North shoulders burden of debt reduction, say MPs

Northern England has been disproportionately hit by the £10.5bn cuts in spending on hospitals, employment projects and industry, opposition MPs and business leaders have said. Labour MPs and the two industry bodies said Danny Alexander's decision to cancel a big hospital project, an £80m steel industry grant, and nearly £1bn in jobless programmes would set back economic recovery in the north-east, Yorkshire and Humberside. Hilary Armstrong, a former Labour minister and MP for Durham North West, said the cuts, which have also hit a £50m health centre in Leeds and a £12m retail project in Sheffield, would be more damaging than in other parts of country. "Clearly, this will differentially affect the north-east, more than in other areas where they're not so dependent on getting people back into work and not having as many unemployed," she said. Alexander, the chief secretary to the Treasury, also cut one of Britain's biggest hospital projects, a £464m, 660-bed hospital for North Tees and Hartlepool. Also in doubt are three minor-injuries centres in Hartlepool, Billingham and Stockton proposed under the same programme. Department of Health officials said this project – which has taken five years to develop – was targeted because it was entirely publicly-funded. Two other hospitals, in Liverpool and London, were saved because they will be PFI schemes. Alex Cunningham, Labour MP for Stockton, said it was simply a short-term saving which would have long-term costs. "It was costed by the Department of Health, the Treasury and the health regulator as very good value for money, rationalising two hospitals into one," he said. He said it was deeply ironic that David Cameron and Nick Clegg had gone into the election promising to protect health spending. "Cameron has delivered on his promise that public spending in the north-east would be hit the hardest and has taken away our hospital," he said. These reservations were shared by the North East and Yorkshire and Humberside chambers of commerce. Both organisations believe swift cuts in government debt are essential and both believe ministers are wrong to protect health spending at the expense of other areas. Yet they also fear Alexander's cuts are crude and ill-judged; they failed to recognise the regions' particular needs and their dependence on public support. The unemployment rate in the north-east is 9.3%, as opposed to a UK-wide average of 7.9%, while in Yorkshire and Humberside it is 9.7%, the highest in the country. Leeds also faces losing a major health project, with the freezing of a £50m "well-being centre" in Holt Park. The steel company Sheffield Forgemasters lost an £80m grant for a state of the art civic nuclear industry steel press, while a £12m grant to build a "retail quarter" in Sheffield has been suspended. Ross Smith, head of policy at the North East chamber of commerce, said the cuts would damage construction jobs, contractors' jobs and harm the public sector. "Across the board, there's real concern about the level of investment in capital infrastructure, which has short-term and long-term implications," he said. Nick Pontone, director of policy at Yorkshire and Humber chambers of commerce, said: "There needs to be a growth agenda, as well as a cuts agenda, and there's some confusion about the message that's coming through." Armstrong, soon to be a Labour peer, said the cuts to the unemployment programmes were a blow to charities such as the Cyrenians homeless charity in Newcastle, which Clegg visited three times before the election. The deputy prime minister said the charity's work highlighted Labour's failure to help Britain's "lost generation". But Armstrong, one of the charity's trustees, said it was ironic that the coalition had again slashed spending on employment programmes central to efforts to tackle youth joblessness and poverty. The coalition government has already cut £290m from the future jobs fund which had allowed the Cyrenians to employ two young men and a further two were about to be hired. On Thursday Alexander cancelled two other jobs programmes, saving £450m by dropping the extension of the young person's guarantee to 2011/12 and a further £515m for the two-year jobseeker's guarantee. "It will have effect on jobs and it will clearly affect the general economy," Armstrong said. "They're going to savagely cut the public sector which will affect jobs in the economy generally, and restrict the ability to grow the private sector."