:00:49. > :00:56.Here in the north, a dramatic week for the economy. Northern Rock sold
:00:56. > :01:00.off, jobs are sailed -- sake. But taxpayers get a raw deal. Jobs go
:01:00. > :01:10.at Northumberland's biggest employer. How can the economy
:01:10. > :01:10.
:01:10. > :40:16.Apology for the loss of subtitles for 2345 seconds
:40:16. > :40:19.Welcome to the Politics Show in the north. Boarded-up and closed. How
:40:19. > :40:25.one regional development agency lost �3 million on firms that went
:40:25. > :40:29.bust. First, unemployment at a 17 year high. Job cuts at one of our
:40:29. > :40:36.biggest employers. A new owner for Northern Rock. It has been a
:40:37. > :40:44.dramatic week for the north-east economy. Alcan has closed its
:40:44. > :40:50.aluminium smelter. There was some good news. After years of
:40:50. > :41:00.uncertainty, Northern Rock has a new owner. Virgin Money will keep
:41:00. > :41:07.
:41:07. > :41:17.the bank's name, -- will keep the The latest unemployment figures
:41:17. > :41:21.
:41:21. > :41:28.prefer learnt a -- present a grim picture. Unemployment is up 11.6 %.
:41:28. > :41:35.In -- for young workers, the story is grimmer still. I had a job and
:41:35. > :41:45.then it was gone. I was made redundant. Then another economic
:41:45. > :41:46.
:41:46. > :41:50.blow. Alcan announced its aluminium smelter would close. A combination
:41:50. > :41:56.of high environmental costs and falling prices were blamed. The
:41:57. > :42:04.result was more workers added to the job was sacked -- stats. It was
:42:04. > :42:09.not expected. 14 people who want one -- who want one job. It is
:42:09. > :42:19.going to double. Then the latest chapter in a long saga. Northern
:42:19. > :42:20.
:42:20. > :42:25.Rock will be sold to Virgin Money. The taxpayer will get six UN and
:42:25. > :42:32.�50 million. Staff will keep their jobs. We are over the moon with it.
:42:32. > :42:39.The three previous years we have had, we had 3,000 redundancy.
:42:39. > :42:45.Frustration, despair and relief. The landscape of the region's
:42:45. > :42:55.economy changed in 24 hours. Where do we go from here? Joining us now
:42:55. > :42:56.
:42:57. > :43:02.is the Labour MP for the City of Was this sell-off the best deal for
:43:02. > :43:09.the North East? I think it is the best deal. No bid for we
:43:09. > :43:13.mutualisation came forward, and it is fine for the Chancellor to note
:43:13. > :43:19.that the time is at the right, but I think I gives a certainty now for
:43:19. > :43:23.the 2,100 people who are employed at Northern Rock, and also, a
:43:23. > :43:28.guaranteed that headquarters function here in the region. I did
:43:28. > :43:35.it gives great potential for Virgin Money to grow its business here in
:43:35. > :43:40.the north-east of England. To the north-east taxpayer, you may be
:43:40. > :43:45.questioning the loss of six and and �50 million. Was it the right one
:43:45. > :43:50.in your opinion? I am quite clear that the right decision to take --
:43:50. > :43:56.to take. The bad Northern Rock Bank, though we are not talking about
:43:56. > :44:00.here, it will over the next 10 years play a lot of money back to
:44:00. > :44:05.the government. The one in state hands. It is possible that the
:44:05. > :44:09.government will come out with no loss. It is possible that a profit
:44:09. > :44:15.will be made on that part of the business. I think the jury is out.
:44:15. > :44:18.Virgin will be paying more money than announce this week. I am more
:44:18. > :44:22.optimistic than others may be. have to admit that the government
:44:22. > :44:26.has got a good deal, for the work force and the north-east in general.
:44:26. > :44:31.I am pleased that the jobs have been secured, but as John himself
:44:31. > :44:35.said, the jury is out on whether this is a good deal for the
:44:35. > :44:41.taxpayer. What we need to do is look at the whole wider situation
:44:41. > :44:46.with regards to the north-east. We have seen unemployment matting --
:44:46. > :44:54.massively increasing. It seems a bit mealy mouth to qualify this.
:44:54. > :44:57.You criticised the government, but the north-east workforce is
:44:58. > :45:03.protected. They should be congratulated? I thought I had just
:45:03. > :45:07.done that. He welcomed it without... I think it is good but the jobs
:45:07. > :45:11.have been safeguarded, but it remains to be seen whether this is
:45:11. > :45:15.a good deal for the taxpayer. I am glad that the jobs have been
:45:15. > :45:18.secured for the north-east. But this needs to be seen against a
:45:18. > :45:22.backdrop of massively increasing unemployment in the north-east, and
:45:22. > :45:26.very little in the way of policy from the government to get
:45:26. > :45:30.investment into the region, because the regional growth fund is not
:45:30. > :45:35.strategic enough, and it is certainly not bring unemployment
:45:35. > :45:43.down. I am lucky you to respond to that, but let's talk about Alcan.
:45:43. > :45:51.They have been clear that the straw that broke the camel's -- camels
:45:51. > :45:54.back. It is the carbon floor price. There has been a debate about the
:45:54. > :45:58.Coburn floor price, and I can understand the debate, however, the
:45:58. > :46:03.decision about Alcan has been on the cards for quite some time, and
:46:03. > :46:09.the question is how we can now build on the Northumberland coast
:46:09. > :46:13.with and renewable energy, and all the successes that are are around
:46:13. > :46:21.belied. How can we make those applied to an enterprise zone in
:46:21. > :46:30.that area? It is very bad news, however, it is possible that with
:46:30. > :46:36.help from Rio Tinto, in Anglesey, they put a lot of jobs in. It would
:46:36. > :46:40.be good not to put pressure on them. Jobs are going to go abroad. It is
:46:40. > :46:47.partly about high energy prices. It is not simply about carbon trading.
:46:47. > :46:50.It is about other things as well. It is unfortunate, and we deeply
:46:50. > :46:57.and bitterly regretted, but the commercial decision has been made
:46:58. > :47:02.by Rio Tinto to close Alcan. The question is to -- what the
:47:02. > :47:12.government can do to assist and what Rio Tinto can do to assist.
:47:12. > :47:12.
:47:12. > :47:16.All who do you blame for Alcan's closer? I blame the government.
:47:16. > :47:21.decay began under the Labour government. They may have started
:47:21. > :47:25.some years ago, but that does not absolve the government from doing
:47:25. > :47:29.something about it. What we are saying is that this lack of
:47:29. > :47:33.strategic thinking and development for the region, including under the
:47:33. > :47:39.last government, we were trying to redevelop a Green economy in this
:47:39. > :47:43.area. Jobs were going to be related to new green industries. This has
:47:43. > :47:48.been lost in the scattered at -- scattergun approach. You have to
:47:48. > :47:53.accept that the Government's policy is not working. There is a record
:47:53. > :47:57.unemployment figures. How long do have to leave it before you change
:47:57. > :48:01.tack? About a week and two days, because the Autumn Statement will
:48:01. > :48:04.be out then, and I hope there will be something significance said
:48:04. > :48:10.about capital infrastructure investment. Investment in things
:48:10. > :48:16.like housing and that is well beyond... Is that they plan B?
:48:16. > :48:20.probably is Plan B. Maybe a plan B is needed. I am deeply disturbed by
:48:20. > :48:23.the unemployment figures. I am particularly disturbed by the youth
:48:23. > :48:29.unemployment figures it is unacceptable to have one million
:48:29. > :48:34.young people on the dole. Something must be done by government, but I
:48:34. > :48:40.am hopeful that in 10 days, that situation will become clearer.
:48:40. > :48:44.that case, what -- should and they bring in a bonus tax on bankers?
:48:44. > :48:50.That will create jobs. They should never have got rid of the Future
:48:50. > :48:54.Jobs Fund. It is because of the decisions that the government had
:48:54. > :48:58.made that the economy is in such a bad situation. They need to seen --
:48:58. > :49:02.the need to take action. I think the government has had to make some
:49:02. > :49:06.very difficult decisions, given the legacy that the Labour government
:49:06. > :49:10.left us of massive overspending. Government is still pouring a
:49:10. > :49:15.quarter of its spending. You can borrow more! Let's just leave it
:49:15. > :49:25.there. On to something else that is shutting down. The regional
:49:25. > :49:27.
:49:27. > :49:33.development agency will set -- break-up. It paid out �3 million to
:49:33. > :49:41.companies that since went under. Critics have said but what of funds
:49:41. > :49:45.have been frittered away. This factory once employed hundreds of
:49:45. > :49:50.people. But we went into administration. He had a huge
:49:50. > :49:57.impact, not just on the people work there, many of whom were couples or
:49:57. > :50:01.families, but also, the people who supplied goods and services.
:50:01. > :50:08.Desperate attempts have been made to keep the factory afloat. It
:50:08. > :50:13.received helped -- help from the regional development agency,
:50:13. > :50:20.including �250,000. Much of that money is still owed to the agency.
:50:20. > :50:24.Many others received help from the transitional Loan Fund. The
:50:24. > :50:29.Politics Show can reveal that after did -- out of 75 firms have
:50:29. > :50:38.received help, 34 went into administration or liquidation. Many
:50:38. > :50:43.of them still owe loan money to the agency. Almost �2.7 million has
:50:43. > :50:47.been written off as debt there will not be recovered. The north-west
:50:47. > :50:52.not be recovered. The north-west development agency loaned �5.6
:50:52. > :50:57.million. It expects to float -- million. It expects to float --
:50:57. > :51:02.lose �1.9 million. A think the agency has some serious money to --
:51:02. > :51:06.serious questions to answer. Nearly a half of the businesses they gave
:51:06. > :51:10.money to have gone into administration or liquidation. What
:51:10. > :51:17.that demonstrates is that it was really bad luck, or they weren't
:51:17. > :51:21.taking due diligence. I think is right that the government demands
:51:21. > :51:26.that the money should be accounted for. We should be asking questions
:51:26. > :51:32.whether it was ministers in London who were giving a direction to the
:51:32. > :51:37.agency to - so -- dish the cash out to justify the agency's existence.
:51:37. > :51:43.That is not the way to create jobs and economic prosperity. A myth the
:51:43. > :51:49.failures, there are also a success stories. This company is thriving,
:51:49. > :51:53.employing 90 people making computer games. It receives cash through the
:51:53. > :51:57.transitional Loan Fund, and has gone on to bigger and better things.
:51:57. > :52:01.Fundamentally, the company would not have made the progress it has.
:52:01. > :52:05.Since we have got the transitional loan, we have created 30 jobs in
:52:05. > :52:12.high-tech graduate positions. We have also got the regional growth
:52:12. > :52:18.fund a ward, which means we are going to create 190 jobs. It is a
:52:18. > :52:23.facilitator that has got us going. Stories like this have shown why it
:52:23. > :52:28.is necessary. We were given the best possible chance to survive.
:52:29. > :52:36.Out of 41 companies still trading today, 2,100 staff employed are
:52:36. > :52:40.testament to the strength of the product. There was a concern that
:52:40. > :52:45.it would be abolished when it went into -- when the Conservatives went
:52:45. > :52:49.into power. Is it a fair accusation? I do not agree with
:52:49. > :52:52.that. The people who have worked for this Agency have taken great
:52:52. > :52:59.pride in supporting the development of the economy. We did what we
:52:59. > :53:06.thought was right. The agency is now being wound up. But this leaves
:53:06. > :53:15.questions over what will be there in its absence if the economy faces
:53:15. > :53:20.another credit crunch or recession. This scheme appears to be a
:53:20. > :53:24.reckless use of public money. It lost the taxpayer �3 million.
:53:25. > :53:28.need to see the context in which the fund was set up. It was in the
:53:28. > :53:31.recession. It was set up for companies where there might be a
:53:31. > :53:35.high risk element. They weren't able to get money from the banks,
:53:35. > :53:40.and 41 of those companies came through the recession and are
:53:40. > :53:47.growing. They have brought in �10 million of private-sector
:53:47. > :53:56.investment. You have to see this in the round. This is about the RDA
:53:56. > :54:00.doing his best. It is supporting companies through the recession.
:54:00. > :54:03.Doesn't it show the way Labour spent money during the time you
:54:03. > :54:08.were in office, that you could afford to gamble this money? That
:54:08. > :54:12.is why we are in the position we are in. There was not a gamble. It
:54:12. > :54:17.was support -- it was supporting companies through the recession. We
:54:17. > :54:21.also built hospitals, schools, employment programmes for young
:54:21. > :54:27.people. This was not a waste of money. It was putting money in
:54:27. > :54:31.public services. Were you aware of the scheme and the money being
:54:32. > :54:38.written off? It was to three years ago that the fund was set up. I
:54:38. > :54:43.agree with Roberto. In a situation like this, when the banks are not
:54:43. > :54:48.lending, and there are cash flow problems, the first duty of a
:54:48. > :54:52.public organisation like this, and the government, is to protect where
:54:52. > :54:55.the banks won't lend. Over half of them have come through. Most of
:54:55. > :55:02.those would have gone under had this not happen. 2000 jobs have
:55:03. > :55:07.been protected. It is a hit-and- miss rate. I think probably, at the
:55:07. > :55:12.time, we would have expected a better success rate, but one of the
:55:12. > :55:17.troubles is that you can't forecast the future. You have to manage risk.
:55:17. > :55:24.I think they did a good job here. That is not to say that everything
:55:24. > :55:28.was perfect. It was not. But if you look at the jobs of the -- if you
:55:28. > :55:33.do the jobs saved, you are not going to be certain which of the
:55:33. > :55:38.businesses will succeed or fail. Other brother do what we did burn
:55:38. > :55:43.see all of the 70 businesses collapse. This sort of support is
:55:43. > :55:48.not there anymore. Absolutely, is it -- it is not there. The regional
:55:48. > :55:55.growth fund has not the same resources. The decisions are not
:55:55. > :56:03.made in the region to support companies in the region. Certainly,
:56:03. > :56:06.they are means the government had its -- has to provide for
:56:06. > :56:12.businesses in difficulty. It has been -- companies have been
:56:12. > :56:16.successful in the face of it. do you move from the -- had unity a
:56:16. > :56:22.tour of the north from Gateshead to Sunderland? It could be shifted
:56:22. > :56:28.into a different parliamentary constituency. The political map is
:56:28. > :56:33.being redrawn to cut the number of MPs amid talk that there will be
:56:33. > :56:39.the same number of constituents in each constituency. Who cares more,
:56:39. > :56:49.the voters of the politicians? is part of the Bishop Auckland
:56:49. > :56:55.
:56:55. > :57:00.constituency for 60 years. That Not even the Romans have tried to
:57:00. > :57:06.conquer territory of this size, and that sums it up. It cannot be done,
:57:06. > :57:12.and if people have issues, there is not going to beat the accessibility
:57:12. > :57:20.to their local MP. All three political parties agree. They have
:57:20. > :57:28.lodged a complaint. There is no little estate for them political.
:57:28. > :57:32.Whatever happens, Labour is likely to win. Politicians are only
:57:33. > :57:36.looking to fight in areas that matter to them. They are looking to
:57:36. > :57:43.preserve safe seats where they can do, and they are looking to
:57:43. > :57:47.preserve a very easy life for some of their men's -- members of
:57:47. > :57:54.parliament. It is not about the public interest, it is that the
:57:54. > :57:58.party Industry -- interest. It is currently -- this is currently in
:57:58. > :58:04.Stockton South. It would move into Sedgefield, where Labour are likely
:58:04. > :58:09.to win. Although there have been ructions here in Yarm, it is not
:58:09. > :58:18.the subject on everyone's lips. But this subject is critical to the
:58:18. > :58:22.political parties. Where it ends up well decide whether the Tories can
:58:22. > :58:26.keep a parliamentary seat here on Teesside. This is the front line.
:58:26. > :58:34.There is a boundary commission hearing into the proposed changes.
:58:34. > :58:37.Labour and the Tories are proposing their own changes. This hearing is
:58:37. > :58:43.about making sure that the changes make sense geographically. There's
:58:43. > :58:52.a lot of debate going on at the moment. Labour's plans will make it
:58:52. > :59:02.impossible for the Conservatives to win here in the future. While
:59:02. > :59:03.
:59:03. > :59:09.Conservatives will look to change it. We do not propose things that
:59:09. > :59:14.are patently annex -- unacceptable to millions of people. We think it
:59:14. > :59:20.is better for the people of Stockton South. We also think that
:59:20. > :59:26.it will serve the people's needs better. I would rather be an MP
:59:26. > :59:31.than not an MP, but the priority for me... I would like to see a
:59:31. > :59:35.constituency that has some coherence, that remains rural, and
:59:35. > :59:41.reflects the diversity of the area. I think that is what our proposal
:59:41. > :59:46.does. The commissioners will now go away to mull over the options. The
:59:46. > :59:50.parties will not find out until next year what their fate will be.