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Mr. Iain Wright (Hartlepool) (Lab): It is a pleasure to follow the hon. Member for Carmarthen, East and Dinefwr (Adam Price), whose technical expertise in these matters is obviously very great. I want also to pay tribute to the speech from my hon. Friend the Member for Doncaster, North (Edward Miliband), who unfortunately is no longer in his place. He took us back to the year 1988, which I remember very well. That year, I did my GCSEs, left school and met my future wife—so it was not all good.

I want to concentrate on how the broad macro-economic factors mentioned in the Budget will impact on my region of the north-east. With that in mind, I was particularly pleased that my right hon. Friend the Member for Darlington (Mr. Milburn) contributed to this debate, and I believe that my hon. Friend the Member for Bishop Auckland (Helen Goodman) is also hoping to catch your eye, Mr. Deputy Speaker.

I warmly welcome the Budget's emphasis on addressing the drivers of productivity: improving competition, promoting enterprise, supporting science and innovation, raising skills levels and encouraging investment. Addressing these issues is a prime concern in my region. We in the north-east have reason to be optimistic, and given that it is my right hon. Friend the Chancellor's 10th Budget, it may be worth pointing out that in the past 10 years we have seen a 10 per cent. increase in the number of jobs in the region. The number of business start-ups is increasing and more young businesses are surviving—at a better rate, in fact, than in any other region. However, we need to address the long-term structural weaknesses in the north-east's economy and our economic performance in relation to the rest of the country.

Despite improvements, far too few people in our region are in employment. For example, unemployment in my constituency has fallen from 9.9 per cent. in 1996 to 4.6 per cent. now, but that is still too high. Although the north-east has broadly the same ratio of working people to the total population as the national average, some 11 per cent. fewer are economically active. It has been estimated that if the north-east raised the proportion of people in work to 80 per cent.—the Government's medium-term target—its output would increase by some £12 billion. That would have a tremendous impact on the UK economy, but more importantly, it would transform the lives of the people of the north-east.

Our skills profile is also relatively low. Despite real improvements since 1997, our region still suffers from appalling disadvantages at the lower end of the skills sector. More than a third of the working population have either no qualification or are qualified below level 2—four to five percentage points below the rest of the country. As my right hon. Friend the Chancellor has rightly identified, globalisation and intense competition from the likes of China and India will make it increasingly difficult for those with low skills to be part of our economy. For economic reasons, but also for social and moral ones, we as a country need to move away from low-paid, low-skilled work. On reading yesterday's Hansard, I was particularly struck by the comments of my hon. Friends the Members for Coventry, South (Mr. Cunningham) and for Burnley
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(Kitty Ussher). I agreed with everything that they said in promoting manufacturing in the north-west and the midlands.

The north-east still has a relatively high proportion of manufacturing industries and jobs. Speaking as a Member who wants the north-east to retain and build on its reputation as an area of excellence in manufacturing, I believe that the threat from China and India means that we will have to be even more innovative, and provide the world with higher value-added manufacturing goods. The region therefore has to be even more determined to improve its skills base, and to do so faster than other parts of the country.

The third structural weakness is that our region's culture suffers from a relative lack of enterprise. Despite recent success, our region has significantly lower business start-up rates than other parts of the country. Both public-funded and privately funded research and development is disproportionately concentrated in the south of England. However, I hope that the expansion of R and D tax credits for small and medium-sized enterprises announced in the Budget will help matters.

The culture to which I refer goes back decades. The north-east has suffered greatly from the legacy of heavy manufacturing decline. In the 20th century, towns such as Hartlepool did not have the cultural identity to encourage enterprise. Men such as my grandfather were part of a mass work force in the shipyards, steelworks and factories. Tens of tens of thousands of men—they were predominantly men—were employed to do the same thing, often for years at a time. Innovation, enterprise and creativity were not encouraged because they were not considered necessary.

When decline came in the 1970s and 1980s, exacerbated by the policy decisions of the last Conservative Government, we saw mass unemployment and the subsequent social problems that accompany it. Culturally, the collective psyche of Hartlepool and the north-east found it understandably difficult to move on from the safe, risk-averse feeling of being part of a large work force to being risk-aware, innovative and ambitious, so I welcome the Budget announcements to encourage enterprise and instil a culture of entrepreneurialism. I agree with the excellent points in a similar vein made earlier by my hon. Friend the Member for Bristol, East (Kerry McCarthy).

A local enterprise growth initiative—or LEGI—was announced in last year's Budget, to provide substantial sums to the most deprived areas to stimulate economic activity and productivity. The first round of successful applicants was announced recently and I was disappointed that Hartlepool was not included, although as my speech is about the north-east economy, I congratulate my right hon. Friend the Prime Minister and the Minister of Communities and Local Government, my right hon. Friend the Member for South Shields (Mr. Miliband), who secured LEGI funding. I hope that Hartlepool will be more successful in the second round of LEGI funding in 2007–08, because I genuinely believe that my constituency, which has some of the most deprived areas in the country, requires that investment to boost activity, performance and productivity.

I welcome the moves in the Budget towards enterprise education: the creation of the schools enterprise education network, the establishment of enterprise summer school
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pathfinders and the launch of the United States enterprise scholarship scheme for undergraduates. The argument that enterprise can be learned in a classroom may be sneered at in some quarters, but such schemes play a large role in embedding a can-do attitude and fostering an enterprise culture that provides young people with the confidence to start their own business or to suggest innovations in the workplace. In the long term, that must be good for the productivity of our economy.

Closely linked to the enterprise culture is the need for high skills in the workplace. The Chancellor's emphasis on education in his Budget statement was absolutely right. Education is the route out of poverty and the real way to transform lives. The opportunity to receive a good education should not be based on who a child's parents are or how much money they have. My right hon. Friend was right to point out that increased investment in education makes a real difference. We need only look at my constituency to see that.

In Hartlepool, we have doubled spending per pupil since 1997. We have increased the number of teachers and doubled the number of classroom assistants. As a result, Hartlepool has achieved the fastest improving education results in the country over the last few years. The percentage of 11-year-olds achieving the accepted level or above in English has risen from 48 to 79 per cent. The percentage of 14-year-olds achieving the accepted level or above in maths has risen from 47 to 75 per cent. In 1997, only 30 per cent. of children left school with five GCSEs at grades A to C; now, the figure is 53 per cent. More students than ever are going on to study A-levels and going to university. So it is quite insulting that on the day of the Budget the shadow Chief Secretary said, on "BBC News 24", that increasing state school spending was "not the answer".

My concern about those real improvements in education is that well-educated young people are moving away to university and being sucked into the economic powerhouses of London, the south-east and other cities, which means that towns such as Hartlepool are losing their foundation for ongoing economic success. A sense of place is vital to boost productivity and prosperity in deprived areas such as mine, and I hope that the initiatives announced in the Budget will do more to encourage people to stay in the north-east and grow businesses.

Obviously, there is more to do, but I am encouraged by the progress made so far and feel passionately that the Chancellor's announcements last Wednesday will improve matters still further.

7.24 pm

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