Regional Economic Performance and Imbalances

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Mr. Austin Mitchell (Great Grimsby): We can always express the hope that the Conservatives will evolve on the issue, as they did on devolution in Scotland and Wales. First, they opposed it strenuously; secondly, they went silent; and, finally, they came out in favour.

Mr. Beith: That evolution seems to be going in the wrong direction, although one of my most intriguing recent experiences was sitting in the Gallery of the Scottish Parliament, observing a former Conservative Member of this House arguing that the Scottish Parliament should not allow Westminster to legislate for it on one matter. That former Member had opposed the creation of the Scottish Parliament and its electoral system, without which no Conservatives would have been elected. The hon. Member for Great Grimsby (Mr. Austin) might be right, and there is always the prospect of the repenting sinner and of political evolution, but there is not much sign of that today.

I had the duty this morning of reading the Conservative party election manifesto. Those who read it will see that the regional development agencies that we have debated, and just about everything else in the regions, are proposed as a source of savings. Such bodies would be abolished to pay for other commitments. Indeed, the regional assemblies that have not yet been created or paid for are also supposed to be a source of savings. Not only the money that the regions have now, but any that they might hope to get in the future is earmarked to be taken away—from some of the most deprived areas of the country.

The issue is dear to the heart of my hon. Friend the Member for St. Ives (Mr. George) and I pass on his apologies to the Committee. He has suffered a significant family tragedy with the death of his brother; otherwise he would have been here to put the strong Cornish case on behalf of the lowest wage area. His area shares many of the problems that we have in north-east England and he, too, feels keenly the need for an effective institution to serve his and other regions.

One of the disappointing stories that the Government have to tell in this election campaign is that their aspirations for the regions have not been met. We were glad to work closely with them on the setting up of the Scottish Parliament, which we sought to shape in the way that we thought important. It was a fruitful co-operation. However many complaints the people of Scotland may make now, if they were asked to vote on the matter, they certainly would not vote to have their Parliament taken away from them. Parliaments are not, by definition, popular, but taking the Scottish one away would incur the wrath of the majority of the Scottish people. It has clear opportunities to serve Scotland, which it carries out, as well as other advantages that I turn to now.

I start with the Barnett formula. Those who argue that a funding formula for the regions is needed do not argue that Scotland should be punished for having had the Barnett formula. In so far as a needs case can be represented for expenditure levels in Scotland and for a Scottish block to be a particular size, that case can be made. Indeed, the proper place for doing that is a commission for the financing of the nations and regions of England, which could determine how the block is distributed on objective criteria, related to need. The creation of a body that would match the claims of Scotland, Wales and Northern Ireland with those of the different regions of England seems a sensible way of proceeding. Perhaps it could become known as the Hughes commission, if the Minister were to put her weight behind it. Some such body is needed to make that allocation.

I agree with the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) about the need for a block basis of funding for the regions, not just in principle but in practice, because it would allow the regions, as it now allows Scotland, to decide on priorities. They are sometimes difficult decisions, such as whether to spend more on one thing and less on another. My colleagues in the Scottish Parliament have made a commitment to fund personal care for the elderly, which they rightly regard as a high priority. That commitment will have financial implications, which will have to be resolved within the Scottish budget. It is quite right that it should be so resolved. We should like to make choices like that about priorities in our various regions.

The lack of progress on this matter is depressing. I respect those Labour Members who have clearly and forcefully argued that case. My hon. Friends and I will argue with them until we get a system that takes account of the genuine needs of disadvantaged regions. Short of some economic miracle or fluke, those regions cannot be expected to overcome their disadvantage so long as their infrastructure, their main public services, their education or their health service are behind other regions. Unless unexpected industry arrives in the way that the oil industry arrived in Shetland many years ago, the disadvantage will remain. A transformation cannot be achieved without a basic change in the funding formula.

As the hon. Member for Blyth Valley (Mr. Campbell) pointed out, other funding formulae affect regions badly too. Certainly in Northumberland and Durham, and some other parts of the country such as Somerset, the local government formula is a serious handicap. Regional businesses that are trying to develop their potential require well-educated young people. The same standards of education for our children are expected nationally, but the funding levels available for that are weirdly different. I use the word ``weirdly'' because they do not correspond precisely to areas where one can show that there is a particular problem, such as a high proportion of children whose first language is not English. That is a specific need and we would all agree that some provision must be made for it.

Other differences between Westminster or Kensington and Northumberland or Somerset are not explained by that and leave schools in those areas at a terrible disadvantage. Business people always stress that what comes out of the education system is vital to their potential. The present local government formula is the one set up by the Conservative Government. It is depressing that, after four years of a different Government, we still have the same formula and are still talking about whether we can do something about it. Dealing with it should have been a priority. The Government are tying their hands behind their back by going into an election in our part of the world without having resolved that question.

I would have liked more progress on regional assemblies. Rather than sitting around waiting for the Government to make progress, some regions, particularly the north-east and Yorkshire, are following the example of Scotland and working together. It is very important to note that various interests in the regions are getting together to set the agenda for developing democratic regionalism. Such regionalism should not be imposed by central Government. It is born of a desire in the regions for accountability on the part of existing Government officers and activities, and for the opportunity to improve regional governance by making real choices. Much more in Scotland than in Wales, that was achieved through a convention and the coming together of various groups to establish the nature of the Scottish Parliament.

In Wales, the process was much more hasty, and as a result the vote on the creation of the Welsh Assembly—of which I was strongly in favour—was extremely narrow. Unlike in Scotland, where real advantage was taken, in Wales the wrong approach was taken to the development of regional government. We in the north-east are trying to follow Scotland's example. The Churches, the trade unions, business, community organisations and political parties are all talking to each other about how to make regional government effective.

By providing the necessary mechanism and giving people a choice in a referendum, the Government would be responding to an existing desire in the regions. I welcome the fact that the Minister has underlined today that that remains a Labour party commitment, but I am disappointed at the progress made during this Parliament. Regional government is a high priority for my party. After the general election, we shall use all the power at our disposal to enable people in those English regions where there is a real interest in regional government to cast their vote on the establishment of a regional assembly. We must present an attractive package that offers real powers and real competence, that embraces existing Government bodies—rather than leaving them without regional accountability—and that has a fair voting system. I am certain that the Scottish Parliament would not have succeeded without a fair voting system. It enabled people to feel confident that one party or one region would not dominate the Scottish Parliament.

The role of regional assemblies is also important in relation to other levels of government. It is important in terms of the European Union, which is crucial to the success of disadvantaged regions. Like a German Land, a regional assembly could represent itself in Europe and win arguments on behalf of its region. At the moment, such opportunities do not exist, although we try our best through our regional offices in Brussels. The offices are sometimes criticised, but they are necessary because they provide funding and opportunities for the regions.

It is becoming clear that, despite all the difficulties and weaknesses in the system, London government allows London to challenge central Government. An interesting and rather difficult argument about the future of the tube is taking place between London government and central Government. We all have views about that, but it is important to note that the north lacks the robustness that enables London to participate properly in that argument. Most of those who might conduct such an argument on behalf of Yorkshire or the north-east are civil servants, who are employed by the Government. They cannot challenge the Government in the manner of the hon. Member for Brent, East (Mr. Livingstone), or Bob Kiley. The ability of a region to speak for itself is greatly affected by the existence of an assembly.

I think that it is generally recognised by the Government that one of the most important ways to enable the regions to prosper is to ensure the necessary infrastructure, such as transport, support services and telecommunications. Infrastructure is crucial, and decisions about such priorities are a matter for the regional assemblies. It is regional assemblies that must talk to business. They must listen to what business says about matters such as freight services and road communications, without which the regions cannot develop. In Northumberland, an important infrastructure development would be A1 dualling; in other parts of the country, an altogether different project might be necessary. We must have the opportunity to allocate money to priorities on the basis of regional decisions.

I want to discuss two more issues, both of which have already been mentioned. The first is that of regional arts boards. As my right hon. Friend the Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan) said last week in a debate in Westminster Hall, the need for a regional level of decision making in the arts is recognised in just about every region. Nobody who works at that level can see any sense in the highly centralised structure that would emerge if we did not have regional arts boards.

The second matter is the regional effort that is being made to deal with foot and mouth and its impact, which was mentioned during the brief stay of the hon. Member for Totnes (Mr. Steen). Scotland has scored in that regard. The capacity of government in Scotland to act in a co-ordinated way has been demonstrated by their handling of the foot and mouth outbreak and its aftermath and consequences. Obviously, they have the advantages of smaller scale, but so would a regional assembly. I pay tribute to the government officers, including the head of the Government office for the north-east, who are working at the foot and mouth emergency centre in Newcastle. They have a tremendously difficult job and are putting a tremendous amount of effort into it.

The Minister must recognise the regional significance of what has happened and the despair of many people—not only in farming, although there is plenty of despair there, but in businesses associated with farming and tourism—about the situation that they now face. That is especially true of people in the tourism industry. Those who have invested in hotels see no match at all between what is available through regional tourist boards and the scale of the losses that they are sustaining. I recently spoke on the phone to a hotelier in my constituency who had invested in a hotel within the past 12 months. Almost all his customers are walkers, and those who are not come to events such as motorcycle rallies, which have been cancelled this year. Many people have had only a tiny fraction of the business that they would normally expect.

Tourist board resources are barely sufficient to mount an effort to counteract the publicity that has been generated by foot and mouth by issuing an invitation to people to come to the region. The resources that are available are helping to deal with the problem, but are insufficient to compensate the businesses that have suffered. The Government must channel more resources into the regions that have been drastically affected by foot and mouth, which is still raging in Northumberland as new cases continue to appear.

This Committee is no kind of answer to the issue of effective democratic government in the regions and scrutiny of that government. Indeed, it has been made available to us only on the last possible day before the dissolution of Parliament. However, that is no reason not to take the opportunity, as hon. Members have done, to raise our concerns and to put them firmly in Ministers' minds. All those of us who hope to be back here after the general election intend to pursue these matters vigorously.

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Prepared 10 May 2001