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Rachel Reeves: Coalition is economically vandalising the north

Labour MP for Leeds and Shadow Chief Secretary to the Treasury Rachel Reeves hits back at Nick Clegg's speech lamenting Britain's economic overreliance on London.

Nick Clegg’s latest speech claims the Coalition is focused on spreading economic prosperity beyond the south-east. In reality, it is his government that is guilty of disproportionate economic vandalism in the north, sucking resources and demand out of the region. Far from building a one nation economy, this government is making the imbalances worse.

It is just another addition to the long list of promises Clegg is failing to keep. He signed a pledge against increasing tuition fees, and then tripled them. He campaigned against a ‘VAT bombshell’ and then promptly instigated a rise when in government. He has failed to deliver a mansion tax, but has signed off a tax cut for millionaires.

As Michael Dugher has said, Nick Clegg is the poster boy for broken promises.

As a Leeds MP, this latest episode in Clegg’s series of broken promises is particularly galling. The numbers of 18-24 year olds claiming JSA for more than 12 months has risen by 170 per cent across the UK as a whole, but it’s 220 percent in Yorkshire and an astonishing 540 percent in the North East. The Audit Commission has said of the government’s local government funding settlement, ‘the most deprived areas have seen substantially greater reductions in government funding as a share of revenue expenditure than councils in less deprived areas’. In Leeds we are losing £81.34 of spending per head – more than twice as much as the £34.33 per head lost in David Cameron’s local authority of West Oxfordshire.

When Clegg talks of spreading prosperity beyond the south-east, he should think about his support for the Benefit Uprating Bill and the tax-cut for millionaires. The real terms cut in tax credits will disproportionately hit the North, whilst the beneficiaries of the £3 billion tax cut for individuals with incomes over £150,000 are overwhelmingly in London and the South East.

And Clegg’s flagship regional policy, the Regional Growth Fund, was designed to ‘foster a thriving and more balanced economy, so that no region or community gets left behind’. But the whole process has been a farce. Created after abolishing Regional Development Agencies with minimal consultation, more than 40% of winning first round bidders are still waiting for their cash over ten months after their winning bids were first confirmed. Only one successful bidder from its second round has received any funding. Only two weeks ago, we found out that 45 winning bids have walked away from the process altogether because of the lengthy delay.

We need more urgency from this government to develop an active and effective industrial strategy to support the Northern economy, which still has huge potential. If it were a country on its own, it would be the eighth largest economy in Europe. The government must back strategically vital export sectors which are key sources of jobs outside the south east, such as high tech manufacturing, renewable energy and creative industries.

The Deputy Prime Minister is looking increasingly desperate. Every part of the country is suffering from this government’s economic failures, but the North has borne the brunt and nobody will believe a word of his speech claiming the opposite.

In the coming weeks, Labour is forcing a vote on a mansion tax, something Clegg has campaigned for in the past. Clegg and the Lib Dems have yet another chance to show that they can at least keep one promise and vote for a mansion tax. It’s the least they can do, after two and a half years backing this government’s failed economic plan and unfair cuts.

The British public will judge the Lib Dems by their actions, not their words.