Governor seeks friends in the North

"WHERE'S THE apology, Eddie?" The question from the unemployed of Newcastle upon Tyne to the governor of the Bank of England was simple enough. But Eddie George, on his first trip to the North-east in five years, had no intention of delivering any apology.

Mr George caused a furore in the country's old industrial heartland last October when he reportedly suggested that unemployment was "a price worth paying" to curb inflation. It had echoes of a similar remark a decade ago by the former Tory chancellor, Norman Lamont, and reinforced the feeling that London's grandees don't give a jot about workers "up north".

The governor claimed his unguarded reply to a leading question had been taken "totally out of context", though he wasn't denying that job losses were a consequence of high interest rates. Whatever he had meant to say, the damage was done, and his two-day visit is to try to set the record straight.

The outcry had been a disappointing experience, Mr George told a selected audience of 100 businessmen and trade union leaders (there was only two women in the uniformly dark-suited audience).

"It was disappointing because of its unnecessary damaging effects on morale here in the region at what I know is a difficult time and, of course, I very much regret that," Mr George said.

"It was disappointing, too, because it created the impression that we at the Bank of England don't care about unemployment. In fact, nothing could be further from the truth."

Far from being repentant, the governor went on to lecture the region. He said it must stop looking back to its ship- building and heavy industrial past and make further moves to diversify its economy, with particular emphasis on the service sector.

The governor was on track, once again, for upsetting the North-east where, among its many traditionalists, manufacturing jobs are regarded as "real" work, while the service industry is seen as part of the "candy floss" economy.

One businessman asked whether Mr George thought that manufacturing was the basis of wealth creation. The governor did not.

Unemployment in the region is running at about 7.5 per cent - well down on its 1993 peak of more than 13 per cent but still above the national average. In certain parts of Newcastle upon Tyne, Sunderland and Hartlepool, there are pockets where up to a third of adults have no regular work.

Mr George did not intend to meet any unemployed people on the first day of his visit, preferring to drop in on a new clothing label firm in Jarrow and a call centre in Sunderland. He wined and dined with the businessmen who had left the old industries behind and diversified.

One particularly disappointed local was Bill Midgley, the president of the North-east Chamber of Commerce. He said the governor had delivered a "reasonable first-year economics degree paper" without acknowledging the need for government support if firms in the North-east were to survive. "We are going to see more pain for companies in this region," he said.

Outside Newcastle Civic Centre, where Mr George delivered his speech, a small knot of unemployed people brandished placards demanding: "Where's the apology, Eddie?" and, "Am I a price worth paying?"

Mr George was only a few metres away from the demonstrators but made no effort to speak to them. Andy Robertson, from an action group for the unemployed, was among those shouting in vain. "His attitude seems to be that if people have to be employed to keep interest rates up to keep him and his friends in comfort then it is, as Mr Lamont said, `a price worth paying'," Mr Robertson said.

A former oil rig worker, Mr Robertson, 47, has been on the dole for most of the past nine years. He said "it was all very well" for Mr George to visit successful, hand-picked businesses, but what the North-east needed was jobs.