The North East: Economic Prospects (Hansard, 31 October 2000)

§ The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty)
My Lords, it is important that the North East, along with other regions, should benefit from economic growth and prosperity. This Government have and will continue to provide new opportunities for a regionally focused approach to tackling these problems. In July, the Chancellor announced an additional £500 million for regional development agencies by 2003–04. One NorthEast will receive its full share of this extra money. That is good news for the region.

§ Lord Dormand of Easington
My Lords, I thank my noble friend for that encouraging reply. I acknowledge that the Government are doing a great deal for the North East, but it is a fact that unemployment in the region remains the highest of any region in the United Kingdom—worse now than in Northern Ireland. My noble friend referred to RDA budgets. Can he say, 787 first, how the budget for One NorthEast compares with the budgets for other regional development agencies? Secondly, are levels of unemployment considered to be among the most important criteria when budgets and grants are determined?

§ Lord Whitty
My Lords, the share of the total RDA budget depends to some extent on inherited programmes. Decisions as regards the allocation of the additional moneys to which I referred have yet to be made in final detail. However, I can assure my noble friend that One NorthEast will receive an allocation that is appropriate to meet local economic problems, including the locally higher rate of unemployment.

§ Lord Elliott of Morpeth
My Lords, I can assure the noble Lord that last week's successful win of an MoD contract by the famous yard, Swan Hunter, has given an enormous boost to the morale of the people of the North East. Some 2,000 new jobs are to be created for a minimum of five years. However, is the noble Lord aware of the strategy put forward by One NorthEast to secure a European grant of £130 million to aid small and medium-sized businesses? Is he further aware that Commissioner Monti has held up this grant on a legal point for some 18 months? Does the noble Lord agree that, if this long delay could be brought to an end, the grant would be a further great aid to the region?

§ Lord Whitty
My Lords, as regards the European grant, discussions on the delivery of those moneys have been held between One NorthEast, officials from the relevant government departments in the North East and representatives of the Commission. I believe that any difficulties will shortly be resolved and that the grant will be rightly allocated to the North East. I join the noble Lord in underlining the importance of the award by the Ministry of Defence of the two ALSL contracts to the Swan Hunter shipyard. Those contracts will certainly provide substantial additional employment opportunities in the region. Furthermore, the US company Atmel has recently decided to take over the former Siemens plant on Tyneside, and a further 1,000 jobs are being created at Orange on North Tyneside. Substantial movements have been made by employers, who recognise the attractiveness of the workforce in Tyneside. Although rates of unemployment are still relatively high, employment figures are improving and unemployment is starting to fall.

§ Baroness Masham of Ilton
My Lord, does the Minister agree that the University of Teesside is a very successful institution?

§ Lord Whitty
My Lords, yes. I am not entirely sure what lies behind the intervention of the noble Baroness, but I am happy to confirm that not only is the University of Teesside extremely successful. It has also greatly improved its facilities in recent years.

§ Lord Puttnam
My Lords, does my noble friend agree that, along with the high rates of unemployment 788 prevalent in the North East, it is also true to say that the economy of the region is extremely fragile? One reason is that many of the new jobs being created are technically quite vulnerable to change. I am thinking in particular of the new call centres. Can my noble friend confirm that sufficient resources will be made available to the North East to enable people to be retrained in work for the changes which will undoubtedly occur in jobs over the next five to 10 years?

§ Lord Whitty
My Lords, my noble friend raises a number of complex issues. It is certainly the Government's intention, as it will be for the regional development agency, One NorthEast, and other agencies, to ensure that adequate training is provided. Such training and retraining will be provided both for those in work and those out of work in recognition of the fact that training is an extremely important element of the skills of the local workforce. The North East has seen a substantial shift of employment opportunities into the service sector, including new jobs in call centres. Although such developments may be regarded as fragile, they nevertheless form an important part of the service economy. Indeed, the North East has been particularly successful in maintaining its share of such work. As technology and communications develop, no doubt skills will need to be built on and further developed. However, I underline a point that I made earlier; namely, that substantial investment is being made in manufacturing industry. The North East continues to be a major manufacturing region.

§ Lord Brabazon of Tara
My Lords, despite the good news on employment prospects given by the noble Lord, is it not a fact that when the Government took office in 1997 unemployment in the North East was 2.6 per cent higher than the national average? Today it is 3.9 per cent higher. What will the Government do about that?

§ Lord Whitty
My Lords, the noble Lord is right to point out that the gap between the level of unemployment in the North East and that in the rest of the United Kingdom has worsened over the past few years, although I believe that the latest figures will show that the gap has now shrunk a little. I have outlined the efforts being made by the local RDA and the Government to reverse that trend. The Government regard it as a priority to try to close the gap so that relative prosperity in the North East may be assured.

§ Lord Dearing
My Lords, does the Minister agree that a helpful measure which could be taken by the Government as regards the North East would be to progressively implement their decision to introduce consolidated regional budgets covering all the relevant departments, and to do that with great speed and 789 vigour? The North East needs all the help it can get. Such help would best be given through local decision taking.

§ Lord Whitty
My Lords, it is important that moneys allocated for development in the North East should be consolidated and flexible as regards local decision taking. As to the local RDA budget, it is intended that a single budget will be drawn up to cover the RDA's entire current spending programmes. Work is under way to complete the work so that the new budgets will be in place by April 2002. The coming financial year will be regarded as a transitional year. After that, the RDA will have moved on to a single budget which will offer the kind of flexibility being sought by the noble Lord.