Q160 Mr. Dave Anderson: I have grave concerns about what you have said, Minister, because we started off saying that everyone wants to see the renewables sector being a huge player in the North-East, but if that is to happen, the one thing we will need above all else is steel, for the pipeworks, rigs and support ships and the towers and blades. Yet more and more of our home steel industry will possibly disappear. We are relying on the private sector to fill that gap. Are we going to have the ludicrous position where we have an industry waiting to be developed, but because we do not have the raw materials on hand we end up being dependent on the rest of the world again to fill that gap? If that is the case, surely we have to take more intervention to make sure that Corus does not go to the wall.

Mr. Brown: When I visited Corus, obviously I asked, "What can I do to help?" I can always say, "No, I cannot do that", but it is best to ask what people want. One of the things Corus was very clear about is the need to strengthen the market for the commodity it produces. I have explored across the Departments to see whether there are any large public sector projects that could be brought forward and would have an impact, and I suppose the obvious thing to think about is defence procurement and the aircraft carriers, but in fact the amount of steel involved in these big defence programmes is not enough to get the objective we are trying to achieve.

The best single thing I could do to stimulate demand would be to try to get an upturn in the construction sector, but of course steel is used for construction, so any uplift, whether in this country or, better still, right around the world, would lead to an increase in demand and, therefore-they hope-a rise in price, and the plant would become viable in world market terms. Those are the issues that are being discussed. Can the Government go further to get the plant through a temporary drop in the price in the hope that the world price will recover? Believe me, all of that is under consideration within Government, but market forecasts are notoriously hazardous.

Q161 Mr. Dave Anderson: The potential is huge, and the need will be huge. I am asking whether enough is being done to make sure that we can match that. If it is going to go to the wall, where will we get the steel? Will we buy the towers ready built from somewhere else in the world?

Mr. Brown: I agree with you that it is a strategic issue and that it is not at the margins of the United Kingdom's economy, but right at the heart of it. In particular it is right at the heart of the economy of Redcar, because of its enormous impact-its overwhelming impact-on the local employment base. It is one of the few large single focuses of employment left in the United Kingdom economy.

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Q172 Mr. Dave Anderson: On funding, the budgets for the RDA are scheduled to go down over the next three years, from £240 million to £239 million. How will you cope with that?

Mr. Brown: Our RDA does a good job. It is value for money. Of necessity, you can only do so much with the money you have got, and its budget is a fixed amount. It has to choose its priorities, and it has chosen very well, I think.

The example I always use is the investment in NaREC, which might have seemed a bit of an adventure at the time but hasn't half paid off for the region. Every major interest in the sector world-wide has been to visit the North East now. I do not want to name names because some of this is commercially confidential, but some very big players have been to visit the North East. They have all been to look at the sites that are available for manufacturing and for development in the offshore wind sector. They have all been to NaREC, have all come away impressed, and have all made the point individually that this is an excellent facility, which is just right for the industry. When the investment decisions were made, it was pretty far-sighted to have seen that outcome. It is working really well for us.

The RDA, for example, is, I think, the only RDA to have invested money in a potash mine right at the other end of the region. Again, you could see how, from a London perspective, that might look a bit adventurous, but it has turned out really well. It has underpinned the mining jobs-a very traditional area of employment-but it is all working away very successfully and the owners are optimistic.

I get asked about the last round of budgetary reductions. My representations were not to reduce the budget of the RDA, but across Government it was decided that this is what we would do. It is right that I mention that we were net beneficiaries of the redistribution of the money, because we gained more through the housing expenditure than we lost on the RDA budget, so that mitigates our losses quite a lot.

On the latest round, my understanding of the position is that each Department is making a contribution from its existing budget, because it is not new money for the latest housing round of expenditure, but I understand that it has not yet been decided, or maybe it has not been decided at all, in BIS that the money will come from the RDAs. I don't know if any of you are more up to date than I am. We are arguing the RDA's corner.

Q173 Mr. Dave Anderson: On a similar point on research and development investment, we have had information that states that other areas have gained more than we have, particularly the East of England and the South West of Scotland. Why do you think that is? Can I ask you to comment on the view that we got from Dr. Rutherford of the New and Renewable Energy Centre a couple of weeks ago? He said, "We have put together what we thought were exceptionally good bids, but they did not get through simply because we were not close enough to the people who were judging the bids."

Mr. Brown: That is a pretty heavy thing to say. My own first-hand experience is that, just after I became the Regional Minister, we were in a contest with other regions for the Energy Technologies Institute bid, which was won by the East Midlands region. I remain discontented about that. I think that the way in which the ETI reshaped once the competition was decided, and the way in which developments in the sector have gone, which have rather proved our point, give some evidence for my continuing discontent with it all.

We have friends, neighbours and competitors to the North and to the West in the devolved authorities of Wales and Scotland, who use their budgets to promote the communities that they represent. It is necessary for us to make sure that we fully punch our weight. We win more than we lose, and as the Regional Minister I have been willing to take up cases even though the advice was that the chances were not so strong-I have still done it. That sometimes means that we don't win, but across the piece it would be wrong to give the Committee the impression that, somehow, collectively we are losing out, because we are not. A very hard look at public expenditure across the piece and where it goes per head of the population does not show our region as disadvantaged.

Q174 Chairman: I think there's a worry that Whitehall's connections to Oxford and Cambridge in particular could actually be very disadvantageous to us in the Northern region.

Mr. Brown: If the question is whether there are academic cliques, as there are cliques in every walk of life, that are reinforcing, I perceive that as an issue and a problem, so that is a fair point that is fairly made. Are we so severely done down that we have massive cause for complaint? I would be a bit more cautious about that. We fight our corner pretty well.

Q175 Mr. Dave Anderson: Are you happy that you have got good enough access to Ministers in BIS to actually argue your corner?

Mr. Brown: Yes. Being the Government Chief Whip is not a disadvantage. I am very cautious about criticising cliques, because I can see what's coming next.

Mr. Dave Anderson: As if.

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Q180 Mr. Dave Anderson: I may not need to mention the importance of skills, but it goes right across the board every time we have had a meeting with various groups. I just wanted to raise a few questions in one. What do we do to make sure that we make construction engineering attractive to graduates from within and without the region? Also, what do we do to make the same industry attractive to people still at school? What support are we giving to businesses to make sure that apprentices are not lost during this time of economic hardship? What if a company has to go to the wall? If the way to stop it going to the wall is by making an apprentice redundant, how will we stop that happening? What do you think the impact in the region will be of the dissolution of the learning and skills councils? In particular, our region still has a huge number of people, disproportionately living in the old industrial areas, whose skills levels are even worse than Dari mentioned at the beginning. Is there a strategy to help them-to give them the special help they need?

Mr. Brown: On the fate of apprenticeships when large, single employers go under, it is a problem that we are well used to dealing with in the region-unfortunate, but we are. I discuss it regularly with Jobcentre Plus, because I meet with them at regional level on a regular basis, usually just after the labour market figures have come out.

It is on a case-by-case basis, but we have been pretty successful in getting other employers in similar sectors to take the apprentices and enable them to complete the apprenticeships. It is slightly different sector by sector. The one I know really well, of course, is the situation at Swan Hunter where when it finally closed, the apprentices were all offered transfer. I cannot say that they all accepted it, but they were all offered transference with the work so that they could complete their apprenticeship in an industrial setting. Huge efforts are made, although I cannot report 100% success, but pretty close to it.

On the question of how we make engineering a more venerated profession, that is not new. The issue has been around for a long time. Comparisons are always made with continental equivalents where the engineer has almost a social status and is said to be ahead of the United Kingdom. There is an issue. The things that work and that are most persuasive are to show what the modern pay bands are in the sector. In my meetings with the engineering company-I am sure it will not mind my mentioning them-which employs engineers and, in fact, are engineers, it says that it is very difficult to get really good quality people in the sector because there is a shortage of such people.

To know that there is good remuneration, that there are job vacancies and that there is a secure future in the sector-it is a broad sector with a large number of specialisms within it-is something that should be better known. I am strongly in favour of explaining that in schools, so that youngsters, when they are thinking of careers, look to it.

Above all, it is the employment base: if we can grow the employment base as we are planning to, and show that it does not lurch-if that is not too strong a term-from project to project; from major procurement round to major procurement round, as it used to be in shipbuilding for example. It is the same for heavy engineering; if you did not have a large single project, you could go from everyone being at work to no one being at work, just on a single order. What we have planned for the future takes us beyond that. It is the steady, remorseless manufacturing of devices that will not only generate electricity, but do so in a way that will help combat climate change.

I think there is an ethical underpinning to what we are planning to do, as well as stability and sustainability, which the old industry, as it has been understood over the last 20 years in the communities we represent, of necessity, just did not have. It is something rather different that we are looking at for the future. I am really enthusiastic about it. What will tell the story is the fact that the job is safe and for life, which I think worries people about going into the sector, and the fact that the pay rates reflect the skills, ability, work and talent that the individual brings. I think it is possible to make a case, and we should set out to do so.

Q181 Mr. Dave Anderson: What about the issue of low-level skills, particularly in the older work force?

Mr. Brown: We have to move our region on. We have to say that where people stand to be retrained-as well as those who stand to be trained, because they are coming into the labour force for the first time-it is about having a skill, being work-ready, having an outgoing and proactive attitude and learning a specific skill. That is not just important to being employed for the future, it will be essential. We all have a responsibility to get that message across.

At its worst-I am not talking about the region as a whole-we have a higher percentage than the national average of youngsters who go out into the world with no skills. We know that that does not help them now, but as the world moves on, they will be relatively even more disadvantaged. We all have a responsibility to stop that happening, which is why the Government are so right in insisting that everyone up to the age of 18 does something; you are in employment, continuing education or learning a skill-something that will help you in the labour market. It is not a punishment, but helping people gain a life skill, and also drawing from them the very best that they have to offer, which is never best summed up by resentfully staying in bed and watching telly.

Chairman: That was very valuable. Thank you very much. It is a very positive note on which to end.

Mr. Brown: Thank you, and thanks to the Committee for the hearing, and for the opportunity to set out what we will do.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

Promoted by Paul Foy on behalf of Dave Anderson, both of St Cuthbert's Church Hall, Shibdon Road, Blaydon, NE21 5PT