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Westminster Hall

Tuesday 17 April 2012

[Sir Roger Gale in the Chair]

Budget (North-East)

Motion made , and Question proposed, That the sitting be now adjourned.—( Mr Newmark.)

9.30 am

Sir Roger Gale (in the Chair): Good morning, ladies and gentlemen. I need to make it plain before we start that I have applied to the office of the Chairman of Ways and Means for a time limit on speeches. A significant number of Members have written to the Speaker indicating that they wish to participate, and even more Members are present. Given that we will need to call the Front-Bench spokespeople at 10.35 am at the latest, I suspect that we will be down to four minutes per person, but that rather depends on Mr Mearns.

Ian Mearns (Gateshead) (Lab): I thank the Speaker’s Office for allowing me to initiate this debate, and also the many Members who have come along. The debate has created significant interest, particularly in our north-east region.

In the Chancellor’s millionaires’ Budget, which will hand back tens, if not hundreds, of thousands of pounds to some of the richest people in our society, including some of his Cabinet colleagues, it is clear who will suffer the most. It will be the poorest, those looking for work when few new jobs are available, pensioners, families, the hard-working, the squeezed middle and the working poor.

Following the Chancellor’s Budget speech, the Treasury produced a briefing highlighting the measures that will benefit the north-east of England. The region has borne the brunt of this Government’s policies. February 2012 figures show that unemployment in my constituency has risen from 8.3% to 10.5% since the coalition took office, and in the latest Office for National Statistics survey, up to January 2012, the figure for the north-east as a whole has risen to 10.8%, yet the Treasury’s briefing runs to a grand total of three measures that it claims will specifically benefit the region.

Although the first measure—the increase in personal allowances—is welcome, it can hardly be regarded as specific to the north-east. The second measure is that Newcastle will receive the princely sum of £6 million, and become a super-connected city. Perhaps the Chancellor and the Treasury do not realise that Newcastle, as important as it is to the entire region, is not the entire region—in fact, it has about a tenth of the region’s population. Finally, in the month when the north-east is losing its regional development agency, its local enterprise partnerships will receive a paltry £10 million from the Growing Places fund.

In the Budget statement, the Chancellor notably consigned to the dustbin of history the phrase, “We’re all in this together.” The imbalance in this Budget means that most of us are in this together, but the few at the top of society will be exempt from it all. The

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regional disparity is all too plain to see. In the three south-east regions— London, the south-east and the eastern region—nearly 195,000 taxpayers will reap the benefit of the Chancellor’s higher-end tax giveaway, but in the north-east the figure will be fewer than 5,000, and about 4,000 in Wales.

James Wharton (Stockton South) (Con): Is it not the case that nearly 1 million taxpayers in the north-east will benefit from the personal allowance increase, and that it is the poorest taxpayers in regions such as ours who will benefit?

Ian Mearns: That would be the case if it had not been for the hikes in VAT, which as an indirect tax particularly disbenefits the very poor in regions such as the north-east. There are significant figures showing the genuine disbenefits of that for poor people.

When William I sought to quell the north following the Norman conquest, he developed a slash-and-burn policy to subjugate the unruly barons and the Saxon citizenry, and the people of the north-east could be forgiven for thinking that the Government had developed exactly the same approach—a 21st-century scorched-earth policy for the north. In just two years, they have abolished our Minister for the north, our local authorities have had to deal with massively disproportionate cuts, our regional development agency has been eradicated and there has been a miserly investment in transport and infrastructure projects, at the same time as disposable income has been sucked out of our pockets and our high streets. My local Gateshead authority has had to cut £70 million from its budget—equivalent to £88 per head of population—losing 1,500 staff into the bargain. The average cut for the 12 north-east councils was £84 per head of population, while the 12 least-deprived local authorities in England, including Windsor and Maidenhead, Richmond upon Thames, West Berkshire and West Sussex, each lost an average of less than £20 per head of population, so we are clearly not all in this together.

Almost every aspect of the Budget looks as if it was designed to have a negative impact on the north—on our people and on our businesses. VAT on takeaway food not only most affects people with the lowest incomes but has reduced the value of Tyneside businesses, including Greggs plc, which saw £20 million to £30 million wiped off its share value when the “pasty tax” was announced. I have no doubt that the measure will also have a negative impact on the work of the Greggs Foundation, which last year donated £1.4 million to support breakfast clubs for 65 north-east primary schools, at least four of which are in my constituency. The foundation also supports youth groups in some of the most deprived communities of the north-east, and also in Scotland and Wales. So much for the big society.

In addition, the Government’s welfare benefit changes will have a massively disproportionate impact on regions such as the north-east. Currently, 11,000 people in Gateshead claim incapacity benefit and, together with the numbers on jobseeker’s allowance, almost 24,000 people are claiming out-of-work benefits. National figures show that of those people undergoing the work capability assessment, 37% have been found fit for work and 34% have been placed in the work-related activity group of employment and support allowance, but for the vast

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majority of them in the north-east there is no real prospect of work in the near future. If the national figures are mirrored in Gateshead, almost 8,000 people will be moved off incapacity benefit and receive lesser benefits, if anything at all.

I am told by Gateshead council that the introduction of universal credit will result in 14,500 tenants having to manage a larger personal contribution each week, which will increase demand for budgeting and money management skills, and risk more tenants being unable to manage their household budgets and resorting to expensive borrowing, including legal and illegal loan sharking. The risk of non-payment of rent, based on a calculation rate for sums not covered by housing benefit, could result in an additional £20 million not being there to be collected by local authorities, which are already struggling to cope with the punitive cuts they have endured.

Benefit reductions for under-occupancy will affect 3,478 of our current tenants in Gateshead—18% of all those with the Gateshead Housing Company. Of those, nearly 3,000 have an extra bedroom and could therefore face a 10% to 15% reduction in their benefit, and the 815 who have an extra two bedrooms could face a 20% to 25% reduction. If we magnify those numbers across the region, we could be dealing with a widespread social crisis.

Mr David Anderson (Blaydon) (Lab): I congratulate my hon. Friend on securing the debate. Is the bedroom tax not an example of how much the Government are out of touch with real people? It is not just about the costs. People who have lived in a community for decades will be forced to move because they will be unable to afford to live there, and everything they have built up over many years will be thrown away as if it means nothing.

Ian Mearns: My hon. Friend hits on an appropriate point. Regarding how out of touch the coalition is with the vast majority of people in regions such as the north-east, its lack of understanding of how the housing market works in such places is absolutely spot on.

I am a north-east Labour MP, so I suppose that no one will be surprised to discover that I am not impressed by the Chancellor’s support, or lack of it, for the region. However, the north-east’s business community is equally unimpressed. The North East chamber of commerce has said:

“The extra cut in corporation tax is welcome and will help stimulate investment in the UK. However, relatively few North East firms will benefit from this, and we would have preferred to see a greater focus on strengthening investment allowances and cutting employment taxes, to address the two key weaknesses in the North East economy.”

Although it does not deal specifically with the north-east, the Federation of Small Businesses wrote to me when it found out that I had secured this debate, asking that I highlight its concerns. The FSB said:

“We asked for a Budget with long-term measures to help to instil confidence, rather than a barrage of micro-measures that have a limited impact on the ground. We are pleased with some of the actions to cut the burden of red tape, help to get our young workers into employment, and measures to improve access to

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finance…However, petrol prices remain a major concern for small businesses and we would have liked some further action on reducing the level of fuel duty to help struggling small firms.”

The cost of fuel, although important to all UK businesses, is crucial to maintaining competitiveness in regions such as the north-east. One local business that makes plastic milk bottles informed me that its biggest cost is the cost of fuel. Let us face it: in effect, that business’s biggest cost is transporting its product, which is 90% fresh air, around the UK. Given the geographical location of the north-east and the vital importance of manufacturing employment, was it too much to ask that the Government reduce fuel costs for businesses and maintain jobs in the regions?

The Federation also commented that it welcomed the enterprise finance guarantee scheme, but said that recent figures clearly show that lending under the scheme is falling rather than rising, and that the Chancellor must do a lot more to encourage banks to increase their lending to small firms without requiring the excessive personal guarantees that deter small businesses, particularly in areas such as the north-east.

The Association of North East Councils, which represents the 12 north-east authorities, was also unimpressed, reporting that almost 50% of businesses in the region have no plans to increase staff numbers in the coming months but are hanging on before deciding on reductions. Weakening sales and poor service sector performance are still preventing much-needed growth to offset public sector employment cuts. Job loss in the north-east as a whole is four times deeper than in the rest of the country. None of that has been helped by the complete lack of recognition or action in the Chancellor’s Budget.

This Government are now doing to public services in the north what they did so successfully in the 1980s to our traditional industries of mining, shipbuilding and heavy engineering: bringing them to ruin and laying them waste. If the Government’s plan to replace those jobs is to build the private sector, why are they doing virtually nothing for the north-east? The main problem is not that they are doing nothing but that they are making things worse. For the young in particular, they are removing hope.

The Government have not recognised that for a region such as the north-east, geography and the new politics of the United Kingdom are realities that must be considered. Scotland is just over the border. The Scots at Holyrood still have economic development and tourism strategies and are still offering inward investment incentives, all important determinants whether a company invests in Scotland or the north-east, but the Chancellor and the Secretary of State for Business, Innovation and Skills seem oblivious. For example, Amazon, despite considering a site in the north-east, has located in Edinburgh, purely on the basis of the grants available. Given the existing imbalance in Edinburgh’s favour, the decision to locate the Green investment bank there seems like a political and economic knee in the groin for regions such as the north-east of England.

In last year’s autumn statement, the Chancellor made much of the Government’s plans for our national infrastructure, emphasising the importance of capital spending on infrastructure to support the UK’s long-term growth prospects. He outlined £30 billion in spending, including an immediate increase of £5 billion in Government

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spending. As one of their central economic priorities, the Government have defined a number of ways in which they wish to rebalance the economy away from over-reliance on public sector jobs and towards private sector employment; away from over-reliance on financial services and towards manufacturing and export industries; away from over-reliance on the south-east and towards more balanced economic growth across the UK.

The Chancellor’s statement emphasised that every region in England will benefit from that infrastructure spending. He even listed a host of road and rail projects in England in his speech. However, research by the Institute for Public Policy Research on the detail behind the Chancellor’s statement paints a different picture. Behind the empty rhetoric and claims of rebalancing, we find that 11 of the 20 largest infrastructure projects will benefit London and the south-east, only five will benefit the three northern regions and more than half of regional transport projects involving public funding will benefit London.

Considered together, London and the south-east account for 84% of planned spending, compared with only 6% for the three northern regions and an unbelievably minuscule 0.04% for the north-east. That equates to £2,731 per head of population for London and the south-east, more than all the other regions combined, compared with £201 in Yorkshire and Humber, £134 in the north-west and just £5 in the north-east of England. A fiver is what we are worth, in comparative terms, in the UK of today. For each £1,000 of gross value added generated in 2009, £81 is being spent on transport projects in London, £38 in the south-east, £12 in Yorkshire and Humber, £8 in the north-west and less than 50p in the north-east.

This Chancellor and this Government have spoken in duplicitous terms, but I now wonder whether they have given up even trying to talk a good fight when it comes to rebalancing the economy. They have clearly been saying one thing and doing another, looking after their home patch while slashing and burning the regions of England. To make matters even worse, they prefer to exemplify the north-east as a basket case. Before this bunch came to office, nothing could have been further from the truth. Thanks to the support of its 12 local authorities and the regional development agency, the north-east had developed an economy that was strong, dynamic and diversified compared with when a Conservative Government last laid waste to it in the 1980s.

However, in a typically knee-jerk, ideological and spiteful reaction, this Government have abolished our RDA, despite the fact that during the last three months of 2011, the north-east enjoyed record high growth in exports. Goods worth £13.5 billion were sold overseas from the north-east, up from £12 billion the previous year. If every other region in the United Kingdom were performing as well in those terms as the north-east, we would be doing rather well indeed.

Only yesterday, I received e-mail confirmation from the largest private sector employer in my constituency—AkzoNobel, known locally as International Paints—that last year it received an essential grant from One North East to support the establishment of its fire protection research and development facility. Recently produced documentation on the legacy of One North East showed that during the past 10 years, the north-east enjoyed the greatest level of economic growth outside London, and

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that during the last Government, the development agency helped to increase the region’s employment massively and its number of businesses and GVA to among the highest in the country.

Before the RDA’s inception, our regional economy was falling further behind other English regions. Since it was established in 1999, only London has experienced greater economic growth, but this Government have replaced the RDAs with local enterprise partnerships, which have no powers and little or no funding, and the much-heralded regional growth fund, which has delivered only modest amounts of direct aid to companies in the north-east.

From 1999 onwards, employment in the north-east rose at the third highest rate in the country after London and Yorkshire and Humber, and 116,000 jobs were created, representing growth of 11.2%. We also had the highest growth in new businesses, 18.7%, and the highest growth outside London in GVA per head of population. Tourism, conferencing and inward investment were all significantly boosted by the RDA’s “Passionate people, passionate places” campaign. The agency’s work on low-carbon vehicle production and green energy generation are legacies on which we could build if only the Government had a credible policy for the economy.

We had a credible policy for growth in the region, a credible policy for jobs and a credible policy to rebalance England’s economy, which included the idea that the north-east is a place to do business. Sadly, this Government have none of those, and prospects for my region remain bleak. Disposable income is being sucked out of our communities through public sector job losses, wage freezes and benefit cuts.

Before the recess, the Newcastle Journal published an editorial headlined “Never mind a Heathrow runway”, which stated:

“It would be a terrible shame if the row over party funding deafened the Government to the findings of the OECD. Its report makes grim reading for the region, but not simply because it highlights the problems caused by rotten infrastructure, poor connectivity and the lack of continuity in government. No, what really hurts is that a Paris-based organisation has been able to recognise basic, obvious, well-known facts that should not have been possible to ignore. Yet successive administrations in London have managed that feat damagingly well. Never mind arguing about a third runway at Heathrow, how about helping the North East instead?”

What are the Chancellor’s answers to these regional conundrums—a brain wave, a stroke of genius, an innovative investment package? No, what we got was the concept of regional pay. If that is the direction that he wants to take, perhaps we could also ask him to consider regionally reduced utility bills for gas, electricity, water and telephones, and while we are at it, cheaper council tax and grocery bills. If the Chancellor or the Prime Minister fancy paying £250,000 for the privilege of dinner with the chief executives of Tesco, Sainsbury’s, Asda and Morrisons, they could ask them, “Could the supermarkets reduce the cost of shopping in the regions, please?” They could also ask representatives of the east coast main line to charge regionally reduced fares for journeys to London.

James Wharton: I thank the hon. Gentleman for giving way to me for a second time. When the previous Labour Government introduced localised pay for the Courts Service, did they also introduce the other measures that he has mentioned?

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Ian Mearns: I am afraid that I am not familiar with the position outlined by the hon. Gentleman, but I am not convinced that he is entirely right.

Why do we not go the whole hog on regionalism and consider re-establishing the RDA and setting up a regional Parliament for the north-east? If regionalism is so much in the minds of coalition Members, let us go the whole hog.

The Budget’s impact on the UK regions demonstrates clearly the Government’s ideology. Despite the negative impact of the Budget and their lack of regional policy, the north-east economy still has vibrant and dynamic aspects, as testified by the expansion of the Nissan plant at Washington, which will make it the largest and most efficient car plant in the world; the growing strength of our offshore wind and green energy sector; and, of course, the relighting this weekend of the Sahaviriya Steel Industries steel blast furnace on Teesside. That good and welcome news, however, does little to offset the negative measures inflicted on us by the coalition. The developments are welcome but small compared with the damage that is being wreaked. We have many skills on tap and a willing supply of people who are currently being denied access to the basics of the fruits of a civilised society through work.

The north-east will survive the economic crisis, but it will have to do so without support from this Government. As a result, many of the region’s people will suffer in greater measure and in greater proportion than the constituents of most Government Members.

The Budget has demonstrated clearly the ideological drive of this Government of Tories and Liberal Democrats. It is not about fairness. It is not about, “We are all in this together,” and it is certainly not about pulling together for the collective good, the benefit of the whole country or for every region in the UK. Under this Government, the Chancellor has given millionaires tax cuts, while pensioners have to pay more. Cabinet members and their chums receive unwarranted and undeserved benefits, while hard-working families suffer. Frankly, the well-off and the well-to-do are looking after the interests of their peers—toffs looking after toffs, with little or no regard for the consequences for the millions for whom the experience will be negative, if not dreadful.

Thanks to the Budget, the north-east and the regions of the UK will continue to struggle to grow and maintain employment and prosperity. The vast majority of my constituents and my region condemn the Budget. We need to maintain and increase the pressure to provide the policy and taxation framework that this country and regions such as the north-east need. The framework has to be designed to secure growth, and to support businesses, regions and our most vulnerable and economically fragile communities. The north-east demands that the Government respond to that challenge. If they are not willing to rethink their outdated and massively inappropriate attitudes to our region and its people, they should get out of the way and make room for a Government who will.

Several hon. Members rose

Sir Roger Gale (in the Chair): Order. In view of the large number of Members who wish to participate in the debate, I will exercise the power granted to me by the Chairman of Ways and Means and limit speeches to

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four minutes. I intend to commence the winding-up speeches at about 10.40 am. The Opposition Front-Bench spokesman has kindly indicated that he is willing to curtail his remarks to about five minutes. It would not be reasonable to impose any such limit on the Minister, because of the large number of Members who want to participate and who will expect answers to the debate. Members will notice, if they do the math, that I have built in a five-minute leeway, so one way or another we hope that we will get to where we want to be. The same rules apply as to the main Chamber. We will add a minute to the four-minute time limit for up to two interventions, but Members will appreciate that if that happens, someone will fall off the end of the list.

This is an exception—we do not normally do this—but it might help Members if I indicate now the order in which I intend to call them, because a significant number have written to Mr Speaker requesting the opportunity to speak. Those who are not on the list will appreciate that I have to give priority to those who have taken the trouble to write to Mr Speaker. They may, therefore, choose to exercise their right to intervene, although that, of course, is not in my gift, but in that of the person speaking. The order for Opposition Members is Grahame Morris, Phil Wilson, Pat Glass, David Anderson, Ian Lavery, Iain Wright, Sharon Hodgson and Stephen Hepburn; and that for Government Members is James Wharton and Mr Swales.

Westminster Hall does not have the countdown clock system of the main Chamber, but we do have the high-tech alternative of a bell, which will be sounded at one minute prior to a speech’s conclusion. Without further ado, I call James Wharton.

9.55 am

James Wharton (Stockton South) (Con): Thank you, Sir Roger. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Gateshead (Ian Mearns) on his passionate speech and on securing such an important debate. The issue is important to all of us who represent the north-east, in whichever party.

It is important to be clear that the north-east is not a basket case. It is not the end of the world and it is not a place where economic activity does not exist. There are many good signs of progress and economic success in our region. Unemployment in the north-east has been falling for the past two months, against the trend in much of the country, in what Members will agree is a difficult economic climate. There are many examples of significant good news stories, such as the relighting at the weekend of the SSI blast furnace on Teesside. That is very good and positive news, due in no small part to the sterling work of my hon. Friend the Member for Redcar (Ian Swales), who has fought long and hard to see steel-making return to that part of our region.

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Will the hon. Gentleman also acknowledge that the work to get SSI to purchase the Corus steel plant began in the summer of 2009 and was largely due to the work of the trade union on the site, which led the “Save our steel” campaign, in conjunction with Labour Ministers, who regularly met plant representatives, unlike this Government’s Ministers, who

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refused to meet work forces at Rio Tinto Alcan and—these are not in the north-east—at steel sites in Kent, such as Thamesteel?

James Wharton: The hon. Gentleman’s generosity in wanting to ensure that everybody who played a part is adequately recognised is testament to his character. The unions played a significant role, as did the Government of the day, when the plant’s closure was announced, as have the Government of today, in delivering the success. It is something about which we can all be pleased in our region and I welcome the hon. Gentleman’s comments.

We have also received the good news that Hitachi will come to Newton Aycliffe to build trains. Nissan has announced that more jobs are being created and more work being done. In my constituency, Nifco has just opened a new factory in Eaglescliffe—a smaller but none the less significant manufacturing investment—and is already considering options for expansion because it is doing well.

More than 47,000 private sector jobs have been announced in the regional media since the last election. Articles in the press report what is said and announced, the levels of investment and the positive news, yet all too often all we hear are the negatives. I am sure that we all agree on a cross-party basis that it is important to take every opportunity to talk up our region and make it clear to anyone who is considering investing there that we are open for business and looking to do business, and that we welcome investment and we want to see the jobs and growth it would create.

Helen Goodman (Bishop Auckland) (Lab): We all agree with the hon. Gentleman that there should be willingness to invest in our region, but does he not understand that it is deeply problematic that only 0.1% of the extra capital investment announced by the Chancellor in his autumn statement came to our region?

James Wharton: I was, of course, referring to private sector investment. The hon. Lady makes an interesting point, but we have to look at the figures realistically. A lot of the spending that has been announced is for specific large projects, some of which are in London, such as Crossrail, and some of which will potentially benefit the north-east, such as High Speed 2. Although it is not yet coming to our region, the benefits are real.

The RDA has been mentioned. I have my differences with Opposition Members on that issue. I always felt that the RDA was too focused on Newcastle and as the hon. Member for Gateshead said, we must remember and acknowledge that Newcastle is not the entire region. I welcome the new local enterprise partnerships because they are more localised and more focused on the areas where the growth that we want to see needs to be delivered. From the growth that we are seeing and the investment that is being announced, the signs are that LEPs are already doing a good job. The LEP in Teesside is certainly doing an excellent job. It hit the ground running and is making a difference to securing the growth that we need in that part of our region.

There were, of course, a number of announcements in the Budget that will both directly and indirectly benefit our region. One of the most significant is the increase in the personal allowance. In total, across all the Budgets we have had so far from the Government, 82,000 people have been lifted out of income tax altogether

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in the north-east region. That significant and welcome benefit will make a real difference to the lives of tens of thousands of families across the north-east who are on the lowest incomes and who most need that support.

The increase in the personal allowance will also, of course, deliver improvements for our regional economy because that money is not being taken in tax and spirited away to London to be redistributed in accordance with the diktat of the Government—whoever they are. That money is staying in the pockets of families in the north-east, so that they can spend it in our local economy, provide a welcome economic boost and create jobs and growth, which is what we all want to see.

In the north-east, the income tax bills of nearly 1 million people will decrease, although some of them will not be entirely lifted out of income tax just yet. The child benefit tapering changes are a welcome mitigation of the impact of the need to control the child benefit bill because of the financial situation in which the Government find themselves. That will benefit 14,000 families across the north-east and is another welcome measure in the Budget that will leave more money in our regional economies and in the pockets of the people who live and work in the north-east and elsewhere. That policy will make a difference to our regional economy and the lives of those who live in the regions.

Negatives in the Budget do exist. Stamp duty land tax is increasing. However, we are lucky in the north-east because only 1% of the properties affected—

Sir Roger Gale (in the Chair): Order. I call Mr Grahame Morris.

10.2 am

Grahame M. Morris (Easington) (Lab): It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my colleague, my hon. Friend the Member for Gateshead (Ian Mearns), on securing this debate, the importance of which is testified to by the number of Labour Members present.

The Budget will have few positive benefits for the economy of the north-east, and there is no discernible regional support within the measures set out in the Budget statement. There are cuts in corporation tax and cuts in tax for the wealthy, but there is no credible plan for what is really needed in the north-east: a stimulus for jobs and growth.

The often used line that we cannot spend our way out of a recession has been shown to be an ideological mantra that flies in the face of economic reality. What the Budget has given us is rocketing unemployment and plummeting growth in regions such as ours. The north-east has the highest rate of unemployment of any UK region, at 10.8% of the economically active population. That is mirrored in my constituency where, despite the good news we have had from Nissan, large numbers of private sector job losses are in the pipeline. We are haemorrhaging private sector jobs at an alarming rate.

Regional economies such as the north-east will not make any headway without investment in a comprehensive and lasting economic infrastructure. That can only be done by the courageous state and by Government intervention. The north-east continues to suffer from the unfinished business of transition from heavy industry. However, that transformation has stalled as a consequence of the coalition Government’s policies.

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The evidence supports the fact that Labour and our regional development agency, One North East, were making progress in transforming the economic landscape. An analysis from PricewaterhouseCoopers shows that, for every £1 spent by our RDA, an average of at least £4.50 of economic output was achieved. That rose to an output of at least £6.40 when future benefits were assessed.

Ministers have sought to propagate the myth that money spent in the north-east under Labour was wasted, but that is not supported by the facts. Based on the gross value added per head indices, the rate of growth in the north-east went from being the lowest of any region during the 1990s to being the second highest during the past decade. The facts and figures were alluded to by my hon. Friend the Member for Gateshead, so I will not repeat them.

Catherine McKinnell (Newcastle upon Tyne North) (Lab): I congratulate my hon. Friend on his speech. Does he agree that another key role that One North East played in the region was to ensure that European regional development funding was drawn down and invested in the region? Some £329 million was made available, but £129 million remains un-invested directly because of the loss of One North East. No one is drawing down that funding and no regional funding can match that investment in the region.

Grahame M. Morris: Absolutely. I am grateful to my hon. Friend for putting that on the record. That was another vital element that the RDA contributed towards jobs and growth in the north-east, and it is sadly missed.

Although the Chancellor told us that the Budget is overall fiscally neutral, its impact by region, class or earnings is anything but. For example, VAT—a regressive form of taxation—remains at 20%, which hurts those who have no choice but to spend their wages on life’s basic essentials and depresses demand. The continuation of wage freezes throughout the public sector will make life even more difficult for ordinary people, as will the rise in fuel duty.

In his Budget, the Chancellor has failed the people whom I represent in Easington and in the north-east. There was the increase in VAT, the granny tax, the pasty tax, the philanthropy tax, increases in fuel duty and the loss of tax credits for modest earners. My right hon. Friend the Member for Doncaster North (Edward Miliband), the Leader of the Opposition, was right to call it a Budget for millionaires when what we need is a Budget for jobs and growth in the north-east.

10.6 am

Ian Swales (Redcar) (LD): It is a pleasure to speak in the debate and I congratulate the hon. Member for Gateshead (Ian Mearns) on securing it. Labour Members’ contributions will no doubt be selective so I will not repeat them; instead, I will say a few things that they probably will not.

The increase in the tax threshold that my hon. Friend the Member for Stockton South (James Wharton) mentioned has taken another 35,000 people out of paying tax in the north-east and given 940,000 workers

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a tax cut. Those workers, including people who are on the minimum wage, would be paying an extra £400 a year under Labour’s tax plans. It would not have been a Lib Dem priority to cut the 50% rate to 45%, but let us remember that Labour’s love affair with the 50% rate lasted for one month out of the 13 years it was in power. For the other 12 years and 11 months, the top rate was 40%. The rate remains 5 percentage points higher than that.

Grahame M. Morris: Does the hon. Gentleman recognise that, in my constituency of Easington, 1,400 families on modest incomes will lose all of their child tax credit, which is worth around £545 a year? In addition, 350 working couples in Easington who earn less than £17,000 a year will lose all of their working tax credit, which could be worth up to £3,870 a year, if they cannot increase the hours they work from 16 to 24.

Ian Swales: I am sure that the hon. Gentleman has his statistics correct.

I will go on to talk about high-rate tax. The Government have cut from £250,000 to £50,000 the amount of pension contribution that can be claimed against tax. They have put a new limit on reliefs, raised capital gains tax from 18% to 28%, put a new tax on expensive houses and clamped down on tax avoidance. Labour has opposed those measures and charged the rich less in tax.

Let us talk about business. As soon as the Budget was delivered, Glaxo announced £500 million of investment, including a new factory in Cumbria and new manufacturing facilities at Barnard Castle, Teesdale. That was a direct result of the Budget provisions on pharmaceutical patents. As AstraZeneca has also shown, that will lead to huge investment in—

Helen Goodman: The key factor was the patent box changes, which were initiated by the Labour Government in 2010.

Ian Swales: I am sure the Minister will respond to that.

Of course our region needs specific help. I welcome the extra £1 billion for the regional growth fund, which has already helped 93 companies in the north-east and is targeted specifically at regions such as ours. Last week’s announcement of help for up to 1,000 jobs in Wallsend in the offshore wind industry was especially welcome.

These occasions usually include a lament from the Opposition for the RDA. However, I shed few tears for an organisation that, in the two years before the general election, spent £148 million on 96 projects in which the directors had to declare an interest, spent nearly £400,000 on gagging orders for 12 staff, and, according to Experian, left Hartlepool, Middlesbrough, and Redcar and Cleveland as the three areas of the country, out of 324, least able to cope with austerity.

Tom Blenkinsop: Will the hon. Gentleman give way?

Ian Swales: I have given way twice already.

I congratulate the Tees Valley LEP on the excellent start it has made and I welcome the further £11 million in the Growing Places fund announced for north-east LEPs.

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The press has picked up on certain items in the Budget, so I will finish with three questions to the Minister. I have spoken to the directors of Greggs. Will the so-called pasty tax not move rather than remove the anomalies? I do not relish asking the Greggs staff to feel the temperature of my sausage roll before deciding the price. Secondly, to those worried about charitable giving, tax relief on charitable contributions that would otherwise be taxed at 50% effectively means the Government will match donations pound for pound. Should that use of taxpayers’ money really be unlimited? Thirdly, how do the Opposition justify a situation in which young people on the minimum wage, who are trying to make their way in life, are paying £600 more in tax than their grannies who are on the same income? As we move towards a threshold of £10,000 for all, is that not a matter of fairness? Budgets cannot please all the people all the time, but help for business and the big reduction in tax for basic rate taxpayers means that this one has a lot going for it.

10.11 am

Phil Wilson (Sedgefield) (Lab): It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing the debate.

People talk about investment in the region, and three examples of investment have been mentioned. GlaxoSmithKline in Cumbria, which also has a plant in the constituency of my hon. Friend the Member for Bishop Auckland (Helen Goodman), SSI in Redcar, and Hitachi in my constituency have one thing in common: they would not be there were it not for a Labour Government. They were the result of initiatives established and settled under a Labour Government and which came to fruition after the general election. From personal experience, I know how much time and effort went in to ensure that Hitachi came to the north-east of England—it was not certain that it would.

I set a “We are all in this together” test for the Budget, and it did not pass that test. Some 57,000 households in the north-east will lose tax credits. I met a young mother at the weekend with twins—two little boys—who will start school in September. She has lost more than £300 in tax credits every month. That is a lot of money for someone with a young family. I know that 940,000 people will be better off under the new tax threshold, but let us not forget that the Institute for Fiscal Studies has said that the changes coming in this month will mean that on average they will be £511 worse off.

Tom Blenkinsop: My hon. Friend gave three examples of programmes starting under the Labour Government: SSI, Hitachi and GSK. That is also the case with DigitalCity in Middlesbrough, where public-led investment increased private-led investment. The hon. Member for Redcar (Ian Swales) referred to information from Experian in relation to Middlesbrough, Hartlepool and Redcar being the hardest-hit areas, but those statistics related not to the RDA, but to an investigation post this Government’s autumn statement.

Phil Wilson: My hon. Friend is right. That proves how much we have to celebrate what the previous Labour Government did for the north-east of England. The hon. Member for Redcar (Ian Swales) mentioned

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the minimum wage. The minimum wage has been frozen for people under the age of 21. It has gone up by only 11p this year as a consequence of the decisions made by this Government. At the same time, 4,000 to 5,000 taxpayers on the 50p tax rate in the region will on average receive a tax cut of £10,000 each. If that does not show that we are not all in this together, I do not know what does. The Government put VAT on pasties, but they did not put VAT on caviar.

The 40p tax rate has been ignored by many people. The threshold has been reduced from £42,475 to £41,450, so that 300,000 people will be brought into the 40p tax rate. How many more people will lose a proportion of their child benefit because of the reduction in that threshold? Will the Minister indicate whether she knows that figure? By reducing the threshold, the number of people paying the 40p tax rate in the region has gone up by 8%. There are now nearly 110,000 people paying the 40p tax rate. Little by little, the Government’s fairness agenda is being found out—actually, we are not all in this together.

I am very concerned about regional pay. The hon. Member for Stockton South (James Wharton) mentioned the flexibility in local pay in the court system, but we reduced the number of bands from 40-odd to five; we did not increase the number of bands. The latest survey by the TUC states that 68%—more than two thirds—of Conservative voters do not believe that regional pay in the public sector will boost jobs in the private sector.

The Budget is divisive. It is also complacent. It does nothing for growth, not just in the north-east of England, but in the rest of the country.

Sir Roger Gale (in the Chair): Order.

10.17 am

Pat Glass (North West Durham) (Lab): I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing the debate, which has allowed so many hon. Members from the north-east to talk about the impact of the Government and the Budget on our region. It is disappointing that we have such a poor turnout among Government Members—one Tory MP and one Liberal Democrat MP. That is less than 50%. It is amazing to hear them speaking with one voice—“We are all Tories now”—and to hear the Liberal Democrat MP defending the 50p tax rate, the granny tax and tax cuts for the rich. Either the Liberal Democrat hon. Members have Stockholm syndrome, or they have no principles and never did. I think that we would all say yes to that.

The Prime Minister, before the 2010 election, talked a lot about the need to rebalance the economy from the south to the north and for the north-east to be less reliant on public sector jobs. However, if we have seen any rebalancing of the economy at all, it has been from the north to the south. Public spending cuts have had a massive impact on jobs in the north-east in particular. The north-east now has the highest unemployment rate of all the northern regions at 10.8% and has received higher than average cuts to local government grants and services. In my constituency, unemployment has doubled since 2010. The hon. Member for Stockton South (James Wharton) said that unemployment has fallen in the region. I do not know what he defines as the north-east region, but it certainly does not cover the area that I

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represent. Youth unemployment in my constituency is now dangerously high, and the Minister needs to be aware of that.

I can tell the Minister that despite a lack of growth in the economy generally since 2007, there have been some areas of real growth in the north-east. I visit companies in my constituency all the time, and there has been something of a renaissance in engineering and manufacturing, but at the high-level specialist bespoke end of the market. In those areas, manufacturers have told me that what they needed from the Budget was more highly skilled toolmakers and specialist engineers, to enable them to take on more of the work that is out there. The Government failed to deliver that in the Budget.

Chemical companies in my constituency have also told me that they have full order books but need more highly skilled chemical engineers to take on more of the work that is out there. The Government’s shabby excuse for an apprenticeship programme will not deliver the skills that those companies need. The Government again failed to deliver on that in the Budget. Other companies—good companies with good products—are struggling.

Ian Swales: Does the hon. Lady agree that nothing done three weeks ago will deliver a chemical engineer to a company tomorrow and that the previous Government’s failure to deliver the skills agenda over the past 10 years is the problem for manufacturers and engineers in the north-east?

Pat Glass: The Budget is a good opportunity and a good place to start, but if this is going to be done, now is the time to start. Did we see that? No, we did not.

Good companies with good products are struggling to get investment. They tell me that, despite the Government’s rhetoric, banks are refusing to invest in good companies that would give a good return. Banks still prefer to spend our money in the speculative markets, risking it, because that brings high rewards and gives bankers bonuses. The Government failed to do anything about that in the Budget.

I am on the doorstep all the time, knocking on doors. When people open their doors, I do not have to say anything: they tell me that the message from the Budget is that the Government are giving tax cuts to millionaires at the expense of pensioners. The Government do nothing and have been a disaster for the north-east region. If they cannot do something about that now, as my hon. Friend the Member for Gateshead said, they need to move over and allow a Government who are interested in the regions to take over.

10.21 am

Mr David Anderson (Blaydon) (Lab): I shall break with the habit of a lifetime and say something good about the Government. I welcome the news about what is happening with Nissan, but the context is that without intervention from our Government four years ago, Nissan might not have been in the position that it is in now. We introduced the scrappage scheme and reduced VAT. We gave grants so that battery electric cars could be developed and brought forward the training budget, which kept

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people from being laid off. Compare that with what the present Government did in respect of the building schools for the future fiasco. In Gateshead alone, £80 million was earmarked for five schools in March 2010, but the Secretary of State for Education took that money away in May, despite recognising, in meetings with me and my hon. Friend the Member for Gateshead (Ian Mearns), that the schools needed to be refurbished and rebuilt. The crazy thing is that, although the money would have gone to Gateshead council, it would just have passed it on to the private sector to build and furnish the schools and put the infrastructure in. So now everybody loses, including the public sector, the children and the private sector.

The RDAs have been mentioned a lot. The RDA was successful in the north-east of England. We have been here before; this is not new for us. Exactly the same programme and attitude that we saw in the 1980s and ’90s is being repeated now. People are being thrown on the dole with no hope or support, no way forward and no framework for intervention. The RDA worked because people came together—unions, employers and the public sector—partnership building, working together, bringing in international support and making things work. That is why it is a real shame that the RDA has gone and has been replaced by the regional growth fund, which is nothing more than a farce and a joke.

Ian Lavery (Wansbeck) (Lab): My hon. Friend tells me that during discussions on the RDAs in the main Chamber, on more than one occasion senior Ministers—in fact, the Secretary of State for Business, Innovation and Skills—said that the RDA in the north-east was the flagship RDA and was working very well indeed.

Mr Anderson: I could not agree more. People will remember when they could believe what the Liberal Democrats said, although that was some time ago. The Secretary of State for Business, Innovation and Skills now says that he supported the RDAs, but the leader was not sure. It is now clear that the Liberal Democrats are being dictated to for ideological reasons. Anything that smacks of being positive about the public sector has to go. That is why we are suffering in our region.

Look at chaos and incompetence that has come from the Budget. People at the bottom have been hit: people with disabilities, old people, vulnerable people, children and women. Benefits have been cut. Millionaires have had tax cuts while pensioners’ tax levels are frozen. Government Members talk about taking people out of tax. They have taken a lot of people in Gateshead out of tax: 1,600 people have been taken out of tax because they have been put on the dole by the cuts, and 710,000 people from the public sector are being put on the dole and will not be paying tax or national insurance and will not be buying goods and services. Lessons from the past have not been learned. These things will have an impact on the economy.

The pasty tax is, to some extent, a joke. However, I am worried that it is classed as a harmonisation and simplification of the tax system; if that is so, will the Minister tell me what else she is going to simplify and harmonise that does not have VAT on it? Are there any other plans to increase the scope of VAT? Will she give us a guarantee today that VAT will not be extended to any other part of the tax system?

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We all know about the impact of the charities tax. Because the Government cannot control the people who are avoiding and evading tax, the charities that the Government expect to cover for the job and service cuts in the public sector will not be able to do so. Charities in my region tell me that they are already suffering because of funding cuts and that, if money does not come from private investors, they will go even further down that road.

The application of VAT to listed buildings has had a disastrous impact. Ryton Holy Cross church in my constituency magnificently raised £300,000 in 15 years. Now, it would have had to raise £360,000 to do exactly the same work. People are telling me that that fills them with despair.

This Budget exposed the Government’s incompetence. They are not up to the job. The best thing that they could do for our region and our country is to go now.

10.26 am

Ian Lavery (Wansbeck) (Lab): The Budget is a great missed opportunity, not only for the north-east but for the whole country. It should have been a Budget for jobs and growth, but instead it was a Budget for tax cuts for the rich and the toffs.

Unemployment rates in the south-east of Northumberland—in my constituency—are alarming. According to the Library, statistics revealed last week showed that, on average, 22.2 people were applying for each jobseekers’ vacancy. Earlier this year, according to the Office for National Statistics, that figure was 55.5. Every time we mention the problems faced by unemployed people in our area, we are told that we should look at the positive signs, such as Nissan. Nissan has been and is tremendous, but it is a million miles away from where I live.

Grahame M. Morris: I am sorry to stop my hon. Friend in full flow, but it is important to place on the record that, although we welcome the additional jobs and the announcement about Nissan, it must be put in context. Does he agree that although 250 jobs are welcome, they do not go anywhere near even offsetting the private sector job losses in my constituency alone? Reckitt Benckiser has lost 500 jobs; Fortress Doors has lost 100; Carillion, Cumbrian Foods and, most recently—

Sir Roger Gale (in the Chair): Order. I am terribly sorry, but the hon. Gentleman is beginning to make another speech. This must be an intervention. I remind hon. Members that each of the first two interventions adds a minute to the time that the speaker is allowed. Hon. Members are in danger of pushing one of their colleagues off the end of the list, if they are not careful.

Ian Lavery: Thank you, Sir Roger. I agree with everything that my hon. Friend said.

We in the south-east of Northumberland are a million miles away from Nissan. The perceived jobs bonanza at Nissan is two bus journeys, a Metro journey and a further bus journey away. We wish that we had the same opportunities as there are at Nissan. We hope that they will come. We have not even got a rail service in my area: there is a railway line but no trains to run on it. We cannot even get to Newcastle, Sunderland or Middlesbrough city centre from where we live, because there are not the transport links and the much-needed transfer links.

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I want to focus on a strong appeal to the Minister to hear the case of the people in south-east Northumberland. If we in Wansbeck are to have an opportunity for growth, a Northumberland extension of the North Eastern local enterprise partnership enterprise zone—the port of Blyth and the estuary—needs to benefit from capital allowances and rate relief at the same time. It is not enough to extend the enterprise zone without the provision of the additional allowances and incentives necessary to attract businesses and jobs. We need those guarantees. In addition, with the appropriate allowances and incentives, further extension to the enterprise zone is desperately needed, so that it stretches through Wansbeck as far up the coast as the Alcan site. A failure to do so will place Wansbeck and south-east Northumberland at a distinct disadvantage, by further damaging employment opportunities for our communities.

James Wharton: On a point of regional, cross-party unity, I echo the hon. Gentleman’s calls. The enterprise zones are a good initiative of the Government, and I should like to see them extended. Anything that we as a region can do to put pressure on Ministers to extend the enterprise zones and to give us further opportunities for growth is welcome.

Ian Lavery: Having enterprise zones surrounding areas such as mine only compounds the entire problem; basically, they incentivise people to stay away. May I appeal to Ministers, on behalf of the young and the old? Please listen, visit the area, help the anxious communities that we represent, give them fairness and a level playing field and give them hope and access to aspiration. Although not the most wealthy people in the country, we are most honest and most sincere. We need the Minister and the Government to act now to save what might be lost future generations.

10.31 am

Mr Iain Wright (Hartlepool) (Lab): It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate my hon. Friend the Member for Gateshead (Ian Mearns) on securing this important debate.

We in the north-east have fantastic potential to lead the country out of recession into sustainable, long-term growth. In the Budget last month, however, the Chancellor failed to help the region fulfil its potential or address its challenges. I am critical of the Chancellor not only because of what was in the Budget, in which he showed the wrong policies, the wrong values and the wrong judgments, but even more because of what he left out. He failed to use the opportunity to grasp the enormous potential of our region and, perhaps most damning of all, simply neglected to remember the north-east at all. For example, there was nothing to mitigate the effect on energy-intensive industries or to incentivise businesses and to give firms in the region or elsewhere the confidence to invest their substantial cash piles in improving the productivity of our region.

On Friday, I met dynamic, energetic and ambitious entrepreneurs in the technical, digital and creative sectors in our region, running businesses such as Stick Theory, Love Your Larder and Sherpa. They have the potential to grow, to thrive and to create job opportunities. I asked them what was the one thing they wanted from the Government. They said improvements in transport

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infrastructure, making it easier to get on a train, to get to London, to make contacts and win businesses. In the Red Book announcement of £130 million for the northern hub rail scheme, however, no north-eastern town or city was even mentioned, let alone had any investment.

In the time available, I want to concentrate on the biggest neglect of the lot: unemployment, which is the biggest single social and economic factor affecting my constituency. The number of claimants in Hartlepool has risen month on month and year on year to reach 4,678 in February. The number of unemployed in Hartlepool is now higher than it was at the height of the global recession, and tomorrow’s publication of the March unemployment statistics will probably see a further rise. Contained in those figures, however, there is even bleaker news. Almost one in four young men, or 23.8% of 18 to 24-year-old young men, is claiming jobseeker’s allowance. When an area hits one in four young men out of work, it has reached crisis point. We last saw such statistics for youth unemployment back in the 1980s, when my shipyards and steel works closed down. For many lads coming to adulthood in that time, theirs was a lost generation who faced no pay or low pay, benefits and illness; they failed to fulfil their potential. My town, arguably, has not really recovered from the social and economic shock of the deindustrialisation of 30 years ago, yet we are in danger of experiencing that shock again because of the neglect of the Government.

The Minister must recognise the lessons of history and ensure that young people are helped into work and training. It is economically ignorant to suggest that public sector jobs are crowding out private sector employment and growth, and that the best approach is to cut drastically public sector employment. It is economically illiterate to believe that a region’s employment and growth prospects will somehow bloom if spending, resources and demand are withdrawn quickly, or will be helped if regional pay bargaining strips out regional income. The Chancellor had a perfect opportunity to do something in his Budget to encourage employment, especially for the young. Instead, he chose to provide tax cuts for millionaires. Despite the importance of youth unemployment, the Red Book contained only one, single, derisory new announcement—complete with spelling mistake—about such a huge social and economic issue. The announcement that the Government

“will pilot the best way to introduce a programme of enterprise loans to help young people”

is patronising, smacks of gimmick and gesture politics and will do nothing to stop a lost generation of young people. I ask the Minister to think again.

10.35 am

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): It is a pleasure to serve under your chairmanship this morning, Sir Roger. I add my congratulations to my hon. Friend the Member for Gateshead (Ian Mearns) on securing this important debate.

I hope that the Minister has brushed up on the geography of our region and where the north-east covers—the Government sometimes struggle with that. I will not repeat what the Minister has said, but other examples

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make interesting reading in

Hansard

. I am sure that the Minister will want to talk in her response about the recent good news of Nissan’s success. Nissan is in my constituency, and I am personally very happy about its fantastic success. The announcement was a great vote of confidence in the local work force in particular, as well as a reflection of all the hard work and sustained relationship-building with Nissan by Sunderland council over the past couple of decades.

A few other welcome gems of news in my constituency include the recent announcements by Calsonic Kansei and Rayovac. However, all those new jobs and pockets of investment in the north-east are not enough to mitigate the effects on tens of thousands of people of losing their jobs in the public sector and elsewhere in the private sector, or the reality of long-term youth unemployment in my constituency, which is up by 188%.

I want to focus my remarks on household budgets and family finances. At the start of this month, an estimated 1,400 households in my constituency were no longer eligible for child tax credits worth £545 a year. A further 355 households will lose their working tax credits, worth £3,870 a year, unless they find a way to increase their working hours by at least eight hours. Throughout the north-east, such changes will affect just short of 50,000 households—so that is 50,000 households having their budgets squeezed, spending less in local shops, pubs, restaurants and other businesses and with less money to have days out, if any, at local attractions. The Institute for Fiscal Studies estimates that families with children will, on average, be £511 a year worse off, and that includes the token amount given back to them by increasing their personal allowances. Some parents may find, therefore, that they are better off not in work than taking up work if it does not make financial sense. What is the sense in policies that push people out of jobs?

We have yet to see the full impact of the changes, but no one believes it will be positive—certainly not our pensioners, who have worked hard and saved throughout their working lives to provide a modest pension for themselves in later life. They will be hit by the freezing of age-related allowances, the worst affected being those who retire next year. In total, Treasury figures state that the changes will take more than £3 billion out of pensioners’ pockets—again, £3 billion that will not be spent in local economies such as Sunderland’s. At the other end of the scale, however, those on more than £150,000 a year will get a tax cut; unfortunately, not many of them live in my constituency.

We needed a genuine plan for growth and real help for families; we did not get it. What we got was worse than nothing. We got measures that will deepen the north-south divide and, as usual, the lives of my constituents will suffer at the hands of this out-of-touch Tory-led Government. Has it not always been so?

10.39 am

Mr Stephen Hepburn (Jarrow) (Lab): This Budget has been drawn up by a Chancellor with no perception or idea of what it is like to live in the north-east of England, and to have to live on a day-to-day basis. On one hand, the Budget cuts the wages and pensions of people in the north-east, and cuts their public services; on the other hand, it turns round and gives a tax cut to

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the richest 1% of people in this country. It is a Budget that will condemn thousands of families in the north-east to poverty, while it makes a priority of giving tax cuts to business by way of corporation tax cuts. It is a Budget built not on fairness, but on privilege.

This is not the Budget that we wanted for the north-east. We wanted a Budget for growth, to create jobs and the necessary economic activity to make the north-east alive again. Instead, we have a Budget that lines the pockets of the rich by cutting income tax and corporation tax. The Government say that they have changed tax thresholds, and that people will be better off, but that is more than compensated for by the cuts in tax credits and benefits, the scanty increase in the minimum wage, and the increasing cost of travel and utility bills for people in the north-east.

The move to regional pay will be a disaster. As the Secretary of State for Business, Innovation and Skills said, it will stigmatise the north-east as a region of failure. It must not be allowed to go ahead. The Government justify the regional pay policy on the basis that public sector pay hurts the private sector and curtails job creation. What nonsense. How come we live in a region with the lowest wages in the country, yet we still have the highest unemployment, with nine people chasing every job vacancy? It is nonsense.

Mrs Jenny Chapman (Darlington) (Lab): My hon. Friend is making a very good point about regional pay, but the situation is worse than he indicates because up to £1 billion could be taken out of the north-east economy, which would hit all sectors of industry in the north-east, particularly the service sector, cultural industries and retail.

Mr Hepburn: My hon. Friend makes a very good point. It is not just the pay of teachers and nurses that affects job growth in the north-east; it is lack of demand. The point that she rightly makes is that every 1% taken out of regional pay in the form of public sector pay cuts sucks an extra £80 million from the north-east economy, causing a spiral down and down.

I am pleased that the Budget is already beginning to implode daily, because people are catching on to the fact that because of tax cuts for the richest in society, charities will receive less, pensioners will receive less, and Greggs pasty eaters will have to pay more. The Budget will not help the people of the north-east. It is a Budget of the privileged, by the privileged, for the privileged. If we really are all in this together as a society, surely it is right that the better-off pay a little more and take the burden off working-class people in the north-east.

10.43 am

Chris Leslie (Nottingham East) (Lab/Co-op): This has been an excellent debate, thanks to my hon. Friend the Member for Gateshead (Ian Mearns), and we are left with one question, which was asked not just by my hon. Friend the Member for Jarrow (Mr Hepburn), but by most contributors. Will the Minister dare to have the audacity to utter the phrase, “We’re all in it together”? I hope that she will. I want to give her ample time to respond to the debate, because so many points have been well made, including the impact on families with children and on single individuals, and the statistic that

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the typical family with children will be £511 worse off annually as a result of cumulative Budget measures. When people open their pay packets at the end of this month, they will see the impact not just of VAT, but the tax credit changes that will also hit working people exceptionally hard.

People are shocked at seeing a Government hit elderly people and pensioners by freezing age-related allowances and using that money to give a tax cut to the wealthiest in society. Those earning more than £150,000 and typical millionaires—if there is such a thing as a typical millionaire—will receive a £40,000 tax benefit. That is astonishing. Is it any wonder that the Government’s fortunes are plummeting? What is even worse—as my hon. Friends the Members for Sedgefield (Phil Wilson), for Jarrow, and for Washington and Sunderland West (Mrs Hodgson) mentioned—is that there is no action of any substance in the Budget to tackle the crisis in jobs and growth. That is at the core of the issues.

The Government have taken a wrecking ball to institutions in the north-east that existed to try to help the economy, whether it was a Minister for the north, the regional development agency, or local authorities whose grants have been slashed disproportionately in the north-east compared with other parts of the country.

Roberta Blackman-Woods (City of Durham) (Lab): Does my hon. Friend agree that the lack of a growth strategy for the north-east is a complete travesty? Getting rid of the RDA and replacing it with LEPs and enterprise zones, fragmenting the whole support system, is not working. The Government are leaving the north-east without the support that it needs to keep regenerating itself.

Chris Leslie: The jobs crisis worries people, and all contributors today have talked about that, including my hon. Friends the Members for North West Durham (Pat Glass), for Hartlepool (Mr Wright) and for Wansbeck (Ian Lavery). The statistics that 22 people apply for every vacancy, and that youth unemployment in the north-east is rising by 155% are shocking. The Minister must react to that crisis.

Ian Lavery: What does my hon. Friend think about the fact that the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling) refused to meet me to discuss the severe problems facing unemployed people in my district, saying that it was inappropriate at this point?

Chris Leslie: I have heard of similar cases. What sort of Minister refuses even to discuss such issues, and turns a blind eye to the problems? A pointless Minister, so what is the point of having that individual in that post.

Many issues have been raised—too many to mention. My hon. Friend the Member for Gateshead and others referred to the case for investment and infrastructure. There is the impact on the so-called big society, with major charitable trusts and others losing out. The Chancellor is taking away from them while staff who are being made redundant from Alcan and elsewhere

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have dug into their own pockets for their works welfare fund donations to local charities. Their example contrasts so much with that of the Chancellor of the Exchequer.

Greggs was founded on Tyneside in 1939, and if ever a part of the country should be astonished at the Chancellor’s move to extend VAT, it is the north-east. The hon. Member for Redcar (Ian Swales) referred to the temperature of his sausage roll, and he will have the opportunity to vote on the matter in the House this week. We hope that he will join us in the Lobby.

I do not want to take up any more time, because we want to hear from the Minister. She should listen to these exceptionally powerful voices from the north-east. People know what they are talking about. She should recognise the warning signs for jobs and growth, and change course now before it is too late.

10.48 am

The Economic Secretary to the Treasury (Miss Chloe Smith): This has been an interesting debate, and I thank hon. Members for their contributions, whether in a constricted four-minute speech or an intervention. The hon. Member for Gateshead (Ian Mearns) spoke with great passion about his constituency and the broader region, and I hope in the time available to address some of his concerns and those of other hon. Members. With a smile on my face, that gives me a chance to place on the record the apology that I have already given to the hon. Member for Bolton North East (Mr Crausby) for having mistaken his constituency on the Floor of the House last month.

Roberta Blackman-Woods: Will the Minister say whether she has visited the north-east to look at the impact of the dreadful Budget on that area, and to refresh her geography at the same time? Perhaps more significantly, has she asked her officials to look at the impact of the Budget on the north-east, and to come up with measures that will support growth in the region?

Miss Smith: If the hon. Lady had let me press on, she would have heard the answer to much of what she asks a little sooner. Let me reassure her that I have often visited the north-east, although not since the Budget, so I look forward to a chance to do that, perhaps in the next recess. As many Members have said, it is a fine region and a great place that we should all seek to support.

Let me return to the matter in hand. In the Budget, the Government made it clear that they have three priorities: first, the creation of a stable economy; secondly, a fairer, more efficient and simpler tax system; and thirdly, reforms to support growth. The 2012 Budget, together with the national infrastructure plan that we published in last year’s autumn statement, set out the Government’s latest steps towards achieving those priorities, based on a model of sustainable and balanced growth, including, of course, in the north-east.

As hon. Members have made clear, the north-east faces difficult challenges. It remains, however, a significant contributor to the national economy, and I would like to reiterate and highlight the numerous good news stories that have been mentioned and involve companies

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that are already investing in the north-east and creating jobs for people in the area. For example, the Japanese automotive company Vantec has created 230 new jobs and secured 800 existing posts in Sunderland. Nissan has announced the creation of 225 jobs at its Sunderland factory and 900 more with its British suppliers. Both companies have been pledged money from the regional growth fund, which illustrates the difference that that initiative makes on the ground. I join other hon. Members in celebrating the relighting of the blast furnace at the SSI Redcar steelworks, which my hon. Friend the Member for Redcar (Ian Swales) mentioned earlier in the debate.

The reforms set out in the Budget will give businesses and individuals in the region a further boost on top of those private sector initiatives. Corporation tax will be cut by an additional 1% on top of the cuts announced last year. From April this year, the rate of tax will be reduced to 24%, and it will ultimately fall to 22% by 2014—a competitive rate when we consider our competitors around the globe. Let me reiterate that the Budget increases the personal tax allowance by £1,100, which will take 34,000 people in the north-east out of tax altogether. It also increases the Growing Places fund, which will provide additional funding for the infrastructure that is needed to unlock developments that lead to jobs and growth. Local enterprise partnerships in the north-east will receive a further £11 million.

I also confirm that Newcastle has been selected to become a super-connected city. I do not sneer at that; hon. Members may fail to welcome it, but the city will receive up to £6 million of funding to deliver ultra-fast broadband to residents and businesses, which is valuable. On top of that, the Budget includes investment of almost £28 million in stalled development projects within the north-east.

Hon. Members were keen to talk about capital spending in percentage terms, but let me provide some absolute terms and mention £4.5 billion for the intercity express programme; £260 million for the new Tyne tunnel; £57 million for the Tees valley bus network; £350 million to reinvigorate the Tyne and Wear metro; and £82.5 million for a new Sunderland bridge, which perhaps hon. Members will welcome.

Grahame M. Morris: I am grateful to the Minister for giving way as I know that time is short. However, she is reading out a list of projects that have already been delivered and were planned by the previous Government. Can she equate the £10 million in the Growing Places fund to a distance of new motorway, for example? Would it buy one, two or three miles of new motorway? We are talking about relatively modest sums of new money.

Miss Smith: I am afraid that my mental arithmetic does not extend to working out pounds per mile on the spot, but I will be happy to look into the hon. Gentleman’s question.

I will continue with my comments, which I hope will help hon. Members. I want to talk briefly about support in the Budget for individuals and families to buy new-build properties with a 5% deposit through the NewBuy scheme, and I wish to put it on record that the Budget increases the maximum right-to-buy discount—[ Interruption. ]

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Sir Roger Gale (in the Chair): Order. I am sorry to interrupt the hon. Lady. Hon. Members have participated in the debate and should do the Minister the courtesy of listening to her response.

Miss Smith: Thank you, Sir Roger. The new right-to-buy discount introduced by this Government is more than three times the current limit in the north-east of £22,000.

In his opening comments, the hon. Member for Gateshead used words such as “outdated”, and various other words have been bandied around today. I think that the hon. Gentleman, and other hon. Members, need to look around and see the threat to today’s economy, which in one word is debt. Debt is a problem both in the UK and globally, and this Government are determined to sort it out. Fiscal consolidation is necessary. Those in the Labour party seek to spend more, borrow more and owe more, and therefore to pile more debt on their children, and indeed my children. The hon. Gentleman, and those on the Opposition Front Bench, still believe that child benefit should be claimed by millionaires. We do not; we believe that there should be consolidation.

Ian Mearns: Will the Minister give way?

Miss Smith: I am afraid that I have no time. If we do not tackle our deficit, it will be worse for everybody. The really outdated view is to burden future generations with more debt, and for the Government to fail to take responsibility and consign all regions in the country to economic disaster. One need only look to the eurozone to get the picture. The Government’s actions have kept our interest rates closer to those in Germany than those in Greece, and made Britain a safe haven.

The topic of young people was raised by the hon. Members for North West Durham (Pat Glass) and for Hartlepool (Mr Wright). I am shocked that the hon. Gentleman thinks that it is patronising to believe that young people can start their own businesses and I disagree strongly. As a constituency MP, I make it my business to support Jobcentre Plus, the youth contract, the work experience programme and the Work programme—perhaps the hon. Gentleman acts differently in his constituency—and that is what I call working together to achieve things for our young people.

Chris Leslie: Will the Minister give way?

Miss Smith: No. I am afraid that I must move on. I know that the hon. Gentleman’s colleagues wish me to talk about regional or local pay.

Chris Leslie: It is a very quick question. I wish simply to ask whether the Minister will utter the words, “We’re all in it together”?

Miss Smith: The hon. Gentleman asks me to do that as well as to respond to other hon. Members in three minutes, but I value his Back Benchers more than he does, and I wish to talk about local pay. The hon. Member for Gateshead focused much of his contribution

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on that issue, and I wish to reassure him about something that he already knows. At this stage, the Government are not setting out detailed proposals; they are asking experts how public sector pay might better reflect local markets. Localising pay has the potential to improve the resources available to private sector businesses that need to compete with higher public sector wages. It can improve or reduce unfair variations in the quality of public services, and tackle a limit on the number of jobs that the public sector can maintain created by having to support disproportionate wages. The principle of local pay has already been established, and I confirm, as has been mentioned, that the Labour party did that in 2007.

I will move on briefly to pasties and the sausage rolls mentioned by the hon. Member for Redcar. The point is that the Budget closes loopholes and addresses anomalies to ensure a level playing field. The National Federation of Fish Friers states:

“There should be a level playing field. Why should the UK’s fish and chip shops have to pay 20 per cent. on all the hot food they sell…when the bakery next door sells hot pies, pasties and sausage rolls free of VAT?”

The Budget seeks to introduce that level playing field.

Mr Anderson: Will the Minister give way?

Miss Smith: I am afraid that I do not have time because I must respond to concerns about local government funding and the claim that local authorities in the north-east have taken disproportionate cuts. As I have made clear, the previous Government left an appalling economic and financial mess, and we have a moral obligation to pay back our debts as quickly as possible. Therefore, tough decisions are necessary. The hon. Member for Gateshead will know that the formula grant in his area will be nearly £555 per person in 2011-12, compared with an average of £372 across England. That reflects the higher level of need in Gateshead, and I expect him to welcome that. In the light of issues raised by hon. Members, the Government’s key priority is returning the UK economy to sustainable, economic growth.

Before time runs out, I want to talk about local enterprise partnerships. Such partnerships have radically reshaped the way businesses and the Government interact at local level, and they mark a sharp break from the top-down, politically driven regional policy of the previous Government. The winners of the first two rounds of the regional growth fund are expected to create over 13,500 direct jobs and 25,000 indirect jobs in the north-east, including at Gateshead college in the hon. Gentleman’s constituency. The Government are taking forward an ambitious work programme that will assist with city deals for core regions, and I encourage all hon. Members present to engage with that.

Sir Roger Gale (in the Chair): Order. Will hon. Gentlemen and Ladies who participated in the last debate and are leaving please do so quietly? As they are doing so, I thank everyone for their courtesy and patience this morning, which has allowed every hon. Member to have at least some say.

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Rural Communities

11 am

Sir Roger Gale (in the Chair): We now come to the next debate. Hon. Members who were not present for the previous debate will be unaware that the Chairman of Ways and Means has granted me the power to impose time limits on speeches. I notice that a significant number of hon. Members are present for the debate. Seven have already indicated to Mr Speaker that they want to participate, and others who have not written in may well want to contribute. I will therefore say now that I am imposing a six-minute time limit on all speeches, other than of course the speech of the hon. Member introducing the debate. That will carry with it a penalty of one minute per intervention for the first two interventions. Hon. Members can do the maths and work out how many of their colleagues are likely to be able to participate in the debate on that basis. It will be the intention of my successor in the Chair to start to call those on the Front Benches for the winding-up speeches not less than 25 minutes before the end of the debate.

11.1 am

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): Thank you, Sir Roger. I will keep my comments as brief as I can, given what you have told us. I begin the debate by thanking a number of organisations for making contributions that have been very useful not only to me, but to other colleagues—in particular, the National Farmers Union, the Federation of Small Businesses, the Countryside Alliance, the Dispensing Doctors Association and BT.

We have been told that the election in 2015 will be fought largely on urban ground, but I hope that in these opening remarks, I can persuade my hon. Friend the Minister that although we might be small in number in rural areas, we are certainly large in political significance. These days, 20% of the population either live or work in rural areas.

As good Conservatives and, I suspect, good Liberal Democrats, we are always pretty sceptical about the concept of an urban-rural divide, just as we are sceptical about a north-south divide. As good Conservatives, good Liberal Democrats and, as the shadow Minister, the hon. Member for Ogmore (Huw Irranca-Davies), would no doubt claim, good socialists, we embrace cultures and traditions—[Interruption.] He is objecting to being described as a socialist, I suspect. Even some of the more quirky and weird traditions, we welcome and embrace and, hopefully, champion.

However, although rural isolation is a dream or an aspiration for some people, it is unquestionably a challenge or even a nightmare for others. I say that because the challenges facing rural communities are often the same as those facing urban communities; they just emerge in a slightly different way. Those challenges include deprivation, poverty—particularly fuel poverty, which I know other hon. Members want to touch on—the perhaps more limited choice of educational opportunities in rural areas and the cost of fuel, particularly as that applies to medical needs or basic provisions. Let us not forget that rural fuel can be up to 5p a litre more expensive than the fuel that people can buy in urban areas.

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There are also challenges in relation to the availability of rural transport and affordable housing, particularly in national parks. I know that one or two hon. Members are lucky enough to live in or near very beautiful parts of Britain. Not surprisingly, the house prices in those areas are much higher and therefore much further out of reach of those who perhaps were born and bred there and want to remain there for the purposes of their job or family life. The availability of health care is often much more of a challenge in rural areas than it is in urban areas, and the fear of crime—not necessarily crime itself, because the incidence of crime is lower in rural areas—is higher, particularly among elderly people. The last challenge is access to financial services. That is a given if people are lucky enough to live in an urban area, but can become and is increasingly becoming a nightmare for people in rural areas. About 300,000 people in rural England do not even have access to a bank account.

There are also challenges for businesses in rural areas. We can take my own constituency of Carmarthen West and South Pembrokeshire as an example. Someone might want to make relatively minor modifications—minute improvements—to the infrastructure of their factory or depot. They might want to engage in some rather limited activity. However, if they are in a national park or another sensitive area, they have to prepare themselves for a long and expensive fight with the local planning authority, which in so many cases has as its default setting “You must be joking,” rather than “How can we help your business?”

In some places, if people want to compete with their European colleagues by means of an internet-based business, they can forget it. The same is true in relation to mobile phone coverage. I remember my hon. Friend the Member for Penrith and The Border (Rory Stewart) mentioning that mobile phone coverage was better in Uzbekistan than in Cumbria. That is ludicrous. As I think I have mentioned in this Chamber before, I cannot talk to hon. Friends in adjacent constituencies because I cannot get mobile phone reception in west Wales. That is a ludicrous disadvantage, and we suffer because of it.

If a company is, as many companies are, a haulage-based business located in rural areas, often around the ports on the coast of England and Wales, what can it do about its overheads when its only two overheads are fuel and people? When it comes to its lorry fleet, what can it do to address the costs that current fuel prices are imposing on those important businesses?

This is an opportunity for the Minister to lay out the Government’s achievements—that will probably include the achievements of Departments other than his own, because this debate is deliberately wide ranging—and to ask himself, as we have asked ourselves, this question. Is rural patience being stretched at the moment? The Government have done well on broadband, food labelling, red tape in farming, and planning, certainly in England—not as yet in Wales, regrettably, thanks to the Welsh Government. I think that, in time, the Government will be seen to have done well on health and health provision, too. However, the rural jury is still out on affordable housing, post offices, mobile phone coverage, fear of crime and, more recently, on VAT on caravans, fuel poverty and transport costs as well. It is therefore not necessarily a rosy picture of Government enthusiasts in rural areas, but they are there for the picking.

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Mr James Gray (North Wiltshire) (Con): My hon. Friend is giving us a most interesting tour d’horizon of problems in rural areas. None the less, he has not touched for the moment on one important area—local government finance. Does he agree that the Government’s forthcoming review of local government finance across England should enable us to change the situation—to correct the anomaly whereby the Government spend about £200 per head in rural areas and about £400 per head in urban areas? Surely that is wrong and the forthcoming review of local government finance and, incidentally, of health finance as well should correct that anomaly.

Simon Hart: My hon. Friend is spot-on. He also highlights some of the difficulties that arise from the definitions of rural and urban. In the past, not just the previous Government but probably the Government before them struggled to get a proper definition that enables that anomaly to be ironed out.

We probably all agree, on both sides of the House, that rural people are entrepreneurial, innovative and, above all, patient. They feel that they perform well despite government, rather than because of it. That does not necessarily apply specifically to the current Government. It is just a general feeling on the part of rural people that they have the skill and determination to overcome the obstacles that sometimes the Government inadvertently put in their path.

Rural people are unquestionably the key to economic regeneration and job creation in rural areas. There is the statistic, which some people might say is trite, that if every small or medium-sized enterprise in Wales hired just one person, there would be no unemployment in Wales at all. That is the raw statistic. Of course it is simplistic, but we are not talking about anything that is out of the reach of most people who have aspirations for their business. Such people epitomise the strivers politicians from all quarters always talk about. We refer to them as if they were our friends. They are the people who are there to bring the country out of recession, and that, indeed, is what they are doing. Sometimes, however, I question whether we quite recognise the additional challenges people in rural areas face in running their businesses.

As the shadow Minister will recall, we used to accuse Labour of doing things to, rather than for, the countryside. That is the nub of my opening remarks, from which my questions arise. I hope the Minister will be able to describe to us how he will be part of a re-energisation of rural communities. I hope he will remind rural communities not only of the fact that the Government are on their side, but of how they are on their side.

I hope the Minister will also be able to tell us about the Government’s plans for broadband and mobile phone coverage in not only rural areas, but isolated rural areas. If the Government’s plans for 95% of the country go ahead, as I hope they will, the few people left in the furthest retreats of rural Britain—the other 5%—will, through a fairly obvious logic, be put at a further disadvantage.

Andrew Bingham (High Peak) (Con): My hon. Friend makes a fabulous point for rural communities. I view broadband as the fourth utility nowadays. Does he agree that companies will start to go back to urban

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areas unless we get broadband right? That would further exacerbate the difficulties rural communities face in surviving.

Simon Hart: My hon. Friend makes a good point well. The struggle to compete with their urban neighbours has already put that question in the minds of some companies and organisations. What a tragedy it would be if the things my hon. Friend talks about happened. That would go against every one of the principles of not only the Conservative party, but the Liberal Democrats and Labour, too. We should not go down that road.

I hope the Minister will set out the real prospects for fuel costs. I hope he will not say what various people who send us briefs from time to time tell us—that fuel would have been more expensive under Labour. That argument does not work in west Wales or, I suspect, anywhere else. We will start convincing fuel and transport-dependent rural businesses that we take their plight seriously only when the price of fuel comes down. I am not going to say to businesses in my area, “I don’t know what you’re complaining about. It would have been much worse had there been another Government.” Let us not deploy that argument; it does not work, it is disingenuous and it is disrespectful to companies worried about whether they can get through to the end of next month, let alone the end of next year.

I hope the Minister can persuade us that young families will be able to afford to buy a house in the area they wish to work in, the area they were born and brought up in or the area they want to stay in and continue to make a contribution in. Perhaps he can tell us how they will be able to do that.

John Howell (Henley) (Con): Will my hon. Friend pay tribute to, and comment on, the opportunities rural communities have under the community right to build scheme to become developers? Small developments can help the affordable housing situation in villages, but many small villages have been prevented from undertaking any development in the past.

Simon Hart: That proposal is welcome. In some areas, of course, it has been subject to bigger planning obstacles than predicted, notwithstanding the improvements that have been made to the planning process, certainly in England. If my community is anything to go by—this is particularly true in the national park, although I do not want to get personal about the national park—even small developers have to pay a significant sum, almost by way of a hidden tax, to undertake such development, and that is a disincentive. I fully recognise my hon. Friend’s positive message, but there are some negative ones, too, and we need to address them if such proposals are to be universally fair.

Mr Mark Spencer (Sherwood) (Con): Does my hon. Friend recognise that there is a fundamental need to distinguish between protecting and preserving the countryside, which are two different things? To protect the countryside, we need development and change so that communities can expand and look after their schools and shops.

Simon Hart: I wish I had thought of that myself because it is such an important point. We are sometimes distracted by the preservation argument, but the countryside is actually all about people, jobs and communities, and

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the landscape, which we are sometimes fixated by, is only a consequence of the tender stewardship of generations of dedicated enthusiasts of the rural big society. My hon. Friend is right to point out that unless we have the conditions and facilities to encourage that, everything else we, the nation and our foreign visitors admire about the countryside will be compromised.

My next question for the Minister—it is not a sarcastic question—is which bits of the recent Budget does he believe give hope and encouragement to businesses in rural areas? Which bits remind them that they should welcome life under the coalition and let them see some sort of vision arising out of the Chancellor’s recent comments?

In drawing to a conclusion, I want to refer to the views of voters and constituents in west Wales. I do not know whether I am unique in this respect, but voters in my area do not really give a damn where the Prime Minister went to school. They have no interest whatever in who he might or might not have to dinner, and they certainly have no interest in what might or might not be on his tax return. All they want to know is whether the Government are bold, trustworthy and competent, and whether the Government’s values are the same as theirs. Those are the things I get asked about—not all the other fluff and nonsense that floats around this place from time to time—and they probably reflect the views of rural, and indeed urban, people across Britain.

In my short opening remarks, I hope I have been able to provide an absolutely open goal for the Minister to aim at. I hope he can convince us that we can continue proudly to defend the reputation of the Conservative party as the party of the countryside.

Several hon. Members rose

Sir Roger Gale (in the Chair): Order. The reason for the slight pause is that I was looking to see who had risen to speak. [ Interruption. ] Okay, please sit down. Ten Members are seeking to speak, and others may seek to intervene. That being so, and despite the fact that I announced at the start of the debate that I wanted to curtail speeches to six minutes, I will actually curtail them to five minutes. That will allow the Front-Bench spokesmen to start at about 12.5 pm. It will also allow a little injury time for interventions. For those who came in slightly late, let me explain that the system is exactly as it is in the main Chamber. For each of the first two interventions, there will be an extra minute, so a five-minute speech could turn into a seven-minute speech. We do not have the same advanced technology as we do in the main Chamber, so I will indicate when Members have one minute left to go by ringing the bell in front of me.

11.17 am

Hywel Williams (Arfon) (PC): I will be brief, as you requested, Sir Roger.

This is a very worthy and great subject for debate, but we have not debated it often enough. Had there been time, I would have talked about a large number of issues, including fuel, taxation, transportation, post offices, broadband and much else. I will, however, confine myself to two issues that are particularly important to my constituents and, indeed, to constituents elsewhere in north Wales: health care and unfit housing.

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I am glad the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) has raised this issue, and I warmly congratulate him on securing the debate. He has a fine record in Wales and, indeed, throughout the UK, on standing up for rural communities, and he is to be praised for that.

As I said, a couple of issues are particularly important in my constituency. The first is health care, which is very problematic. Some hon. Members might wonder why I, as a Welsh Member, am raising the issue of health, given that it is devolved. During the recent debate on health, however, sufficient attention was not given to the fact that many people in north Wales and mid-Wales access treatment on the other side of the border. I have raised the issue with Health Ministers over the past few weeks, but I am unsatisfied by their response. I have also raised it with the Secretary of State for Wales, who had a better understanding of it, but I still do not think it has been tackled properly.

The issue of health impacts on people in rural areas. Most of north Wales, and particularly north-west Wales, is rural. People from north-west Wales travel two and, sometimes, three hours just to access specialist treatment. Most of us will have had briefings on the debate, with references, for example, to an ambulance response time of just a few minutes. The reality in the area I represent is travel of two or three hours. I had a response from the Minister suggesting that we need to think of the issue as a problem of people registering with GPs just the other side of the border; but it is a great deal more than that. I ask him to bear that in mind. He will have a great many points to respond to, but I wish that the Government would take the matter more seriously. I see that the hon. Member for Ogmore (Huw Irranca-Davies) will speak for the Opposition, and I wish that the Welsh Labour Government would take the matter more seriously too.

Nic Dakin (Scunthorpe) (Lab): I congratulate the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on securing the debate. Before leaving the question of health, does the hon. Member for Arfon (Hywel Williams) agree with me on the importance of dispensing doctors practices in rural communities? They are particularly important for getting treatments to elderly and infirm people in rural communities such as the towns and villages south of Scunthorpe, which are served by the Riverside practice in my area. That is an important part of health care provision in rural areas.

Hywel Williams: Briefly, there are GP surgeries in my area that dispense, and that has been a vital part of the service to the population. It does not take two or three hours to travel to a pharmacy, but it is highly inconvenient, especially when bus services are so patchy.

I want to refer to housing, and to mention that we have many unfit houses in Wales. However, the repair and renovation of housing is subject to VAT, and I think that that is wrong. VAT is charged on repair and renovation, but it is not charged in the same way on new build. Plaid Cymru has repeatedly called for a tax cut. It might surprise some hon. Members to hear that a usually left-of-centre party has called for tax cuts, but that is a particularly useful one. It is a matter of equality between people, such as a young couple renovating their first house—adding a kitchen and bathroom to the

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back of a pre-1919 terraced house, and being charged VAT for it—and someone retiring, say, from the City to the home counties, and building a retirement home, free of VAT.

Mr Gray: Does the hon. Gentleman agree that some particularly unfortunate small print in the Budget was about VAT on the restoration of historic churches and houses? Because of that, it will be necessary to do away with the restoration of the church at Castle Combe in my constituency.

Hywel Williams: The hon. Gentleman makes a fine point. I had a hugely confusing conversation with the Welsh Government, some time ago, about historic and listed buildings being free of VAT. The conclusion, after 20 minutes of discussion, was agreement that they were free of VAT—but only for new build. Given that we were talking about historic and listed properties, the idea of building them anew seemed somewhat peculiar to me, to say the least.

I will conclude by saying that we have social housing in Wales, as elsewhere. Social housing is extremely valuable, but often it is of the wrong type, and in the wrong place. The ability of social landlords and local authorities to let houses in rural areas has been severely curtailed. In many villages in my area, social housing has been sold. It is not available. The proposed changes in housing benefit are unlikely to help. More people under 35 will be looking for houses in multiple occupation, of which we have few in rural Wales.

Sir Roger Gale (in the Chair): Order. Before we proceed, I now have a fairly definitive list of hon. Members who have applied to speak. Although it is exceptional to do so, it may help if I give the names of those people, so that hon. Members not on the list may consider whether to intervene. From the Government Benches, in the order of application, speakers will be Mr Rory Stewart, Caroline Nokes, Sheryll Murray, Glyn Davies, Roger Williams and Neil Parish; and now that Mr Hywel Williams has spoken the only name I have from the Opposition Benches is Mr Ian Paisley. Any hon. Member not on the list has not so far indicated a wish to speak.

11.24 am

Rory Stewart (Penrith and The Border) (Con): I join everyone in congratulating my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) on securing this important debate. The enormous number of people here is testimony to the importance of the subject.

Speaking on behalf of Cumbria, I want to say that we need to recognise, when we talk about Government support for rural areas, that there is already significant Government support for them. We cannot start the debate pretending that rural areas are somehow entirely neglected or forgotten. It is correct that there should be Government support for them, but we should recognise that in per capita terms—and of course, it is driven by our need—Government support can be considerable. In our part of Cumbria, for example, we run two district hospitals for a population of 300,000 people. We have the smallest high school and the smallest sixth form in England. That means that the per capita costs of running those services are high. That is a form of cross-subsidy from other parts of the country.

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Therefore, we should not over-push the argument. We should not stand up again and again in the House of Commons and present ourselves as victims. To do so is dangerous. If we present ourselves as victims and demand more and more transfer payments, and start to take on board the arguments about productivity and the connection between rural areas and the City of London, for example, we will create unpleasant tensions. We will end up with people in London saying “Why should we subsidise rural areas?” We do not want to get into that conversation. We will, in short, find that we are having the same conversation that we are now having with Scotland, which has become poisoned by the question of how much money is moving north of the border, and how much is moving south.

Nor should rural areas try to imitate cities. One of the most dangerous things that we have been doing in Cumbria has been to pursue industrialisation policies that are entirely unsuitable for rural areas. Of course it is true, as my hon. Friend the Member for Sherwood (Mr Spencer) said, that we need to be sure that the economy flourishes in rural areas. However, that does not mean going into an area such as Penrith and The Border, where currently we have close to full employment, and building businesses for which we have no workers, shipping them in from other parts of the country, then saying we have a housing shortage and building another 400 houses, and then saying we do not have jobs for the people in those 400 houses, and building more businesses. That may be convenient for district councils that could generate money from that kind of operation, but it is not what is demanded by our area, our population, or our economy.

Instead, we need to look at the country as a single complementary unit—complementary in the sense that city and rural needs are different, but also in the sense that we are one community, one country and one nation. We are not about transfer payments. We cannot allow people in London to see themselves as some city state that is paying for the rest of the country. We must understand that our contribution is valuable.

Gloria De Piero (Ashfield) (Lab): I suspect that many people in London would, however, be surprised to find out that in rural areas such as mine people cannot get a school bus. I am thinking specifically of the 7.55 am bus from Sutton in Ashfield to Tibshelf, which has been removed, throwing mums’ lives into chaos. Would the hon. Gentleman agree that getting a school bus is not just desirable but essential?

Rory Stewart: Absolutely, and I thank the hon. Lady for raising that point.

With the caveat that we do not want to present ourselves as victims, it is essential to demand the basic services that other people in the country take for granted. Those could be buses, or access to hospitals or schools.

Andrew Bridgen (North West Leicestershire) (Con): I am so pleased that my hon. Friend is happy with the funding of education in Cumbria. As a Leicestershire MP I am not happy with the funding settlement for Leicestershire, which is the lowest-funded county, per capita, in the whole of Great Britain. We are in the bizarre situation, with no indication of any movement by the Government to repair the damage, in which the

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education of every pupil in the city of Leicester is valued at a stunning £800 a year more than that of every pupil in Leicestershire. That is untenable and cannot be perpetuated. To say that is not to plead poverty: there is a clear disparity between the education funding for rural areas such as Leicestershire and that for cities.

Rory Stewart: I am certainly not going to stand up in the House of Commons and say that I am happy with Government funding for education in Cumbria. There is not a single person in this Chamber who would say that they feel happy with the funding for their local area, but we need to strike a balance that is sustainable for the nation. There are two things that we need to do. Instead of focusing on money we should consider what the Government can provide—above all, I am thinking about infrastructure and getting the broadband in the ground and sufficient mobile coverage—and we must understand that Government could provide a lot more for rural areas if they gave space to rural communities to fill in the gaps. In our case, for example, the first responders enormously help the ambulance service, but they are not allowed to deal with children, which takes out a whole chunk of the population who could be served by volunteers within our communities.

In relation to our air ambulance service, the Government could do an enormous amount by exempting VAT on fuel. However, in relation to broadband, which is the most exciting area of all, it is about assigning responsibility. It is about the Government saying to communities, “This is what you ought to do and this is what the Government will not do.”

We should see rural communities not as victims but as the vanguard of Britain; as miraculous places that produce things that other parts of the country do not. In Cumbria, we have a magic alchemy that turns wet grass into productive protein, which we can sell around the world. If we get the broadband right, small and medium-sized enterprises from rural communities can challenge the rest of the world, but that involves education, focus and confidence. Importantly, we can provide an image for the 21st century on how to live in rural areas, and we no longer need to present ourselves as victims.

11.31 am

Ian Paisley (North Antrim) (DUP): It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on securing this debate. We should celebrate the fact that this Parliament has been more rural centric in its attitude than previous Parliaments for a long period of time. Parliament is now starting to speak up for the countryside, which possibly reflects the fact that we are lobbied strongly by our countryside constituents who want a fair crack of the whip and that is something that should be encouraged. There needs to be a voice rising from the countryside for a vibrant, healthy agricultural industry, from the farmer, to the processer, to the consumer. That is what our countryside should be all about. We need policies that sustain our agricultural industry so that our living, breathing rural communities continue to contribute the most important thing—sustainable food produce.

My own constituency in Northern Ireland has an agricultural economy that employs some 20% of our

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workers. As the hon. Member for Penrith and The Border (Rory Stewart) mentioned, we must move away from the public sector and towards a more balanced economy. That is happening; agricultural productivity is growing, which is positive, but it can only be sustained if this place starts to put in place some very strong policies to keep young people on our land; to encourage young farmers to stay in the industry; and to ensure that the key area increases in pillar two of the common agricultural policy should not be at the direct expense of pillar one, which supports agricultural productivity. Supporting agricultural productivity is the most important thing that can be achieved by EU and CAP policies. What the Westminster Government should be doing is putting money where it matters most to assist the farmer to produce sustainable, good, traceable food which is what our consumers want and need. That is the critical issue that out rural policies should be driving at.

However, this debate is more about rural communities and remoteness. I represent a constituency that also includes the inhabited island of Rathlin.

Jim Shannon (Strangford) (DUP): I thank my hon. Friend for giving way and I congratulate the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on bringing this matter forward. It is a really good issue and we are all supportive of it. My hon. Friend mentions the island of Rathlin and has also talked about agriculture. Sometimes a poor relation in rural communities is the fishing industry. Does he think that the fishing industry needs help from Government, and that the fishing villages initiative is one way of getting money to those communities? It is important to create jobs at this critical time.

Ian Paisley: Absolutely. When we talk about agricultural productivity, we must not forget our fishermen who produce a harvest from our seas and who must form part of this important debate.

Nothing could be more remote than living on an island, off an island, off an island, and that is what happens in my constituency. Those people on Rathlin know what remoteness really means. They have to travel by boat to get to their mainland in Ulster. It is critical that we address the needs of that community. When rural post offices close or a bank closes in Ballycastle or Bushmills, it has an even bigger impact on a place such as Rathlin. Whenever fuel costs go up, the knock-on effect in Rathlin is twice as big as it is on the mainland. Whenever we speak about rural communities, we must understand that there is level of remoteness that is doubly remote and we must take that on board whenever we address this issue.

Some hon. Members have mentioned broadband. Broadband does not operate appropriately in areas such as Rathlin island. A GP comes over once a week by boat to see his patients, and when he finds that the computer does not work, he cannot order the prescription from the mainland of Ulster. What happens next? Those people who are already remote feel the real sudden impact of living on that island, off an island, off an island. We must ensure that the issue of broadband is properly addressed for our rural communities because it makes a difference. It allows young entrepreneurs who live in remote areas to create businesses. It also enables our tourism industry to flourish and our community to be driven forward.

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I leave one thought with the Minister: rural proofing should be a golden thread running through all policy. Whatever Department is involved, it must consider how a policy affects the people in the rural United Kingdom, because they matter most.

11.36 am

Caroline Nokes (Romsey and Southampton North) (Con): I pay tribute to my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) for securing this important debate. I will keep my remarks brief. In the spirit of alliteration that we saw throughout the Easter recess, I will focus on the two p’s—planning and pubs. I am a little surprised that so far we have not had any comment on rural pubs. In my constituency, village pubs close frequently. In rural areas across the country, they close at a rate of six per week. In my constituency, we have seen the phenomenon of pub companies, where a leaseholder will have several pubs, one of which might be very successful, but most of which are failing. The failing pubs are dragging down the popular, well liked village pubs. This is a classic case for the community right-to-buy policy, whereby a village can step in and rescue a critical and important asset that provides not just a place to meet and have a drink, but a number of other services such as post office facilities and cash points. Without such services, that community might be very isolated.

I spent an entire day last summer recess with a pub company, visiting various pubs across the Romsey and Southampton North constituency. It may sound like a pub crawl, but I can assure hon. Members that it was not. Representing a constituency that has both rural and urban areas, I was struck by the stark differences between the two. I saw how easy and possible it was to run a successful and thriving pub in a suburb or in a city compared with running a pub in a village, where there is a much smaller customer base. I welcome the community right to buy policy, and I hope that we will see some progress in helping to preserve pubs in my constituency in the future.

Planning, the second area on which I wish to focus, is always something of a political hot potato. What I have seen in my constituency over the past six weeks or so, certainly as the local authority produces its core strategy, is the emphasis placed by local people on having a greater say in planning and more control. Test Valley borough council was at the vanguard—this will mean nothing to most people—of policy ESN 05. The clue is in the 05. Some years ago, the council introduced a policy that allowed local communities to propose small affordable housing developments that were specifically designed for local people. People had to prove that they had a coherent link to a village, to gain access to one of the affordable homes being built there. It is an excellent policy and I am pleased to see that, through the Localism Act 2011, it is being widened and used across the country. But of course, it produces something of a conflict, because ties to local areas generally have to be very current and we have a lot of people living in our towns and on the edges of the city of Southampton who may have been forced out of the villages years ago and now have great aspirations to move back to them. There also tends to be a little bit of conflict between villages, as people who live in a nearby village will try to claim that they have a good link to a village that has introduced an affordable scheme, so there is—as ever—an enormous balancing act to be done.

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The key issue that I want to highlight is that of productive land. I was pleased to hear the hon. Member for North Antrim (Ian Paisley) talk about the importance of productive agricultural land, because that issue is certainly a huge concern around the edges of Romsey, where significant farm land could be brought into agricultural use very easily and would be very productive. But of course, landowners tend to look towards the opportunities that they can gain by providing their land for future housing development.

My big plea to the Government is to ask them to consider changing the rules to make the green belt easier to establish. Currently, it is very tricky to establish what is green belt. Many people in rural Hampshire actually believe that the county has many areas of green-belt land; it does not, and there is only one small corner of green-belt land in the county. Much of the countryside in Hampshire is just deemed to be ordinary countryside, without any special designation whatsoever.

I have a final plea to the Minister. Will he please give greater consideration to the beautiful River Test, from which an enormous amount of water is abstracted, to ensure that we have enough water for the new houses that are being built?

11.41 am

Sheryll Murray (South East Cornwall) (Con): I thank my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) for securing this important and timely debate today. The concerns of rural communities and how the Government can best support those communities is a very broad issue. Many of my hon. Friends have already mentioned the importance of rural communities in their constituencies, and I just want to focus on a few issues that affect my constituents in South East Cornwall.

Rural transport is very important. The Commission for Rural Communities noted that rural residents placed public transport as a top priority for improving their quality of life. In my constituency, four out of five electors use their own motorised transport. Around 80% of households in South East Cornwall own a car or van, with about half of those households owning more than one vehicle. In South East Cornwall, a car is not a luxury; it is a necessity.

There is no doubt that changes in taxation and legislation relating to the car hit the person living in a rural area much harder than people in a city, who frequently have transport choice. Also, having a 4x4 vehicle in a rural area is often a necessity, particularly for farmers, but it is penalised under green taxation. We accept that the Chancellor has changed Labour’s plans to introduce heavy fuel duty, which were in its forward budget; indeed, the cost of a litre of fuel would have increased by an additional 5p under Labour. The Chancellor has delayed the extra 3p per litre increase.

Jake Berry (Rossendale and Darwen) (Con): Does my hon. Friend agree that, in places such as her constituency or mine, we have a real problem with fuel price competition? Just a few miles—perhaps four or five miles—down the road from my constituency, fuel can be several pence a litre cheaper than in my constituency. I have raised that issue with large retailers, including supermarkets, but they have said that they look at a small geographical area to set the price. Does that policy not mean that we have a problem in our fuel market for rural residents?

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Sheryll Murray: We certainly do. I happened to travel to the midlands at the weekend and the price of fuel in South East Cornwall was 10p per litre higher than in Bristol. I wrote a letter to the Chancellor last night, outlining my constituents’ worries about fuel prices. I said that I appreciated the terrible economic situation that the previous Government had left us in, and I fully understand that there is little room for manoeuvre. However, the fuel situation is getting worse and causing many of my constituents great hardship.

Mr Mark Williams (Ceredigion) (LD): Has the hon. Lady reflected on the position of a lot of the smaller, independent, family-run filling stations? We are losing those stations by the hundreds every year, and in the process we often lose other valuable village facilities, such as a shop or post office, which are often incorporated in the business.

Sheryll Murray: The hon. Gentleman will accept that that is not a trend that has just begun under this Government. It started in the early 2000s, when we saw petrol stations in rural areas haemorrhage, which demonstrates that there was very little support for our rural communities under the last Government.

Public transport is weak in South East Cornwall; there are very few buses and there is little access to the railways. It is clear that the majority of the rural population drive, but it is also important to have some kind of alternative. Everyone has periods when they cannot drive, whether because of age, medical reasons or the car has broken down. Unlike in towns, where the local GP’s surgery can be a few hundred metres from someone’s home, in the country it can be a few miles away.

Similarly, in rural areas, train stations are often a great distance away from people’s homes and transport is needed to get to the station. So railways cannot be seen as a solution in their own right. However, we need to encourage people on to the railways and other forms of public transport. The train is often the best method for commuting to the cities, thus avoiding the congested roads that buses also travel along.

The March 2012 report, “Reforming our Railways: Putting the Customer First” said that the Government are allocating funding for additional capacity for people to commute to cities at peak times, including faster journey times, more frequent trains, more through-journeys, more reliable journeys and more cost-efficient journeys. I hope that the South West Trains franchise will make some of those improvements.

The lack of public transport and the increase in the price of fuel are major concerns for people in South East Cornwall. Wages in Cornwall are very low in relation to both the south-west as a whole and the rest of the country. In 2001, the average income per household in South East Cornwall was around £23,000. Since then, the figure has not changed significantly. Any increase in fuel prices is disproportionately felt in my constituency, as are increases to many other household bills. In my constituency, the average house price is around 10 times the average household income.

Transport is important in supporting our rural communities, and it has a knock-on effect on people’s standards of living. I am glad that the Government are committed to helping our rural poor. There are initiatives such as the Cott Yard community resource centre in

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St Neot in my constituency, where £330,000 was provided under the community and social enterprise, or CASE, initiative, which is a funding stream in Cornwall that was part of the rural development plan for England. That project is one such example of the Government helping rural areas. It provides rural workshops, a post office and a library run by volunteers, to deliver services in rural areas. Another such example is the fisheries local action group, or FLAG, initiative, whereby substantial funding is provided under the European fisheries fund. It has been enlarged to support coastal communities as a whole, extending out to one mile from the coast. I am really pleased that the Department for Environment, Food and Rural Affairs has introduced those initiatives, and long may they continue and be built on.

We all accept the economic legacy left by Labour’s maxing out of our credit cards, and I hope that the two examples that I have just given will be built on, so that we have faster positive changes to help our constituents living in rural areas.

Sir Roger Gale (in the Chair): Order.

11.48 am

Glyn Davies (Montgomeryshire) (Con): Thank you, Sir Roger, for calling me to speak in this debate. Yet again, it is a pleasure to serve under your respected control.

I want to take a Welsh perspective and in particular a rural Welsh perspective. Rural Wales is where I have always lived and where I always want to live, and above all else I try to represent its interests in the House of Commons. That is why I am really pleased that my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) has secured the debate.

I have been involved in rural development for—frighteningly—about half a century, beginning with the local young farmers club. One of my proudest achievements was winning the bardic chair at a YFC eisteddfod and the speech that I made was on the future of rural Wales. The essay that I wrote advocated building a new town of 70,000 in the village of Caersws, smack in the middle of my current constituency. I would not continue to advocate that as a policy, but the underlying principle is much the same—a recognition that the traditional land-based industries in rural areas could no longer sustain a social economy. They did not employ enough people, and other forms of industry had to come in, which during the time that I have been involved have principally been manufacturing and tourism, although of course there are many others, which depend a lot on the development of broadband and on not falling behind urban areas, a point that other Members have made.

Many important issues are involved in developing these different forms of employment, but I want to talk about just two of them today, one of which, planning policy, has already been raised. We need an efficient planning services policy, and we must have attitudinal change. I was the chairman of a planning authority for about seven years, and at that time the purpose was to encourage development and do what we could to make it acceptable. Today, the position seems to be almost one of “How can we stop development?” It seems to be about making developers go through a whole series of hoops that cost them a fortune—making the process as difficult as possible. In my constituency, good projects that would provide employment are sitting in the planning

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department’s in-trays, and at a time when we are suffering recession and high unemployment across Britain such absolutely outrageous behaviour desperately needs to be changed.