A Plan for Growth or A Strategy for Growth?
Date published:
It’s undoubtably a powerful achievement that a new Government and leadership, albeit within a long-serving administration, has delivered a not-so mini-budget barely two weeks into office. Prime Minister Truss has an extraordinary set of tensions to resolve – once-in-a-generation inflationary pressures and spiking energy prices creating a costs crisis for households and businesses still recovering from the impact of Covid.
For our members the Chancellor’s fiscal statement brought some important wins. Along with the British Chamber of Commerce network we were pleased to see the planned National Insurance increase reversed, something our members recommended to offer temporary relief as the cost of doing business challenges grew over the year. We also welcomed the ambition and intent of the new Investment Zones, with notable wins for the region in Mayoral Combined Authority areas and other local areas. New opportunities for Hartlepool, Middlesbrough and Sunderland, with the North of Tyne Combined Authority areas under consideration, are all good news and we look forward to the detail on the freedoms and flexibilities they will be offered. We have urged Government to use this moment to support further devolution in the North, as a means to achieve just this end.
The benefits of the proposed planning flexibilities remain to be seen for the North East where our members tell us it’s actually a lack of capacity in the planning system, rather than red tape which is slowing down their projects. We will make sure we study the detail of the new Planning and Infrastructure Bill once it is drafted. Several of the tax interventions such as the decision to keep the Annual Investment Allowance for machinery at £1 million will be welcomed by our members, especially some of the small businesses in the region.
The need for Levelling Up of course has not gone away, despite the relatively small number of mentions in the Plan itself. If the Chancellor’s Plan is going to achieve the radical restructuring he and the Government hope for, we will need more regional economic interventions, not less. This will be especially true in the areas largely absent from the Plan – skills, research and development, health and social infrastructure.
This is illustrative of the biggest circle this particular budget is trying to square. Many of the interventions and their anticipated outcomes are highly contingent. Greater conditionality for people already in often low-paid, part-time work assumes the tax cuts and infrastructure investments will work quickly to generate higher paid roles, especially in traditionally under-served or deprived areas. The Investment Zones “could” encourage further investment in new shopping centres, restaurants, apartments and offices – all aiming to create thriving new communities. But, as our members know only too well, time is running out for both the Chancellor and businesses in the North East. This is especially true following yesterday’s forecast that inflation may exceed 10% into October. That’s why we’ll continue to campaign for a strategy beyond the Plan – one which supports business, ensures essential public services are funded, fights for Levelling Up to be meaningfully delivered, and has people at its heart.
Find our full mini-budget briefing document here.