Regional Economic Performance and Imbalances

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Mr. Ronnie Campbell (Blyth Valley): I shall be as brief as possible. The Barnett formula was devised 22 years ago to help to revitalise Scotland, which had gone through a bad period of shipyard closures and so on. The formula provided money for public expenditure. That, at least, was the official reason for it; the unofficial reason related to the Scottish National party making great inroads into the Labour vote in Scotland. The formula was a buy-off of the Scottish people. That second aspect of the Barnett formula still exists today. I understand the issue involved, but I cannot understand why the Government—the Chancellor and Prime Minister—have closed their minds in the past four years to the idea of bringing us up to the Barnett formula or devising a Barnett formula part 2, which has been referred to many times.

Our debate this afternoon has been good. Different regions have different problems. It is fine if the block money meets the needs of those regions, but the Barnett formula is much discussed and people in my constituency ask me why Scotland receives free tuition fees and personal help for old people when people in the north-east of England—or anywhere in England—cannot get it. Scotland receives an extra £1 billion.

I shall finish off with the story of LG, because it is a great one. That company was supposed to come to my constituency. We were delighted and we thought that we would get some money together—£4,500 a job. We thought that we would have a big factory in our region, but that did not happen; the factory went to Wales, because it had extra funding and the Barnett formula, which meant some £24,000 a job. We could not compete with that, and that is wrong. I understand that that is being changed, but I do not understand why we are being done down again in comparison with Scotland and Wales. Will the Minister explain what is happening with the money for the regions for the industrial side?

3.52 pm

Ms Beverley Hughes: We have had an excellent debate. We have shown that there are regional imbalances and inequalities, but we have also discussed the reasons for the different economic positions in the English regions, the factors that need to be addressed to improve that economy, the priorities that must be addressed first and the differences in the action that needs to be taken. Hon. Members have presented different histories and constellations of problems requiring different solutions in our regions. This historic debate—as some members of the Committee have called it—has itself, by the contribution of those members, demonstrated the most powerful case for the regional perspective and for the Government to provide the vehicle for that perspective to be articulated and implemented in government and regional policy.

A number of hon. Members made points, so I hope that I can do them justice in the time that I have. I have picked out four themes in addition to some of the detail mentioned by hon. Members. First, for many hon. Members, the related issue on the question of imbalances and inequalities regionally is funding. Several hon. Members have referred to the Barnett formula and the local government formula. The right hon. Member for Berwick-upon-Tweed initiated that theme, and it was continued by my hon. Friends the Members for Newcastle upon Tyne, Central, for Great Grimsby, and for Blyth Valley. I stated the Government's position on the matter, and I am sure that my hon. Friends' words will be noted. As my hon. Friend the Member for Great Grimsby says, the subject will continue to be strongly addressed in the next Parliament.

I make a general point in addition to those that I made in response to questions. I understand the point about the strength of feeling about perceived considerable differences in funding levels or funding per head, particularly vis-a-vis Scotland and the English regions. However, in relation to Barnett, but particularly local government finance—with which I am more familiar—I tell my hon. Friends that we do not want to reach a position from which we argue for exactly the same amount per head for services for each of our different areas of the United Kingdom. Although, as the right hon. Member for Berwick-upon-Tweed said, we want to work towards achieving the same standard of public services, we must recognise that to achieve the same standard and the same opportunities for people in different parts of the country, we must acknowledge that costs differ throughout the country, and that levels of need, which impact on cost, differ. We must reflect on the fact that the same amount will not achieve the same standard of public service in different areas, so, inevitably, if we are to meet need and strive for the same standard of service, different areas will receive different amounts; otherwise, we are not, as my hon. Friend the Member for Blyth Valley reflected, redistributing to meet need. I am sure that my hon. Friends accept that.

A second theme was to acknowledge the importance of RDAs and other regional partners in reacting to local challenges. I am pleased that my hon. Friends the Members for Scarborough and Whitby and for Riverside acknowledged the contribution of such partners, and particularly the RDAs, to the Plaxton and Daresbury matters. In relation to Marconi, local partners have been galvanised to respond to that matter. I am sure that Government Departments will support that regional initiative, as they already have with matters such as Daresbury.

A third theme was the importance of a wide range of factors to reduce economic disparity and inequality. My hon. Friend the Member for Scarborough and Whitby mentioned transport, and my hon. Friend the Member for Sittingbourne and Sheppey referred to the importance of higher education and the role that that should play, and increasingly plays, in several regions—certainly my own in the north-west. Universities there, as my hon. Friend the Member for Riverside will testify, were crucial in mobilising the response to some of the matters that she mentioned. We certainly need to see more of that.

A further theme concerned many hon. Members looking forward to and supporting the process of the evolution of the regional agenda, and wishing to see a movement toward directly elected regional government. There was a variety of views on how that could be put into operation—whether there is a one-size-fits-all formula or whether we can contemplate the possibility of people in different regions moving at different speeds or even toward different structures to accommodate peoples' regional aspirations.

One matter that we all share is our indictment of the Conservative party, which has shown no interest in the English regions, and no concern about the imbalances and inequalities that we have discussed. Its disastrous economic policies of 18 years only served to widen and deepen such imbalances and inequalities. Although we are discussing regional policy, we are really talking about people. Clearly, Conservatives have no regard for people in our regions, who need the thrust of regional policy to deal with the specific regional challenges faced. If the Conservatives were serious about their concern, they would have been here to support us.

Our policy is founded on the belief that, if we are to make progress, that progress must be at the regional level. Central Government have the task and responsibility of putting the macro-economic structure, templates and tools in place, but it is at regional level, with the full involvement of local partners, that enterprise, skills, innovation, higher education, scientific excellence and infrastructure can be dealt with most effectively to deal with the imbalances and inequalities that we want to see reduced.

Question put and agreed to.


    That the Committee has considered the matter of raising the economic performance of the regions and tackling regional imbalances.

        Committee rose at Four o'clock.

The following Members attended the Committee:
McWilliam, Mr. John (Chairman)
Ashton, Mr.
Buck, Ms
Ellman, Mrs.
Murphy, Mr. Denis
Pearson, Mr.
Quinn, Mr.
Steen, Mr.
Wyatt, Mr.
The following also attended, pursuant to Standing Order No. 117(3):
Allen, Mr. Graham (Vice-Chamberlain of Her
Majesty's Household)
Beith, Mr. Alan (Berwick-upon-Tweed)
Campbell, Mr. Ronnie (Blyth Valley)
Cousins, Mr. Jim (Newcastle upon Tyne, Central)Hughes, Ms Beverley (Parliamentary Under-Secretary of State for the Environment, Transport and the Regions)
Mitchell, Mr. Austin (Great Grimsby)

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