Sharon Hodgson MP

Working hard for Washington and Sunderland West.

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North East Chamber of Commerce speech 10.09.10

Sharon's speech to local business leaders, organised by the NECC.


Good morning everybody.

I'm very happy to be here for this lunch. I know that the NECC and my office have been trying to arrange for me to come and speak to you all for some time now; as I am sure you can understand, this year has been quite busy for us MPs.

I am sure that this has been a busy year for many of you, too. 
I know that some of you may have been struggling with the prevailing economic circumstances, I know that some of you will also have been busy growing your business, and I know that most of you will have been trying to keep up with the Government's breakneck spending announcements.

As you might expect, I do not exactly approve of what the Coalition have done since they assumed control of Downing Street, and I am extremely fearful of how much further they will go.

Even ahead of the Comprehensive Spending Review, the future for business and enterprise in the North East is acutely uncertain.

One North East, one of the best RDAs in the country and instrumental in the securing and creation of thousands of jobs around here has been issued its notice and is winding up. What will replace it we are not exactly sure.

I understand that the Northern Business Forum and the Association of North East Councils have now applied to Whitehall to set up a North East Economic Partnership, and below that there may be five Local Enterprise Partnerships, including one for Sunderland and South Tyneside. 

The first thing to say about that, I suppose, is that I commend those involved for managing to put together a bid without knowing exactly what the Government want from them.
We might actually be unique in being able to retain a region-wide body if the bid comes off.

However, the Government has yet to publish the White Paper setting out the details of what they might look like, how they will help create jobs and improve skills, and what resources will be at their disposal.

This just shows that they were more concerned with removing RDAs than they were with actually improving regional development.

More importantly to you though, in engineering a situation where One North East has been scrapped without first deciding what will replace it, the Government have created a confidence vacuum for businesses in the North East. 

Even though it hasn't been wound up yet, ONE now cannot take any decisions which require funding past the next 6 months. 

How are they supposed to provide meaningful help on that basis? 
In effect, they have already been neutered, leaving the region without any kind of strategic economic oversight.

That is not to say that a partnership between business and local government is not a good thing; I think it can be a very good thing, in spite of what the CBI have said.
There will be conflicts, but ultimately you share the same priorities - growing successful businesses - and will no doubt give each other a better idea of your sector. 

However, Regional Development Agencies, and in particular One North East, have amassed a wealth of talent and experience that I fear will now go to waste as employees are forced into other jobs, perhaps even other sectors, even before they cease to exist.

Just last week it was announced that the person responsible for significantly boosting tourism in the North East has left - tourism is now worth £4bn to our local economy, accounting for almost 5% of jobs.

Would tourism be worth that much without the contribution One North East has made? 
Come to that, would the future of the Nissan plant have been secured, or the commitment to installing the charging points network to support electric vehicles made if five local partnerships had all been working independently? 
I am not sure they would.

And I very much doubt that the talent lost from One North East can be brought into councils, as they are facing their own funding pressures.

Those same funding pressures will probably also see significant cuts to Business Link services, which are estimated to create 5,000 jobs a year, and undoubtedly help countless businesses access crucial advice and funding.

There is also the risk that the over-arching North East Partnership may be deemed superfluous by the Government.
Assuming it is, but that all the other LEPs are created, we then have 5 different bodies effectively in competition with each other for pots of money in Whitehall.
Will those bodies be able to work together strategically to attract investment that might only benefit one area directly?

On their own, will they have the expertise and resources to attract investment from government or the private sector, especially from overseas?

They may well do. I certainly hope they do, because if they don't my constituents will suffer. 
The fact is that we don't know. 

Because nobody, including the Government, knows what the outcome of these changes will be, they are a gamble, and I don't think that this is the time to gamble with the livelihoods of millions of people in the North East and across the country.

I could probably go on all afternoon about the many benefits that One North East have brought to our region, but I am aware that the longer I talk, the longer everyone has to wait for their lunch, so I'll move on.

It is not just in removing RDAs that the Government are putting businesses and therefore jobs at risk.

On Wednesday Vince Cable announced that funding for scientific innovation would suffer - I am sure the Comprehensive Spending Review will show that research and development and innovation funding across the board will be cut. 

Innovation and research is what drives successful economies, and it pays for itself many times over in the long term - dropping programmes will seriously impact on our competitiveness on the world stage.
It is clear that Vince is so keen to help reduce the deficit that he's raised some extra cash by selling off his principles.

His announcement is on top of the statement back in June that investment allowances and reliefs would be scaled right back to fund a cut in corporation tax.

We recognised that investment in equipment helps businesses stay competitive - removing them seems completely nonsensical and will mean that manufacturers will think twice before investing in the North East.

Capital spending programmes like Building Schools for the Future have also been frozen - I know many local contractors have benefitted from that particular programme, as thankfully all of the schools in my constituency were in the first waves.

Those capital programmes to face the axe will also include transport infrastructure - not only vital to the contractors who deliver it, but also to the businesses and their employees who use it.

The Future Jobs Fund provided real work experience for 2,300 unemployed young people across the North East, often helping them into permanent jobs, but always giving them something to put on their CV for the future. 

It has now been scrapped, with no replacement scheme likely.
The other week I spoke to someone from a recruitment and training agency in Washington. They are struggling because the coalition has scrapped Recruitment Subsidies and pre-employment training.

If they are suffering, that means there are countless unemployed people suffering, and many businesses who would have hired them to increase capacity will be suffering too.

My constituents are acutely aware of the need to create more jobs - at the last count 2,973 of them were seeking employment, which is less than the same time last year, but over 1,300 more than 5 years ago. 

Even more worrying is the fact that the number of people unemployed for 12 months or more has more than doubled over the last year to nearly 500. The total claimant count across Sunderland is 9347. 
That is 9347 people more than I would like, yet I know it will rise.

It will rise because of a raft of public sector redundancies - in the NHS, in local authorities, in the Government Office for the North East and others.
Of course, the Government are trying to get through a Bill at the moment which will make it cheaper to make all these people redundant.

I even heard from a constituent the other day that employees at GONE have basically been told to stop working - an attempt at constructive dismissal on a grand scale if ever I heard one.

And all this is just the first raft of announcements.

If I were being cynical, I'd say that they are merely a series of snap decisions the coalition made quickly to show they were busy in the first few days in office.

The real worry for me is what cuts the Comprehensive Spending Review will bring.
I hope that the figures being floated are expectation management from the Government's spinners - making everyone worry about 40% cuts so you can look compassionate when you only make 25% cuts.
Again, we just have to wait and see.

Many people agree that Government needs to rein back spending to pay down the deficit - myself included.
But it will be my priority over this Parliament to try and stop them from making changes that will damage our local economy, close local businesses and put people out of work.

Many more people unemployed means much less money in the local economy, which means many local businesses will struggle, which means they will be forced to make their own redundancies to survive, and reduce orders from their suppliers.
And so the cycle of decline starts.

Once we get into this cycle, it will be very difficult, even with the best will in world on the part of those involved in LEPs, to arrest the decline in our area.
There is a real risk that Sunderland could lose the skills and experience that many of those people - and others who will no doubt lose their jobs in the near future - have.

Equally, if there are no jobs, many young people will not get the chance to develop skills and experience in the first place, which can put the region at a disadvantage even when the national economy returns to steady growth. 
We know all this because it's exactly what we've been working on rectifying from the last major recession.

I'm sorry for the gloomy outlook, but I am sure everyone here recognises my concerns.

What I would say is, if you have concerns, you have a voice and you should make yourself heard.  I've helped a number of businesses access help from the Government over the last couple of years, and made sure many more have had their questions put directly to Ministers. 
I can even try and get meetings with Ministers, depending on how generous the Minister in question is with their time.

I'm sure my colleagues in other seats are happy to do the same, because ultimately helping you survive means helping their constituents stay in jobs.  The more businesses speak out against what the Government is doing, the better the chance that they will see sense!

Things will be difficult, but together we must try to make the best of what we have got. 
Although I have my concerns about LEPs, it is imperative that you, as the business community, seek to play an active role in their operation.  The CBI have already expressed a worry that they could be dominated by councils; the FSB has expressed worries that they will be dominated by bigger businesses.

I know it will be difficult to balance competing agendas, but it in everybody's interests that you work together for the benefit of the whole area.
I hope that didn't make me sound like an exponent of the Big Society, but if this all goes through, it really will be down to you to keep the North East motoring.

Don't get me wrong, I'm sure there will be rays of light over the next few years.
The resumption of steelmaking at Redcar will have a significant impact on the region (thank you One North East).

I have also joined the campaign, which I believe the NECC are involved in, to lobby the Government to award the Inter-City Express Programme to Hitachi, who have said they want to build the trains in Newton Aycliffe.

If successful, this would be worth an estimated 800 direct and 7,000 supply chain jobs across the region. I sincerely hope that whatever replaces One North East can help deliver this.

And there may be more similar opportunities if spending focussed on creating the low carbon economy, such as the promised Green Investment Bank, comes through.

The North East has successfully established itself as a world class centre for low carbon technology, thanks in no small part to the contribution One North East has made.
We have the skills, we have a motivated workforce, and we have a range of small to large enterprises keen to contribute to the region's success.

As such we are uniquely placed to take advantage of any capital spending programmes in the low carbon sector, as well as others.

And, I have to say, there is a welcome commitment from the coalition to provide more funds for apprenticeships.
We increased apprenticeship places to 250,000 nationally, and the coalition have pledged £150m to create 50,000 more as of next year.
I'm more than happy to give credit where it's due for this, and I sincerely hope that some of you here today will make use of these extra apprentices - as well as contributing to your business, you are also kick-starting the career of a young person who might otherwise have been languishing on benefits for a long time.

Possibly my biggest hope though, the one I really think will benefit everybody in the area, is that the Lib Dems will realise what they are doing to the country as part of the coalition and give us an early election!

Thank you for listening - I'm keen to hear what you all think, so please fire away with the questions.

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