20/11/2011 The Politics Show North East and Cumbria

Here in the north, a dramatic week for the economy. Northern Rock sold

off, jobs are sailed -- sake. But taxpayers get a raw deal. Jobs go

at Northumberland's biggest employer. How can the economy

Apology for the loss of subtitles for 2345 seconds

Welcome to the Politics Show in the north. Boarded-up and closed. How

one regional development agency lost �3 million on firms that went

bust. First, unemployment at a 17 year high. Job cuts at one of our

biggest employers. A new owner for Northern Rock. It has been a

dramatic week for the north-east economy. Alcan has closed its

aluminium smelter. There was some good news. After years of

uncertainty, Northern Rock has a new owner. Virgin Money will keep

the bank's name, -- will keep the The latest unemployment figures

prefer learnt a -- present a grim picture. Unemployment is up 11.6 %.

In -- for young workers, the story is grimmer still. I had a job and

then it was gone. I was made redundant. Then another economic

blow. Alcan announced its aluminium smelter would close. A combination

of high environmental costs and falling prices were blamed. The

result was more workers added to the job was sacked -- stats. It was

not expected. 14 people who want one -- who want one job. It is

going to double. Then the latest chapter in a long saga. Northern

Rock will be sold to Virgin Money. The taxpayer will get six UN and

�50 million. Staff will keep their jobs. We are over the moon with it.

The three previous years we have had, we had 3,000 redundancy.

Frustration, despair and relief. The landscape of the region's

economy changed in 24 hours. Where do we go from here? Joining us now

is the Labour MP for the City of Was this sell-off the best deal for

the North East? I think it is the best deal. No bid for we

mutualisation came forward, and it is fine for the Chancellor to note

that the time is at the right, but I think I gives a certainty now for

the 2,100 people who are employed at Northern Rock, and also, a

guaranteed that headquarters function here in the region. I did

it gives great potential for Virgin Money to grow its business here in

the north-east of England. To the north-east taxpayer, you may be

questioning the loss of six and and �50 million. Was it the right one

in your opinion? I am quite clear that the right decision to take --

to take. The bad Northern Rock Bank, though we are not talking about

here, it will over the next 10 years play a lot of money back to

the government. The one in state hands. It is possible that the

government will come out with no loss. It is possible that a profit

will be made on that part of the business. I think the jury is out.

Virgin will be paying more money than announce this week. I am more

optimistic than others may be. have to admit that the government

has got a good deal, for the work force and the north-east in general.

I am pleased that the jobs have been secured, but as John himself

said, the jury is out on whether this is a good deal for the

taxpayer. What we need to do is look at the whole wider situation

with regards to the north-east. We have seen unemployment matting --

massively increasing. It seems a bit mealy mouth to qualify this.

You criticised the government, but the north-east workforce is

protected. They should be congratulated? I thought I had just

done that. He welcomed it without... I think it is good but the jobs

have been safeguarded, but it remains to be seen whether this is

a good deal for the taxpayer. I am glad that the jobs have been

secured for the north-east. But this needs to be seen against a

backdrop of massively increasing unemployment in the north-east, and

very little in the way of policy from the government to get

investment into the region, because the regional growth fund is not

strategic enough, and it is certainly not bring unemployment

down. I am lucky you to respond to that, but let's talk about Alcan.

They have been clear that the straw that broke the camel's -- camels

back. It is the carbon floor price. There has been a debate about the

Coburn floor price, and I can understand the debate, however, the

decision about Alcan has been on the cards for quite some time, and

the question is how we can now build on the Northumberland coast

with and renewable energy, and all the successes that are are around

belied. How can we make those applied to an enterprise zone in

that area? It is very bad news, however, it is possible that with

help from Rio Tinto, in Anglesey, they put a lot of jobs in. It would

be good not to put pressure on them. Jobs are going to go abroad. It is

partly about high energy prices. It is not simply about carbon trading.

It is about other things as well. It is unfortunate, and we deeply

and bitterly regretted, but the commercial decision has been made

by Rio Tinto to close Alcan. The question is to -- what the

government can do to assist and what Rio Tinto can do to assist.

All who do you blame for Alcan's closer? I blame the government.

decay began under the Labour government. They may have started

some years ago, but that does not absolve the government from doing

something about it. What we are saying is that this lack of

strategic thinking and development for the region, including under the

last government, we were trying to redevelop a Green economy in this

area. Jobs were going to be related to new green industries. This has

been lost in the scattered at -- scattergun approach. You have to

accept that the Government's policy is not working. There is a record

unemployment figures. How long do have to leave it before you change

tack? About a week and two days, because the Autumn Statement will

be out then, and I hope there will be something significance said

about capital infrastructure investment. Investment in things

like housing and that is well beyond... Is that they plan B?

probably is Plan B. Maybe a plan B is needed. I am deeply disturbed by

the unemployment figures. I am particularly disturbed by the youth

unemployment figures it is unacceptable to have one million

young people on the dole. Something must be done by government, but I

am hopeful that in 10 days, that situation will become clearer.

that case, what -- should and they bring in a bonus tax on bankers?

That will create jobs. They should never have got rid of the Future

Jobs Fund. It is because of the decisions that the government had

made that the economy is in such a bad situation. They need to seen --

the need to take action. I think the government has had to make some

very difficult decisions, given the legacy that the Labour government

left us of massive overspending. Government is still pouring a

quarter of its spending. You can borrow more! Let's just leave it

there. On to something else that is shutting down. The regional

development agency will set -- break-up. It paid out �3 million to

companies that since went under. Critics have said but what of funds

have been frittered away. This factory once employed hundreds of

people. But we went into administration. He had a huge

impact, not just on the people work there, many of whom were couples or

families, but also, the people who supplied goods and services.

Desperate attempts have been made to keep the factory afloat. It

received helped -- help from the regional development agency,

including �250,000. Much of that money is still owed to the agency.

Many others received help from the transitional Loan Fund. The

Politics Show can reveal that after did -- out of 75 firms have

received help, 34 went into administration or liquidation. Many

of them still owe loan money to the agency. Almost �2.7 million has

been written off as debt there will not be recovered. The north-west

not be recovered. The north-west development agency loaned �5.6

million. It expects to float -- million. It expects to float --

lose �1.9 million. A think the agency has some serious money to --

serious questions to answer. Nearly a half of the businesses they gave

money to have gone into administration or liquidation. What

that demonstrates is that it was really bad luck, or they weren't

taking due diligence. I think is right that the government demands

that the money should be accounted for. We should be asking questions

whether it was ministers in London who were giving a direction to the

agency to - so -- dish the cash out to justify the agency's existence.

That is not the way to create jobs and economic prosperity. A myth the

failures, there are also a success stories. This company is thriving,

employing 90 people making computer games. It receives cash through the

transitional Loan Fund, and has gone on to bigger and better things.

Fundamentally, the company would not have made the progress it has.

Since we have got the transitional loan, we have created 30 jobs in

high-tech graduate positions. We have also got the regional growth

fund a ward, which means we are going to create 190 jobs. It is a

facilitator that has got us going. Stories like this have shown why it

is necessary. We were given the best possible chance to survive.

Out of 41 companies still trading today, 2,100 staff employed are

testament to the strength of the product. There was a concern that

it would be abolished when it went into -- when the Conservatives went

into power. Is it a fair accusation? I do not agree with

that. The people who have worked for this Agency have taken great

pride in supporting the development of the economy. We did what we

thought was right. The agency is now being wound up. But this leaves

questions over what will be there in its absence if the economy faces

another credit crunch or recession. This scheme appears to be a

reckless use of public money. It lost the taxpayer �3 million.

need to see the context in which the fund was set up. It was in the

recession. It was set up for companies where there might be a

high risk element. They weren't able to get money from the banks,

and 41 of those companies came through the recession and are

growing. They have brought in �10 million of private-sector

investment. You have to see this in the round. This is about the RDA

doing his best. It is supporting companies through the recession.

Doesn't it show the way Labour spent money during the time you

were in office, that you could afford to gamble this money? That

is why we are in the position we are in. There was not a gamble. It

was support -- it was supporting companies through the recession. We

also built hospitals, schools, employment programmes for young

people. This was not a waste of money. It was putting money in

public services. Were you aware of the scheme and the money being

written off? It was to three years ago that the fund was set up. I

agree with Roberto. In a situation like this, when the banks are not

lending, and there are cash flow problems, the first duty of a

public organisation like this, and the government, is to protect where

the banks won't lend. Over half of them have come through. Most of

those would have gone under had this not happen. 2000 jobs have

been protected. It is a hit-and- miss rate. I think probably, at the

time, we would have expected a better success rate, but one of the

troubles is that you can't forecast the future. You have to manage risk.

I think they did a good job here. That is not to say that everything

was perfect. It was not. But if you look at the jobs of the -- if you

do the jobs saved, you are not going to be certain which of the

businesses will succeed or fail. Other brother do what we did burn

see all of the 70 businesses collapse. This sort of support is

not there anymore. Absolutely, is it -- it is not there. The regional

growth fund has not the same resources. The decisions are not

made in the region to support companies in the region. Certainly,

they are means the government had its -- has to provide for

businesses in difficulty. It has been -- companies have been

successful in the face of it. do you move from the -- had unity a

tour of the north from Gateshead to Sunderland? It could be shifted

into a different parliamentary constituency. The political map is

being redrawn to cut the number of MPs amid talk that there will be

the same number of constituents in each constituency. Who cares more,

the voters of the politicians? is part of the Bishop Auckland

constituency for 60 years. That Not even the Romans have tried to

conquer territory of this size, and that sums it up. It cannot be done,

and if people have issues, there is not going to beat the accessibility

to their local MP. All three political parties agree. They have

lodged a complaint. There is no little estate for them political.

Whatever happens, Labour is likely to win. Politicians are only

looking to fight in areas that matter to them. They are looking to

preserve safe seats where they can do, and they are looking to

preserve a very easy life for some of their men's -- members of

parliament. It is not about the public interest, it is that the

party Industry -- interest. It is currently -- this is currently in

Stockton South. It would move into Sedgefield, where Labour are likely

to win. Although there have been ructions here in Yarm, it is not

the subject on everyone's lips. But this subject is critical to the

political parties. Where it ends up well decide whether the Tories can

keep a parliamentary seat here on Teesside. This is the front line.

There is a boundary commission hearing into the proposed changes.

Labour and the Tories are proposing their own changes. This hearing is

about making sure that the changes make sense geographically. There's

a lot of debate going on at the moment. Labour's plans will make it

impossible for the Conservatives to win here in the future. While

Conservatives will look to change it. We do not propose things that

are patently annex -- unacceptable to millions of people. We think it

is better for the people of Stockton South. We also think that

it will serve the people's needs better. I would rather be an MP

than not an MP, but the priority for me... I would like to see a

constituency that has some coherence, that remains rural, and

reflects the diversity of the area. I think that is what our proposal

does. The commissioners will now go away to mull over the options. The

parties will not find out until next year what their fate will be.