North-East must unite behind its manifesto

The North-East is on the move. But where is it heding? the Rt Hon Alan Milburn MP and Partick Diamond demand that the region draws up a road-map to the future.

THE North-East feels like it is on the move. One visible sign of progress is the remarkable renaissance of the Newcastle-Gateshead waterfront around iconic buildings such as the Baltic contemporary art centre and Norman Foster's Sage Gateshead music complex.

Another is the regeneration success of the Tees Valley Partnership. Take my own Darlington constituency: it is an enormous building site. There's an education village, a new college and, hopefully, a new city academy, plus there's a whole host of business developments - Morton Palms, Faverdale - which is beginning to reshape the nature of the local economy.

So, this progress in the North-East is real. Unemployment has fallen by 44,000 in the past five years. 7,700 more people found work in the past year alone. Economic growth exceeds London and the South-East, and is higher than the national average.

Underpinning all of this is the North-East's distinctive sense of identity built on our resilience and sense of community.

There are good reasons to be optimistic about the future. Today's forum will provide a platform on which to celebrate success in what has been achieved so far, and to recognise the potential of local people and businesses.

But here we ought to balance optimism with realism. The forum must also debate the major, enduring challenges facing the region in the new century.

The North-East has to overcome these if we are to compete successfully for jobs and prosperity in the future. We still lag behind much of the rest of the UK on a range of indicators. Indeed, since the early 1990s, the gap in economic performance, as measured by GDP growth, between the North-East and the South-East has doubled, from 30 per cent to nearly 60 per cent.

While one in five of the working population in the North-East (20.3 per cent) claim state benefits, the equivalent figure for the South-East is less than one in ten (8.8 per cent). Due to lower educational achievement and the "brain drain" effect, nearly a third (31 per cent) of workers in London had a degree or equivalent, while in the North-East this falls to under a fifth (19 per cent).

It is clear then that, although the Labour Government has helped the North-East make progress since 1997, more needs to be done.

And this is the right time to consider what. It is not just that across the world the pace of economic change is intensifying, making it vital that the North-East is clear about where best its competitive advantage lies.

It is particularly critical now, after the public's decisive rejection of plans for an elected regional assembly, for the North-East to define and unite behind its own priorities for the future. The risk otherwise is that those priorities will be devised elsewhere.

The evidence of recent decades is that a policy mix devised centrally in Whitehall for every region does not necessarily address the specific needs of our region.

Britain is a small country. But it does have big differences. The challenges facing the North are simply different from those of the South. We need to devise our own regional manifesto for the future.

Today's forum will start that process. It will move the focus off institutional changes - since there is no prospect of revising plans for a North-East elected assembly. Instead it will focus on the big practical policy changes that could make the biggest difference in helping our region realise its potential. A coherent package of reforms and resources can give the North-East a distinctive edge at a time of unprecedented global competition.

First, then resources. The North receives large dollops of public spending.

Indeed the region is highly dependent on public expenditure for its jobs and living standards. More than 60 per cent of regional GDP is based on the public sector.

However, it can be argued that too little of this public money has been used to strengthen the productive potential of the region with resources diverted instead to pay for benefit bills and still high levels of economic inactivity.

With central government undertaking a fundamental review of spending in 2007, the North-East needs to ensure the review has a strong regional dimension. And we need to have a clear view about how our share of public expenditure should be spent.

To meet the challenges of the modern global knowledge-driven economy and ensure a dynamic business culture, an ever-higher proportion of the region's public spending will need to be invested in people, skills and infrastructure. The North-East should be formulating its own bid for the projects that can have the biggest transformative effect on opportunities in the region.

Second, we need a clearer view of where our future economic strength will lie. The industrial backbone of the region - coal mining, steel making, shipbuilding and heavy engineering - was destroyed in the 1980s. Regional policy, often focussed on inward investments such as Nissan, helped replace some of those jobs in the 1990s. And while the region's development agency, One NorthEast, will rightly continue to fight for more inward investment, the shift of manufacturing to low-cost parts of the world means that the future of the region cannot rely purely on this approach.

The regions that are most successful the world over are those which forge a consensus about the parts of the economy on which future prosperity can be built - and then go about building links between local universities, businesses and councils to make it happen. Whether that is tourism, culture, media, IT or genetics the North-East needs to do the same.

Third, more concerted action is needed to address some of the structural shortcomings that have held the North-East back such as low levels of business start up and survival. Here, social enterprises, drawing on the regions' vibrant voluntary and community sectors, could have a key role to play. In this information-age, the most important resource of a firm or a country is not its raw materials, or its geographical location, but the skills of the whole workforce.

In a highly competitive world, every talent wasted is not just a loss to the individual but a drag on the country. We have to unlock the talents of all the people in this region. What is right on ethical grounds in the 21st Century is right on economic grounds too.

A knowledge economy needs an opportunity society - that means good schooling and high skills guaranteed to all in the North-East. We need to shape the education and training system to fit the region's specific needs.

Critically, the culture of management in both the public and private sectors, underpinned by the education curriculum at all levels, must embrace and celebrate enterprise and greater risk-taking, backed up by clear mechanisms to support local entrepreneurs with innovative ideas.

The forum will discuss these and many other ideas for securing a future for the North-East that provides high quality jobs and prosperity for local people.

The event is not about pitching the North-East against the rest of Britain. People in the South-East face higher living costs, rising house prices and endemic transport problems. The North is less cro wded, with a better quality of life for many of its people, but has a weaker economy, lower wages and too few quality jobs.

A strong regional policy is in the interests of the whole of the UK.

But to work effectively, the North-East needs that regional policy to be home grown. We need to identify the practical policy priorities that would make the biggest difference; develop them; and then pursue them relentlessly.

Above all else we need to be ambitious for the North-East. Ours is a region of enormous potential. The forum provides us with a new opportunity to realise it.

* Patrick Diamond was Special Advisor to the Prime Minister 2001-2005 and is currently Senior Visiting Fellow at the London School of Economics and the University of Northumbria. The Rt Hon Alan Milburn is MP for Darlington and formerly Secretary of State for Health.