UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 625-iii

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

NORTH EAST REGIONAL COMMITTEE

 

INDUSTRY AND INNOVATION IN THE NORTH EAST

THURSDAY 16 JULY 2009

(WESTMINSTER)

Rt. Hon. MR. NICHOLAS BROWN MP, FIONA GOUGH, FERGUS HARRADENCE and SUE HOUSTON

 

Evidence heard in Public

Questions 149 - 181

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the North East Regional Committee

on Thursday 16 July 2009

Members present:

Ms Dari Taylor (Chairman)

Mr. David Anderson

Mr. Denis Murphy

Phil Wilson

 

Examination of Witnesses

Witnesses: Rt. Hon. Nick Brown MP, Minister for the North East, Fiona Gough, Deputy Regional Director for Environment, Government Office for the North East, Fergus Harradence, Deputy Director, Innovation Policy, Department for Business, Innovation and Skills and Sue Houston Head of the Regional Economy Team, GONE, gave evidence.

 

Q149 Chairman: Good morning, everybody. You are warmly welcome. We are really keen go through all the questions that we have to ask you. Would each of you like to make a statement to start? If you would, that's fine. We would like you to keep it as tight as you can because time is not overly generous. We think we would like to finish around 12 o'clock, if that is all right with everybody. Nick, will you start with an opener?

Mr. Brown: That is absolutely fine. Thank you for inviting me. As you know, I am a big supporter of the idea of Regional Select Committees acting as a counterpoint to the relatively newly established post of Regional Minister. I am a great enthusiast for all this. I am joined by Fergus Harradence, who is on loan from Peter Mandelson to help. He is the Deputy Director for Innovation Policy at the Department for Business, Innovation and Skills. I am also joined from our own region by Fiona Gough and Sue Houston. Sue is head of the Regional Economy Team and Fiona is Deputy Regional Director for the Environment.

My opening points are that when I became the Minister, I said that my desire was to drive up the prosperity of the region and that the key method of doing so was to work with the private sector to broaden our industrial base to make it look more like the economy of the United Kingdom of a whole. I also wanted to assist with this very dramatic journey that the region's economy has undergone over the last two decades away from the over-reliance on coal, shipbuilding, ship repair, heavy engineering and perhaps manufacturing more generally to make sure that we have a broader private sector base, that the service sectors are encouraged and that the quality of the jobs is slowly driven up, so that our future is better than being a supplier of unskilled and semi-skilled labour. That has been my objective and we did really well at it until the economic downturn struck.

Although it is from a very high base, the rate of unemployment has been growing sharply. It is spread right across sectors, but of course the downturn's impact on construction has been particularly marked. In order to respond to that, my strategy has been twofold. First, it has been to meet with the individual sectors, including the public sector but predominantly the private sector, to talk through the details of their problems and to see where, by intervening with Government Departments or, frankly, by meeting the Chancellor and the Prime Minister on specific problems and local issues, or more strategic issues that affect industry as a whole but which are particularly marked in our region, we can give real help now, which is Government policy.

We have been pretty effective on this. At the beginning of the downturn, the key point was access to capital liquidity and the relationships between those who were running businesses in the region and their banks, which brings me to my second point. As the labour market has loosened, my objective has been to tighten it. Now, I cannot do it quickly enough-that is a disappointment to me, but it is just a fact of the modern world. We have identified sectors, working very closely with the local authorities, which have been great allies in all this. That is not a party political point. Local authorities collectively, whatever their political composition, have really tried to work together to focus on and discuss the needs of the region and what they can do to help. The same is true for the development agency. I believe that we are well served by One North East and by the region's Government Office. Partnership working is more developed in our region, I would say, than in many other English regions. I do not say that to disparage them; I say it to praise us.

What we have done is pick the big projects that the private sector has identified for itself. In other words, it is not a case of Government saying what you must do, but a case of us listening to what is coming to us. It is very clear to me that we have emerging in our region a very strong set of new industries based on the need to tackle climate change.

I have got behind that as strongly as I can with specific projects such as the offshore wind farm industry that is developing on the north banks of the Tyne. The Clipper factory is being built, so this is not an aspiration. Real jobs are coming from the building of the factory as well as doing the work that will go on in it. That product is for the offshore market.

We do not yet have a domestic offshore wind farm industry. Given our aspirations for offshore wind farm energy production, it seems to me to be right that we should have a domestic industry, and we are planning to build a world-beating one on the north banks of the Tyne, with a very credible partner in Clipper. The project is able to succeed only because of the investment of the Shepherd family, who have sufficient liquidity to make the investment without being hauled up by the current banking arrangements and affected by the current downturn.

We have aspirations to take part in the early carbon capture and-rather more expensively-storage project, which the energy Department wishes to pilot. The Prime Minister came to see our bid a fortnight ago-that was a great gain for us-so we were able to explain first hand, not least showing him the North Sea, which is next door to where we want to locate. I think that gives us a geographical advantage.

As everybody knows, we have aspirations to be at the forefront of the development of the electric car. I want to thank the business Department-the Department for Business, Enterprise and Regulatory Reform, as it was-for the work that the officials have put in. They really have fought for us, and that has been given a very firm political lead by Lord Mandelson, who clearly retains an affection for his old region. They fought our corner and have done everything they could-as have I, of course, as the Regional Minister, but the scale of the project is well beyond anything that we could do at regional level. We need the support of national Government and have had it wholeheartedly.

There are smaller projects, which also fit in with this renewable agenda. The Eastgate project in Durham involves the old chalk pit. Because of the peculiar geological conditions in Durham, it is particularly suitable for a geothermal installation. There is an entrepreneur who has ambitions to build the sort of project that would serve to underpin the region's tourism and hospitality industry, so as well as being important in its own right, it would have a strategic importance for us.

You will know from your own knowledge of Teesside the work that is going on in the energy generation sector with the use of woodchip and the recovery of very heavy oils into something more commercially usable. Taken as a package, that offers a very exciting future for the region. My approach has been to get my shoulder behind all these things and just help them on. In summary, that is what I have been up to-focusing on the downturn.

 

Q150 Chairman: That is really valuable. Let me follow that up for a moment. We have taken evidence from across the piece, as you know. The Engineering Employers Federation was a very positive group and it made two comments. If the RDA was not there, it would have to initiate, innovate and produce a similar organisation, so that the collaboration that is taking place could continue. That was one statement the group made. The second statement it made was that we are in a very tight time capsule to deliver. If we do not start to prioritise now on whether it will be clean coal or renewables, we shall spread too thinly and miss the opportunities before us. That would be a disaster for the northern region.

Can you give us your thoughts, certainly on the prioritising point? We understand the point about One North East. We are delighted that that statement came from the Engineering Employers Federation, but how about the second statement? Can we spread to renewables, clean coal and wind power? Can we do the lot or do we have to prioritise so that we can manufacture to product level and profit level to give the North East a real new economy?

Mr. Brown: Every single project that I have described is private sector-led. We do have to prioritise. We have to listen carefully to what is being said to us. The days when the Government chose what the economy would do and then asserted it are well over. It is the private sector that comes to us and has said that these are the schemes-the projects-that it wishes to pursue. Obviously, common-sense tests about viability are applied, but we must not let ourselves down by not being ambitious enough.

If there is a real chance of getting a carbon capture and storage pilot for our region-the Government are proposing up to four, so we have a chance, and the company, Rio Tinto, has made it very clear that it has what it considers to be a unique proposition in terms of the way in which it would be carried out in the upper Blyth in the North East-we ought to get behind it and give it the best possible chance.

Of the schemes that I have put to the Committee, there is not one that I do not think has a realistic chance of success. Therefore, I am quite happy to spend my time, and it is quite a lot of time, getting behind each of them-not as a package, but each of them in its own terms, specific to the requirements of the project. They are all good projects. They all involve tightening the labour market and they are all sustainable. Once in place, they have a viable future.

You asked about the regional development agency. In my dealings with it I found it a good institution to work with-very direct and conscious of the need for collaborative arrangements and the sensitivities about public life. I do not mean parliamentary life; I mean local government. It has a good working relationship with the leaders of the local authorities. The present collaborative arrangement is probably the right structure for us.

I know there has been a lot of discussion about the sub-national review and how we would get subsidiarity. The task for us in the public sector is to make sure that the two conurbations work well together; we are moving in the right direction and the sense of it is very clear. I also think that over time the benefits of creating the new Northumbria and Durham unitary authorities will become clearer. Certainly the ability to work with 12 strategic authorities for the region is a great plus.

The RDA itself works well for our region. As the Regional Minister I find the size of the region to be something that I can cope with along with my other responsibilities. I think there is a feeling like that in the RDA as well. There is so much going on and so much that needs to be done, uniquely because of the journey that our region has had to travel from its industrial base and its employment base to where it will inevitably be, or where we want it to be, in the 21st century.

A lot of intensive and very practical work has had to be undertaken, and I think the RDA has done it well. It is private sector-led but not overwhelmingly dominated by that sector-there are other voices there-which is the correct structure. The choice of people to serve and, frankly, the willingness of people to serve have been a big plus for our region.

 

Q151 Chairman: I agree. I am going to go back to the script. You inspired me to ask that question, so I asked it. That is a bit of an abuse of my role as Chair.

You know that we are looking at how and in what way innovative industry is supported in the region by the RDA, the Government and the private sector. To start off this morning's questioning, how and in what way will the establishment of BIS be supportive to us developing in an innovative and value-added way in order to become world leaders? How is it going to ensure that we are at the best place in the world to run effective businesses and services?

Mr. Brown: Structural change in government takes place from time to time-there are a range of reasons for it. As for the latest round of changes, obviously I look at it quite closely, because my first thought is, what impact will this have on the North East? It seems to me that the structure of the new business and innovation Department is wholly beneficial to us. The link between skills and our industrial base is probably more pronounced now than it has ever been in our past, because of the older model of the region's industrial structure, where the specific training schemes and the older apprenticeship schemes related directly to almost monolithic employment in certain sectors. What is happening now is far more diverse. We are well served by our own academic institutions-five very strong and of course very different universities, plus the Open University and a good network of colleges.

The thing that the region has not done as well as I would have liked is ensure that youngsters who have left school have gone on to learn a skill. We are still underperforming against the national average. It is my hope that the structure of the new Department and the fact that training for 16 to 19-year-olds will be linked to the Department that is sponsoring almost all the nation's private sector employment base-although agriculture and, I think, the food and drink sector are different-will be of value to us.

With everyone I have talked to so far, although obviously they are waiting to see, that is the sort of response I am getting back. I was in Sunderland College Friday last, and these were the sorts of things that were being said to me there. I am meeting the university sector on the 24th-all five universities together. It is quite difficult logistically to get all the people in one place, but I will raise this issue with them, and I am quite happy to report back to the Committee.

Chairman: Thank you.

Mr. Brown: I imagine that they will be reflecting on the opportunities and interests that go with being in this very large Department. Obviously, the funding arrangements are separate and independently done, but having this very powerful Department as their sponsor is a great opportunity, I think.

 

Q152 Chairman: That is really quite good. Sue, Fiona and Fergus, if you want to come in, please do. This is a session where any and all thoughts are valuable. The Minister is obviously going to drive them, and we are thrilled that he is driving them-I make that quite clear to everyone. It is important, because we will all have offshoots that we will want to emphasise at different points. If you do, please come in.

Mr. Brown: Fergus, do you want to say something on the structural point-the new departmental structure?

Chairman: Yes; you are BIS.

Fergus Harradence: I think that the creation of BIS represents a real opportunity for us to increase the co-ordination across all the different elements and activities that government performs that benefit business. For the first time we are consolidating in a single Department, under a single Secretary of State, responsibility for science and innovation, the other business support programmes that are beneficial to industry, such as the Business Link service and sponsorship of the RDA's manufacturing advisory service, and people who are responsible for funding activities in universities-not including knowledge transfer activities-and skills. It is an opportunity to bring everything together. The new strapline for the Department, "Investing in our future", is what we are all about-that is the mission statement for BIS over the next few years.

Chairman: That is very valuable.

Sue Houston: I think it is very helpful that we now have this major Department of State that has this responsibility for the whole of the business agenda plus the innovation and skills agenda-although in advance of this merger, as a Government Office, we clearly had a very important role to play in supporting businesses in our region, working with our RDA and with BERR, as it was the sponsor Department. We did not have a remit around innovation and skills, and all of that is developing. It is good that we now have a more formal link to the Department that has that lead responsibility. It will give us more strength in our work going forward, in delivering for the economy of the region.

Chairman: That is really valuable.

Mr. Brown: Can I emphasise the importance of this issue for the region? We have steadily underperformed in ensuring that the youngsters who leave school with no qualifications get qualifications and a future. Our region will not get by as a supplier of semi-skilled or unskilled labour. What is involved here is everything from the moral case-just around releasing the talents and people who were not given an opportunity, as it is in the youngsters somewhere.

Chairman: Absolutely.

Mr. Brown: You need to draw them out, even if it is just enthusiasm and front-facing skills you need in the more basic part of the service sector-that is of value. But of course, with many of these youngsters, you can do much more for them. As the unemployment figures rise and then come down as the recovery takes effect-we know that there will be a lag and that it will not be felt proportionately right across the region, but disproportionately among school leavers and younger people-it is essential that they are not lost to the world of work or discouraged from making the best of the potential that is inside them. For the region's economy, all the vacancies require skills. It is the people without skills who struggle to find any job. It seems to me completely reprehensible that anyone should contemplate leaving any of the youngsters out of this, and I am very determined that we don't. One of the great strengths of the new industrial base that we are trying to build for the region and the different sectors that we are looking at is that it is ethically defensible-I think that is important to our region. But also it requires a skills base and there are jobs there that people can do and can learn to do. That will get them to jobs that are reasonably well-remunerated, and enable them to build a life for themselves and to have career opportunities as well.

Chairman: That is really valuable, but we are well aware as a Committee that we need to move to a point where 40% of all our youngsters have skill level 4 and 80% have a minimum of skill level 2. We are aware that this is a critical area. I am now going to ask Phil to take up the questioning.

 

Q153 Phil Wilson: Outside of all the industry and innovation we are getting with climate change, wind power and so on, what other sectors are innovating in the region at the moment?

Mr. Brown: You would be surprised by the answer. There are two very different things happening. I would point to the printed lighting, for example, at Thorn Lighting, which I have been to see and which was incredibly exciting. It is not unique to us, of course. There are other parts of the world that are also on the threshold of trying to commercialise what is a stunning new way of doing things. I visited Romag glass and saw them encapsulate photovoltaic cells into their glass products. There are already examples of the fruits of this in London, where they have clad whole buildings with it and, when the sun is shining, they are therefore able to generate the electricity to power the buildings.

Right at the other end, I went to a summit of the hospitality sector two or three weeks ago. People do not think of the hospitality sector as necessarily innovative, but in the discussion it was very clear to me that on everything-from training people to work in the sector, to the way the sector presents itself to the outside world and to the way that our region is explained-there is enormous scope for innovation, for clever thinking and for diversifying the region's economy. I know-I have probably said this so many times in public that it is getting to be a cliché-that if I had more time and if I could put more effort and energy into any one sector it would be the hospitality, tourism and leisure sector. I think it could be a huge winner for our region.

I do not know whether it counts as an innovation, but if we could get the Lindisfarne gospels back in a single place as a permanent visitor attraction-as well as a historic artefact that is so overwhelmingly associated with our region-and as a permanent centrepiece, I think it would lift the region up. It would lift up the number of visitors who would come and see it and who could then explore the rest of the experiences that the region has to offer-everything from internationally acknowledged historic monuments and some great entertainment experiences, to some of the most beautiful countryside and seaside in the world. We have got an enormous amount to offer and I know it is not the cutting edge of science-we have all that as well-but it is innovation and enterprise: things that we could develop, and although we are doing that, my ambition is to do more.

There are two great things we could do: get the Lindisfarne gospels back and get the Eastgate project under way, so you could have that covered in a leisure experience which youngsters enjoy with masses of hot water free-well, not entirely free. You do have to put the installation in, but the revenue costs are low.

 

Q154 Phil Wilson: On another point-Fergus might be able to give his point of view on this-what are the Government doing to ensure that the best conditions exist for companies to develop innovative products? What is BIS doing to ensure that the environment and the atmospherics are right for ensuring that the products are created?

Fergus Harradence: We invest an enormous amount of money every year in support of innovation and technology development in the UK. The technology strategy board, working with the RDAs and the research councils, will invest a total of £1.061 billion in supporting innovation and research and development in the current spending review period from April 2008 to March 2011.

In addition, you see significant investments from other Departments such as the Ministry of Defence and Department of Health, both of which invest well over £1 billion each year. The Department for Transport and the Department of Energy and Climate Change are also significant investors in energy and technology development. We provide a considerable amount of money to support research and development technology activities, plus there are other discrete streams of funding that go into knowledge transfer activity through universities and other knowledge-based institutions. We have a series of venture capital initiatives, our own seed funds in the regions, in the universities and the public sector research establishments. There are investor incentives such as venture capital trusts and enterprise capital funds. We have just launched the UK innovation investment fund as well, which will have a cornerstone investment of £150 million from the Government, again to stimulate the growth of innovative high technology companies.

Mr. Brown: In our region you can point to the bio-technology developments at the Centre for Life, linked in with the university at Newcastle. The work that is being done on physics at the University of Durham would be a good example, although it has expertise across a range of fields. The links between the big universities-all five of them in their different ways but particularly the research universities-and business is an area where both Business Link and the development agency have put in a lot of work. Every time I have been asked about this I have been able to approach either the RDA or Business Link and have people write back to me and say that they are pleased with the response. It is quite uplifting. I know the Minister's casework is going to get probably slightly more attention than everybody else's but it does get done well. I want to emphasise that to the Committee.

 

Q155 Chairman: Would you say that the economic climate has impact? We are all talking about green shoots. We can see things happening. We can see it all in our localities. Has the economic climate had a serious impact on innovation?

Mr. Brown: It is difficult to tell sector by sector. All generalisations are flawed but people who were planning to make a long-term decision are doing one of two very different things. Some are pausing to see how the recessionary forces at work in the world economy pan out and how deep it is going to go. Most informed commentators say to me that they think the approach to dealing with the downturn that our Government led and is being echoed in different forms around the world, is the right approach. It is probably too early to say anything definitive but it does seem to me that the proof of that is now being demonstrated. At the opposite end of the spectrum, one or two decision makers-the obvious example would be Clipper and the investment that the Shepherd family has made on the north banks of the Tyne-have been able to say because of their own resources, "This the direction of travel. It is abundantly clear what the Government's strategic approach to global warming and energy supply is going to be and we are going to back it and get in there and get ourselves to the forefront of what is going to be a strong new industry for the UK."

 

Q156 Chairman: It was said to us again and again that the one thing Government could do was to make sure that their policy was clear, concise and unchanged because that was the way in which most private money would see the reality of outcomes. I guess we might all nod in agreement with that, but do you think we are sufficiently clear and focused and determined about our policy aims to encourage private money?

Mr. Brown: I strongly agree with that point. I have done my utmost to get stability and a sense of where we are going to be for the foreseeable future, in order to enable the private sector to plan for the medium term. The sort of projects we are talking about require substantial investment up front and the return, of course, and therefore the funding of the money borrowed, only comes at the end. It is very necessary to have as much certainty as can be had. Certainly in the sectors I have been heavily involved in, I would say that that was the case. That is one of the main reasons why the projects are going ahead.

 

Q157 Phil Wilson: There is a lot of talk in BIS, and Lord Mandelson made a statement a few months ago, about industrial activism. That is obviously very important and everybody is enthusiastic about it. It seems to tend towards innovation. The Tees Valley joint strategy unit is keen on industrial activism, but it says it is worried about the Government's attitude to traditional industries, which are still the bedrock of the manufacturing economy, particularly chemicals and steel. It seems to be saying that this industrial activism and the strategic approach to innovative industries and new industries is only right, but we do not seem to have a strategic approach to traditional industries such as petrochemicals and steel. Would you agree with that?

Mr. Brown: I agree with the thrust of what Peter Mandelson is saying. But there are two issues on Teesside that are identified. They are both big and important issues. One is the future for Corus on Teesside. The future for the steel sector in the United Kingdom more generally is a big issue because the world price of steel is low and for parts of Corus it is below the cost of production. That situation cannot endure. The Government centrally are working very closely with Corus. I am taking a close interest, as the Regional Minister, together with Vera Baird, who is now assisting me on the industrial side and is also the constituency MP. I visited recently and I know the Secretary of State is going to visit soon. Vera Baird is there because it is her constituency.

It is not a lack of ministerial attention that is the issue with Corus. We are all desperate to find a way through that keeps the plant open. There is no solution in downsizing it further. We are at the point where it would not be downsized any further without it having to be mothballed. We have to find work to get through. The plant, the management and the unions are working hard on that objective. At times they are taking work for one day at a time-it is as difficult as that. I am not blind to the consequences of us not being able to sustain it. It will be devastating for Redcar. I have had a hard look with Jobcentre Plus at what our response would be if there was a really large redundancy round. Jobcentre Plus in the region is very experienced at handling situations of this kind, but the numbers involved are just too big for Redcar alone or even the Tees valley to make a decent effort at absorbing, so there is a need to do more. Far and away the most sensible strategy is to try to get the industry through intact and working. That is plan A.

On the separate point about the chemical sector-I guess in particular ethylene oxide-I have been briefed on this. The processing sector had a bilateral with me down on Teesside. I have been to visit Stan Higgins, who we all know, at the processing centre at Wilton to discuss in detail what can be done. We cannot get beyond the point that any initiative has to be private sector led. Although it has been worked on for two and a half years, a satisfactory private sector solution has not been found. I have told the sector collectively-remember there is a range of different interests in the detail of this-that if it comes forward with a plan I will listen. I will champion the plan within Government if it is viable and has a chance of working. I know that the Department itself is well informed on this complex situation, but we have to have a private sector initiative, or an initiative across the whole sector. Maybe the different companies could come together to do something to sort out what is at bottom-I know this is simplistic-a supply chain issue.

 

Q158 Chairman: Absolutely. I would like to follow that up, because our anxiety on Teesside is that Dow has now stated that it is closing, and Croda has followed. The absolute fact is that there is no demand for glycol, so the price is rock bottom. They have attempted to get a private group to buy Dow so that ethylene oxide can be produced, but that has not worked. One suggestion from the industry is that maybe, at ministerial level, we have to get all the companies, such as Shell and INEOS, together to talk about the future of petrochemicals in Great Britain. Do you think that there is any currency or mileage in that?

Mr. Brown: I am willing to explore that with the industry and the processing sector collectively, as all sorts of other things are at stake here, such as the centre for the processing industry itself and the training arrangements that are being put in place, which we have all supported. If, by any endeavour, I can help us get through, I am more than willing to put my energies into it. It is an important issue, and there does have to be some initiative, if not a completed programme, from the private sector. There is not a public sector solution.

 

Q159 Chairman: Absolutely. I shall take my moment and come to you to talk about that further, if that is all right.

Mr. Brown: I am willing to try to help, and I know that the Department wants to be as helpful as it can be and take that extra step as well if pushed, but we must have a credible initiative from the private sector, collectively or from an individual entrepreneur.

Chairman: I am with that.

 

Q160 Mr. Anderson: I have grave concerns about what you have said, Minister, because we started off saying that everyone wants to see the renewables sector being a huge player in the north-east, but if that is to happen, the one thing we will need above all else is steel, for the pipeworks, rigs and support ships and the towers and blades. Yet more and more of our home steel industry will possibly disappear. We are relying on the private sector to fill that gap. Are we going to have the ludicrous position where we have an industry waiting to be developed, but because we do not have the raw materials on hand we end up being dependent on the rest of the world again to fill that gap? If that is the case, surely we have to take more intervention to make sure that Corus does not go to the wall.

Mr. Brown: When I visited Corus, obviously I asked, "What can I do to help?" I can always say, "No, I cannot do that", but it is best to ask what people want. One of the things Corus was very clear about is the need to strengthen the market for the commodity it produces. I have explored across the Departments to see whether there are any large public sector projects that could be brought forward and would have an impact, and I suppose the obvious thing to think about is defence procurement and the aircraft carriers, but in fact the amount of steel involved in these big defence programmes is not enough to get the objective we are trying to achieve.

The best single thing I could do to stimulate demand would be to try to get an upturn in the construction sector, but of course steel is used for construction, so any uplift, whether in this country or, better still, right around the world, would lead to an increase in demand and, therefore-they hope-a rise in price, and the plant would become viable in world market terms. Those are the issues that are being discussed. Can the Government go further to get the plant through a temporary drop in the price in the hope that the world price will recover? Believe me, all of that is under consideration within Government, but market forecasts are notoriously hazardous.

 

Q161 Mr. Anderson: The potential is huge, and the need will be huge. I am asking whether enough is being done to make sure that we can match that. If it is going to go to the wall, where will we get the steel? Will we buy the towers ready built from somewhere else in the world?

Mr. Brown: I agree with you that it is a strategic issue and that it is not at the margins of the United Kingdom's economy, but right at the heart of it. In particular it is right at the heart of the economy of Redcar, because of its enormous impact-its overwhelming impact-on the local employment base. It is one of the few large single focuses of employment left in the United Kingdom economy.

 

Q162 Mr. Murphy: Minister, you have rightly mentioned, several times, some of the renewables that are currently very successful in the region. Wind power will obviously play a huge part in any growth of the renewables sector, yet we do not manufacture a wind turbine in the region. When do you see that changing?

Mr. Brown: Now. We are building the factory to do it on Tyneside. Clipper plans to manufacture the turbine, the generator and the monopile on which they stand.

 

Q163 Mr. Murphy: The complete unit will be manufactured?

Mr. Brown: That's my understanding of the current position. As you say, we bought it all; there isn't a domestic industry at the minute. There is a small domestic onshore industry, but not an offshore industry.

 

Q164 Mr. Murphy: How do you see this changing people's attitudes towards wind power? Currently, whenever a wind farm onshore is suggested, there is major opposition to it. I am mindful that there have been several in Northumberland that have created quite a number of protest groups to oppose them, but not one-that I am aware of-to support them. Yet in Denmark and Holland we have villages queuing up to have a wind farm in their village, because they see a genuine benefit from it. Do you think we should adopt a slightly different attitude and offer communities a real stakeholding in a wind farm, whether it be through lower energy prices or community benefit?

Mr. Brown: I think a sense of local ownership in projects of this kind is always important; and hopefully with the move to feed-in tariffs and more local power generation people who are used to receiving their energy through electricity conduits from a large generator-over time that is going to change-will feel closer to more local methods of generation. There is enormous general support for combating climate change and considerable local opposition to doing it next door to people's individual homes. I know Phil has been faced with these difficult issues in his constituency and I guess you get the same in yours. I think it also underpins the case for the offshore development of wind generation. There isn't an easy answer, but my hope is that over time people will become more reconciled to these things

 

Q165 Mr. Murphy: But should we not, rather than just using the planning system, which a lot of people say is used against them in situations like this, encourage the people who would benefit financially-the generators-or compel them to make sure that the communities that will, for want of a better word, suffer these actually get a genuine benefit from them?

Mr. Brown: That wouldn't be a planning issue, but I certainly agree with you, it wouldn't half help make up for the perceived loss of amenity if there was a quid pro quo on the cost of local electricity. I think it's a good point, well made, and it is something I could foresee for the future.

There are two further points I want to make. The planning system should, strictly speaking, be neutral in hearing these issues. There are genuine concerns about landscape, local loss of amenity, and the shape and the look of the countryside, but there is a countervailing argument about legitimate business and the need to combat climate change and, frankly, cost-effectiveness, as well. All these factors are taken into consideration in the public debate. They're not all planning factors.

There is a separate issue, just for completeness, about the operations of the airports in the context of the new onshore wind power generation. Although I think we have managed to find a provisional way forward between Newcastle airport and the surrounding applications there is a tension there, which I think we have to recognise.

Finally, it is my hope that the creation of the two new local authorities in Northumberland and Durham will make it easier for at least the local planning system to take an overview-a strategic overview-rather than have a whole series of decisions that will appear locally as piecemeal.

Mr. Murphy: Fiona, you seem keen to come in.

Mr. Brown: Yes, you want to correct all that.

Fiona Gough: Not at all, Minister. I was just going to offer an example where exactly the sort of practice you are describing has taken place. There's an example just north of Ashington where through use of the section 106 arrangements in planning there is a local community trust that is benefiting per megawatt of energy generated from that wind farm, which could potentially amount to £60,000 a year for that community. The mechanism exists and, as the Minister said, the opportunities with feed-in tariffs coming on board, and the renewables obligation certificates on generators, provide incentives for the local generation of electricity.

 

Q166 Mr. Murphy: On carbon capture and storage, you rightly pointed to the Prime Minister visiting Alcan two weeks ago to view what is being proposed with regard to clean coal technology and carbon capture and storage. The downside to that is that Alcan itself will not provide the infrastructure for the storage of the carbon, although it will certainly provide the technology on its plant. A number of witnesses who have come before us have said that this is the sort of job where the Government should provide the pipework and the infrastructure, and it should be on such a scale that the whole of the region from Teesside to Northumberland can take advantage of it. Have you a view on that?

Mr. Brown: Yes. I think there is a very exciting opportunity for us to create a whole new public utility, meaning the pipeline which leads to the storage of the captured carbon. Very roughly, about half the cost of the total project is in transmission and storage once the carbon has been captured. The plan, as the Committee will know, is to store it beneath the North sea in one of the great cavities that has been created by the extraction of oil or gas, or quite often both. There is a fringe benefit to that as the carbon going in forces out a little bit more gas and oil, which can be captured and brought the other way and used as fuel.

I am really excited about this. I am convinced by the argument that Britain's medium-term energy needs will require the use of coal. Because we are an advanced industrialised nation, and our historical contribution to the climate change problem has gone on longer than that of other nation states, we have a moral responsibility at least to be at the forefront of dealing with the problem. Carbon capture and storage is one-although not the only-possible way forward for clean coal. A Government-sponsored pilot in the area seems to be a proportionate response to the problem. There is a lot of work in it, but I think that Denis is on to a good point: it will require some Government support. For the pilot to be conducted solely with private sector resources is probably asking too much. It will be a mixture of things.

The private sector has a vested interest in this as well, but it is a mixture of interests. There is huge public interest in all of this. We will need coal for the medium term-that is my best assessment based on the information available to me. If that is the case, we have a responsibility to ensure that it is clean coal. The two most likely technologies are the current filtration technologies, or the exciting new possibilities in capture and storage in those huge reserves that we have created under the North sea.

 

Q167 Chairman: There is a thought that the utilities will benefit most, and that they should be seen clearly as companies to be putting in a fair amount of money.

Mr. Brown: This is going to be a hard-fought argument, and it is probably not wise for me to plunge into it except to say that there are a range of interests, and therefore there should be a range of contributions.

Chairman: Fair comment.

 

Q168 Mr. Murphy: The fact that we have not currently made a decision on that has impacted on the investment of the private sector. RWE npower said two years ago that it intended to build a power station in north Blyth near Cambois on the site of the old coal fired power station. It is a £2 billion project that would consume 6 million tonnes of coal a year, unfortunately all of it imported. It has now taken a step back from that until the decision is made on carbon capture and storage, so we really need to try to have a decision made on the region's position on that as quickly as possible.

Mr. Brown: I think that the region's bid is good. I think that Rio Tinto's element in how they intend to go about the capture is clever, innovative and well worthy of consideration by the Department. I think in the storage-the creation of this utility-there is clearly potential for other coal-fired generators to join in next door. It almost goes without saying that it will want to do it for the power station that services Alcan; the chances of the neighbouring site being used for a coal-fired power station would be enhanced, because the additionality could join it to their storage part. It couldn't be very much, although of course there is a cost to the capture.

It is also conceivable, and I think cost-effective, as we develop this new utility to involve Teesside as well. The argument here is bound up with the future for Corus because the main power user-the largest single power user by far on Teesside-is the steel plant.

 

Q169 Phil Wilson: I think that this might be for Fiona. To go back to wind farms basically-onshore wind farms-we have the transitional plan that Ed Miliband published yesterday, which is excellent, and we've taken on the strategic approach with how we take on climate change and how we try to resolve the issue. We have a moral obligation to sort it out. Wind farms, on and offshore, are part of the way forward. However, having said that, do you think there is a lack of joined-up thinking on this with the Government? When I'm dealing with wind farm issues for example, I have to deal with three different Departments-the Department for Communities and Local Government, BIS and the Department of Energy and Climate Change as well.

We want to take a strategic view, but we do not seem to be taking a strategic view on planning because it is left to each individual climate authority, although wind farms where the turbines are 125 m high can be seen for miles around. Each has to be taken on its merits. Although PPS22 says that we have to take into account the effect of the cumulative impact, it just seems to fall apart if each planning application has to be seen and treated individually. Do you think there is a problem around that that needs to be sorted?

Mr. Brown: It is a semi-judicial process and every single applicant has the right to have their own case heard on its own merits. Is it possible over time to develop a framework and a strategic approach? I think that it is. Over time, I hope that the creation of the new unitary authorities in Durham and Northumberland will lead to that happening. There are a range of issues to be taken into account, such as loss of amenity, the landscape-we have some very beautiful landscapes in our region that deserve consideration and there is a case for protection-and the legitimate interests of the two airport operators and their need to have clarity for the flights coming in and out, and clear air corridors. I also think that the case for the offshore wind farms is very strong, not least because the impact on the countryside, landscapes and local amenities is far less severe. It is more expensive of course.

Phil Wilson: Fiona Gough?

Fiona Gough: I was just going to add that CLG and DECC were working very closely on the announcements that came out yesterday and, as part of that, there are two elements in there that are relevant to your question. One is about providing some funding for regions to develop a fully evidenced-based understanding of the potential for renewables within each region and then to build that into the regional strategies that have to be developed. The other component is support for the local planning community to help to develop the skills and understanding necessary to be able to make these decisions against that framework.

 

Q170 Chairman: When can we anticipate the strategy being delivered?

Fiona Gough: The formal process of the strategy can start once the Bill that is currently going through is enacted, and we would expect the process to take about two years after that.

 

Q171 Chairman: I have a question, Minister, that I think you might just say "yes" to. You might not, but I think you might. It says, "Should One NorthEast's funding of centres of excellence in the north-east be replicated in other regions?"

Mr. Brown: I suppose the short answer is, of course, yes, but there is a caveat, which is that although the days when the Government picked winners and asserted what they should be are clearly over, we are very keen to work with private-sector-led projects that have a chance of succeeding, and also to make sure that Government investment is carefully thought through and adds value to the enterprises that are already under way and have clear commercially grounded, private sector sponsorship. I think a good example would be the Centre for Process Innovation at Wilton. That has led, in turn, to national recognition of training for the sector. We all understand the importance of it to Teesside.

If we are able to win our bid for the electronic car production at Nissan-we have fought very hard for it-that would clearly be a whole new industry, with a large number of jobs and a huge potential coming to the North East of England. With the work that is already under way at Tanfield with the electric vans that are a commercially viable product now, that would make us de facto the centre for a new industry. Things are not going to stay that way. It would be a very fast-moving market, but it would give us a clear lead, which we should consolidate.

Chairman: Absolutely. That is really good. Thank you.

Mr. Brown: The whole region will be behind it, if it comes off.

Chairman: Absolutely. Without a doubt.

 

Q172 Mr. Anderson: On funding, the budgets for the RDA are scheduled to go down over the next three years, from £240 million to £239 million. How will you cope with that?

Mr. Brown: Our RDA does a good job. It is value for money. Of necessity, you can only do so much with the money you have got, and its budget is a fixed amount. It has to choose its priorities, and it has chosen very well, I think.

The example I always use is the investment in NaREC, which might have seemed a bit of an adventure at the time but hasn't half paid off for the region. Every major interest in the sector worldwide has been to visit the North East now. I do not want to name names because some of this is commercially confidential, but some very big players have been to visit the North East. They have all been to look at the sites that are available for manufacturing and for development in the offshore wind sector. They have all been to NaREC, have all come away impressed, and have all made the point individually that this is an excellent facility, which is just right for the industry. When the investment decisions were made, it was pretty far-sighted to have seen that outcome. It is working really well for us.

The RDA, for example, is, I think, the only RDA to have invested money in a potash mine right at the other end of the region. Again, you could see how, from a London perspective, that might look a bit adventurous, but it has turned out really well. It has underpinned the mining jobs-a very traditional area of employment-but it is all working away very successfully and the owners are optimistic.

I get asked about the last round of budgetary reductions. My representations were not to reduce the budget of the RDA, but across Government it was decided that this is what we would do. It is right that I mention that we were net beneficiaries of the redistribution of the money, because we gained more through the housing expenditure than we lost on the RDA budget, so that mitigates our losses quite a lot.

On the latest round, my understanding of the position is that each Department is making a contribution from its existing budget, because it is not new money for the latest housing round of expenditure, but I understand that it has not yet been decided, or maybe it has not been decided at all, in BIS that the money will come from the RDAs. I don't know if any of you are more up to date than I am. We are arguing the RDA's corner.

 

Q173 Mr. Anderson: On a similar point on research and development investment, we have had information that states that other areas have gained more than we have, particularly the East of England and the South West of Scotland. Why do you think that is? Can I ask you to comment on the view that we got from Dr. Rutherford of the New and Renewable Energy Centre a couple of weeks ago? He said, "We have put together what we thought were exceptionally good bids, but they did not get through simply because we were not close enough to the people who were judging the bids."

Mr. Brown: That is a pretty heavy thing to say. My own first-hand experience is that, just after I became the Regional Minister, we were in a contest with other regions for the Energy Technologies Institute bid, which was won by the East Midlands region. I remain discontented about that. I think that the way in which the ETI reshaped once the competition was decided, and the way in which developments in the sector have gone, which have rather proved our point, give some evidence for my continuing discontent with it all.

We have friends, neighbours and competitors to the North and to the West in the devolved authorities of Wales and Scotland, who use their budgets to promote the communities that they represent. It is necessary for us to make sure that we fully punch our weight. We win more than we lose, and as the Regional Minister I have been willing to take up cases even though the advice was that the chances were not so strong-I have still done it. That sometimes means that we don't win, but across the piece it would be wrong to give the Committee the impression that, somehow, collectively we are losing out, because we are not. A very hard look at public expenditure across the piece and where it goes per head of the population does not show our region as disadvantaged.

 

Q174 Chairman: I think there's a worry that Whitehall's connections to Oxford and Cambridge in particular could actually be very disadvantageous to us in the Northern region.

Mr. Brown: If the question is whether there are academic cliques, as there are cliques in every walk of life, that are reinforcing, I perceive that as an issue and a problem, so that is a fair point that is fairly made. Are we so severely done down that we have massive cause for complaint? I would be a bit more cautious about that. We fight our corner pretty well.

 

Q175 Mr. Anderson: Are you happy that you have got good enough access to Ministers in BIS to actually argue your corner?

Mr. Brown: Yes. Being the Government Chief Whip is not a disadvantage. I am very cautious about criticising cliques, because I can see what's coming next.

Mr. Anderson: As if.

 

Q176 Chairman: If we have heard one thing from many of the people who have given us evidence, it is that getting money for innovations for product development that relies on moneys from £1 million to £14 million is very difficult. We do not have venture capital in the North East effortlessly at hand. It is a problem. What is happening is that we put money into science, we can develop the science, we are brilliant at the research, but there is a gap between research and product and the market.

Mr. Brown: This is a real issue, particularly in the current economic climate. It's not entirely clear to me how much it is a facet of the current economic downturn and the peculiar circumstances that have brought it about and how much it is a continuing problem. I cannot think of a major issue of this kind having come towards me before the downturn, but I am very conscious that the projects that we have got under way are under way because issues of liquidity are not problems for the particular entrepreneurs. That's making the point the other way around, which suggests that it is a real point.

Fergus Harradence: I would add that venture capital is by no means the only route to the commercialisation of new ideas and technologies out of the research base. Venture capital financing is a very valuable part of the innovation infrastructure, and venture capital-supported companies do tend to be very innovative, but the fact of the matter is that equity finance is suitable for a very small number of businesses, and a very small proportion of those businesses are actively engaged in R and D and innovation. Development capital, business angel financing, traditional Government grants, support from a larger company: all of these are equally valid and useful routes, and many companies find it easier.

If you're looking at venture capital funding, they are looking to fund small businesses with the potential to become real stars. There are a very small number of those. There are a lot of small businesses that can grow to a reasonable size and generate decent revenues on the back of smaller-scale innovations, but they don't have the potential to be the kind of global player that venture capital is used to support.

 

Q177 Chairman: I think it would be very useful, Fergus, if we could follow this up at a later stage with you and with people from NEPIC-the North East Process Industry Cluster-and the process industry, renewables in particular. I think there's a space here to have some real information and sensible dialogue which maybe is not taking place at present. That would be very valuable.

Mr. Brown: A few months ago, I met with the heads of the region's financial services sector-the big banks and the big accountancy firms as well-to try to respond to the immediate problem, which was the economic downturn, the lack of liquidity in the region's economy, to find out how the banks see it and what their response was to the much-felt charge that the Government had bailed out the banks and the banks weren't seeing through all the people who relied on them for finance, and that terms were being enhanced and interest rates were being put up for people who wished to borrow money, if they could borrow money at all.

I thought the dialogue was useful. Many of the regional banks are constrained, of course, by the national policy of their institutions, but there is room for a continuing dialogue. If, in your further discussions, the Committee identifies an area that we as a region ought to be talking to the finance sector about, then I am more than willing to try to get that dialogue going again, and to see if we can find some mechanism that meets the identified need.

Chairman: I am most grateful, and the Committee will be most grateful for that. Phil is going take us very quickly to transport.

 

Q178 Phil Wilson: What role do you and the Government Office for the North East take on advocacy for transport policy in the north-east, be it road or rail and, obviously, being very helpful on regional airports as well? What role do you play in that? What are the major investments you would like to see take place in the area over the coming years?

Mr. Brown: My role began as being an advocate-in other words, understanding the position and being an advocate for the next steps that are identified for the region-but it has developed. First, I have taken an interest in strategic policy. Every meeting I go to, I get asked about transport policy more than any other single topic-more than the employment base, more than the training opportunities. That is not surprising. The external transport links are essential to the region's economy. We are a net exporter. The transport links within the region are also essential to the functioning of the region's economy.

Tees airport and Newcastle airport have been involved in making direct representations to the Ministers of State and the Secretary of State-both the last Secretary of State and the present one. The present Secretary of State is visiting the region on 28 July and I will be joining him on that visit. I hope I have got the date right; I think that it is 28 July. I will again push our case then.

I am not sure if it is controversial or not-nobody has stopped me, so it cannot be controversial-but I took the chair of the region's interim transport board for a specific reason. That is the body that advises the Department on the expenditure of the regional allocation. For the two years prior to the current one, we have had a quite substantial underspend on the budget and we were heading for a third underspend. I thought that that was indefensible; I will put it as strongly as that. I make no criticism of what has happened in the past, but to have had an underspend for a third year, because the principal programmes are delayed, is not what the region would have expected of us.

I took the chair and asked if any of the identified programmes could be brought forward. They could not be, so the underspend is real. I asked if those programmes could be phased without detriment to the priority that had been chosen by the partners in the arrangements and it turns out that they could be. That left a potential underspend to be allocated. The members of the board had identified other projects that they wanted to get in, if they could get them in. Fortunately, those projects could be brought forward.

We agreed to bring into the programme the work on the smartcard, which is the north-east version of the Oyster card. Then there was a series of projects relating to the stations in Tees Valley, so that those projects could effectively be-I am sure that I am not allowed to call it this-phase 1 of the Tees Valley metro. In other words, those projects are the upgrades of the stations on the line where we have our ambitions for the metro, and the long overdue reform-it is long overdue in my opinion-of shifting the East-West line to the eastern side of the East coast line rather than the western side. There is a cost to doing that, which is why it has not been done. However, as well as underpinning the development of the Tees metro, it will also improve capacity on the North-South line, the main East coast line, which would be an advantage for the whole region and also for our neighbours, to the north and south of us.

Chairman: I am sure that everybody will understand if I say that we are very, very excited about that whole idea.

Mr. Brown: Yes. But the question was what did I do? That is the sort of thing that I do. Whether I should do it or not, I don't know.

Chairman: Yes, you should, definitely.

Mr. Brown: I am the Regional Minister. I am democratically elected and an appointed member of the Government, so it seems reasonable to do so. Of course, I consulted with the Department beforehand and I understand that our proposals are getting a very fair wind. We have a great advocate for rail transport in Lord Adonis, who is taking a constructive and enthusiastic interest in all of this, which is very welcome.

Chairman: Absolutely.

 

Q179 Mr. Murphy: Minister, I share your concerns about three years of underspend on transport in the region. Along with many others, I have been campaigning for the last 12 years to have passenger rail services reintroduced on the Ashington, Blyth and Tyne railway line. For £5 million capital spend, we could have those passenger services reintroduced within six months. It is a regional incentive that it is currently a fully maintained mineral line. That sort of figure-£5 million-is very low in transport terms. It could bring huge benefits to a former mining area and allow people to travel out of Wansbeck and into Tyneside for work, and allow people to travel from other parts of the country directly into Wansbeck.

Mr. Brown: I know you got the previous Secretary of State to come and look at the site and the potential, therefore the Department will be very well briefed on it. When the new Secretary of State arrives in the region, I undertake to raise the issue with him. There are other potential unused rail links within the region, which I would like to discuss with him-as well, I promise you, Denis, not instead of.

Mr. Murphy: I am delighted to hear that. There is none so well advanced as the Ashington, Blyth and Tyne.

Mr. Brown: Yes. I think we should look at public transport and at connectivity-by which I mean rail connectivity-within the region. If we could join the conurbation of Tyne and Wear and Teesside together, we would have the fourth largest conurbation in the country. I know it is not an entirely practical proposition, but I think we could strengthen the links and encourage our constituents to travel, for the simple reason that the more interconnected the conurbation is, the more it drives up the prosperity of the whole conurbation.

Chairman: I am sorry that this has turned into a bit of a bidding war, but you are here so, inevitably, we are all pressing our case, which is not exactly what we were supposed to be doing.

Mr. Brown: But these are good cases.

Chairman: But it is not exactly where we should be. Minister, we are over time-we have one more question, if you have the time.

Mr. Brown: Of course I do.

Chairman: Then the day will end for us.

 

Q180 Mr. Anderson: I may not need to mention the importance of skills, but it goes right across the board every time we have had a meeting with various groups. I just wanted to raise a few questions in one. What do we do to make sure that we make construction engineering attractive to graduates from within and without the region? Also, what do we do to make the same industry attractive to people still at school? What support are we giving to businesses to make sure that apprentices are not lost during this time of economic hardship? What if a company has to go to the wall? If the way to stop it going to the wall is by making an apprentice redundant, how will we stop that happening? What do you think the impact in the region will be of the dissolution of the learning and skills councils? In particular, our region still has a huge number of people, disproportionately living in the old industrial areas, whose skills levels are even worse than Dari mentioned at the beginning. Is there a strategy to help them-to give them the special help they need?

Mr. Brown: On the fate of apprenticeships when large, single employers go under, it is a problem that we are well used to dealing with in the region-unfortunate, but we are. I discuss it regularly with Jobcentre Plus, because I meet with them at regional level on a regular basis, usually just after the labour market figures have come out.

It is on a case-by-case basis, but we have been pretty successful in getting other employers in similar sectors to take the apprentices and enable them to complete the apprenticeships. It is slightly different sector by sector. The one I know really well, of course, is the situation at Swan Hunter where when it finally closed, the apprentices were all offered transfer. I cannot say that they all accepted it, but they were all offered transference with the work so that they could complete their apprenticeship in an industrial setting. Huge efforts are made, although I cannot report 100% success, but pretty close to it.

On the question of how we make engineering a more venerated profession, that is not new. The issue has been around for a long time. Comparisons are always made with continental equivalents where the engineer has almost a social status and is said to be ahead of the United Kingdom. There is an issue. The things that work and that are most persuasive are to show what the modern pay bands are in the sector. In my meetings with the engineering company-I am sure it will not mind my mentioning them-which employs engineers and, in fact, are engineers, it says that it is very difficult to get really good quality people in the sector because there is a shortage of such people.

To know that there is good remuneration, that there are job vacancies and that there is a secure future in the sector-it is a broad sector with a large number of specialisms within it-is something that should be better known. I am strongly in favour of explaining that in schools, so that youngsters, when they are thinking of careers, look to it.

Above all, it is the employment base: if we can grow the employment base as we are planning to, and show that it does not lurch-if that is not too strong a term-from project to project; from major procurement round to major procurement round, as it used to be in shipbuilding for example. It is the same for heavy engineering; if you did not have a large single project, you could go from everyone being at work to no one being at work, just on a single order. What we have planned for the future takes us beyond that. It is the steady, remorseless manufacturing of devices that will not only generate electricity, but do so in a way that will help combat climate change.

I think there is an ethical underpinning to what we are planning to do, as well as stability and sustainability, which the old industry, as it has been understood over the last 20 years in the communities we represent, of necessity, just did not have. It is something rather different that we are looking at for the future. I am really enthusiastic about it. What will tell the story is the fact that the job is safe and for life, which I think worries people about going into the sector, and the fact that the pay rates reflect the skills, ability, work and talent that the individual brings. I think it is possible to make a case, and we should set out to do so.

 

Q181 Mr. Anderson: What about the issue of low-level skills, particularly in the older work force?

Mr. Brown: We have to move our region on. We have to say that where people stand to be retrained-as well as those who stand to be trained, because they are coming into the labour force for the first time-it is about having a skill, being work-ready, having an outgoing and proactive attitude and learning a specific skill. That is not just important to being employed for the future, it will be essential. We all have a responsibility to get that message across.

At its worst-I am not talking about the region as a whole-we have a higher percentage than the national average of youngsters who go out into the world with no skills. We know that that does not help them now, but as the world moves on, they will be relatively even more disadvantaged. We all have a responsibility to stop that happening, which is why the Government are so right in insisting that everyone up to the age of 18 does something; you are in employment, continuing education or learning a skill-something that will help you in the labour market. It is not a punishment, but helping people gain a life skill, and also drawing from them the very best that they have to offer, which is never best summed up by resentfully staying in bed and watching telly.

Chairman: That was very valuable. Thank you very much. It is a very positive note on which to end.

Mr. Brown: Thank you, and thanks to the Committee for the hearing, and for the opportunity to set out what we will do.