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Mr. John Greenway (Ryedale) (Con): I am grateful to the Deputy Prime Minister for his statement. Does not he realise that his refusal to rule out completely a referendum in Yorkshire and Humber and his response to my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) on unitary authorities will only prolong the uncertainty as regards local government in North Yorkshire? Most people in North Yorkshire—a county that is almost 100 miles wide—think that they already have regional government through North Yorkshire county council. Will the Deputy Prime Minister get on with the job of devolving powers back to it so that, as my right hon. Friend said, we can get good people elected into the council chamber and get some decisions made locally?

The Deputy Prime Minister: I thought that I had made it clear to the House that changes to the local government structure of, in this case, Northumberland and Durham would fall if the people said no, which is what they clearly did. I made it clear that no changes to the local government structure would arise out of the
 
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assembly. Our manifesto stated our belief in establishing unitary local government, but that would require primary legislation.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): Wrong—ask the Minister for Local and Regional Government.

The Deputy Prime Minister: I am only passing on the advice that I receive. I do not necessarily agree with the hon. Member for Ryedale (Mr. Greenway). Basically, local government reorganisation would need to go through a proper process. As that is not being proposed, the local government structure that we have at the moment is not affected whatsoever by this decision. Local government as it is, in its county, district and unitary form, will continue.

Mr. Ronnie Campbell (Blyth Valley) (Lab): I thank my right hon. Friend on behalf of the north-east of England for at least giving us a vote. If the Tories had been in power, we would not have got one. People are basically saying that they want more democracy in their areas and their councillors to be more professional but, unfortunately, we lost the vote. We should have some sort of organisation, even if it has to be in Parliament, to tie the north-east together, join the threads and get moving because we are being left behind by the Welsh, the Scots and Londoners.

The Deputy Prime Minister: I am grateful for my hon. Friend's words. I read some of the reports on Friday and Saturday after the results and I have heard the comments that we should do something. I presented one proposal, which the people in the north-east emphatically turned down. I can therefore only say that we shall continue to see what we can do to strengthen the assembly, RDAs and local government generally. Giving people more power to make decisions means devolving some of the decisions from local government to communities. We are doing that; it is embodied in the local vision and we shall continue with the reforms because we want to decentralise decision making.

I am sorry about the decision that the people in the north-east made, but it is their decision and it is our job to recognise that. However, I reassure myself by remembering that a successful conclusion was ultimately reached in Wales and Scotland.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): The right hon. Gentleman will acknowledge that his proposal for directly elected regional assemblies was at least a partial answer to the West Lothian question. Given that it has failed, will he consider preventing Members who represent Scottish constituencies from voting on exclusively English business?

The Deputy Prime Minister: No.

Mr. Gordon Prentice (Pendle) (Lab): I congratulate my right hon. Friend on his decision not to press ahead with a referendum in the north-west of England, which would certainly have been lost. Was the referendum in the north-east lost during or before the campaign?

The Deputy Prime Minister: I am used to clever questions from my hon. Friend. It is time to worry when
 
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we get support from him. I do not know why the referendum was lost—there is a range of reasons. I have probably spent more time than anyone else defending the proposal and listening to people's views in markets, streets and in debates. I gave some of the reasons, which included worries about too many politicians and cost. Europe was mentioned from time to time, as if the proposal were a Euro-plot. All those factors played a part. I do not think that there was one major reason. I cannot therefore really give an answer to the question "Why?". All I need to know now is that I did not convince people and that I was emphatically defeated. I have had to take the consequences today. As to the north-west, we must wait and see.

Mr. Andrew Stunell (Hazel Grove) (LD): I thank the Deputy Prime Minister for his statement and share his disappointment. He may know that the Northwest Development Agency held a meeting last Friday as a briefing for Members of Parliament. Several Labour Members attended, as I did. The development agency was clear that some untidy ends remain in the north-west. The links between the agency, the Government office for the north-west and the Learning and Skills Council are not as strong as they should be and accountability remains poor and divided. Will the right hon. Gentleman assure us that he will take those issues forward and improve the accountability of those big budget quangos?

The Deputy Prime Minister: That is an important question, which I had to address during the debate. We produced a White Paper that reflected the judgment between Whitehall and us about the powers that could be redistributed. Some were already undergoing a form of reorganisation. The Learning and Skills Council was a classic example of something that was established both nationally and locally. As I said earlier, people found in the regions that regional directors had to be appointed to make regional decisions about training. I argued after the White Paper that people in the regions should make the decisions. Local bodies alone cannot do that; there needs to be regional decision making. That has been recognised by the Learning and Skills Council, and the fact that we approved the number of people to be appointed by the assembly to sit on the board responsible for training is an improvement. This is also a recognition that regional dimension decision making is going to be there all the time, whether it involves elected people or unelected people.

Mr. Peter Pike (Burnley) (Lab): I understand why we cannot go ahead with the referendum in the north-west, but it is very disappointing. I urge my right hon. Friend not to lose sight of the fact that, while there has been a reversal in the north-east, the case for regional devolution and accountability has not been lost. There is still a very strong case for it, because too many strategic decisions are still being taken by unelected and unaccountable people. I hope that he will address that issue. In the case of local government in Lancashire, does he recognise that the changes brought in under the Banham review by the Conservative Government were
 
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a poor, hybrid solution that introduced two unitary authorities and left the rest of the county with two-tier local government? That also needs to be addressed.

The Deputy Prime Minister: I certainly agree with my hon. Friend's last comment. In regard to regional devolution, the thing that has always convinced me of the need to do more than simply leave things to central Government is the increasing differential between the north and the south. It has now been measured that if the three northern regions were to secure the same level of growth in gross domestic product that there is in the south, they would be £30 billion better off and there would be 250,000 more jobs. That is the reality. While all the regions have now increased their prosperity under the Labour Government and reduced their unemployment by half, the differential still exists. That is why I feel strongly that we need to do something more.

The institutional changes in London, Wales and Scotland have made a difference and I tried to argue the case for such changes in the north-east. I certainly recognise that that argument is also true for the north-west, but it will be up to the people of the north-west to make their views clear. We have kept the legislation relating to these measures, and if it is their declared opinion that they want one, the legislation remains for another exercise, but not within the next year or so.

Mr. Graham Brady (Altrincham and Sale, West) (Con): Many Members on both sides of the House have been telling the Deputy Prime Minister for months that the soundings exercise was incompetently handled. Does he now accept that he completely mishandled that process and completely misread public opinion through the soundings exercise?

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