North-East England: Economy (Hansard, 23 January 2003)

§ Lord McIntosh of Haringey
My Lords, the Government have undertaken to make sustainable improvements in the economic performance of all English regions. In addition, we have for the first time undertaken to reduce the persistent gap in growth rates between them over the long term. Our policies towards the north-east of England, both directly and through the regional development agency, ONE North East, are directed towards achieving this end.

§ Lord Dormand of Easington
My Lords, the Government have done a great deal for the north-east of England, although am not quite so impressed by what my noble friend has said in relation to the actual position. Does he agree that there is a continuing 884 difficulty in the region in that it constantly has the highest rate of unemployment in the country? I understand that it has had the highest rate since such figures have been kept. What does my noble friend think is the cause of what I might describe as the inconsistency of the region? When a new factory opens with 500 jobs, it is frequently followed by the closure of a factory with a similar number of jobs. Could not the Government give more assistance to the regional development agency, ONE North East, which makes such a valuable contribution to the region's economy?

§ Lord McIntosh of Haringey
My Lords, I am not at all happy about the performance of the north-east of England. The gap between that region and the rest of England has not only not fallen but has been increasing in recent years. The heavy dependence on manufacturing industry, which is still enormously important in the North East, is partly to do with that. As to the unemployment figures, for many years there has been a difference of about 2.5 per cent between the figures for the North East and the figures for the rest of the country—and the North East has been the worst. If it is any consolation, the unemployment figure for the North East is now 6.7 per cent, which is only 1.5 per cent greater than the national average. This must be, by a long way, the lowest unemployment figure in the region for a long time.
As to the regional development agency, I agree entirely with my noble friend. We are increasing our grant to ONE North East from £189 million this year to around £227 million next year. This is in recognition of the need for the excellent work that it does.

§ Lord Redesdale
My Lords, given that there are many rural areas in the North East, what are the Government doing to promote the spread of broadband? It is particularly difficult for many rural areas in the North East because they do not qualify for European assistance in the promotion of broadband. Without government help, it will be difficult to meet the Government's target of bringing broadband not only to businesses but to doctors' surgeries.
Does the Minister believe that the particularly strong bid by Newcastle and Gateshead to become the European City of Culture will automatically help the north-east economy?

§ Lord McIntosh of Haringey
My Lords, it is very good news for the North East that Newcastle and Gateshead are on the shortlist for the European City of Culture. Without expressing any preference between the different British cities on that shortlist, clearly winning the title will bring very considerable economic advantages to the region in which the city is located.
As to broadband, there are problems in rural areas. But the Government's commitment to installing broadband in every school, for example, applies to the North East as well as to everywhere else.

§ Lord Elliott of Morpeth
My Lords, many of us can remember the unemployment rate being very much higher in the North East than that which the Minister 885 has rightly quoted today. Will he commend the North East for being the first of two regions of the country to introduce the venture capital fund? This fund releases capital to medium and small businesses in the region provided that they have good ideas. It allows them to expand, develop and create more employment.

§ Lord McIntosh of Haringey
My Lords, I am well aware of the work which the noble Lord, Lord Elliott, has done over many years in this area for his native North East and I pay tribute to it. He is right about venture capital. I could also refer to the Regional Centre for Manufacturing Excellence, which, again, is one of only two and is already starting to do excellent work.

§ Lord Corbett of Castle Vale
My Lords, manufacturing accounts for 60 per cent of this country's exports and employs 4 million people—about 20 per cent of the workforce. Does it remain the Government's policy that manufacturing is of critical importance to our economy? Will the Government encourage, in particular, investment in the sunrise industries that can harness and use new technologies to safeguard and expand the number of jobs in manufacturing?

§ Lord McIntosh of Haringey
My Lords, I can certainly give that assurance. We give heavy priority to manufacturing industry, which is particularly important for the North East, where 5,000 enterprises employ 150,000 people. It employs 21 per cent of the area's workforce and accounts for 28 per cent of its GDP.
There have been many recent successes in attracting sunrise enterprises to the North East. The trouble is that they have been accompanied by losses from the North East—as from other parts of the country—to manufacturing in eastern Europe and the Far East. It is a continuing battle.

§ Lord Mackenzie of Framwellgate
My Lords, is my noble friend aware that Durham city, where I hail from, was one of the first cities—in fact, I think it was the first—to introduce a congestion charge, which seems to be working extremely well?

§ Lord McIntosh of Haringey
My Lords, so I gather. My understanding is that the system has reduced traffic in Durham city centre by 90 per cent, which is far more than is intended for central London.

§ Baroness Maddock
My Lords, I am sure that the Minister is aware that the North East has many good universities. Is he also aware that many graduates travel to the hotspots in the South East and the South of England and do not remain behind to build up a broader base of industry in the North East? What can the Government do to assist?

§ Lord McIntosh of Haringey
My Lords, the answer is that they should not travel to the South. The noble Baroness, Lady Maddock, is right: the universities in the North East can contribute a great deal and can be very attractive to undergraduates.
886 My noble friend Lord Sainsbury of Turville has been very active, as Science Minister, in encouraging collaboration between industry and academia through the science and industry councils in the North East. For example, there is the University Innovation Centre for Nanotechnology, which was set up in the North East and designed specifically for that purpose. I hope that that and other similar ventures will go a considerable way to answering the problem identified by the noble Baroness, Lady Maddock.