Regional Economic Performance and Imbalances

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The Chairman: Order. The Committee is supposed to be asking questions, but the hon. Gentleman is making debating points.

Mr. Cousins: In respect of the answer to the question put by my hon. Friend the Member for Riverside, will the Minister consider the possibility of providing a territorial block allocation to English regions on the same basis as that which has operated in Scotland, Wales and Northern Ireland for more than 70 years?

Ms Hughes: The position of the Tories is to abolish not only regional development agencies, but regional chambers and the Government offices, even though they created them. They are obviously keen to have no structures in our English regions, nor do they recognise the significance of what we are debating—regional imbalances and the importance of improving the economy in each region, which will in turn contribute to driving up the national economy as a whole. The policy of the Conservatives is clear: they do not like regions and they would do nothing to help them.

The net budget for One North East RDA this financial year is a little short of £150 million, so the region would lose at least that amount, but we all know that such funds are largely pump priming money, which generates more money through investment, project development and job creation. The full value of the amount lost to my hon. Friend's region would therefore be much greater and would impact more significantly on the north-east.

The Government have yet to decide the detail of our approach to the policy, but our fundamental position is clear: we remain committed to directly elected assemblies when people in the regions want them and then vote for them in a referendum. Later this year, subject to the election, we shall publish a Green Paper setting out the proposals, but I can tell my hon. Friend no more than that.

I am not sure that the Hughes formula has quite the same ring to it as the Barnett formula. I understand my hon. Friend's point and his strength of feeling, but the Government have no plans to change the formula and he and his colleagues will have to keep pressing if they want change.

Mr. Austin Mitchell (Great Grimsby): I welcome the Minister's statement and the first sitting of the Committee, belated though it is. We are taking a big step because regionalism will be the major issue of the next Parliament, as devolution was the major issue of this.

The matter is not stationary, as regionalism and devolution are a process that needs to move forward, and I pay tribute to my right hon. Friends the Deputy Prime Minister and the Minister for Trade for driving it forward so effectively. Furthermore, I welcome the establishment of the regional development agencies, but, given that so many jobs have been taken on by the RDAs, the funding will almost certainly be inadequate. There are regional disparities in public spending to which hon. Members have alluded. Public spending per head is £5,271 in Scotland, but only £4,224 in Yorkshire and Humberside, which is £1,000 less, even though the problems of unemployment, deprivation and industrial decline are worse than in Scotland.

Will the Minister say what plans the Government have in that respect? Now that the Conservatives have left the Room she is among friends, and I hope that she will elaborate. Will the Government increase allocations to the RDAs and even up the anomalies, not by dragging Scotland down, but by boosting regional spending?

Ms Hughes: As to RDA spending, as I said in my opening statement, the RDAs' initial budget, which comprised the streams that they inherited, was about £900 million. We have already increased that substantially. The budget for this financial year represents a 15 per cent. increase on the budget for the previous financial year. There is a total of £1.3 billion for this financial year, which is a substantial increase on £900 million, and, as a result of increases built into the spending review, that will rise to £1.7 billion in 2003-04. The Chancellor provided for substantial year-on-year increases in the RDAs' budget to tackle the issues facing them.

I emphasise what I said about the Barnett formula and what my hon. Friends consider to be disparities between the English regions and the other countries in the kingdom. I know that I am among friends, but I am not yet Chancellor of the Exchequer, and I regret that I cannot go further than I have.

Mr. Ronnie Campbell (Blyth Valley): Northumberland has four Members of Parliament. Three of us are in the Committee Room—only the Tory is missing—and we have a case to press.

The Barnett formula has been mentioned, and I asked Lord Barnett about why it was introduced. It began because Scotland was having a rough time and was fairly run down, so it needed extra spending. In those days, we were great socialists, so we did not mind the Scots receiving extra money to bring things up to scratch, but unfortunately the formula has continued for 22 years. What my hon. Friend the Minister says about my right hon. Friend the Chancellor of the Exchequer is right, but he is a Scottish MP. I mention that in passing.

I want to ask the Minister about standard spending assessments. In Northumberland, we always get a bad deal. In particular, headmasters and headmistresses do not receive enough money for their schools. We are not on a par with most of the country and we always receive less than the average, because of the way in which local government spending is formulated and the imbalances of SSAs. For many years, my hon. Friend the Member for Wansbeck (Mr. Murphy), the right hon. Member for Berwick-upon-Tweed and I have pressed for a review, which has been almost as hard as trying to have the Barnett formula reviewed. There is an imbalance, and it is bad for Northumberland. I do not know how the formulas work—we would need to be rocket scientists to understand them—but are there plans to take action on SSAs?

Ms Hughes: My hon. Friend will agree that, although my right hon. Friend the Chancellor represents a Scottish constituency, he is Chancellor for the United Kingdom. I am sure that most of my hon. Friends accept that.

I understand my hon. Friend's point about SSAs, and many Members throughout the country have made similar ones. We have recognised for some time that the SSA formula needs to be changed and we would have changed it earlier had we achieved any consensus among local authorities about the direction in which it should go. Although we have not achieved that consensus, we are committed to reform, as my hon. Friend knows.

As my right hon. Friend the Prime Minister repeated yesterday at Prime Minister's questions, we are committed to publishing a White Paper in October. Work is going on in my Department and all Departments that contribute to the SSA blocks through spending. We are seeking a way to change the system radically, so that it does not depend on the formulas that create perversities in outcomes, but reflects the different needs in different areas.

I cannot give my hon. Friend any detail about the White Paper's content, but I can say that we are working on it. Officials will continue to work on it during the summer and we hope to produce it in October. I hope that it will deal with some of the legitimate concerns that he has raised.

Mr. Quinn: May I take my hon. Friend back to her opening remarks? I think that she referred to building blocks for regional regeneration and a new economy in England's regions. I do not know whether I should declare an interest, but I am a civil engineer and I must tell her that we need to put the foundations in place before the building blocks. One of the most important aspects of building a new economy in my part of the world—Yorkshire and one of its most peripheral areas, Scarborough and Whitby—is the desperate need for transport infrastructure renewal, investment and a far more proactive approach.

I want to know how the Government propose to achieve accountability, particularly for transport infrastructure improvements, so that areas such as mine can achieve an enhancement of the A64 corridor, of which I know the Minister is aware. We must ensure that a peripheral area such as Scarborough and Whitby do not lose out because it is 42 miles from a major conurbation. There have been major job losses recently, so she will know how anxious the people of Scarborough and Whitby are about the Opposition's proposals to terminate RDAs and other agencies.

Ms Hughes: My hon. Friend raises an important point because transport infrastructure is an essential factor in economic development. That is why my right hon. Friend the Deputy Prime Minister announced significant additional investment in transport, and returned decision making on priorities to regional and local initiatives and transport planners through regional development agencies and the assemblies. I hope that my hon. Friend agrees that this is an evolutionary process and that we are beginning to devolve down to the regions not only big economic questions, but related issues such as draft planning guidance, and regional and local transport strategies. That is important because, if we want to achieve our objectives in regional economic strategies, we must devolve decision-making and priority-setting powers on infrastructure matters.

Regional Economic Performance and Imbalances

Motion made, and Question proposed,

    That the Committee has considered the matter of raising the economic performance of the regions and tackling regional imbalances.--[Ms Beverley Hughes.]

2.30 pm

Mr. A. J. Beith (Berwick-upon-Tweed): Perhaps I should have moved to the top seat on the Opposition Benches because, in the absence of the Conservative party, I have taken over as the official Opposition spokesman. When we resolve at the end that the Committee has considered the matter, we shall have to say ``the Committee minus the Conservative party'', which is an appalling state of affairs. The hon. Member for Totnes (Mr. Steen) disappeared without so much as a goodbye, which is rather sad if his fate in the coming election is as I predict.

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