| I'm delighted to be here at the Centre for Life.
Delighted that IPPR now have a base in the North East.
I'd like to start by saying a few words about my other meetings
today, because I think they illustrate really well the range of
businesses and experiences in the North East at the moment.
I've just come from the Institute of Bioinfomatics based at the Centre
for Life. It's an amazing project which is using leading edge technology
and the skills of biologists, geneticists and IT experts to explore the
data involved in proteomics and the human genome. It's also a great
example of the region's universities teaming up with a very successful
company based in the North East, Nonlinear Dynamics. Together, they can
work to make the North East not just a national centre of excellence in
the field of bioinformatics, but an absolute world leader in this
cutting-edge field. Together with One North East, the regional
development agency, we're backing the Institute to the tune of £3.8
million.
Earlier I visited Allied Bakeries - in many ways a very traditional
food manufacturing plant - who are also thinking about innovation. I was
there to open new training facilities, which will help all their staff,
from drivers and people on the production line upwards, to improve their
skills, and ultimately benefit the company's bottom line. They've
pioneered the idea of a Training Academy, which may well be extended
nationally across the company
And this morning I met a group called Women into the Network, who
have created a base for entrepreneurial women at Durham Business School.
As the Global Entrepreneurship Monitor found - the single biggest thing
we could do to improve our business startup rates in the UK would be to
encourage more women to set up and run their own businesses. So the
support, confidence, and advice which Women into the Network give to
their members is vital and I hope they continue to expand.
Global developments affect local and regional economies. China
joining the World Trade Organisation, India producing a quarter of a
million science and IT graduates, 10 new countries joining the EU. All
of these represent new opportunities for Britain, new markets in which
to sell our products and new trading partners. But they also present
challenges.
The paradox of globalisation is that the further it spreads, the more
we need localisation. In the end, economic success grows from local
leadership.
Opportunity and prosperity should not be dependent on where you were
born or where you live.
We want to boost wealth and employment in every region. Building
capacity by strengthening innovation, enterprise and skills, modernising
infrastructure and improving university/industry links.
But Whitehall is not necessarily the best place to make decisions for
Newcastle, or Durham. We created the RDAs in 1999 because we believe in
regional empowerment. And they've made good inroads.
In 2002 the North East achieved its highest rate of growth for over a
decade and had the highest growth in the UK in terms of Gross Value
Added per head. But there is still a long way to go. As finance,
production and people travel more easily around the globe, our local
economies have to work harder to act as magnets - drawing new businesses
in and encouraging existing businesses to stay.
The gap between regions has been growing since the 1920's and
successive governments' regional policies have done nothing to alter it.
If the three northern regions could raise their productivity to the
English average - England as a whole would be £35 billion better off.
Every person in the North East, the North West and Yorkshire &
Humberside would be richer to the tune of £2,500.
And because we're committed to raising the productivity of all
regions, we've improved the way we offer support to businesses.
On business support - I absolutely agree that the number of
intermediary bodies is confusing for business - there are 240 in the
North East. I've asked the RDA Chairs to lead on rationalisation and
we're forging closer ties between the RDAs and Business Links.
For my own department, the DTI, that means we've simplified the
structure of our business support schemes, reducing the number of
different schemes from over 100 down to just 10 schemes.
We're in the process of devolving the delivery of that support to the
different regions - because we realise that the 'one size fits all'
approach won't do. We are setting up a partnership structure at DTI so
that regions are not just consulted - they are fully involved in policy
making and delivery.
The Treasury now requires all departments to spell out how their
spending proposals would affect the regions. And, in response to the
recent Lyons and Gershon reviews, Whitehall is changing not just the way
it does business, but looking at where it does it too.
We do recognise that regions are distinct, with different
requirements and challenges. One North East, the regional development
agency, gets £88 per person - six times the funding of the regional
development agency in the South East (£14). Yorkshire Forward gets £58
per capita and NWDA gets £45.
We have to be able to meet the needs of our most disadvantaged
communities, for economic development and business growth.
But we are clear that we can't boost the performance of 'lagging'
regions by holding back the ones in the lead. It's simply not an option.
We know that there are challenges in terms of the future of EU
funding. The EU has expanded, and most of the new member states are
poorer than average. Our ability to provide regional selective
assistance will be severely limited.
At the moment, the European Commission's proposals do not meet the
needs of disadvantaged parts of the north-east and the rest of the
country.
But reform of the EU's Structural and Cohesion Funds must focus on
provision for the poorest member states - and other countries should be
able to use their own funds flexibly as they see fit. We should not get
into a subsidy race.
The bottom line is that reform of state aid must lead to "less
but better".
What we must do instead is create other centres of strong growth to
provide a counterbalance to the strong pull of the South East and bring
opportunities to people and communities all over the UK. And in a global
market these centres need to be big enough to compete on the
international stage.
Together, the North East, North West and Yorkshire and the Humber have a
population nearly twice the size of London - nearly 15million.
Catching-up with the country's average economic performance would mean
an extra 200,000 people in work.
I'm absolutely delighted that the three RDAs are working together to
create a world-class economy linked to a great quality of life in these
three regions by 2025.
The two Midlands RDAs are following suit. And the South West RDA is
looking to exploit its links with Wales, the Midlands and the South
East.
These are significant developments, pulling together regional
expertise and banding together to compete globally.
As I've said - the answer to regional disparity does not lie in
holding back successful regions. The UK as a whole must continue to
compete internationally and we need to work harder to raise the
performance of lagging regions to match the most successful.
We've got to encourage our businesses, wherever they are, to plunder
scientific research wherever it takes place - relocating science
institutes is not the answer. 2001 figures on research funding showed
that the biggest percentage growth in funding was in the North East - to
Newcastle and Durham Universities and to the South West - Bristol and
Exeter Universities. The best companies look locally, regionally,
nationally and internationally for their ideas - we've got to encourage
more to do the same.
Employment is an important factor, but short-term job creation that
disintegrates with the slightest fluctuation in the global market is not
our goal. We must concentrate our efforts on creating sustainable
opportunities focussing on high skills and high productivity - it's the
best guarantee for long-term growth and flourishing communities.
The UK as a whole can only prosper if all the nations and regions
perform to their full potential. The RDAs have both the freedom and
resources to identify and build on regional strengths and to work to
remedy weaknesses. They have made a strong contribution in identifying
the action we need to take at the centre to help them achieve their
goals. And we are working together to deliver them.
We can't reverse an 80 year trend overnight but we are determined to
tackle it.
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