Chancellor: our long term economic plan for the North East

Chancellor talks through the six-point long term economic plan for the North East.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon George Osborne

It is great to be here in Stockton today, and at here at Nifco in particular, as today you celebrate winning the biggest contract in your history and creating another fifty jobs on this site.

It is fantastic news for the company and for Stockton.

And it demonstrates the growth in the northern economy, and a recovery now being felt in all parts of our country.

For where have we seen the fastest rate of job creation over the last quarter in Britain?

Here in the North East.

Where did the most recent figures show unemployment falling more than twice as fast as the national average?

Here in the North East.

And where have earnings risen over the year four times faster than the national average?

Here in the North East.


Because we have pursued a long term economic plan for the North East, that has put businesses at its heart.

Today I set out the next stages of our long term economic plan for the North East.

A plan to create jobs, invest in transport, back science and manufacturing and chemicals.

A plan to support exports and tourism, and a plan to give people here a greater say over their future.

I want the North East to be at the heart of the Northern Powerhouse we are building.

A Northern Powerhouse that is able to rival any global city on Earth.

For decades the gap between the north and the south, London and the rest, has grown.

That’s not healthy for our national economy – and it’s not something we should sit back and accept as inevitable.

The last few years have shown us how we can get the North, including the North East, growing.

Now we need to sustain that growth, and close that north-south gap.

This plan today charts the way ahead.

Let me take you through each of the components of this plan in more detail.

First, our ambition should be to increase the long term growth rate of the North East to at least the expected growth rate of the whole UK.

Over much of the last three decades, the growth rate here has lagged behind the UK as a whole.

In my view, the attempts by previous governments of all political colours to change this have failed because of the lack of a broad, coherent strategy encompassing the whole of the north of England.

That is what our commitment to a Northern Powerhouse is all about.

It is based on solid economic theory that says the city areas of the North are collectively stronger than their individual parts, and that connected together they can rival any global city.

It is the thinking of Jim O’Neill’s City Growth Commission.

And it is an idea that has driven our vision for the north of England.

And it is this idea that provides the means of reaching our first ambition.

If the region was to grow as fast as the forecast for the whole UK, we could add over £6 billion in real terms to the North East economy by 2030, than if the region continues to grow at its long-term average.

That’s equivalent to an increase of over £2,000 per person.

But to drive this growth, we need the North East to continue creating jobs – that’s the second part of our plan.

I want to maintain the current rate of job creation to ensure we have over 50,000 more people employed here during the course of the next Parliament.

We do that by backing the existing strengths of the North East…

Whether it’s the chemical industries in Middlesbrough and Redcar….

Scientific innovation in Newcastle…

Agriculture and tourism in Northumberland…

Or exports from the North East ports.

But what all of these industries need to succeed of course is modern, world-leading transport links.

I am not alone in believing that stronger agglomeration is a key driver of economic performance…

As an economy becomes more knowledge and technology based, the paradox is that people want to be closer to each other.

So transport is a central theme of the long term economic plan for the North East.

Today we commit to delivering £4.5 billion in new transport connections across this part of the country.

This amounts to the largest investment in transport in the North East in our country’s modern history.

This is not some vague promise.

We are committing specific sums to road and rail investment.

£290 million for upgrading the A1 north of Newcastle.

Over £300 million for widening the A1 Newcastle and Gateshead Western Bypass to get traffic moving through the city.

Supporting for the £2.7 billion investment in brand new, high spec Intercity Express Trains, serving Darlington, Durham, Newcastle, Morpeth, Alnmouth and Berwick, and being built in County Durham.

Delivering the new Virgin Stagecoach East Coast rail franchise to serve new destinations including Middlesbrough, Thornaby and Sunderland.

And on top of that, backing HS2 – a £42 billion investment, which would reduce journey times between Newcastle and Birmingham by over an hour.

Today we are going further.

We’ve already given the green light to HS3 – but I want to make sure we’re unlocking the maximum potential for the North East.

I have already asked the Department for Transport and Network Rail to begin talks to develop a business case for the infrastructure improvements to make 140mph running on the East Coast a reality.

New figures today show that 140mph trains running between Newcastle and York, combined with HS3, could cut journey times between Manchester and Newcastle by a quarter, fully connecting up the whole of the North East to high speed rail.

Today we’re also launching the Invitations to Tender for the new Northern and Trans-Pennine Express franchises – this will mean new trains, getting rid of the old Pacers, and improving local services with more capacity and a more frequent rail service.

New trains.

Getting rid of the old Pacers.

A promise I made to the travellers in the North.

A promise I am today delivering.

Some services will double in frequency, and this whole initiative will play a key role in smart ticketing across the north, which we plan will be overseen by the new body we’ve created to bring coherence to our transport network here –

Transport for the North.

But it’s not just roads and rail that we’re looking at – it’s air travel too.

In November we announced that, as part of a package of devolution, we would be passing powers over Air Passenger Duty in Scotland to the Scottish government.

This was a key recommendation of both the Calman and Smith reports.

The Scottish government have already set out their intention to reduce this, or cut it all together.

But the devolution of Air Passenger Duty to Scotland poses new challenges…

Challenges which I know many of the regional airports in England are worried about, particularly here in the North East.

Airports like Newcastle are crucial to the Northern Powerhouse.

I am not going to let them struggle because of Scottish Devolution.

I am going to give them a bright future.

So today I can announce that we are launching a major review of the options to support regional airports, such as Newcastle and Durham Tees Valley here in the North East, as well as airports like Manchester in the North West, to report ahead of this summer.

The fourth part of our plan is to back unashamedly the existing strengths of the North East.

There’s world-leading science….

From the Centre for Process Innovation at Redcar, Sedgefield and Darlington, part of the High Value Manufacturing Catapult…

To the National Centre for Ageing Science at Newcastle University – a brilliant centre which I am backing with government investment.

There’s huge strength in the chemicals industry – this was of course the home of ICI for many years, and the Centre for Process Innovation is now taking this strength forward.

There’s advanced manufacturing – the Nissan plant in Sunderland is the biggest car manufacturing plant in the UK.

And the North East is exporting those strengths too – a total of £12 billion of exports last year alone, and the only region in the UK to consistently export more than it imports.

It’s a model for the rest of the country.

I am committed to building on those strengths.

Today I can announce that we are supporting the extension of the Tees Valley Enterprise Zone, to expand their work into oil and gas decommissioning.

I’m backing the existing work of the Centre for Process Innovation, and want to see their proposals to develop a new biorefinery worked up.

And we’re backing skills too – because we know that strength in innovation is something that only happens if we’re providing world-leading specialist training and education.

Today I can announce that the government is providing £1.4 million funding, matched by Nissan, for training for high-skilled engineers at their Sunderland plant.

This will support courses for over 1,700 engineers, to support the creation of Nissan’s new Infiniti vehicle, and generate the skills base to win more contracts of this calibre in the future.

In Newcastle, today we’re approving a new University Technical College to specialise in technology and healthcare science.

This is a project sponsored by the University of Sunderland and Accenture, in partnership with the local NHS Trusts, with places for 600 students.

And I’m delighted that the Secretary of State for Education, Nicky Morgan, is also in the North East today, to set out our plans for how thousands of children across the North of England will benefit from £10 million investment to improve education standards.

It’s a plan I announced last year that we’re taking forward today – a real boost for local education.

But as well as boosting skills and education, I want to look at how we build on the North East’s exporting strengths too.

So today I can announce that the government will lead a series of trade missions, to promote the North East’s exports overseas, and attract more foreign investment to this part of the country.

It’s something that I want us to look at doing across the North of England, something that I will return to in the Budget next month.

With the North East’s powerhouse of science and industry, it can be easy to forget that this is one of the most rural – and most beautiful – parts of the country.

So the fifth part of the long term economic plan for the North East is backing the rural economy, culture and tourism.

We should set ourselves a challenging ambition – to attract an additional 150,000 visitors to the North East each year – an increase of over a third.

If we can achieve that, we’ll add over £70 million to the local economy and generate over a thousand new jobs.

To kick this off, today I’m contributing to a whole host of local cultural and historical projects across this part of the country.

From Lindisfarne Castle to Hadrian’s Wall to the Captain Cook Museum in Middlesbrough.

I want us investing in rural industry too.

We are already improving the infrastructure businesses need in Northumberland with improvements to the A1.

We are making superfast broadband available to 95% of homes and businesses here by 2017.

The next step is to attract in more businesses to our rural areas.

I know that many local areas are working on plans to do this…

I’ve been told, for example, about proposals to redevelop the jetty in Berwick, to support local employers and allow them to expand their businesses.

It’s a great idea that I support.

I want to see detailed plans worked up so we can take a look.

The final part of our plan to build a Northern Powerhouse is to give the North East a stronger voice.

Because a powerhouse needs power.

Our approach to devolution has not been the top-down approach that tried to impose a regional assembly which people in the North East overwhelmingly rejected.

Instead we have allowed local areas to choose the arrangements that work with the grain of the real local economy.

Tees Valley have created their own successful Local Enterprise Partnership and are in the process of creating a Combined Authority, something which I fully support.

In the rest of the North East a Combined Authority is now well-established, and I want to make clear today that my door is open to the devolution of powers where that is part of a strong private sector led plan.

This could be more control over skills and business support. As you have seen this week in the North West, my door is open to new and exciting ideas to give the people of the North a much greater say over the future of the North.

So let me be clear.

We have a long term economic plan for the North East.

It is part of building a Northern Powerhouse – to transform the economy of this country.

It aims to add £6 billion to the local economy and create another 50,000 jobs.

It sets out the biggest investment in transport in the North East’s modern history.

It backs science, skills and industry.

It supports culture and tourism.

It gives the North East a stronger voice.

It’s a prize worth having and with your help we will deliver it.

Published 27 February 2015