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Archives for March 2011

£15m donor saves Zurbarán paintings for County Durham

Richard Moss | 00:00 UK time, Thursday, 31 March 2011

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Zurbarán paintings

A donation by an investment trust manager means the Church no longer plans to sell paintings that have been part of North East history for 250 years.

For a long time it looked like County Durham would lose some of its greatest treasures.

The Church Commissioners appeared set on selling the Zurbarán paintings that have hung in the Bishop of Durham's Auckland Castle home since the 1750s.

But now an investment fund manager who was born in the North East has stepped in to save them for the region.

Jonathan Ruffer's £15m donation will allow the formation of a Zurbarán Trust.

That will stop the sale of the paintings, and has also probably helped to secure the future of Auckland Castle as a public building.

It seems Mr Ruffer has effectively bought the paintings and then given them back.

The Church of England says money from the Trust will also help them carry out more pastoral work in the North East's communities.

The pictures of Jacob and his sons were painted by Spanish artist Francisco de Zurbarán in the 17th Century, but have been hanging in Auckland Castle since 1756.

The Church Commissioners were looking at selling them to raise badly-needed funds. They could have raised upwards of £20m.

There was also talk they might look to sell Auckland Castle too.

But the Church says it has now also opened discussions to open the Castle up permanently to the public.

Auckland Castle

Auckland Castle could be opened up permanently to the public as a cultural centre for the North East.

It's talking to the National Trust, the National Gallery and Durham County Council about the project. The National Gallery has said it would be prepared to loan works to hang alongside the Zurbaráns.

Another donation of £1m from the Rothschild Foundation will help towards that goal, although the Church says it will need more money to make it happen.

Dr Richard Chartres, the Bishop of London and Acting Chair of the Commissioners, said: "Jonathan Ruffer's generosity has made that rarest of scenarios possible: the best of both worlds.

"There is now an opportunity to create a leading arts and heritage centre in the North East, and a chance for both the Church of England and the Zurbarán Trust to contribute to the wider spiritual, social and economic regeneration across the region."

The news comes ahead of a Commons debate about the future of the paintings.

The local MP Helen Goodman has been opposed to their sale from the start.

Now Helen Goodman can use her time in the House to celebrate victory.

The initial decision outraged many in the region and the BBC's Inside Out featured the campaign to keep them in the North East.

It also even drew in the Culture Secretary Jeremy Hunt at one stage and inspired a 3,000-name petition.

But of course it is an unlikely hero who has made this possible. Of all people, it's an investment fund manager who has come to the rescue.

Yet an internet search on Jonathan Ruffer's name suggests he's not a man who seeks much publicity.

He does have a North East connection as the Church Commissioners say he was born in Stokesley near Middlesbrough.

He has also clearly made a lot of money by running successful investment trusts.

From his Debrett's entry we also know he is 59, married with a daughter and now lives in Hertfordshire.

He's written a book called Babel: The Breaking of the Banks.

He also lists his hobbies as opera and sleeping, but gives little else away.

In fact, even in the world he's best known in - finance - he's described as an "unsung hero".

But from today, he will certainly be the toast of the North East.

High speed rail but same speed to London

Richard Moss | 12:33 UK time, Wednesday, 30 March 2011

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High speed train

Can high speed trains like this really boost the North East economy if they don't pass through the region?

The Government has set a lot of store by the potential positive economic effect of high speed rail on the North East.

The Transport Secretary Philip Hammond has even said it will provide the biggest boost to the region for decades.

That might seem slightly strange as there are no current plans for a high speed line north of Leeds.

But by connecting the existing East Coast Main Line into a high speed line running from Leeds to London, the Government has said the North East could see huge benefits.

The Transport Minister Theresa Villiers was in Tyneside last week to sell that idea to the region as part of a consultation about the high speed rail plans.

The consultation document presented there talks about a half-hour cut in journey times between Newcastle and London.

It says journey times would fall from 3hrs 9mins to 2hrs 37mins.

But anyone who has travelled on the East Coast Main Line might have spotted something odd.

It is in fact already possible to travel by train from Newcastle to London in 2hrs 37mins.

Admittedly, it's only possible on one train a day via an express that goes non-stop southwards.

But nevertheless, that does mean the existing high speed rail plans won't actually cut the fastest journey time betweeen the North East and the capital.

Map of proposed high speed rail lines

There are no plans to bring high speed rail any further north than Manchester or Leeds.

It might mean there are more trains travelling at that fastest time, but is that really the economic game-changer the Government's talked about?

Former North East minister Nick Brown certainly doesn't think so. He says the region would be much better off if the billions invested in high speed rail were diverted into increasing capacity on the existing East Coast Main Line instead.

And the Taxpayers Alliance has released a report today suggesting that the North East will actually see its service stand still or even deteriorate if high speed rail goes ahead.

The Government disagrees, insisting that the capacity problems on existing lines won't be solved unless you build new ones.

But in reality the only real game-changer for the North East would probably be a proper high speed line in the region.

That would cut the journey from Newcastle to London to 2hrs, and from Teesside to London to 1hr 40mins.

The Government says that might be a possibility in the future, but at the moment the only firm plans are for a link between Birmingham and London.

There would then be an extension later to Manchester and Leeds, but even that will be decades away. The West Midlands line could be open by 2026, the northern extensions would follow in 2032 at the earliest.

There is a legitimate debate to be had about the merits and demerits of investing billions in high speed rail. And it may well bring economic benefits.

But so far there seems little concrete evidence that the existing plans will be a quantum leap for the North East.

Four MPs to go in North East and Cumbria Commons cull

Richard Moss | 11:52 UK time, Friday, 25 March 2011

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Hadrian's Wall

Hadrian's Wall might be immovable, but parliamentary boundaries in Northumberland and Cumbria will be changing.

I don't expect many people to monitor the Boundary Commission website very often, so you could be forgiven for missing something very significant for the North East and Cumbria.

At the start of the month, the Commission released the latest electoral statistics.

That doesn't sound exciting (it certainly didn't set my pulse racing). But the figures will now decide just how many MPs the region has in the future - or perhaps more significantly how few.

The Government is cutting the number of MPs from 650 to 600, and that means fewer constituencies in every part of the country.

The Boundary Commission says that means the North East has to lose three seats - reducing the number of MPs from 29 to 26. The North West - which includes Cumbria - will have to lose seven seats. North Yorkshire should keep all its MPs.

Constituencies will also have to be more equal in size too though. The Government says the average electorate should be around 76,600, and no seat should have a population lower than 72,800 or higher than 80,400.

And one county almost certain to lose a seat will be Northumberland.

It has an electorate of around 240,000, but four MPs. Logic says that should come down to three.

But that will lead to some constituencies covering huge geographic areas.

Sir Alan Beith's Berwick seat already covers the second largest area in England - around 1,000 square miles.

It will have to get even bigger though, as it's its voting population of 56,000 makes it the country's second smallest in population.


The Berwick constituency is amongst the biggest geographically, but has one of the smallest number of voters.

That is worrying some locals who feel that rural areas already struggle to get their voices heard.

And much will depend on how the electoral map is redrawn. Rural might have to be combined with more urban areas to make the numbers work. Parts of Northumberland might have to be mixed in with North Tyneside.

Cumbria will also have to get used to bigger constituencies. The population figures suggest it should have five MPs, rather than the current six.

And there are a whole series of seats across the region that fall well short of that 75,000 figure.

All three in Newcastle are below average. And overall Tyne and Wear would also need to lose a seat to reach the 75,000 figure.

There are similar shortfalls in County Durham and in Teesside.

The Government says reducing the number of MPs will offer value for money, and points out that Britain has far more national politicians per head of population than most other countries.

That is certainly true, but that figure is skewed by the size of the House of Lords which won't be reduced at all.

Ballot box

The Government believes voters will get better value for money from fewer MPs, but Labour disagrees.

It also fails to take into account that some of the countries the Government has compared the UK to (Germany and the USA) have federal structures with a whole tier of powerful politicians operating below national level.

Nevertheless, I don't expect many people will be manning the barricades to save a few MPs' jobs.

But don't believe there aren't party political interests in action here too.

The Conservatives have most to gain. They point out, rightly, that it currently takes fewer people to elect a Labour MP than a Tory one.

And there's no question the reduction in MPs stands to hit Labour hardest. Not surprisingly then, they are strongly opposed.

They say their motivation isn't self-interest though, but concern for voters who may be short-changed. And they also believe lax electoral registration in urban areas means their constituencies have larger populations than official figures suggest.

But then you would hardly expect turkeys to vote for Christmas.

The time for debate though is over. The Commons will be cut in size.

A consultation about the proposed numbers of MPs per region ends next week.

The Boundary Commission will then aim to redraw the boundaries by 2013 to allow the parties to begin selecting candidates.

And then some fun could really start as sitting MPs find out if they still have a seat, and discover whether it's as winnable as it used to be.

Chancellor announces Enterprise Zones for Tyneside and Teesside

Richard Moss | 14:20 UK time, Wednesday, 23 March 2011


George Osborne

George Osborne leaves 11 Downing Street to deliver his Budget.

It was billed as a Budget for growth - a switch from rescue to recovery - and in the North East much of that will depend on the success of two new enterprise zones.

The Chancellor announced there will be 21 enterprise zones in total and revealed the areas that will get the first 10.

They include Tyneside and Teesside.

George Osborne said there will be more specifics announced about their exact locations within those areas tomorrow.

But he did reveal what will be on offer.

Businesses could be offered up to 100% rate relief, superfast broadband and enhanced capital allowances to encourage investment.

And the areas that get enterprise zones will also benefit. They will be able to keep and spend any growth in business rate receipts for 25 years, and benefit from simplified planning regulations.

It marks the latest departure from Labour's policy of putting economic development in the hands of the likes of One North East.

Instead of big grants, the emphasis will be on offering incentives to businesses to locate and expand in targeted areas.

But will it work?

One Labour MP certainly doesn't think so.

Middlesbrough South's Tom Blenkinsop secured a Commons debate this week about economic development in the region.

In it he raised serious doubts about the effectiveness of the enterprise zones that existed under the last Conservative government.

He said: "Locally, Middlesbrough's Riverside Park...was designated as an enterprise zone, but all that happened was a rush to get speculative office development off the ground with no tenants and no businesses to fill the new buildings."

Tom Blenkinsop

Labour's Tom Blenkinsop is not convinced that enterprise zones will be a big help to the North East economy.

He also quoted figures which suggested that between 1981 and 1986, the £300m poured into enterprise zones only created 13,000 new jobs.

The same research also suggested many of the jobs created were merely displaced from areas which didn't have enterprise zone status - 25% from within the same town.

Others though are enthusiastic. The Stockton South Conservative MP James Wharton is a big fan of the idea, and has pushed hard for Teesside to be among the first tranche.

He said: "The Enterprise Zone is further great news story for Teesside, hot on the heels of the announcements of new investment in Corus and Hitachi. It provides the new Teesside Local Enterprise Partnership with a powerful tool for attracting investment, and will bring sustainable jobs to our community."

But what of the areas that missed out? Local Enterprise Partnerships will get a chance to bid to be in a second wave of zones in the summer, but somewhere like Cumbria will have to compete with big urban areas if it wants a slice of the action.

The Politics Show will be looking at what enterprise zones might or might not have to offer at 12pm on 27 March.

Some were expecting the Chancellor to announce the first awards from the Regional Growth Fund too.

The North East and Cumbria has 76 bids in, but with the fund massively oversubscribed, the ones that don't get money might attract as much attention as those that do.

But that will have to wait, although not for too long.

The Government is keen to get away from the constant talk about cuts, and move the agenda onto what they are doing to boost the economy. The announcement of the growth fund grants will be a key part of that.

And transport minister Theresa Villiers is in the North East to talk about the economic benefits of High Speed Rail for the region (we won't be on the line, but the Government says it could cut 30 minutes off journey times from Newcastle to London).

But nevertheless of course, we are still living with the legacy of George Osborne's first budget. The new financial year will be one of austerity for councils and other organisations dependent on public sector funding.

And Labour is already seizing on the Chancellor's downgrading of growth forecasts.

So George Osborne and the Coalition really do need enterprise zones and the like to deliver to ensure cuts do fade in the public mind before a 2015 election.

Can carbon capture make coal king again?

Richard Moss | 13:55 UK time, Friday, 18 March 2011


A digger moves coal.

Could clean coal be the key to our future energy needs?

With grave doubts about the future of nuclear power, there may now be renewed focus on alternative ways of supplying our future energy needs.

And one option takes us firmly back to the region's past - coal.

But 21st Century coal also needs something new to make it environmentally-acceptable in an age where global warming is a big issue. It needs carbon capture.

This is a technology that would see the carbon dioxide emissions from coal-fired plants fed into rocks under the sea to avoid it being pumped into the atmosphere.

Billions of pounds of funding are available to schemes which could develop carbon capture and storage technology.

And at least two of those bidding for the money are from the North East.

One bid has come from a consortium which includes Alcan in Northumberland, which is looking to cap the existing power plant at its smelting works.

But another is for a new coal-fired power station in Teesside.

If the bidders can make carbon capture work, it could create valuable jobs and even eventually see the re-opening of coal mines in the UK.

It could also help plug the energy gap that will develop as old nuclear and coal-fired stations shut.

But some believe that is a big if.

Jonathon Porritt

Green campaigner Jonathon Porritt believes carbon capture will not plug the UK's energy gap.

The Politics Show has been talking to environmentalist Jonathon Porritt. He used to advise the last government.

He believes we are already a long way behind China in developing the technology, but he also doubts that carbon capture can work.

And he isn't alone in that. The Green Party believes it is an unproven technology which might leave future generations with a legacy of carbon dioxide that could leak into the atmosphere or the seas.

It does not want to see any development encourage nations to mine and burn more coal.

And even if it is achievable, critics point out that it is not cheap - adding between 20% to 30% onto the costs of generating electricity according to some estimates.

Instead, many environmentalists would prefer to see the focus on renewables and energy conservation in homes and businesses.

But the search for solutions to our energy needs has never been more complex.

Jonathon Porritt, who has always been opposed to nuclear energy, also thinks the last week's events have put the last nail in the coffin of plans for new power stations in Britain.

He believes the crisis in Japan will force any nuclear power station to be loaded down with even more expensive safety devices to reassure the public.

That will make them even more uneconomic, and make it even less likely that private investors will fund them.

And as the Government says no public subsidy will be available for new nuclear, the future could be bleak.

So there still appears no easy long-term solution to keeping our lights on. Some still have real doubts about how big a contribution renewables like wind, tidal and biomass could really make.

Using much less energy might be one way of helping, but how big a sacrifice would we all be prepared to make?

The Politics Show will be discussing carbon capture and our future energy needs on BBC1 at 12pm on 20 March.

Euro-MPs - on the gravy train or great value?

Richard Moss | 11:51 UK time, Thursday, 17 March 2011


European parliament sign

All roads lead to the European Parliament, but is it worth the expense?

I may have only spent a couple of days in Strasbourg last week but it did give me some insight into the life of an MEP.

I am sure if he or she were so inclined, an MEP could limit the workload to a lowish level, but to be fair there was little evidence of that on show.

The parliament building is not too distant from the city centre, but most of the MEPs I spoke to said they rarely saw the more scenic Strasbourg because of the long hours spent in meetings.

But I suppose the question is, are all those meetings worth having?

I sat through a small amount of one about emission limits from tractors - I am glad I didn't have to stay for all of it.

Of course, the meeting actually is important to tractor manufacturers and to environmentalists, but it doesn't set the pulse racing.

Any MEP who's a euro-enthusiast might be happy to spend their life on such matters, but wouldn't it frustrate sceptics?

I spoke to two with different approaches.

The Conservative North East MEP Martin Callanan certainly thinks Europe should interfere less in UK affairs.

But he says that as long as the EU has the powers it has, he has to engage fully to ensure any legislation is as well-drafted as possible.

UKIP's Godfrey Bloom though takes another approach, saying he rolls up in Strasbourg each month determined to vote against everything.

He says: "I take the Groucho Marx approach. Whatever it is, I'm against it."

European Parliament in Strasbourg

The European Parliament in Strasbourg - one of two buildings which house our MEPs.

And there are of course real concerns about the money spent on having a parliament - or rather two as MEPs split their time between duplicate buildings in Brussels and Strasbourg.

That duplication costs around £200m a year - something that a majority of MEPs are disgusted with. While I was there the opponents achieved a minor victory by effectively stopping one of the sojourns to Strasbourg each year.

But on paper MEPs also look expensive.

They get a salary of around £81,000 - £16,000 more than an MP (inflated mainly because they get paid in Euros at a time when the pound is weak).

They also get £258 each day they attend towards accommodation and living expenses. Add in up to £242,000 in staff salaries and office expenses and an MEP can cost around £400,000-a-year.

The Lib Dem MEP Fiona Hall admits that sounds like a lot, but she says it sounds much better value if you realise it amounts to 24p for each of her North East constituents every year.

And while I was there though I did come across someone who felt her MEP and the Parliament did have something worthwhile to offer.

Heather Cairns and Fiona Hall

Heather Cairns celebrates with her MEP Fiona Hall after getting the signatures she needs for her campaign.

Heather Cairns is from Northumberland. Her daughter Eilidh was killed while cycling in London, when a lorry collided with her. The driver didn't see her.

Her family is campaigning for sensors to be compulsory for all HGVs - something that needs a change in European law to be effective.

With the help of Fiona Hall and her staff, she had come to Strasbourg to gather signatures of MEPs.

She needed half of the parliament's MEPs to sign up to what's called a Written Declaration - something which then forces the parliament to debate the issue.

While we were filming, the campaigners secured the final signature - no mean achievement.

She was overjoyed. There's still a lot more work to do before any law is passed, but the Cairns family certainly think the parliament is worthwhile.

And as long as we are part of the European Union, it is also up to us as constituents to ensure our MEPs do represent our interests to the best of their ability.

Japanese earthquake shakes faith in new nuclear plans

Richard Moss | 15:58 UK time, Tuesday, 15 March 2011


Japanese troops in recovery operation.

Japanese troops continue the recovery operation in the devastated communities of Northern Japan.

The horrendous events in Japan make you realise just how vulnerable we still are to the power of nature.

An earthquake can unleash a wave that can wipe out whole towns, and threaten to cause a nuclear disaster.

And the aftershocks of that are being felt here too.

Some are already beginning to write off the chances of a new generation of nuclear power stations being built in the UK.

In a way that seems a little odd.

Although the UK can suffer minor earth tremors, there is no prospect of a serious earthquake or tsunami.

The only major nuclear incident in British history - the Windscale fire - was certainly not down to nature.

So in a way, events in Japan should not make any difference to confidence here.

But inevitably it does. The problems in Japan have reminded us again how potentially deadly nuclear power can be if something goes wrong.

In recent years, even some greens have begun backing nuclear power.

But that could all change. The fear factor that brought the industry to a halt after Chernobyl may well re-emerge.

And communities - such as Hartlepool or West Cumbria - which were due to have a new generation of nuclear power stations built close by may be more worried than they were.

Fukushima nuclear power station

Explosions at the Fukushima nuclear power station threaten to damage confidence in the industry.

The opponents of nuclear power have been quick to notice that. But they also say the Japanese nuclear crisis is relevant even outside an earthquake zone.

And so the North East Lib Dem Euro-MP Fiona Hall now wants all nuclear development in the UK halted.

She has written to the Energy Secretary Chris Huhne asking for a a moratorium to allow a public debate to take place.

She said: "The key issue at Fukushima is not the earthquake but the failure of back-up systems during the emergency shutdown. With Hartlepool on the list of sites the Government is considering for future nuclear development, this is a very important issue for the region.

"Public and investor confidence in nuclear energy has been severely shaken by events in Japan. A moratorium is now necessary to give time for a full public debate and reassessment."

And elsewhere in Europe the Japanese crisis is already having an impact. Both the Swiss and German governments have suspended decisions on their nuclear programmes.

You can imagine many other Lib Dems feeling the same should happen here.

The Coalition Agreement had committed the Government to pursuing a new generation of nuclear power stations, as long as there was no public subsidy.

But many Lib Dems would love to bury that commitment.

Chris Huhne has not gone down that route to date, but he has asked UK nuclear regulators to examine what is going on in Japan and see if there are lessons to be learned.

Others though are urging caution.

The Copeland MP Jamie Reed has Sellafield in his constituency, and also wants to see a new nuclear power station built in the area.

He says there should be no kneejerk reaction to events in Japan.

He accepts lessons may need to be learned, but he points out that the technology in Fukushima is more than 50 years old. He says it is not the kind of station that would be built in Britain.

He also thinks that any decisions need to be made for the long term. He told the BBC's Newsnight that nuclear power was essential for energy security, reducing carbon emissions and for promoting economic growth.

Those are all arguments that have helped encourage a rise in public support for nuclear power in the last few years.

But even Jamie Reed accepts that the Japanese earthquake will make it much harder to convince the public that it is also safe.

Fishing for a future - can the discards be stopped?

Richard Moss | 09:05 UK time, Sunday, 13 March 2011


Fish being discarded

Millions of tonnes of fish are being discarded by the fishing industry to keep within quotas.

As you'll notice if you catch the Politics Show this week, you'll see I have spent some of this week at the European Parliament in Strasbourg.

It wasn't my strange idea of a political anorak's annual holiday, but an attempt to wrestle with the impact of the European Union on the region.

There will be much more of that next week.

But there is no doubting the influence the EU has had over our fishing industry, indeed some would argue that it has had a devastating impact.

Strict catch quotas have often made it hard for boats to make a living. But at the same time the restrictions haven't prevented further falls in fishing stocks.

And then there's the issue of fish discards.

Around one in ten fish caught are thrown back into the sea to avoid busting quotas even though they are already dead.

TV chef Hugh Fearnley-Whittingstall has been among those campaigning to get the practice banned.

And the EU Fisheries Commissioner has listened.

Maria Damanaki says she wants to see a total ban on discards by 2013, describing them as unethical.

But that is just the start. She has to get it past the various countries and interest groups first.

Chris Davies

Chris Davies MEP says any reform to quotas must still protect fish stocks.

And already the lobbying is beginning. I met North West Euro-MP Chris Davies in Strasbourg. The Lib Dem has formed a group of MEPs called Fish for the Future.

He does want to see a ban on discards, but worries that it might be used as an excuse for our already-depleted seas to be overfished.

He says any reform must also protect fish stocks for the good of the environment, but also ensure there is a sustainable future for fishing fleets across Europe.

But there is a further problem. Policing a ban on discards could be difficult.

Many fishermen dislike the practice, but if they had to count the discards in their quota, they could be forced to sell fish that are too small to have any value, or from species that people don't want to eat.

They might be tempted to continue to discard the low-value fish to avoid that.

So under the reform plan, CCTV could be installed on fishing boats to prevent any discards.

Chris Davies thinks it could work, as it is already being trialled in Scotland. He also thinks you could shift subsidies to avoid imposing extra costs on vessels.

But the plans are already worrying the fishing industry. They fear reform will just mean more bureaucracy and regulations, and less money. There is already a suggestion they could be forced to spend more time in port.

Many want quotas to end or at least be relaxed. But, of course, doing that might lead to the seas being denuded.

So while everyone agrees discarding tonne upon tonne of fish is unacceptable, getting unanimity on how to stop the practice could be more challenging.

£180m of European aid put at risk by North East cuts

Richard Moss | 11:02 UK time, Friday, 11 March 2011


EU flags

Funds from the European Union have helped to create jobs in the North East.

With pressure on public spending, there is less money available in the region than there used to be.

But one source of funding looks as if it is still in plentiful supply as it comes from the EU.

The European Regional Development Fund (ERDF) exists to help create jobs in the North East.

The latest programme began in 2007, with £360m available to bidders from the region.

It has two years to run, and there's up to £180m still left in the pot.

But it seems public sector cuts in the UK could actually prevent the North East getting its hands on much of that money.

The EU insists that grants from the fund can only ever fund 50% of a project's costs - forcing the bidder to raise the rest. Without evidence that any project has the other 50% of funding in place, no European grant will be paid.

In the past much of that "match funding" as it's known, has come from the regional development agency One North East, or local councils.

But One North East has had its operations curtailed in preparation for its abolition, and councils are cutting back.

Businesses who want European grants are at risk of being left high and dry.

Hugh Morgan-Williams from the regional CBI says in past rounds of cuts, banks have stepped in an alternative but this time they are proving reluctant to lend.

And in any case, he says, the businesses that want to access the EU money are sometimes risky propositions which wouldn't attract the banks.

They are often starting out, with unproven business ideas.

One example is UK Haptics in Newcastle. When it first started, the firm struggled to find any financial backers.

Virtual reality technology

UK Haptics used European aid to develop virtual reality systems that can help medical staff practice their techniques.

It was using largely unproven virtual reality technology. The firm was saved though when it secured £50,000 from a fund made up money from the ERDF and One North East.

That helped it develop systems which allow medical staff to practice procedures on virtual patients.

The business has just won a £1m contract with a pharmaceutical company, and plans to double its workforce. But managing director Gary Todd is clear that the business would have failed if it hadn't been for the grant aid.

And since 2007, ERDF money is estimated to have created 2,500 jobs and helped 5,000 businesses.

So could the opportunity to add to those figures be lost?

The North East's Labour MEP Stephen Hughes thinks so. He believes the Government is pulling the rug on the region.

He says without the European aid the North East could be at a huge disadvantage at a time when every extra job matters.

His Conservative counterpart Martin Callanan does admit match funding from public bodies is now in short supply. But he believes good projects will still be able to raise money from the private sector.

And he says there is some doubt about whether the ERDF has offered the North East value for money in the past.

It will also be some time before we know whether the EU aid will end up unspent. There is still more than two years to find new sources of match funding.

But some suspect the Government might not be too heartbroken if the North East failed to spend it.

Although the money would initially go back to Brussels, much of it would then be handed back to the UK as a discount on tis EU budget contribution.

So the North East's loss could yet be the Treasury's gain.

Councils warn business rate changes could cost North East £320m

Richard Moss | 09:51 UK time, Friday, 4 March 2011


South Shields

Towns like South Shields look to have plenty of shops, but the North East has fewer businesses than other regions.

Councils often say they want more freedom from central government, more control over their own destiny.

The Coalition says it is keen on doing just that.

And so it is considering handing control of business rates back to local authorities.

They would be able to keep rates they raised locally, and potentially even decide what rate to charge businesses.

Sounds great, yet some councils are already protesting about plans which on paper hand them both more power and control over their finances.

The problem is that some areas can raise more from their business rates than others.

Councils in central London and the South East gather billions in rates, while local authorities in poorer parts of the North can only raise a fraction of that.

At the moment that is not a problem because business rates might be collected by councils, but they are all sent back to the Treasury's coffers in London.

The Government then redistributes it on the basis of population and deprivation.

The result is that southern business rates end up subsidising northern councils.

So if you localised rates completely, it could cause a financial catastrophe in the North East.

According to figures provided by parliament, one council - Stockton - would gain an extra £4m per year.

But every other local authority would lose out.

Here they are in ascending order of financial loss per year:

Darlington £352,000
Gateshead £10m
Newcastle £10m
Hartlepool £16m
Redcar and Cleveland £18m
North Tyneside £19m
Middlesbrough £27.5m
Northumberland £40m
South Tyneside £46m
Sunderland £49.5m
Durham £84m

Pretty serious stuff. It amounts to a net loss to the region of £320m. It's estimated that Yorkshire and the North West could lose a similar amount.

Add that kind of loss to the cuts they are already facing, and our councils could be devastated. Durham County Council says it would add up to half its budget.

Frederick Street, South Shields

Streets like this in South Shields show why North East councils struggle to raise as much in business rates as their southern counterparts.

In contrast, councils London and the South East would be the big winners - gaining £3bn. Westminster Council alone would get an extra £1bn every year.

That contrast was raised in the Commons this week by the Bishop Auckland MP Helen Goodman.

But Local Government Secretary Eric Pickles insisted that those figures were nonsense, because the Government would still find a way through its grants to redistribute money to poorer councils.

That has not allayed the fears of our councils though.

Durham County Council leader Simon Henig fears the redistribution will not be big enough to make up for the financial black hole.

And he may have a point. The Government believes handing back control of rates to councils would give them the incentive to attract more businesses into their area.

That wouldn't work so well if you continued to use southern rates to subsidise our region to the same amount.

But there may be another consequence too.

The Government could also decide to let councils set the rate locally (currently every part of the country pays a uniform rate).

That was the system in use before 1990.

It fell into disrepute when some councils began to hike up rates to make up for the money they were losing in cuts.

Businesses also hated the chaos of different rates in different areas.

And the North East Chamber of Commerce is concerned that rates would almost certainly head upwards if they were set locally, damging the economy.

Lord John Shipley

Former Newcastle Council leader Lord Shipley thinks business rates could fall if councils gained control of them.

But supporters of the idea disagree. The former Lib Dem leader of Newcastle Council, Lord Shipley, believes it could lead to a closer relationship between businesses and councillors.

And he thinks councils might even decide to cut rates to encourage more companies in.

He also points out that rates currently rise with inflation anyway - up to 5% this year - and that local authorities could choose to vary that to help companies out.

The problem is the Government still hasn't published its proposals on business rates and council finances.

There appears to be some wrangling between the Coalition partners about how far to go.

The Lib Dems want to give councils much more latitude, creating self-financing "free councils" by allowing them to keep the area's road tax receipts or levy local sales taxes.

The Conservatives though are nervous about handing that sort of power to local authorities.

They would though be keen to end their dependence on central government finance.

And Labour councils in the North East fear that would leave communities sinking rather than swimming.

The subject will be discussed on the Politics Show on 6 March at 12pm on BBC1.

Senior council managers get rises despite pay freeze

Richard Moss | 11:24 UK time, Wednesday, 2 March 2011


Eric Pickles

Eric Pickles may not be amused when he discovers that some senior council managers have had pay rises.

As I have already highlighted, our council Chief Executives did not spring into action when asked by Eric Pickles to take a pay cut.

Only one took a reduced salary, while five have either taken or are about to get a rise.

And it seems some of the other senior managers in our councils have also had increases, while none have taken pay cuts.

In response to our Freedom of Information requests, various councils confirmed they had awarded some of their top staff extra pay.

And although Northumberland's Chief Executive Steve Stewart took a 5% pay cut, his fellow managers did not follow suit. The council says 19 members of the senior management team received an increase in their basic salaries.

But it says many of those were due to the management shake-up that followed the council's new unitary status, and changes in responsibilities.

There were four jobs though which they said were directly comparable, one of which was the Chief Executive role.

The three others were: Lead HR Business Partner (rise of £1,982 or 3%), Acting Chief Fire Officer (rise of £5,944 or 6.5%) and Associate Director, Strategic Commissioning (rise of £386 or 0.05%).

In North Tyneside, five council officers received a pay rise.

The Director of Finance took an extra £8,300, the Head of Legal, Governance and Commercial Services £7,300, the Head of Environmental Services £3,750, the Head of Cultural Services £6,150 and the Head of Neighbourhood Services £3,300.

In South Tyneside, Patrick Melia, the Executive Director of Regeneration and Resources, got a rise of £2,545, and Helen Watson, Executive Director of Children and Families, got an extra £2,547.

In Sunderland, one unnamed officer got a rise of £5,722 or 4.88%.

The Assistant Chief Executive of Darlington Council changed roles to become a Director, and received a pay rise of £735, or 0.76%.

In Stockton, where the Chief Executive Neil Schneider got a rise of 1.3%, three other managers got similar rises.

Corporate Directors Julie Danks, Jane Humphreys and Paul Dobson all received pay rises of 1.2% or around £1,500.

Middlesbrough Town Hall

Three senior managers in Middlesbrough Town Hall have seen their pay rise.

We already know that Middlesbrough's Chief Executive Ian Parker saw his pay rise by £7.344 or 5.4%.

But there were also rises for the Assistant Chief Executive, the Executive Director of Environment and the Head of Children's Trust and Performance. (The council wouldn't specify who got what, but the rises mentioned were £5,403 or 5%, £5,000 or 6.67%. £1,259 or 1.79%).

In York, where Chief Executive Kersten England got a rise of £1,875 or 1.4%, two other managers were also awarded an increase.

One unnamed head of directorate got an extra £5,883 or 6.1%, and another £2,944 or 2.95%

I cannot tell you about Cumbria County Council as it has yet to answer our Freedom of Information request.

But in Allerdale the Strategic Managers of Places, People and Business all received a £2,000 rise, worth 3.85%.

All these rises came despite a general freeze in local authority pay, but all were due to the officers earning increments based on their performance or length of service.

Again, council officers could well argue that they have earned those rises, and removing them would certainly make little difference to the cuts the local authorities face.

It is also worth noting that the majority of managers did have their pay frozen. There were no reported rises in Durham, Gateshead, Redcar and Cleveland, Copeland, Carlisle, South Lakeland, Barrow, North Yorkshire, Ryedale, Richmondshire and Scarborough.

But the rises that did take place may well raise the hackles of Eric Pickles, and the eyebrows of trade union members and council taxpayers.

Hitachi train factory investment hailed as 'new Nissan'

Richard Moss | 16:58 UK time, Tuesday, 1 March 2011


Hitachi express train

An impression of the new Inter City express trains that Hitachi will be building in Newton Aycliffe.

You wait for ages for a big job announcement, and then you get two in a week.

The confirmation that Hitachi will be bringing a train factory to County Durham is the news that the North East has been waiting for.

The Government has confirmed that it will be pressing ahead with plans to buy new Inter City Express trains.

That means Agility Trains, which is owned by Hitachi, will be basing itself in Newton Aycliffe, creating 500 direct jobs.

It's hoped that will also create thousands more indirectly in the local supply chain.

County Durham has waited a long time for an announcement that was repeatedly delayed.

At one stage, it looked like the work could go to Bombardier Trains in Derby instead.

But there has been some assiduous campaigning in the North East, not least from the Sedgefield MP Phil Wilson.

Phil Wilson

Sedgefield MP Phil Wilson has been among those campaigning for investment in the new trains.

The Transport Secretary Philip Hammond acknowledged the work put in by Mr Wilson and other campaigners from County Durham after his announcement in the Commons.

Indeed there has been political unanimity across the board in the region in support of the plans.

And there even appeared to be some cross-party love in the chamber as Darlington MP Jenny Chapman tweeted that she could "kiss Philip Hammond" when he delivered the news.

As Philip Hammond pointed out in his announcement, the news comes just days after the Thai company SSI had bought the steelworks in Redcar. The company plans to create 800 new jobs there.

The Government will say this proves that they are right to place their faith in the private sector to provide new jobs in the North East (although of course the train contract was conditional on the spending of public money).

Both the steel sale and the train investment do represent a shot in the arm for the region.

Nobody knows though yet whether these two very good news stories will be enough to offset the public sector job losses that will gather pace in the months to come.

Nevertheless, it gives the Government a chance to point to its support for the North East. (You'll have noted that Nick Clegg did turn up at the Redcar steelworks as I suggested he'd planned to, even if it was a couple of days late).

The Stockton South MP James Wharton has also dubbed Hitachi's train factory as a "new Nissan". He points out that was investment which was also made under a Conservative government (although he seems to have forgotten that his party is in coalition now).

Labour though will say that the credit belongs to the campaigners in County Durham, and point out that this investment was originally planned by the previous government.

Whoever you want to thank though, the region is getting some badly-needed jobs.

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