David Miliband

This article first appeared in The Journal ahead of David’s Westminster Hall debate on the North East economy

There are no Government Ministers from the North East, and the Government have abolished the Regional Minister and the Regional Development Agency for the North East.  But today the Government has to answer for its policies that affect the North East in a debate I have called in the House of the Commons.

We know that our region has real strengths.  Biggest export surplus in Britain.  Great universities. World-beating companies.  But we also know the problems: income per head lower, education lower, unemployment higher than the national average.  So we have work to do.

The biggest thing we need is a growing British economy.  When the South catches a cold the North gets the flu.  The Government’s masochistic economic strategy of ‘austerity first, think later’ means we are having to run up an escalator going down.  We need the Chancellor to realise that when the private sector is low on confidence, then the Government has to step in.  Just like President Obama has done in the US (it is good politics too).

But the Government are not going to announce a change of overall economic policy in the debate today.  I wish they would, but they won’t.  So I am going to concentrate on five practical areas of policy that hold the key to the future of the North East economy.

First, every successful economy in the world, whether a city or a region or a country, is connected to its neighbours and the rest of the world.  That makes transport important – not just rail and road but also air transport.  The growth of Newcastle Airport is great.  But we need a transatlantic flight as well as Emirates flying to the Middle East.

Government does not control the decisions of airlines.  But connection to the world is not just about transport.  It is about people.  And the way the Government are mismanaging the immigration system is crazy.

The Government are making it much harder for students to come and study here from abroad, including by abolishing the right of students to work here for two years after they graduate.  According to the Government’s own figures that is costing billions of pounds a year.  It makes no sense.   It is good when people come here from abroad, and then contribute to our economy.

Second, we need to make much more of local assets – from arts and culture to football and tourism.

We have a fantastic manufacturing tradition.  We need to make that pay in the new green industries that could dominate the future.

The Regional Development Agency highlighted the continuing importance of offshore ‘estuarial’ industries, including the production of wind turbines.  That market is being wrecked by Government failure to establish a clear and long term policy for renewable energy.  We need it sorted, quickly.

Third, we need to stop complaining about public investment in the region, and start realising that in every successful economy public and private sectors work together and support each other.  It is not the case that by cutting public investment we spur private investment.   In fact, every time there is public investment there is a private sector supply chain that can benefit.

Just think of the decision to invest in 700 Hitachi jobs building rolling stock in Newton Aycliffe.  That needs to be a boon for the small and medium sized companies that should be part of the supply chain.

Fourth, we need to tackle inequality and stop groups in the population being left behind.  I am especially concerned about long term youth unemployment.  We know from the 1980s the damage that can be caused when people are left without the chance to contribute to the economy.

At the moment there are 29,585 people aged 18-24 claiming JSA in the North east.  Thenumber claiming JSA for over 6 months is 12,490.  In my own constituency the number of youngsters claiming Job Seekers Allowance for over 12 months has risen 590 per cent, to 380, in the last year alone.

The Government are fiddling at the edges of this programme.  Apprenticeships are a numbers game with younger workers getting a minority of the benefit.  The wage subsidy for the young unemployed is not big enough to create job opportunities.  We need a change of tack.

Government needs to devolve money and power to allow public, private and voluntary sector in the North East to come together to raise the level of the wage subsidy, guarantee a job after say a year’s unemployment, develop a region-wide mentoring programme for the young employed to help the unemployed, tackle the cost of transport for youngsters getting to interview or a job.

Fifth, the future of the economy is about innovation, and we need the financial services sector to be part of driving funds to support business innovation.  It is understandable that we need greater regulation to prevent a repeat of the financial crash.  But we cannot afford to strangle the flow of finance to business.  In fact we need to increase it.

I have advocated for some years a British Investment Bank, to channel money to business investment.  Now I think we need local and variants of that, bringing public and private sectors together, close to business customers, to make up for the failure of the financial services market to deliver the kind of long term investment that business needs.

None of this is a revolution, but it is start.  We need to raise our voices louder together.  Labour MPs will provide a lead in the House of Commons today.  But we need business, media, local authorities and voluntary sector – and people – from across the region to speak up.  Nowhere in the world succeeds without  local leadership.  That isn’t about one person.  It is about all of us agreeing on some key priorities, and arguing for them wherever we can.