Chamber calls on Chancellor for commitment and clarity in Budget
Date published:
The North East England Chamber of Commerce has written to the Chancellor ahead of the Budget on 15 March calling on him to commit to greater fiscal devolution and high-quality education which targets local skills needs.
In the submission, John McCabe, Chamber Chief Executive, added that investment in the region and in schemes which remove barriers to entry or re-entry into the workforce are vital for long term growth.
John McCabe said: “The North East is the ideal place to invest in the creation or growth of business. Last year, we created more jobs through inward investment than any other English region outside of London. This is one of our strengths. Investment in the North East is a down payment on future growth and prosperity.”
Last week the Chancellor outlined his priorities for economic growth as the four E’s – enterprise, education, employment and everywhere. The Chamber’s response has added energy, export and – because economic growth is only successful when it is inclusive – everyone as additional priority areas for the North East.
Recommendations for government action from the Chamber cover a range of issues including investment, guidance and support to ensure organisations are prepared for longer term energy challenges and are enabled to fully contribute to Net Zero.
Levelling up and devolution remain key priorities, with recommendations including expanding single-pot funding arrangements to provide local areas with the flexibility and freedom to ensure funding meets local needs.
The letter asks for targeted funding and support for SME’s to grow trading capacity and capability, recognising that imports and exports are the backbone of the North East’s economy, worth nearly £27bn to the region.
In line with energy and inflation concerns, other recommendations include business rate reform and multi-year settlements to provide councils and other public agencies with long-term certainty.
The submission emphasises that employee progression is essential for the region, highlighting the importance of putting employer insight and engagement at the heart of all employability initiatives.
Recognising that older workers, parents and people with caring responsibilities all have a valuable contribution to make to regional productivity, the submission said it is important for government to invest in occupational health, with a strong focus on mental health, and support flexible working and the childcare market to maximise the contribution of everyone in the North East.
Thomas Lonsdale, Chamber Knowledge and Research Executive, said: “We’ve structured the submission based on the current economic agenda to make it as easy as possible for the government to understand the needs of the North East in the context of broader economic policy. Our submission includes clear, practical calls for action which will make a positive contribution to both the North East and the wider UK.”
The Chamber’s letter emphasised that inflation, energy prices and staff costs remain businesses’ main concerns, demonstrating the cumulative impact of inflation and the cost of living crisis. However it also highlighted that, in response to these concerns, North East businesses have been creative and innovative. Positive signs in the wider economy, combined with this resilience suggest that some of the pressures of 2022 will ease in 2023.
John said: “The Chamber understands the challenges we face in the North East and we’ll continue to shine a light on the aspects of our economy that aren’t working. At the same time, we will never shy away from championing all that makes this such a great place in which to live, learn, work and play.
“We are committed to being a collaborative force for good in this region and we invite this and future governments to join us in the growth of a stronger, fairer North East.”
Click here for Chamber Budget submission letter.
Click here for Chamber Budget submission slide deck.
NOTES
According to the Bank of England’s latest MPC report, annual CPI inflation is expected to fall to around 4% towards the end of this year, alongside a much shallower projected decline in output than in the November report forecast.
The Chamber’s Quarterly Economic Surveys over the past year have shown business confidence low. In the final quarter of 2022, 90% of members responding were concerned about inflation, 89% about energy prices and 74% about staff costs: 86% of manufacturing firms alone were concerned about the cost of raw materials.
The region’s employment rates are 4% below the national average and the unemployment rate is 1% above the national average.
However, businesses are increasing investment in plant and training plans, a positive indicator of business health in difficult economic circumstances.
There are some indications that the impacts of high inflation are easing slightly. Cashflow remains depressed at -7.7% but this represents a recovery from last quarter’s result of -17.4%.
Economic inactivity rates in the North East are the highest in England at 1 in 4 of the working age population.
Child poverty rates are growing, and almost 2 in 5 children in the North East are living in poverty.
By 2025, student funding for 16-18 education will be 5% less in real terms than in 2010.
82.2% of businesses said they had taken action to try to reduce expenditure on energy compared to 73.0% in Q3, an increase of +9.2%.