Ticking time bomb

Ticking time bomb

The region’s private sector has already been left behind in the new competition for government funding. Sir Ian Wrigglesworth tells BQ how it could make up lost ground.

The North East will have some soul-searching to do if it discovers, two years from now, that it has failed to win a satisfactory share of the £1bn contained in the Government’s new Regional Growth Fund being introduced. Late out of the traps in agreeing the make-up of its local enterprise partnerships to follow the abolition of the One North East regional development agency, the region is now under threat of being left behind also in the mustering of private sector projects worthy of fund support.

Ironically the fund could hardly have been led by two individuals more understanding of North East needs as it tries to build an economy less reliant on the public sector. Chairman Lord Heseltine as environment secretary in the early 1980s was prime mover of development corporations for the likes of Tyne, Wear and Teesside, which led to transformations evident now at Quayside’s new business area in Newcastle, marinas at Sunderland and Hartlepool and Riverside Stadium at Middlesbrough – those just a few examples.

And Sir Ian Wrigglesworth, chairman of the Port of Tyne, former MP for two Teesside constituencies and past chairman of the Newcastle Gateshead Initiative, as well as running his own commercial property business – was born and bred in the North East. “Most of my life has been spent trying to help this region in one way or another,” he says. Since the 1960s and 70s he has been fighting to narrow the North/South economic divide.

Deputy prime minister Nick Clegg says of Heseltine and Wrigglesworth: “Both are, like the Government, utterly committed to ensuring the parts of the country with the greatest need share in the prosperity of the future.” But Sir Ian is very disappointed by North East tardiness. Manchester, Leeds, Sheffield and Doncaster leave it behind.

“The sooner the North East can get its act together, the better,” he warns. ”Some of the largest regions in the country have their proposals for local enterprise partnerships (LEPs) pretty well developed.

“I know from conversations that bids are already being mounted for the Regional Growth Fund. The North East is still scurrying around trying to decide what the LEPs should be.” He was speaking exclusively to BQ having just returned from a constructive early morning meeting with the leader of Leeds Council. He wishes the North East to do well out of the fund not simply out of loyalty but out of recognition that the North East requires its support more than most.

“A very clear and specific job needs to be done,” he says. “The private sector must be built up in regions too dependent on the public sector. The one region above all too dependent on the public sector is the North East. That its economy is almost 60% dependent on the public sector tells its own story.” He was still unaware at the BQ meeting what sort of LEP structure the North East was inclining to, despite LEPs’ importance in bringing bids together. Richard Moss, the BBC’s political correspondent for the North East, has calculated that the original idea was for the North East to have one LEP, then the region wanted five, then some wanted a sixth, then some wanted just one again, and that turned to perhaps two.

So it could be one for the Tees Valley, and one for the rest of the region in the end. Sir Ian comments: “I’m very surprised the organisations that have put in the proposals haven’t read more clearly what the Government asks for. LEPs are supposed to represent travel-to-work, economic areas. Putting in a bid that splits Tyneside into three separate areas when it’s clearly one economic area seems to me madness.

“County Durham putting in a bid when it’s a single unitary authority is bizarre,” says Sir Ian. “They need to get together and work together. I think too much was left to the local authorities and their prejudices and parochialism.” Though detail will not be clear until a White Paper has been published following the Government’s recent spending review, it seems businesses will be free to apply for state support independently of their local LEP. But as Sir Ian observes: “It might be seen as helpful if they do have LEP support because the LEPs are going to be business-led. Because they have been very largely based on local authority boundaries there’s something of an assumption they are local authority bodies.

“But they’re business led and the North East Chamber of Commerce, CBI and other business organisations in the region will have a profound influence. They will want to develop economic strategies for their areas, so any application that comes to us dovetailing with a strategy the relevant LEP has developed will obviously strengthen its power to be accepted.” If the North East loses out by default it will be the second big error the region has made in recent years, according to Sir Ian.

“We made a mistake in the North East earlier in pressing the previous government to establish regional development agencies right across the country,” he says. “By definition, if you need a development agency you have problems within your economy. I don’t think anyone would claim London and the South East have problems in comparative terms. I think antagonism grew towards development agencies in parts of the country not suffering the same problems – not least among local authorities that felt in the shire counties and some other parts that the regional development agencies were taking over a lot of their roles.

“I don’t think that’s been the case in the North East or in other parts of Northern England. But I think the Government moved in that direction (abolishing development agencies) because of the antagonism.

“When people in the North East pressed the Government to establish a whole network of development agencies I think if they had realised what they were doing they might have thought twice, though it was done from the best of motives.

“We had a powerful position when we had the earlier Northern Development Company, which I was a director of. The North West had one, Yorkshire and Humberside had something similar. But we had one of the best development bodies in the country at that time and it gave us an advantage. Once the agencies were set up all over we had no particular advantage.” It seems unlikely any particular sector will be favoured by the fund though, again, the White Paper will clarify. The vice-chairman says, however: “I think it will support modern growing industries of the future. I don’t think it will be there to prop up industries past their sell-by date. We need the high technology, knowledge based industries, the sort the region has been doing very well with during the last decade, to be the basis of future private sector development. A business will not succeed unless it is investing in a market with a long term future.

“There may be some instances where restructuring is taking place within an industry and we shall want to help them there to sustain themselves.” Chairing Newcastle’s bid to become Capital of Culture earlier prompts him to think a regeneration is needed in people’s heads.

“The fund needs to get into people’s minds that what this is about, and particularly in the North East, is aspiration,” he says. “It’s about whether individuals have the appetite to build businesses, develop existing businesses, set up businesses.

“The fund can then be a carrot helping to change people’s views both of themselves and of the region. If we don’t do that we won’t succeed.” But he’s no Jonah. “I think a transition has been taking place very well here in the past decade,” he says.

“Newcastle, it may surprise people in the North East to learn, is one of the 10 cities most successful in creating private sector jobs during the past 10 years. If Newcastle can do it, others can.

“Many good things have been done by the regional development agency, and by the private and public sectors. There are many signs of hope in the North East. I want to see the fund support that sort of activity. But businesses and the region need to stop thinking it’s Government’s job to regenerate the region. The region must realise it’s the region’s job to regenerate the region.

“Getting this change of thinking is vital – building people’s confidence and pride, making them feel they can do it... developing a can-do culture and creating a ferment of people doing different things because they see other people doing them and succeeding in them. This can apply also to firms of accountants and solicitors just as much as to media firms or firms making computer games. Peer example is tremendously important.

“The region needs people in the likes of Ferryhill, Easington, Tow Law and Consett no longer thinking they are necessarily going to be employed for life in one organisation. There’s a terrible parochialism sometimes in the region that we need to overcome.

“In the end, it’s all about aspiration, broadening people’s horizons so they can see opportunities for themselves and for their families. Parents are tremendously important in this. That’s the important thing, changing the culture.”

Think about the Normans, he urges. “If the people who built Durham Cathedral had had to wait for a government or a regional development agency to come along and give grants it would not have been built.

People built it because they had the passion and the aspiration and the self-belief. We need people in the region who are going to build a few more Durham Cathedrals without help from anyone else.” He is confident there are enough people in the region capable to get on and do that. His archetype is Sir John Hall.

“He’s done a mass of things, had Government support for some of them, but perhaps another 20 like him would do it, and we’ve got them – they’re around. Also we need another 20 Wellstreams, another 20 Sages.”