08/01/2013 10:48 GMT | Updated 09/03/2013 05:12 GMT

The Cuts in the North East are Deeper Than in Spain

One hundred years ago the North East of England was the main driver of economic development not just in Great Britain but across the British Empire. Today it is still the most successful regional exporter in Britain outside London - it has the largest car plant in Europe, the largest chemical plant in the UK, and a thriving centre for sustainable energy innovation. The North East offers enormous growth potential and a chance to rebalance our country's economy once and for all.

And yet the Government seems to have a blind spot for the potential of the North East. This has come at the whole country's expense; the Tories, with their eye on the 2015 general election, appear to be prioritising spending in regions with large numbers of marginal seats, whilst slashing budgets in the North East and elsewhere.

In the North East, the government has been delivering massive and sustained cuts, on a scale greater even than those seen in Spain. According to a report by PricewaterhouseCooper, the scale of the cuts in 2010 to North East councils was three times those in South East. This has meant a staggering reduction in spending equivalent to the loss of £1,000 spent on every man, woman and child in the region.

The North East is also failing to receive its share of the infrastructure funding the government has allocated. In the 2011 Budget the North East was allocated a shocking 0.03% of the Chancellor of the Exchequer's £40bn infrastructure budget. And in the Autumn Statement the region received only a paltry 3% of the capital spend allocation.

So the North East is contributing to the savings the government demands - but not receiving the investment it needs. In effect the Chancellor is taking with one hand, and then taking with the other.

Perhaps as a consequence, unemployment in the North East is at 9.9% - the highest in the UK. The Institute for Fiscal Studies says that 45,000 jobs have been lost in the public sector already. Alarmingly Oxford Economics projects total job losses at 68,000 while job creation of 46,000 over the next 10 years will still leave us with a 20,000 jobs deficit.

What is the justification for these disproportionately high cuts and this disproportionately low spending? Could it be that the Chancellor thinks that the political battleground for the 2015 election will be the marginal seats in the East and West Midlands and has targeted spending accordingly? Is the Government therefore playing politics with public money? The Government talks about rebalancing the economy, but the statistics suggest otherwise. Perhaps the Chancellor needs to think less about Tory chances at the next election and more about the state of the UK economy.

I have coordinated the Northern Labour MPs group response to the Local Enterprise Partnership (LEP) review of the North East economy, because we feel there is a significant amount more that the Government could do to boost growth in the region.

I am calling for a One Nation Approach where the people and the assets of the North East are valued and nurtured. There are fair-funding formulae for public service spending based on need. Investment in infrastructure should be based on economic potential, not a political calculation.