the assisted areas and also be able to answer my questions on the A.1. My Lords, I beg to move for Papers.

3.23 p.m.

Lord Elliott of Morpeth

My Lords, I begin by congratulating with enthusiasm the noble Lord, Lord Redesdale, on his very well delivered speech. Those of us who knew his distinguished father as a friend feel that he would be proud of his son today. I thank him also for raising the subject of the economy of the North East. He is a young man, just arrived in your Lordships' House, and in all probability this is the first time he has taken part in a debate on the region of the North East. Some of us here have taken part in such debates on many occasions, both in your Lordships' House and in another place.

I very much appreciated what the noble Lord had to say about the region, having known it and its problems for quite a long time. He is right to stress the remarkable achievement which the North East has attained with regard to its exports. It is right also to emphasise that the region has known enormous government support, from governments of both parties.

The recession is biting, but it has been pleasing for many of us who have known the region's problems closely for a long time that it was longer in biting the North East of England than in other parts of the country. This was not least because of the success we have known in diversifying our industry in recent years.

The noble Lord talked of the region having the highest rate of unemployment. It often has had the highest rate of unemployment, and has now. And no wonder! The northern region, in terms of recasting its industry and recasting its means of employment, has had a mountain to climb. That is putting it mildly. It may surprise your Lordships to know that I can remember when North-East England, which for a long time now has known a considerable employment problem, had, in the definition given by the late Hugh Gaitskell, full employment. In the late 1940s there was full employment. Believe it or not, at that time we had 188 coalmines in east Northumberland and County Durham. There are five today, only two of which have any hope of a future.

We had full employment on the Tyne and Tees in terms of shipbuilding, with full order books. Consett Ironworks was booming. I can even remember in the late 1940s a great trade union row blowing up in County Durham when there was the suggestion that Italian labour be introduced into one of the mines there.

By the late 1950s the storm clouds were gathering with regard to employment; and the obvious signs of a major industry declining were there. Since the late 1950s, our major industry has declined. Goodness me!, think of that, my Lords. There were 149,000 men and boys employed in the pits in the North East of England. Now it is down to possibly one pit remaining open. The shipyards on the Tyne have all gone except one, and that is struggling for orders. There are no shipyards at all on the Wear, or in the once-proud shipbuilding town of Sunderland. It was the saddest thing possible that just when the shipyard had been modernised to make it one of the most modern not only in Europe but in the world, there were no further orders. The shipyard had to be closed and dismantled.

We climbed the mountain; what is more we are still climbing it. There is still much to do. As the noble Lord, Lord Redesdale, outlined in his interesting speech, a great deal of new industry has been brought into the region and encouraged to come there. It employs an enormous number of people, many ex-mineworkers, ex-shipyard workers and ex-steel workers. What a blessing that is! There is still a great deal of unemployment and we must continue to work on it.

I interject that much of the new employment is far better than the old. Perhaps I may tell the noble Lord, who is a young man, that I have two memories of my youth. One is of visiting Consett Ironworks with a group of students. It was a dark November evening, and I still remember the flames, the heat, the unbelievable noise. I thought at that time that if there was a hell on earth anywhere, it must be a steelworks. The Consett Ironworks is now closed and many of its employees are in modern industry.

The second memory I have is of accepting a challenge, when I was a prospective Parliamentary candidate, to work a half shift. Thank goodness it was not a whole shift, I should never have recovered from it. The half shift was in the Duke Pit in Ashington. I did it, I worked at the face—or rather I did not work, I was there at the face, looked after by a splendid senior deputy. It was a two-foot seam and those good-humoured men, so far as I was concerned, were shovelling coal on to a moving belt underneath. At that time I thought what a terrible way it was for men to have to make a living.

So it is a great pleasure to me to know that there is much nicer and healthier employment now in so many areas of the North East than there was then. But the problem which the decline of major industry in that region brought about was an enormous one. It was a mountain that we had to climb. The great providers of jobs for generations—mining, shipbuilding, steel, heavy engineering—had gone. So it has been that over a considerable period of time now new industry has been encouraged to replace the old. We have known remarkable success. We have now got a varied industry with varied forms of employment in the region. That has come about in the periods of both Labour and Conservative Governments. I pay due tribute to both.

The debate which I recall in another place occurred after 35 years had elapsed since the end of the Second World War. As I was preparing a speech in another place for that debate, it occurred to me that 17½ of those years, by chance, had been with Labour Governments and 17½ years with Conservative Governments. Our score has gone up a little since then and that pleases me enormously. There were 17½ years of each government at that particular point 35 years on. I say in all sincerity that both major parties have done their best to restore the North East of England to a state of reasonable prosperity where it can contribute to the national good.

Of course mistakes were made. I do not suppose that any of us who know the region remember the regional employment premium with very great pleasure. That premium injected a great deal of money where it was needed: it also injected a great deal of money where it was not needed. So we learnt and we have been on a learning curve ever since.

I well remember the Labour victory of 1964. The Minister who became responsible for regional development was the late George Brown. What enormous energy and enthusiasm he had! I remember him saying in a speech that the Conservatives did not really know how to plan. He abolished development districts. We called them growth points then. He turned the whole region into a growth area. It was not very long before we were back to the growth points. The growth areas in turn developed into the highly successful enterprise zones which have done so much in recent years to restore our well-being.

A very large part of the success of recent years has come from training. I can remember entering another place as a duly elected member and when the Newcastle upon Tyne polytechnic was not there. Now happily it is there. It has recently become, under the distinguished chancellorship of the noble Lord, Lord Glenamara, the University of Northumbria. We wish it well. Since it has been in being so many people have gone through the polytechnic, as it was, and gained some training for life on which they could earn a modern way of living. So training in general has played an enormous part in the recovery which our region has known. It must go on doing so. I repeat: we are not yet to the top of the mountain. We still have a great deal of unemployment and we still have a great deal to do. But a great deal has been achieved.

In our various agencies there have been consider-able successes. The noble Lord mentioned the Tyne and Wear Development Corporation. That is one of the more recent attempts by a Conservative Government to assist the area into a state of prosperity again. It is five years old. I understand that it has a prospective life of 10 years. In five years it has achieved a very great deal. The other day I looked at the annual report of the development corporation and I quote from it. In the past year: Land reclaimed-350.8 acres; jobs created 3,752". There is more about the number of housing units completed, and so on.

When we had the recent announcement about the package associated with pit closures given by my right honourable friend the President of the Board of Trade, it was most pleasing that included in that package was an extra £2 million for the Tyne and Wear Development Corporation. That will help the corporation enormously to further extend the Sunderland and Viking Enterprise Parks. The enterprise park in Newcastle has been such an enormous success and has created quite a number of new jobs.

I sum up by always believing that the North East of England has a great future. We are an ingenious and adaptable people. We have known enormous employment problems. In common with all other areas in the country—here again I do so agree with the noble Lord—the region would benefit enormously by the ratification of the Maastricht Treaty. Without a single market heaven help the North East of England. I am sure we shall get that ratification.

Let us continue the encouragement of enterprise zones. How successful they have been! It is a concentration on areas to which businesses wish to come and in which businesses will naturally develop. That has been very important to us and let us continue with it. Let us also continue with the encouragement of English Estates with its headquarters on the oldest trading estate of all at Team Valley in Gateshead. The English Estates has done much to help the region. We must continue that encouragement in the widest sense with all forms of training.

I was born in the North East of England. I claim to know its people. They are proud people. The main thing which the people of the North East of England wish is that they shall play their fullest part in the establishment of national prosperity. I believe that they will.

3.37 p.m.

Lord Dormand of Easington

My Lords, I too wish to congratulate the noble Lord, Lord Redesdale, not only on his most admirable speech but on his good fortune in winning the ballot to have this debate today. He may remember that I said informally to him yesterday that he had anticipated me by about a month. I had hoped to raise the same topic in an Unstarred Question, but it is much better to have it as a balloted debate because at the very least we are having it at prime time.

I hope that the noble Lord will forgive me if I sometimes refer to the North rather than to the North East. He referred to the North himself on several occasions. I do so because the North is an official region. I say that because many of the official facts, including statistics, are related to the northern region and not just to the North East. The noble Lord will also know that the northern region is the North East plus Cumbria. The features and problems of Cumbria are in fact very similar to those of the North East.

The noble Lord, Lord Elliott of Morpeth, will not expect me to agree with everything he said. He and I are old adversaries both here and in another place in debates about the northern region. However, I must agree with him that there has been substantial progress. I intend to make reference to some of the features of that progress in the course of my remarks. It must not be forgotten—I am glad that the noble Lord, Lord Redesdale, mentioned it—that the northern region remains the region with the highest unemployment. He referred to 20 years, but the period is longer than that. Ever since records were kept the northern region has had the highest rate of unemployment.

At the moment that rate is 13.1 per cent. There is presently a total of 139,800 people unemployed in the North East. In the past four months there has been a net growth of 4,400 unemployed, and what is even more disturbing is that announcements have been made in recent weeks—indeed, within the last month—of a further 6,000 redundancies, excluding those that will arise from the pit closures. That will add considerably to the problems of the North East. As the Minister knows, within the last week the Confederation of British Industry has issued its regional trends survey. That shows that output will fall in every region except three—and the North is not one of them.

The latest blow to the North East is, of course, the proposed closure of more pits. It is impossible to be optimistic about the outcome of the review. It is highly likely that within a year only one pit will remain in the North East. I think that the noble Lord, Lord Elliott, referred to one in County Durham. There are five pits there at the moment, but I am sure that only one will be left in 12 months' time. Some 4,500 miners' jobs are involved, and if we accept the usual multiplier figure, an additional 9,000 jobs in related industries and services will be affected by the closures. These figures will cancel out the gains which have been made in the region in recent years.

I hope that the devastating effect of all these figures will be seriously considered by the Government when they assess the grant to be made to the Northern Development Company. The NDC continues to do splendid work in the region. It enjoys the support of employers, trade unions, businesses, local authorities, small businesses and others—indeed, of everyone. The NDC received £1.41 million from the Department of Trade and Industry for its inward investment work this year. I hope that the Government will agree—I am sure that they will—that the company made excellent use of every penny of that money. However, there must be not only an increase next year because of the continuing substantial increase in the number of jobless, some of which I have just spelt out, but also an addition because of the problems which will arise from the further pit closures which in my view will undoubtedly come.

Every effort must be made to stimulate manufacturing industry in the region. As the noble Lord said, the workers of the North have a tradition of work in heavy industries such as coal, steel and shipbuilding, so they are well fitted to adapt to the newer manufacturing businesses, provided—and it is an important proviso—that proper and adequate training facilities are made available. I have to say to the Minister that I am not entirely convinced that the variety and depth of the training provision needed are available. I hope that the Government will examine this matter closely.

Some time ago the Minister admitted in answer to a Question from me that there has been a transfer of training money from the North to the South. Figures published on 11th November show the extent of the budgetary changes for the training and enterprise councils. The biggest loser is the northern region where the TEC budgets have been cut by no less than £21 million. In the region with the highest rate of unemployment, how on earth can that be justified? If the North is to make economic progress, adequate training is absolutely essential. We must remember that, in addition to the figures that I have given, 3,513 businesses failed during the first nine months of this year, an increase of 36.8 per cent. on last year. It takes little imagination to realise what a massive task faces the training and enterprise councils, internal training programmes and, of course, the colleges and other educational institutions if they are to meet those training needs.

I make a brief, but important, reference to the splendid work being done by the two urban development corporations in the North East. Both have been mentioned by the noble Lords, Lord Redesdale and Lord Elliott. Perhaps I have one advantage in that I am deputy chairman of the Teesside Development Corporation, so perhaps I should spend the rest of my speech praising what we have done. However, all that I will say is that in the five years since we started we have created 7,000 new jobs and have met our other objective —the objective of all UDCs—which is to clear the dereliction. The place is transformed. As deputy chairman I offer an open invitation to any Member of your Lordships' House who would like to come to see what we have done and what we are doing.

The same story can be told of the Tyne and Wear Development Corporation where a transformation of the banks of the Rivers Tyne and Wear is taking place. Perhaps I might advise the noble Lord, Lord Elliott—and I am being helpful here; he knows that I am always helpful—that, although I believe he said that 3,000 jobs had been created, I had a brief from the Tyne and Wear Development Corporation this week which says that it has created 9,000 jobs

Lord Elliott of Morpeth

My Lords, my figure was for the past year.

Lord Dormand of Easington

My Lords, I hope that I am right and I am sure that the noble Lord joins me in that.

The Minister will be aware that UDCs receive their core funding from the Government. Speaking for Teesside Development Corporation—and I think that I can speak for the Tyne and Wear Development Corporation also—I can say that the Government have been very co-operative in recognising the needs of both areas. I am not just saying that in the hope that our next application will be favourably considered, although if it has a spin-off, so be it. Eventually, of course, the areas covered by the UDCs must return to democratic control. In the meantime—and I make this point quite genuinely—I hope that the Government will allow both corporations to complete their tasks. Those tasks have been defined for some time now and if, as the noble Lord said, it takes another five years, perhaps that is the length of time that is needed.

I have argued for many years that the North's greatest asset is the quality of its people, and of its workforce in particular. They are hard-working, fair, amenable to suggestion—and that certainly includes training—and responsible, but I often wonder whether those qualities are sufficiently advertised not only in this country but abroad. When I was a Member of another place and doing my bit to try to attract industry to my constituency, I soon discovered that employers were primarily concerned about the quality of the workforce. Although they wanted to know about the grants and other incentives, it was that factor which in many cases—perhaps in all—finally decided them to come to a particular area of the North or the North East in order to meet the needs of their companies. I am not sure that the Government have a role in this matter, but others certainly have, such as the CBI, the chambers of trade and commerce and the training and enterprise councils. I hope that more will be done in this respect.

I turn to tourism. The North East has a great deal to offer and the Northumbria Tourist Board plays an important role in increasing the number of visitors to the area. The board has over the years taken some important and imaginative initiatives and has been strongly supported by many of the local authorities. It must be said, however, that, in spite of its many attractions, the North East is still not regarded by most people as a holiday area. Tourism is Britain's biggest export and it is sad that an area like the North East is not earning its fair share of it.

I am deeply concerned to learn that money for the English Tourist Board, which includes funds for the 11 regional boards, is to be progressively cut over the next two years. It will get £13.9 million in 1993–94 and £9 million 1995–96. If the Minister tells me, as she probably will, that the allocations to the regional boards is a matter for the English Tourist Board, is there not a case for intervention when one realises the difficulties and the problems of the North East? I hope that the Government will have a close look at the position.

I conclude with a fervent plea—and underline what the noble Lord, Lord Redesdale, said—that the Government retain and indeed extend the present coverage of assisted areas. It is clear from the evidence of past investments that the North will not attract the necessary inward investment without this status. Had time permitted I could have produced a battery of statistics on this matter but presumably the Government themselves examine what effect assisted area status has. If that happens in this case, the noble Baroness will find that the North's case is absolutely unanswerable.

While much has been achieved in the North East in recent years there is still a great deal to be done. What worries me in particular is that some of the structures which have helped—this point was referred to by both previous speakers—are being dismantled. I suggest to your Lordships that we are at the end of an era in the North East and we could be on the threshold of a new and perhaps even more exciting era. I stress the words "could be" because so much remains to be done and some government policies frankly are not helping. A good start has been made by the degree of diversification, by attracting and retaining world class companies, by exporting more than we have ever done in the region's history and by the development of effective partnerships between public and private sector interests. All of those and other features demonstrate that the North East is not a begging bowl economy. We are a self-help and cohesive community. But the Government have an important role to play and I hope that they will act on the many useful and constructive suggestions which have been made in this valuable debate today.

3.51 p.m.

Viscount Ridley

My Lords, I add my thanks to the noble Lord, Lord Redesdale, for introducing this debate today. He will not mind my saying that he is a relatively recent graduate of the University of Newcastle, but a distinguished one. I am also delighted to see that he now shares a peg in the cloakroom with my noble brother. Whether or not he shares his views, I have yet to find out.

I was reluctant to take part in this debate because I am anxious to avoid any trace of party politics. I do not want to join the chorus of those who want more public money for this part of England. We are all aware that there is not going to be much more public money for anything for quite a long time. But in North-East England, where I have spent all my life, and which has probably always had a relatively high level of unemployment and sadly probably always will, there are indeed some worries. I shall refer to only one of those today, and that concerns the aluminium industry, which is, as your Lordships will be aware, intimately linked to the coal industry. The issue was raised at Question Time yesterday by the noble Lord, Lord Williams.

I do this because I was deeply involved more than 20 years ago in the successful attempt to attract Alcan to Lynemouth in Northumberland. I am still emotionally attached to that period. At that time I was chairman of the Northumberland County Council. We had important help from the government of the day. We were jointly able to provide for the needs of Alcan to establish a large smelter on the coast linked to its own power station and Ellington Colliery. There were then four smelters: this one, in England, one in Wales and two in Scotland. Invergordon has now permanently closed, and British Alcan, as it now is, remains the largest one in Britain. It was a large investment and it created a great many jobs. Now, British Alcan's smelter is threatened, and already half its production has ceased. To reopen that half, and to modernise the pollution control equipment to meet EC regulations, will cost £80 million. In order to justify this money, British Alcan has to have a guarantee of supplies of raw materials for at least 20 years. The key to this is the cost of fuel, because aluminium is only produced by electricity, and to compete on the world market, the cost of electricity must come down—below £1 per gigajoule. I do know what a gigajoule is. I am sure that your Lordships know too so I shall not weary the House with a description of it. It is an important thing. If this is not done, British aluminium will not be competitive and the smelter may have to close, probably for ever.

I do not need to paint the picture which the loss of the smelter would produce. We are not talking of a few hundred jobs but of more than 4,000. There would then be a loss of jobs in the colliery, the last in Northumberland, and fatal damage to the port of Blyth, through which the alumina is shipped, and to the power station as well. The port was the largest coal port in the country 30 years ago. I am not exaggerating. It would be a very serious setback for the North East. The jobs that would be lost would be far more than those that have been produced by the Nissan factory in Sunderland.

What has to be done? I believe that British Alcan is desperately keen to continue production and to play its part in keeping people in work. It has a good chance of success if fuel costs can be reduced. At the moment, the cost of deep-mined coal fed straight to the power station is too high. In time, perhaps costs from this colliery can be reduced, if there is a will to do so, which I believe there is. Nor do I think it relevant to argue whether this is done by a public or a privatised industry. I do not know. I do not think anyone knows. But much more important is that the people doing this should have regard to local interests.

There are alternative possibilities. One would be to import coal. As British Alcan needs at least 20 years' guaranteed supply of fuel at the right price, it does not believe that this is a realistic option; nor does it think it right to add to our already disastrous balance of payments situation by importing coal. We should all be glad that British Alcan takes that view.

Secondly, it could use another form of fuel, but again, it would not wish to put so many people out of work in the coal industry, and the investment already made would be wasted. British Alcan rejects this solution as impractical. There is a third option, which is hopeful, which is that it should be able to get for 20 years a supply of deep-mined and opencast coal mixed in about equal proportions. British Alcan needs in the order of 1.3 million tonnes per annum. With this 50:50 mix, it is probable that it can compete in the world market; otherwise it cannot. So what I have to ask is that, in the interests of thousands of jobs, we should, as a nation, accept the continuing need for opencast coal. It is approximately 25 per cent. cheaper than deep-mined coal. I do not know the exact figure because British Coal is not keen to publish it, but I think that that is about right, and it is a fact which cannot be ignored.

However, opencast mining arouses deep passions. I should know, having lived on top of it and among it for at least 50 years, since it started during the Second World War. It can devastate people's lives. It can ruin agricultural land. It is dirty, noisy, smelly and often dusty; but the land eventually recovers. Anyway we do not need any more arable land at the moment or for a long time to come. The environmental lobby hates it. My father fought the Opencast Coal Act 1958 in this House bitterly at the time. He would not enjoy what I am saying now. It is a rape of the countryside and I too have hated it as much as anyone else. But we have to bring ourselves to accept that we must have cheap coal if we are to preserve jobs in the aluminium industry and that we stand to lose far more than the landscape or hedgerows. We shall suffer far worse than mud on the roads, the disturbance of heavy lorries during the night and so forth if we cannot have it.

This is not a new idea. Opencast coal is not a new thing. It has been around for a long time and no doubt will continue in one way or another. It is exploiting what is one of the North East's most important assets. As the noble Lord, Lord Dormand, said, the quality of the workforce is very much another one. I hope that the review which the Government are rightly conducting into the coal industry's future will take note of all this and will explore the real cost of coal from above and below the surface. I do not view opencast coal as a threat to deep-mined coal. It will supply a cheaper fuel while the deep mines adjust to the new competitive world which they have to face.

It has been suggested that there is no need for opencast coal while the stocks at pitheads from the deep mines are so large. Of course it is possible that those stocks could be, for a limited period, made available before they completely deteriorate. I do not know, but they certainly would not be available for the 20-year period which is necessary. This would also need a massive distortion of costs in the price of coal, which is not open to us. I noted with interest a report in the Financial Times the other day that the German Government can subsidise the German coal industry to the tune of 3 billion deutschmarks a year. We could do that but I doubt whether we have any deutschmarks left to do it with.

We need a long-term commitment by planning authorities and government departments. In this field development area status for the area would be enormously helpful, a point raised by the noble Lord, Lord Peyton of Yeovil, yesterday. We also have to suffer a sacrifice of amenities, albeit temporarily. But I believe that this has the real merit of not asking for much more public money, if any, only a sense of realism in facing what is a frightening threat to jobs in north east England. I end by saying that this matter is urgent.

4 p.m.

Lord Rodgers of Quarry Bank

My Lords, I should like to add my own tribute to those already paid to my noble friend Lord Redesdale for choosing this topic for debate today, and for speaking in the way that he did. Since the days of the hunger marches, the distressed areas, and indeed Team Valley, referred to by the noble Lord, Lord Elliott, the problems of the North East have been a proper subject for debate in Parliament. I agreed with the noble Lord, Lord Dormand, when he said that substantial progress had been made, but I agree also with the general sentiment—and it is important to emphasise this—that whatever progress has been made there is still a long way to go.

It is true that the North East finds unemployment a chronic condition. Therefore, in a recession as severe as this it sometimes appears able to ride it out more comfortably than the South East. But the plain fact is that in the northern region as a percentage of the workforce as a whole 11.5 per cent. of men and women are out of work but in the South East even today that figure is 9.7 per cent., which is substantially lower. If we look at pockets of unemployment, particularly on Teesside, in County Cleveland the level is 14.1 per cent., but pockets of male unemployment are far more acute than anything found in any other part of the United Kingdom and without doubt there is nothing worse to be found in London and the South East. Let us have the perspective that the problems faced by the North East are still in large part unchanged in relative terms and that it remains the duty of Parliament and successive governments to redress the balance in favour of the North East and the northern region, so far as they can, as a matter of priority.

We must beware of false dawns, because there have been many of them. I remember—and the noble Lord, Lord Bottomley, will remember it well—that on Teesside 20 years ago there were many of us who believed that the future was ours. I remember making a speech in which I referred to "an escalator of progress". Whatever the problems elsewhere, in the North East we had overcome them. ICI, which had an important role in Britain's export performance, was employing 25,000 men and women, mainly men, at Billingham and Wilton, and British Steel, which had just constructed its new plant at Redcar, also employed some 25,000 men and women. I am glad to hear from my noble friend Lord Redesdale that new plant is coming into operation today.

Nevertheless, on Teesside today, instead of 25,000 men and women employed by ICI, there are 11,000. Instead of 25,000 in the steel industry, there are 5,500. Where we were optimistic, as we believed with good reason, 20 years ago things have not worked out quite as we then anticipated and hoped. We thought that the final elimination of heavy engineering, including marine engineering, and the run-down of the coal industry were almost complete, and that therefore employment would grow. The process of change has been much extended, and there is a great deal of hardship on the way. Prosperity in the North East, perhaps more than anywhere else in the United Kingdom, still remains precarious.

I referred to the contrast between the North East and the South East and to the problems of the North East being chronic. We may see this reflected equally in the construction industry. It has been of much concern to this House, particularly when some 450,000 men have been laid off over the last two years. But the problems of the construction industry and all those associated with it are certainly as acute in the North East as in the South East. The only difference is that the North East did not enjoy the boom of 1988 and 1989, and had less distance to fall.

I should like to believe, as all of us must—and perhaps the noble Baroness will refer to this in her remarks later —that the Autumn Statement will do something to transform the problems of the North East as elsewhere. But I have to say with reluctance that so far there is very little sign that this is the case. We know that there has been no perceived return of confidence, and I am not aware that most of the manufacturers of the North East believe that the Autumn Statement will have a significant impact upon them.

As for capital receipts, something to which the Government have attached considerable importance and from which we hope much, we must not forget that capital receipts that local authorities will be able to spend have to be earned from sales between now and the end of 1993, which means that any part of the recovery expected to come from that quarter will not occur soon, and will occur only over a period of time and probably not before next year. When we look at what the Autumn Statement could have contained, we can reflect on the fact that a quarter of all dwellings in the northern region, 24.8 per cent. of them, were built before 1918. They and many others would benefit from a major programme of rehabilitation, especially to raise them to new energy and environmental standards. Alas, there is no proposal to spend the money necessary in the North East and elsewhere to achieve such desirable objectives.

I referred to false starts. I was much involved in 1964 and thereafter with the establishment of a new economic planning framework for the North East. Since that time not only has the Northern Economic Planning Council been disbanded but economic planning has gone, as things will from time to time, out of fashion. I hoped at that time that the tentative steps that were taken in establishing the Regional Economic Planning Council and the Regional Economic Planning Board might develop in due course into a form of regional government. Alas, this did not happen, and a good deal of the impetus that we acquired at that time petered out and much of the machinery was disbanded. I am alarmed to hear from the noble Lord, Lord Dormand, that some of the existing structure for the rehabilitation of the North East is still being taken apart today.

There were, however, some positive gains. Despite the proper remarks of my noble friend Lord Redesdale about the need to improve transport, particularly the A.1, I believe that the North East has been given by successive governments a much better transport network than hitherto. If I may in that context make a modest claim of my own, I was responsible as Secretary of State for Transport for improving the A.19 through Cleveland and the A.66, and I saved the Tyne-Wear Metro at a time when it was much under threat following the visit of the International Monetary Fund in 1976. Although we have still further to go with transport improvements, I think we can claim that one factor that we have inherited from those years of the 1960s is a better transport network.

Secondly, we have inherited the ability in the region to speak with one voice. Those of us who were conscious of the importance of Parliament in persuading the government to play their part in these matters were always aware of the role of the Secretary of State for Scotland. At a crucial juncture in a Cabinet meeting when the Cabinet was likely to make a decision which he as Secretary of State would find unfavourable, he would bang on the table and make clear how many seats would be lost in Scotland by whatever government it was if such and such a course rather than another one was adopted. Those of us who had some role in the North East were aware that there was nobody who could do the same for us. I have never been persuaded, although we have had some admirable Ministers of State performing this role, that anything less than a Cabinet Minister banging the Cabinet table is likely to have that impact for the North East, or for anywhere else.

Nevertheless, during that period the region began to speak with one voice, which is what the Scots had always done. They had argued that new investment had to come to Scotland, and whether it went to Strathclyde or to Tayside was only a secondary consideration. For a long time that was not the case in the North East, but from the middle of the 1960s men and women in the North East began to argue that it was important that there should be inward investment to the region and whether it went to Teesside, Tyneside, Wearside, Durham or Northumberland was of secondary importance. That too is something that we carried over.

The third thing we have carried over is a willingness to accept change. There was a time when the outside world thought that the northern region was all whippets and Andy Capp. There was a great yearning for a past which was slipping away and sometimes an inability to adapt to a different world. That has now gone. The response to Nissan's investment, to which my noble friend, Lord Redesdale, referred, is one measure of the adaptability which the North East, and the northern region as a whole, has achieved in recent years.

There is still much further to go. I was looking the other day, for example, at the number of school leavers going to university and higher and further education. The percentage of school leavers in the northern region going to university is lower than anywhere except East Anglia. We have 10.2 per cent., compared with a national average of 12.1 per cent and 13.6 per cent. in the South East. If we take the percentage of school leavers going to higher and further education other than universities, at 30.8 per cent. we have the lowest percentage in England and Wales, and we had the lowest percentage 10 years ago.

When I and, I think, the honourable Member for Motherwell put forward a proposal in 1963 for a university of Teesside it received little local support. That was a great disappointment to us. It is good news that, as I understand it, a combination of Durham University and Teesside Polytechnic has now proceeded to create what will be known as the University College of Teesside. I repeat that we still have some distance to go in the North East towards ensuring that a sufficient number of our young people have all the advantages that others possess and have taken the opportunity to use.

There are other areas where one must hope that progress will be made. My noble friend Lord Redesdale and other noble Lords have referred to the role of the North East within the European Community. In the referendum of 1975, 62.9 per cent. of the people of Tyne and Wear voted for Britain's membership of the Community; in Durham it was 64.2 per cent; in Cleveland, it was 67.3; and in Northumberland it was 69.2. That was the verdict of the people at that time. The North East will not prosper if Britain is seen to be half in and half out of Europe. The Government will have my full support not just in maintaining but in perhaps accelerating the momentum of their commitment to Europe if for no other reason than that it is so important for the steady prosperity of the North East and the achievement of many of the goals that the region has set for itself.

ss Given a favourable wind from government, and given the long-term commitment to which my noble friend referred, there is a brighter prospect for the North East than we have seen before. If this Government, and successive governments, get their macro-economic policies right, and if they give regional development policies their due weight again, we can look back at the changes of the past 25 years and look forward to rather better changes in the next quarter of a century.

4.15 p.m.

Lord Gisborough

My Lords, the recession that we are now experiencing has been particularly noticeable to the South of England to which it has come as an unaccustomed shock after years of prosperity. Against all previous experience, early indications were that the North was going to avoid the full impact this time round. As recently as this Spring, surveys by local chambers of commerce were pointing to continued optimism in Cleveland's local economy. However, over the past six months, business confidence in Cleveland has fallen to an all time low. Companies are reporting cutbacks, not just in orders but in equipment replacement, training and recruitment. That does not bode well for future commercial development in the sub-region.

Cleveland's economy remains dominated by the traditional manufacturing industries—steel and chemicals—and they remain the largest employment sectors. The move to contract out many of their operations has resulted in the formation of numerous new small companies which depend entirely upon the prosperity of their customers—British Steel, ICI and other large firms. Heavy industry therefore is for ever the key to the local economy and its continued commitment is vital. That commitment has been seen in the past. For example, ICI has done its best to attract new investment into the area, has itself made major investments in new plant, and has contributed to the formation of new business parks which have created over 600 new jobs. But times are difficult even for it at the moment, and it has had to restructure to keep in the game.

Many small businesses were started in the' eighties; but there have been many failures. In September, one consultant described the recession as being just two months away from catastrophe. It is to be hoped that the recent drop in interest rates will belie that possibility. Many firms moved into the area with their head offices rather than branches which could be easily closed down when things became tough. That has been a healthy development. However, if new firms are to bring wealth to the area, they must sell not just to their local customers but outside the area, just as, nationally, we have to sell abroad.

Among new firms, 78 per cent. of sales were made within the county and only 1 per cent. abroad. That is not a strong basis for the long-term development of the county or the country, and perhaps the Government could give more encouragement to export out of the region and out of the country.

There are many vital linkages that must be appreciated, and a successful manufacturing economy must recognise them. First, there is transport. Having seen the success of the Japanese philosophy of "just in time", firms now rely upon moving components to and from manufacturing plants to a tight schedule, and that requires highly efficient transport links. The county roads, still with certain gaps, are acknowledged throughout the country; but once the area is left, transport meets the endemic delays of the A.1 which were referred to by the noble Lord, Lord Redesdale. Thus, the decision to upgrade the A.1 to motorway standard has been welcomed warmly by the county and it cannot come too soon.

Another linkage is education. Links between education and heavy industry were looked down upon for a long time, with industry seeing little relevance in the theoretical and academic approach within higher education. Likewise, education saw little reward in getting one's hands dirty on machinery, and engineering was not therefore seen as a proper academic qualification. Consequently, Britain has not fostered the environment for research and development so vital for the diversification of its manufacturing base.

In Cleveland, in the past 12 months BASF and ICI have opened major new research establishments, and they are warmly welcomed. For the county to achieve a period of sustained recovery, a commitment to research over a whole manufacturing spectrum will be required. That provides the only chance for entering the 21st century with any degree of hope; but there are good signs. The University of Teesside has started to reap the benefits of its newly-acquired status, while Britain's newest university—University College, Stockton-on-Tees—has just opened its doors to students who are studying the environment.

Having restructured to meet the streamlining of heavy industry, the North East is facing yet another economic problem—that is, massive cut-backs in the coal industry. That will require new investment and support in addition to that already in place. The recent review of assisted area status has demonstrated conclusively that any downgrading of the Cleveland area will put in jeopardy all the benefits that that status has brought in recent years; namely, the creation and safeguarding of over 10,000 jobs through regional selective assistance. All the good work undertaken by various councils, the chamber of commerce, Teesside Development Corporation and other agencies, will have been in vain. Despite those efforts, Cleveland remains among the bottom two or three counties in terms of its rate of employment. Where would it be without that assistance, my Lords? One in six of the workforce is without a job. That figure rises to one in three, and even higher in certain inner urban areas. There is no sign that a ceiling has been reached. This is a terrible waste of resources, particularly as some of the unemployed have skills that are a vital ingredient of economic recovery and are in danger of being lost for ever. The jobless situation is very serious and leads not only to great hardship, waste of resources and personal depression, but also to crime as unemployed youngsters have nothing to do but get into trouble. In one of the most wide-ranging surveys recently undertaken, it transpired that 29 per cent. of unemployed people aged between 18 and 24 had never had a regular job, and 37 per cent. of those who had been unemployed for more than six months had no skills. Yet mobility has increased; more people are prepared to travel to their jobs than the average in the region. Not all is despair. Fifty-seven per cent. of the unemployed had education and vocational qualifications, while 56 per cent. had been on training courses.

Homelessness in Cleveland has recently been reported in very vivid terms. For example, in Stockton the number of homeless single people applying for housing is 633, or the equivalent of 13 double-decker busloads. In the past 12 months, 387 families have been re-housed on the grounds of homelessness. At present there are 70 families who must wait three or four months to get homes; and some 9,000 people are reported to be on the waiting list.

Cleveland is not used to just sitting back and suffering when the going gets tough. Massive redevelopment projects continue to be initiated, and there is close working between the private and public sectors. The university I mentioned earlier has been built as part of the largest project for the reclamation and redevelopment of derelict land in western Europe. Over the past 10 years the county council has contributed to attracting some £78 million of European assistance. Cleveland is an example of infrastructure spending having a real and rapid impact. The Government must be well aware of the effect of their own direct activities. There was great joy when it was decided that the Quality Assurance Directorate would be moved to that area from Woolwich with 1,700 jobs and, as a knock-on effect, several hundred more. Sadly, the project was cancelled. But hope now lies in current discussions about the threat to 180 jobs as a result of the Royal Navy spares department being moved from Eaglescliffe to Bath and the possible creation of 1,700 jobs at the unified Army personnel centre.

The TDC is spending £4 million on converting 200 hectares of derelict land into a largely self-sustaining nature reserve which will be one of the largest and most sophisticated environmental projects in the country. Stockton made a successful bid for City Challenge. There will be a £20 million town centre redevelopment scheme together with a dramatic and exciting upgrade of the river Tees and a training scheme for the unemployed to build houses for the homeless. At Hartlepool there is a new marina, a fine waterside housing development and a branch of the Imperial War Museum that will be a great benefit to the area. There are many other multi-million pound projects in the county.

But Cleveland needs a sustained period of confidence to encourage would-be industrialists to put the area at the top of the list for new projects. New arrivals find to their amazement that in a few minutes they can travel along the motorways from their homes to the countryside, their offices and the town centres. And five times a day they can take a 40-minute flight to London. For recreation indoor tennis courts, first-class theatres, walks in the national park, racing, cricket and every other sport are available. I remember when the area was smoggy and unhealthy with hideous old industrial buildings belching smoke. All of that has gone. The industrial area is now clean and very often impressive in its own way. Now we look only for continued confidence from the Government in return for which the county and region will be able to make a positive contribution to the economic rejuvenation of the country as a whole.

4.26 p.m.

Lord Glenamara

My Lords, I should like to add my thanks to Lord Redesdale for initiating the debate. By so doing he has done a service to the North East, and I hope that we hear him frequently in this House.

The north east of England is a quadrilateral: the Tweed is to the north, the Tees is to the south, the Pennines are to the west, and the North Sea is to the east. It is a clearly defined geographical area that contains over three million hard-working, intelligent, excellent people who have served Britain well both in peace and war. For six years I served in the Durham Light Infantry. The Durham Light Infantry was recruited mainly from the mining industry because (as the noble Lord, Lord Elliott, said in his "half-shift") miners worked in the dark and in confined spaces. Those are the qualities required of infantrymen. The mining industry produces the best infantrymen in the country. But, as one would expect, the Government have abolished the Durham Light Infantry. They have either abolished or privatised almost everything. They are now going to privatise the castles which are so important to the tourism to which the noble Lord, Lord Dormand referred.

The North East was the crucible in which was forged the Industrial Revolution on which our country's prosperity in the 19th century and early 20th century was based. Even as late as 1975, as Lord Redesdale, said, a third of our non-service jobs were in steel, shipbuilding and coal. Today, 17 years later, that 35 per cent. has dropped to 3 per cent. Those two figures illustrate the problem facing the north east of England. Of course, the heavy industries had to run-down but the problems associated with that run-down have been greatly exacerbated by this Government's policy.

I shall mention one or two examples. First, there was the shameful betrayal of Sunderland in collusion with the EC. Not only did they close down shipbuilding in Sunderland—the oldest shipbuilding centre in Europe, maybe in the world —but they made an agreement with the EC which forbade any further shipbuilding in Sunderland at any time in the future. Secondly, the Government privatised the steel industry. Now, the only criterion for the siting of steelworks is profit for shareholders. According to my philosophy there should be another criterion in addition to profit: the provision of employment. Thirdly, the latest step is the appalling betrayal (that is not too strong a word) of the coal industry. Let us face the facts. The purpose is to prepare the coal industry for privatisation.

Another example was mentioned today and came from an unexpected source—a right reverend Prelate. The noble Baroness replying to his Question, pointed out the effect that electricity prices charged since privatisation had had on industries such as ICI. I just wonder how many of the job reductions mentioned by the noble Lord, Lord Rodgers of Quarry Bank, in ICI on Teesside are due to the same cause as the redundancies in Cheshire; namely, the astronomical increase in energy prices since privatisation. The result of all this, as almost everyone has said, is our unemployment figures announced today of 11.6 per cent. and of 15.3 per cent. male unemployment.

I implore the Minister not to tell us we are doing better than other areas. The Government have tended to do that simply because in one or two years our rate of increase in unemployment in the North East has been marginally lower than elsewhere. The figures that came out today, which I checked, show that our rate of increase is a little higher, at 0.1 per cent., than most other areas. I hope the Minister will not tell us we are doing better than other areas. Not only do we have high unemployment, but we have far more than our share of deep-seated, long-term unemployment. The North East has 12.5 per cent. of the national total of people who have been out of work for three years or more. Just imagine that. The North East has 5 per cent. of those employed but 12.5 per cent. of the total of those who have been out of work for three years or more.

The noble Baroness knows quite well that the longer people have been out of work, the more difficult it is for them to get jobs. All the evidence up and down the country points to that fact. What chance have those unemployed people, who account for 12.5 per cent. of the total unemployed, of getting a job? What chance have the 16 per cent. of people who have been out of work for two years or more of getting a job? What chance have the 35 per cent. of people in the North East who have been out of work for one year or more of getting a job?

There are 10 travel-to-work areas in the North East with assisted area status. I am glad they have that status. I shall not trouble the House by reading out the names of those places, but I shall read out the male unemployment figures in those 10 areas which cover most of the North East. The figures are 16.8 per cent., 15.9 per cent., 24.3 per cent. in South Tyneside, 18.5. per cent., 11.9 per cent., 20.9 per cent., 12.3 per cent., 15.2 per cent. and in my noble friend's area of Middlesbrough the figure is 19.8 per cent. The final figure is 15.5 per cent. Those figures are not only unemployment statistics but they also show up in other statistics too. They show up in the statistics about poverty.

At the weekend the Daily Telegraph published a table of family incomes by regions. The North East was well down at the bottom. I believe that is a direct result of this appalling unemployment, especially the deep-seated, long-term unemployment. We have this reservoir of unemployment and poverty. I think that that is quite appalling after 13 years of Conservative rule which was supposed to be doing great things for this country. We have heard about miracles and all kinds of things but this is the state of affairs after 13 years.

I should have thought that when the Prime Minister stood up in the Guildhall—that citadel of the classless society—the night before last he might have devoted just a few sentences to the plight of the 3 million of his fellow citizens who are out of work and their 3 million dependants. I should have thought he might have mentioned the 6 million Britons who are living either in poverty or on the very verge of poverty. However, they did not receive a mention. That omission from the Prime Minister's speech, plus the brutality of the coal closure announcements, plus the Chancellor's statement that unemployment was a price worth paying, to me are clear evidence that unemployment is not exactly uppermost in the minds of Ministers. I could put it more bluntly and say it looks as though they do not care tuppence about unemployment.

As everyone has said, there has of course been a great deal of inward investment, especially from abroad, and we are delighted about that. Thank heavens for the Japanese. Nissan is not the only Japanese company in the North East. The Japanese have brought with them many companies and they have provided excellent employment. We are grateful to our ex-enemies for that. Thanks to the excellent work of the Northern Development Company and the local authorities—I do not think anyone has paid tribute to them; I know this Government do not like local authorities, but they do splendid work in the field of industrial promotion—who have co-operated with the Northern Development Company and with government agencies inward investment has been brought into the area.

It would be churlish of me not to admit that the assisted areas policy has achieved a great deal. We are grateful for that. Nissan has been mentioned by a number of speakers. It is a unique example of how one firm can regenerate a whole area. Its investment and the excellent employment which it provides are important, but also a multiplier effect is created in the local economy. Nissan is a good example of inward investment. What of the future? There have been a number of medium-term models of the British economy and they seem to show that by the year 2000 our unemployment will rise to 185,000. I believe it should be everyone's job and everyone's concern, especially the Government's, to ensure that that dreadful target is not reached.

I wish to mention two areas of special concern. The first concerns coal. It took the North East, the Northern Development Company, local authorities, the Government and everyone else four-and-a-half years to attract 4,500 jobs. If Mr. Heseltine had had his way those 4,500 jobs would have been wiped out in one afternoon because he proposed to create exactly that number of redundancies in the coal industry in the North East. But of course his plans would not merely have resulted in 4,500 redundancies. There is also the knock-on effect of that to be considered in technical support industries such as mining machinery, in the transportation of coal and in the possible effects on our two coal-fired power stations. The multiplier effect of the loss of one job in coal has been variously estimated at ratios of 5:1 and 3:1. But let us suppose that it is a factor of 2:1. That would mean that if Mr. Heseltine's plans are carried out, a total of 9,000 redundancies would be created in the North East; that is, 4,000 in coal and 4,500 elsewhere.

The second area of concern is the offshore industry. That has been one of the great success stories in the North East in recent years. It currently employs 20,000 people, but there are great fears about the future. There are fears that a reduction in orders could put much of this employment at risk. AMEC has already talked about 1,500 redundancies, but 10,000 jobs could be at risk in this industry. So the outlook is not exactly rosy in spite of all that has been done and achieved.

I wish to make three pleas to the noble Baroness. First, I know an inquiry is taking place at the moment—we referred to that point yesterday or the other day—but I plead with the Minister to retain, and if possible improve, the assisted areas policy. If possible, please can it be extended to the areas of the North East where it does not apply at present and where unemployment is projected?

Secondly, please will the Government increase the funding from the DTI for inward investment work, which costs a great deal of money, beginning with 10 per cent. of the level of funding of similar work in Scotland and Wales? I do not suggest for one minute that they get too much; they do not. But we get far too little. Please try to provide more resources for that work.

Thirdly, I have heard from a number of people in the North East over the past year or so that there is a need for more co-ordination of government efforts in the region. Individual government departments in the region appear to be running their own programmes and doing their own thing, with little concern for what other departments are doing. We hear that complaint from many places. Therefore, will the Minister please try to co-ordinate what the Government themselves are doing?

The North East is a marvellous area of the United Kingdom. It is a beautiful area, a hard working area and an innovative area. It deserves better from the country in the future than it has received in the past.

4.40 p.m.

Lord Crathorne

My Lords, speaking at this point in a debate one usually has to cross out much of what one had intended to say. It would be pointless for me to repeat many of the points and statements which have already been made. I should like to concentrate on my own particular area of the North East—Cleveland. That is still thought of as Teesside by many people. I should like to focus on one or two points in relation to that area. Therefore, I hope that there will be little repetition.

As we have heard, the area has to some extent bucked the trend, but it started from a low base. It is clear from the debate today that we are considering the position of the North East at a particularly critical time when its economy is delicately balanced.

The geological make-up of the Cleveland area has meant that the economy has always been bound up with iron, steel, shipbuilding and chemical manufacture. The success of the giants—ICI and British Steel—is vital to the area. It is good to know that ICI has committed another £159 million to the area. Many smaller companies owe their very existence to the industrial giants.

The traditional image of those giants conjures up a picture of pollution, which, thankfully, is not nearly as bad as it was. However, we have to overcome that in order to attract businesses and people to the area. I should like to register two caveats to the Government. The first concerns the erection of the chemical waste plant at Seal Sands. It is clearly needed, but I gather that large additional amounts of chemical waste will be imported into the area. That seems unsatisfactory. I am not clear as to how the dioxin emissions will be monitored and I have some doubts on that aspect.

My other point concerning pollution relates to the use of North Sea gas and the problems which spring directly from the lack of a coherent energy policy. A pipeline which is to bring 1,400 million cubic feet of gas per day into Teesmouth is nearing completion. Experts tell us that that irreplaceable fossil fuel should not be burnt in power stations and sewage sludge chemical incinerators but should be used as chemical process feedstock in the production of plastics and the endless other products of gas.

One of the consumers of that gas will be the ENRON power station currently being built on Teesside—the largest of its kind in the world. It will supply 3 per cent. of Britain's energy needs. In retrospect it appears that insufficient thought has gone into considering how to direct that energy to where it is required. Only a small percentage will be required on Teesside. The National Grid's plans for linking the electricity created into the grid system threatens our area with a proliferation of pylons, which is seen by all of us living in the area as unacceptable. That has led to a public inquiry which reports to the Secretary of State next year. My noble friend the Minister should be in no doubt about the strength of feeling on that issue. Indeed, there is to be an adjournment debate on the subject in another place this Friday.

We in Teesside, and in the rest of the North East, do not want to become a visual or chemical dumping ground. The Government have a role to play here. I understand that there is a rumour that further power stations will be built on Teesside. That would be unfortunate. First, that is not where the electricity is needed. Secondly, I understand that soon there will be massive overproduction of electricity—more than we can consume. I also understand that if those new power stations are not built the new pylons would not be required.

Having made that plea to the Government in relation to environmental pollution I should now like to be more positive. The Teesside Development Corporation has been and continues to be a great success. It is good to know that the Government have agreed the TDC's budget in full for next year in these difficult times. The noble Lord, Lord Dormand, was very modest about the achievements of the corporation and about his own achievements. He has contributed enormously to the success of the TDC.

I should also like to pay tribute to my noble friend Lady Blatch, who is the sponsor Minister for the Cleveland area with responsibility for the Cleveland Action Team and the City Challenge programmes in the county. She has shown great commitment to the area. I know from my attendance at discussion meetings that her efforts have been admired and appreciated right across the political spectrum.

The Teesside area has been particularly successful with City Challenge. There is about a one-in-three chance of success for those who enter the scheme. Last year Middlesbrough was a winner and this year both Stockton and Hartlepool won. This has attracted funding of £37.5 million over five years for each winner.

There are also numerous other innovations in the area. To mention just one, the new task force for Stockton, with an annual budget of £1 million from April 1993, will help inner city residents into work.

I turn now to tourism. In addition to the North Yorkshire Moors national park, Teesside has a wide range of tourist attractions. As noble Lords have said, we do not yet have enough tourists there. It is particularly good news that the Imperial War Museum is to have a permanent exhibition at Hartlepool based on 20th century naval heritage. The decision to locate this prestigious facility in that area is a great vote of confidence.

I should also like to mention a much smaller attraction—the Captain Cook Birthplace Museum in Stewart Park, Middlesbrough. I have always been fascinated by Captain Cook and I am pleased to be a member of the museum's trust board. I am delighted to see the noble Lord, Lord Bottomley, our chairman, in the Chamber today. We are now embarking on a major development. Already new environmental controls have been provided allowing a wider range of exhibits, particularly very fragile ones. A three-phase development costing around £750,000 is about to start. The initial financial package of £140,000, including contributions from the borough council, Cleveland Action Team, the European Regional Development Fund, the Museums and Galleries Commission, Teesside TEC, Teesside Development Corporation and English Estates, has been put together by the curator working with the Cleveland Action Team and others. I have mentioned all those who are involved because that is a marvellous example of the arts, tourism and urban policies all working together. There will also in that first phase be a new educational study centre, which will be particularly targeted on schools in the disadvantaged area, covered by Middlesbrough city challenge programme. We hope that visitor numbers will increase from 100,000 per annum to about four times that amount.

This is not a debate to discuss the arts in detail. However, to attract people and businesses to the area, the area has to be made as attractive as possible. Northern Arts has done its best to foster the arts in the area and has mounted a splendid bid for the area to become the visual arts region of 1996, fighting off particularly stiff competition from Bradford and Glasgow. Plans for that are progressing and it will be an all-year, all-region celebration of the visual experience. It will be managed by a consortium including the Northern Development Company, the North of England Assembly of Local Authorities, the Northumbrian-Cumbrian Tourist Board and Northern Arts. It is to be hoped that that will have a major economic impact on the area.

Sticking with the arts for a moment, we are still without a fine concert hall in the North East, which obviously inhibits what can be done. We are certainly better off with theatres, including the oldest theatre in the country, the Georgian Theatre Royal in Richmond, North Yorkshire. It is of extraordinary interest and beauty and I have been involved with it for a number of years.

It is quite clear from the speeches made today that the North East is doing a lot to help itself. It has to be said that the Government have played their full part in that. We now look forward to hearing what my noble friend the Minister has to say.

4.52 p.m.

Lord Williams of Elvel

My Lords, the House will be grateful to the noble Lord, Lord Redesdale, for winning the ballot and for introducing his Motion so effectively. In almost every case noble Lords who have spoken have some association with the North East itself. My association is extremely distant: my grandfather was rector of St. Mary's, Tyne Dock, for 23 years, and my father was born and educated in Durham. So in my time I have been called an honorary Geordie, though I would still say that I am an honorary Geordie from mid-Wales. I think I can compromise on that.

I was very glad that my noble friend Lord Glenamara mentioned the role of local authorities because this allows me also to declare something of an interest—again, it is an honorary interest as it is not paid—as president of the Federation of Economic Development Authorities. They are the development authorities run by district councils. They have played an enormous role over the years. This year the federation is celebrating its 50th anniversary—if I may put in a commercial plug for the association. The role of local authorities in the North East, as elsewhere, as my noble friend pointed out, is extraordinarily important.

The main theme in this debate has been that of a north eastern economy in transition. It is not a new problem, as the noble Lord, Lord Elliott of Morpeth, pointed out. The problem has been with us since the Second World War. Heavy industry—coal, steel and shipbuilding—is gradually running down. In some cases plants have shut down overnight, or there has been an attempt to shut them down overnight. But I think everybody recognises that, given the world market for ships and the difficulties in the steel industry, inevitably there will be a transition out of heavy industry in the North East towards some sort of lighter industry. Nevertheless, as the noble Lord, Lord Gisborough, said, the result of this process, together with the recession, is now hitting the North East much harder than it has been hit before. It has resulted in what I take to be the major problem that almost every noble Lord who has spoken today has raised: that is, the problem of unemployment.

First of all, I would like to say that all your Lordships will have an opportunity to take part in a rather larger debate on unemployment because my noble friend Lady Turner has put down a Motion for a five-hour debate on Wednesday, 25th November. We look forward to responses from noble Lords opposite as to what they feel should be done about unemployment generally. Unemployment in the North East has a series of characteristics which we ought to look at in greater detail.

Perhaps I may give your Lordships one or two figures. Since 1979—taking the period June 1979 to June 1991—the change in manufacturing employment is minus 36.3 per cent. The increase in banking and finance employment—although the gross figures are small—is 52.6 per cent. The decrease in production employment is 40.7 per cent. and the decrease in employment in energy and water is 52.6 per cent.; in metal manufacturing and chemicals it is 49.5 per cent. There is an increase in public administration, and defence is 5.1 per cent. Those are rather dramatic percentage figures. No other region in the United Kingdom has experienced such a large decline in employees in employment. That is an important figure to grasp.

There are various problems linked with the figures that I have given your Lordships. There is the problem of inward investment, however welcome it is. We accept the views of those noble Lords who have said that Japanese inward investment, for instance, has brought great benefit to the North East. Unfortunately the inward investment has not made up for the decline in employment in traditional industries. Furthermore, in manufacturing there is a continued dominance of large firms, many of them foreign owned. Small firms on the whole have not done all that well. I know that the noble Baroness is the Minister for small firms, but I hope she will agree that the North East has not been a particularly productive area for small firms, whatever has happened in the rest of the United Kingdom. On the whole the balance has not been good. As we heard from the right reverend Prelate the Bishop of Chester, a point taken up by the noble Viscount, Lord Ridley, employment is very much dependent upon that balance. If a large firm runs into trouble, the knock-on effects are absolutely enormous, both in terms of the firm itself and the downward multiplier in terms of employment of the supplying firms.

There is also the problem of emigration. We learn that there is to be net emigration from Cleveland and Durham, for instance, which are expected to suffer population losses up to the year 2001. Those losses will be among the younger, more able elements of the workforce and they are likely to continue to out-migrate, as it is called. For obvious reasons, employment opportunities in Cleveland and Durham are entering a period of great uncertainty—I shall come back in a moment to the point about confidence mentioned by the noble Lord, Lord Gisborough—because quite frankly unemployment, whatever we do, unless we do something very dramatic, will remain above the national average, and long-term unemployment, as my noble friend Lord Glenamara pointed out, will remain a most serious problem.

Nonetheless, we find that training money—money to train people who are unemployed—has been shifted massively from the North to the South, with Tyneside and Durham TECs losing more than any other in the whole country. That leads me back to the point made by my noble friend Lord Glenamara. We wonder whether the Government care very much about what happens to the unemployed.

The noble Lord, Lord Gisborough, mentioned the question of confidence. There is no doubt that during the past few months confidence in the North East has taken a sharp blow. Home market orders continue to fall. Export orders are not too bad, particularly after devaluation, but optimism about the general business situation fell after a short revival post-election. Output has declined further and employment continues to be reduced. That is not a happy situation.

In order to try to combat the effects of recession, which are now hitting the North East almost as hard as they hit the South East a year or two ago, I recommend to the Minister the prescription of my noble friend Lord Glenamara; that more money is required by government to fund inward investment work. There is no doubt that the workforce in the North East consists of good workers. They are solid, honest people who want to help and want to get on and work. But it is up to the Government to make sure that that can happen.

I agree with the noble Lord, Lord Redesdale, that the economy of the North East is now at a turning point. That view was echoed by my noble friend Lord Dormand of Easington. Perhaps it is like the rest of the United Kingdom. As the noble Lord, Lord Rodgers, said, either we are in Europe and at the heart of Europe or we are not. If we are, and I hope that we will be, the impact on the North East could and should be immense. But for that to happen the Government must make sure that the proper infrastructure is in place, that the ports are properly developed, that the Channel Tunnel does not lead to a corridor running up the western side of the country thereby neglecting the North East and that the North East reaches out to Europe. None of that can be achieved without help.

Perhaps I may give as an example the M.4 corridor. There is no doubt that the M.4 corridor, which now reaches from Slough to Swansea, has had an enormous effect on the economy of the South and of South Wales. If there is a high-speed link from the Channel Tunnel up the western side of the country to Glasgow in Scotland, there is a fear that in the long term the North East will suffer. That will be corrected only by the development of the north eastern ports so that the North East can reach out directly to Europe.

The simple fact is that the Government must be prepared to plan ahead for those events. It is not enough simply to lurch from one spending round to another. The planning must be long term. Furthermore, the Government must be prepared not only to plan but to lead. They must lead together with members of the community, organisations and institutions, many of which have been mentioned during the debate, co-operatively and with consensus in ensuring that the north eastern economy turns in the right direction rather than into further decline. That is the only way forward.

The essential point is that if the North East is to build on what has already been achieved—and I recognise that a great deal has been achieved—the Government must move forward. Either they are prepared to abandon the philosophy of the 1980s—that is the wholesale reliance on market forces—and join with everyone in the North East in a collective effort or they are not. That is their choice. I hope only that they make the right choice. If they do, there is no doubt in my mind that the North East will go from strength to strength.

5.5 p.m.

Baroness Denton of Wakefield

My Lords, the noble Lord, Lord Redesdale, has called for today's debate to draw attention to the economy of the North East. In doing so, he has rendered a great service to the region. I congratulate him on initiating a stimulating debate about a number of issues which are important not only to the North East but to other areas in the country. The North East is fortunate to have a young champion in this House who will continue to defend its cause for many years.

I hope that we shall not see a contest between Front Benches in claiming relationships with the North East. I wonder whether the claim of the noble Lord, Lord Williams, is connected with the state of Welsh rugby. My first job was in Newcastle and as a Yorkshire lady at least I recognise quality. There is a great deal of quality and there are many achievements in the North East. Perhaps I may first pay tribute to the partnerships there. They have made a great deal of difference to the work of the Northern Development Council and of local authorities in their co-operation in working with others. They have achieved a great deal. I refer also to central government's role and to my own regional office, which is well networked into those partnerships.

The North-East region has undergone a transformation. Indeed, that continues. There has been a transformation from dependence on the traditional industries such as coal-mining, shipbuilding and steel-making to a broader, modern industrial base. Some of the fears of the noble Lord, Lord Williams, will be protected by the diversity of those industries, although the automotive area is much to the fore. They include food companies and an environmentally-friendly bicycle tyre. The diversity is considerable. Ten days ago it was my privilege to open a £1 million extension of Mi-King, which symbolises all that is happening which is so good. There is a manufacturing steel strip activity; an inward investment, joint venture partnership with Japan; a large company with a small company; and of course it has an excellence. It was typical of the smaller to medium-sized companies which are supplying some of the large companies in the area.

The reduction in the dependence on traditional industries offers opportunities which the region has seized to restructure its industrial base. Despite the tough times—and I do not wish to under-estimate the situation—the area is more resilient against the cyclical fluctuations to which individual industries can be prone. Indeed, during the previous four or five years, the area has staged a significant recovery. Although recently an effect of the overall world recession has been apparent in the North East, unemployment, albeit the highest in mainland Britain, is significantly below the level prevalent during the mid 1980s. Regrettably unemployment rates were then between 18 and 19 per cent. Noble Lords from the North East must be pleased that the regional disparity between unemployment levels in the North and South is smaller than it has been for 25 years. A great deal of that is due to the efforts of people in the North East.

There has been a resurgence in local enterprise with more than 10,000 new businesses registering for VAT between 1980 and 1991. Your Lordships will appreciate that that was no mean transition from an employment culture which had not lent itself to breed entrepreneurial spirit but which had been used to an "employee" existence. Yet we saw the birth of 10,000 new businesses.

In opening the debate, the noble Lord, Lord Redesdale, recognised that some of the activity in the area—for example, British Steel activity—does not necessarily create more jobs but it protects the jobs which are there. That is an important factor which we must bear in mind. The component industry supplying the car factories works to a standard which allows it to be competitive worldwide; that is important. I was delighted to hear noble Lords comment on the fact that it is crucial for the future of the North East and the rest of the United Kingdom that the GATT negotiations should be concluded successfully and that we should become a full partner in Europe.

It will not be easy to attract more inward investment into the North East because France and Germany have woken up to the fact that that is an area in which the United Kingdom took the lead. They are putting much more effort into pursuing inward investment than was ever the case before. I am delighted to say that the DTI regional office has launched a programme of aftercare for inward investors which involves making sure that we look for expansion from the companies which are already there and do not say, "Thank you for coming. Next one please". I believe that will prove to pay dividends in the future.

The region was the first in the country to have complete training and enterprise council coverage. I do not deny that there has been a swing elsewhere in some payments, but the combined budget for the North East training and enterprise councils for 1992–93 is £136 million. Of course, extra money is involved from the coalfield issue. The Durham training and enterprise council has already submitted a programme in that respect.

Many noble Lords mentioned the importance of the review of the assisted area map. I cannot go ahead of decisions yet to be made; but the choice is made by identifying the third worst part of the country based on unemployment figures. I stress that we are well aware of the need for speed in completing the review. I assure the noble Lord, Lord Redesdale, that the current assisted area map review is not linked to European regional support programmes and European support is not conditional on assisted area status. I hope that that will reassure the noble Lord.

Several noble Lords followed the lead given by the noble Lord, Lord Redesdale, in identifying the key role which infrastructure plays in the North East. Roads are a matter for the Department of Transport, but I can confirm that the department has made it clear that it is desirable for the A.1 to be fully dualled from Newcastle to Edinburgh. There are dualling schemes in progress at Marshall Meadows and in Northumberland, design work has commenced on schemes to complete the Alnwick by-pass. There are also a number of schemes under way or at the planning stage in Scotland. In July 1990 the Secretary of State for Transport announced that over a period of time the 260 mile section of the A.1 from the M.25 motorway to Tyneside would be upgraded to a motorway. That announcement recognises the strategic importance that that road has for the economic wellbeing of the area.

The noble Lord mentioned also the A.69 trunk road. Following discussions with Northumberland County Council and Cumbria County Council in May 1991 the Minister with special responsibility for roads agreed to commission a study of the requirements of the A.69 trunk road. Although that was unfortunately delayed, I am pleased to tell your Lordships that the report is due to be published shortly. I hope that that will reassure the noble Lord.

My noble friend Lord Elliott of Morpeth always brings a positive view to the work of the area. While we all agree that there is a great deal of work still to do, what has been achieved sets a tremendous example and is an enormous tribute to the people involved. I shall deal with development corporations in a moment, but I hope that the work of English Estates with the new urban regeneration agency will be of continuing benefit to the North East.

Several noble Lords mentioned the role of development corporations. The two north-eastern development corporations have set examples which are to be followed by others. I pay tribute to the work of the noble Lord, Lord Dormand, and the Teesside development corporation which was totally innovative in founding University College. That must have a long term effect on the future of industry in the North East. The Tees barrage is one of the largest civil engineering projects in the country. That has created about 7,000 jobs, as the noble Lord said; but I understand that the forecast is that 12,000 jobs will be created in the area. That is much to be praised. There are large numbers from the Tyne and Wear Development Corporation but it is interesting that it has attracted over £450 million private sector investment in the area, which is the key to the work of the development corporation. The Tyne and Wear Development Corporation has reclaimed 806 acres of derelict and polluted land. That is the kind of effort which needs focus and is the kind of work which the development corporations are doing so effectively.

The noble Lord, Lord Dormand, referred to the CBI's survey of regional trends which has just been published. I know that we shall always look at matters through different glasses; but it is important that I should put on record that the survey recorded that export orders have increased for the first time for more than a year, and investment plans for plant and machinery point to an increase in expenditure. I believe it is a typically North East comment to say that that is motivated primarily by the need to raise efficiency. There is certainly no playing amateur in the North East.

I was delighted also that tourism was mentioned in our debate. Jobs in tourism in the North East have increased significantly in recent years from 59,000 in 1987 to 65,000 in 1989; that is an increase of 9.6 per cent. That is a good figure as regards tourism. A recent study shows that in the first seven months of this year, the Northumbria Tourist Board region was the only English region to demonstrate increased occupancy levels. I pay a personal tribute to the diversity and interesting type of tourism which is being developed in the North East. Tributes to the industrial heritage of the region are a great attraction and are very important.

Noble Lords would not expect me to prejudge the Government's review of the coal industry. The North East would be fully eligible to participate in the range of assisted measures announced on 21st October. They include incentives to enhance the prospects of inward investment. Consideration will be given as to whether enterprise zone status would be an effective means of helping particular areas. There is a local co-ordination effort from the North East under the direction of a local person, Danny Sharp, with a budget of £3 million over three years. The money is following the knowledge.

It is important that I should mention the activities of British Coal Enterprise in the area. We have often mentioned the number of jobs created; but I should point out that British Coal Enterprise has invested £2.4 million in work space in the North East and is seeking to build the first development on Wansbeck Business Park in Ashington, an area to which the noble Viscount, Lord Ridley, drew attention. Having heard a Question asked yesterday by my noble friend Lord Peyton of Yeovil and the speech of the noble Viscount, Lord Ridley, today, there can be no doubt that British Alcan has powerful allies. There can be no doubt that their anxieties will be heard. As the noble Viscount rightly pointed out, the linking of the industrial scene in the Wansbeck area is of crucial importance. My honourable friend met a delegation from the district council and my honourable friend Mr Eggar, the DTI Minister with responsibility for the area, is a full and active supporter of the Wansbeck initiative.

I was interested to hear of the noble Viscount's support for the contribution of opencast coal. I have seen an area of opencast coal restored in a totally operational state. With a residential committee, some of the problems were taken away and we did not have local protests. However, what is happening is that again we see solutions being sought by all parties working together, as is the tradition in the North East.

The noble Lord, Lord Rodgers, is less optimistic about the effects of the Autumn Statement than I must be and am. The balance between keeping a grip on inflation and encouraging growth was well handled. I can certainly reassure him that although DTI regional Ministers cannot bang Cabinet tables, we look after our own regions. We shout loud and perhaps we whisper effectively in the right places. It was nice to hear my noble friend Lord Crathorne's tribute to the work of my noble friend Lady Blatch in the area, and as I said, of my honourable friend Mr Eggar in Northumbria. I am doing the same for Yorkshire, but not this afternoon. The noble Lord, Lord Rodgers, is to be greatly thanked by the area for preserving the Metro programme which is still something which other regions admire.

One other point to which noble Lords drew attention is the importance of Europe. We must pay tribute to my right honourable friend who valiantly and successfully fought off attempts to keep cars produced in the North East out of Europe. We won that battle and it now affects the Midlands and Swindon.

I am pleased to reassure my noble friend Lord Gisborough, in view of his comments earlier this afternoon, that one of the forward-looking develop-ments which we can appreciate in the North East is the increasing role that women are beginning to play in the economy. There are several successful medium-sized firms which are run by women in the area. Probably one of the leading TEC chief executives in the country is a woman in Tyneside, and my own regional director is a woman. That is a personal remark which I hope my noble friend will appreciate. He rightly paid tribute to the contribution that ICI makes in the area which we should not underestimate.

I must be more positive than the noble Lord, Lord Glenamara. I think there is a danger that we might send a message about problems of social violence to which we all know unemployment is related. However, we must not send that message out to the rest of the world so that it stops bringing investment to the area. That is a key issue of which we must beware.

Lord Glenamara

My Lords, I am not sure why the noble Baroness mentioned me. I did not refer to social violence.

Baroness Denton of Wakefield

I apologise, my Lord. We are aware of the problems that the area is facing but we must point out the benefits which so many noble Lords have identified today. We and the DTI are already working with the offshore oil industry on diversity of manufacture in which their skills can be used to find other markets. We cannot remake the market, but we can make sure that skills are re-used.

I must point out, as I did earlier today, that ICI generates its own electricity at Teesside. I regret that the Ministry of Defence did not move to Cleveland and understand the disappointment to local expectations. However, defence changed drastically as a result of the opening up of the East-West frontiers and the peace dividend is significant. But on the more positive side, there are large DSS offices in Newcastle, employing over 4,500. The Inland Revenue has an office in Darlington and the import licensing branch of my own department is at Billingham. There is a consciousness of the benefits that government relocation brings to the area.

The noble Lord, Lord Crathorne, raised the issue of the chemical waste incinerator at Seal Sands. The fact that the Department of the Environment recently approved plans for the construction of this incinerator at Seal Sands and that it followed a full public inquiry will indicate that all environmental questions, including pollution, must have been satisfied.

The noble Lord also drew attention to the contribution that the arts play in attracting investment to the area. Sometimes it is neglected because it is not easily quantifiable; but I think we all agree that it is a crucial part of the process of selling inward investment on the quality of life the area can offer.

I was therefore a little surprised that none of your Lordships mentioned the recent success of Newcastle United, sitting proudly at the top of the First Division. They identify the spirit of the area, as do the other sporting achievements: Durham County Cricket Club elevated to the first class game; the cricket stadium at Chester-le-Street, which is the first new stadium in the United Kingdom for 70 years. The Great North Run is now an official world championship, and Gateshead International Stadium is the host to major international athletics. Those attributes typify some of the activities which are positive in the North East.

The noble Lord, Lord Williams mentioned the lack of smaller firms in the North East. I am conscious of some of the issues, but I see evidence that "just in time" processes being used by the major manufacturers mean that they have to develop a circle around them of the smaller companies which become competitive again.

I wish to list the great success that the North East has had in inward investment. Since 1985, over 25,000 jobs have been created or safeguarded; £2 billion has been brought in; there are 340 overseas companies in the North East; and, with the highest concentration of Japanese companies in Europe, up to 10 per cent. of the region's workforce is now employed by overseas companies. They have brought a new culture, a new quality expectation and new management styles which will only be of benefit to the area in the times ahead which will not be easy.

Within the overall context of the UK, each region can point to aspects of its economy that call for action. We have heard much about the challenges that confront the North East. I use the word "challenges". They have been described as "problems", but "challenge" is how the North East has responded to the problems it has faced before. There are many positive factors that make the North East economy more resilient than ever before; but paramount must be the people. Their adaptability and attitude to change have made possible in the region the creation from scratch of a car industry. It is a car industry with extremely sound roots. The positive attitude finds expression in the agencies which have become adept in their task of economic regeneration of the region. As I said, nowhere else is there such an energetic and creative combination of agencies.

The noble Lord, Lord Dormand, rightly paid tribute to the Northern Development Company. It speaks for itself that it won the European Development Agency of the Year Award. The NDC has been instrumental in attracting projects to the area. With the after-care programme planned by the DTI now, I am sure that we shall continue to see the North East set an example which many can usefully emulate. Again, I thank the noble Lord, Lord Redesdale, for giving noble Lords the opportunity to air this very positive side of the scene.

5.30 p.m.

Lord Redesdale

My Lords, I thank the Minister for that reply. I do not believe that anyone who took part in the debate could go against her sentiments about the very positive aspects of the economy in the North East. I also thank her for the Government's commitment to the transport policy. I am a little disappointed that she could not have been more specific over the assisted areas. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.