Chamber says spring measures ‘not on scale needed’

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Arlen Pettitt, North East England Chamber of Commerce knowledge development manager said: ““This Spring Statement was not on a significant enough scale to make a difference to many businesses, or our region as a whole, at present.”

“However, we do acknowledge the Chancellor’s recognition of the enormous pressures on the economy and household spending at present.  Unfortunately recognition is not enough. There needed to be more to tackle the huge pressures created by the cost of doing business at present. We believe an initiative such as a temporary energy price cap for small businesses would have been extremely helpful, as would a reduction in NI in line with that announced for individuals.

“There were some positives. Our haulage sector will be pleased to have the fuel duty cut but many companies are still disadvantaged by the removal of red diesel as a low price option.  It is also good that the Chancellor is looking at tax breaks for training and changes to the apprenticeship levy.

“In summary this Spring Statement tinkered around the edges of some substantial challenges facing businesses.”

Chamber sets out key demands for Chancellor

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Ahead of the Chancellor’s Spring Statement on Wednesday, 23 March, North East England Chamber of Commerce has set out what announcements it wants to see to support the region’s business community.

John McCabe chief executive, North East England Chamber of Commerce said: “Many businesses are still recovering from the economic shock of the pandemic and now they’re facing sharply increasing energy prices, raw materials costs and other inflationary pressures. This all adds up to a very sudden and very significant cost of doing business crisis.

“We hope the Chancellor will acknowledge this in his statement and will take whatever steps are necessary to ease the current pressures facing business. That’s how we’ll protect jobs and stimulate growth.

“The economic recovery from Covid is long, slow and fragile and it will be placed at great risk unless the Chancellor listens to business during yet another period of uncertainty.”

The Chamber policy team will be analysing the Spring Statement and issuing a response to what it contains.

Autumn Budget 2021 briefing

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The Chancellor delivered his Budget and Spending Review today, which included some announcements for the North East as part of spending on transport in city regions, from the Levelling Up Fund, the Community Ownership Fund, and an investment from the UK Infrastructure Bank in Teesside. 

The Treasury has summarised these announcements in a set of regional fact sheets here. 

Our initial comment from our policy director Jonathan Walker is here: “The Budget had some welcome announcements for North East businesses but our wait for a long-term levelling up strategy goes on.” 

But how did Rishi Sunak’s announcements compare to the priorities we outlined for the region in our submission to him last month? 

We said that this Budget and Spending Review must… 

  • provide a clear, bold definition of levelling up 
  • fund departments and public bodies in a way that makes them responsible and accountable for levelling up  
  • advance the cause of decentralisation and devolution 

There were a number of announcements in the Budget either made from the Levelling Up Fund or under the wider auspices of ‘levelling up’. These include regeneration projects in Newcastle, Sunderland and Teesside. However, the long-awaited White Paper on levelling up is yet to be published, while other related strategies such as the Integrated Rail Plan have also been much delayed. 

The projects announced today are all extremely welcome and will make a difference to their local communities. However, the fact that they are being awarded from a central funding pot after a national competition speaks to the centralised nature of the country. Without a greater commitment to long-term devolved funding settlements we are unlikely to see much progress in levelling up. 

  • provide support for exporters 

There was a £67.6 million budget increase for the Department for International Trade (DIT) over the Parliament to maintain capacity to secure trade agreements and support exporters.  

An announcement of £180 million to build a UK ‘Single Trade Window’ which aims to reduce the cost of trade by streamlining trader interactions with border agencies.  

Funding for EU-focused Export Support Service from DIT as part of Export Strategy to be published shortly. 

£838 million over three years to 2024-25 to complete delivery of Customs Declaration Service (CDS).  

£107 million next year for the Trader Support Service (TSS) which helps traders move goods to Northern Ireland.  

  • establish the UK Shared Prosperity Fund based on regional economic need 

The first announcement was made from the Shared Prosperity Fund, which will distribute £2.6bn over the next three years, including through the £560m ‘Multiply’ scheme which is aimed at adult numeracy. The Treasury suggests regions such as the North East, where adult numeracy levels are lower, will benefit most from this. 

The schemes so far are national in focus, and don’t reflect the structure of EU funds, which were distributed direct to regions based on need. 

  • deliver on aspirations for broadband investment 

The Government in the Budget confirmed its target to invest £5 billion in to support the rollout of gigabit capable broadband in across the whole of the UK.  

The Government will also provide £180 million over the next three years as part of its £500 million investment in the Shared Rural Network, to deliver 4G mobile coverage to 95% of the UK 

There weren’t any particularly new announcements around broadband but we welcome the Government committing to targets to improve digital connectivity. We now need to see this investment take place to improve connectivity for the region.  

  • properly fund rail investment across the North, including the eastern leg of HS2 

There has been welcome investment confirmed in the Budget for improving local rail links in Teesside including redevelopment schemes for Darlington and Middlesbrough stations. We are still waiting for the Government’s integrated rail plan to set out plans for investment around HS2 and Northern Powerhouse Rail.  

  • ensure the long-term success of regional airports 

We welcome the Government extending the Airport and Ground Operations Support Scheme (AGOSS) for a further six months to help airports as they recover from Covid travel restrictions. 

The Budget also announced a 50% cut in domestic APD and a new ultra-long-haul distance band.  

  • incentivise investment in low-carbon housing and retrofitting 

The Government set out plans to invest £450 million in growing the heat pump market and reduce costs by 25-30% by 2025 to allow the technology to be rolled out across the UK.  

The Government is also providing business rates exemptions and relief in England to support the decarbonisation of non-domestic buildings.  

  • support arts and culture as a means of regenerating communities 

The arts and culture sector will benefit from 50% business rates relief for retail, hospitality and leisure sector businesses, as well as specific Covid recover funding of £52m next year. There is also tax relief for museums, galleries, theatres, orchestras and film and TV projects. 

  • properly fund and support our further and higher education sectors 

Adult skills 

Skills funding will increase by £3.8 billion compared to 2019/20. This funding will quadruple places at skills bootcamps, expand the Level 3 qualifications on offer to adults and fund the newly announced Multiply scheme, which will equip adults with basic numeracy skills. The £560 million investment in the Multiply scheme will benefit the North East disproportionately due to the region’s lower-than-average numeracy levels.  

Schools and colleges 

The Budget outlined a £1.6 billion increase to 16-19 education funding over three years which will help maintain funding rates and expand the rollout of T Levels. Rishi Sunak also outlined a £4.7 billion boost for schools budgets by 2024-2025, amounting to a cash increase per-child of £1500. Also announced was £2.6 billion of funding to be spent on creating new school places for children with special needs and disabilities. Whilst these investments are a step in the right direction, it is unlikely they will counter the record cuts which schools and colleges have faced since 2010.  

The Chancellor also announced additional funding for the schools recovery fund of £1.8 billion, aimed at supporting schools. The total investment of £ 5 billion is still much lower than the £15 billion Sir Kevan Collins, the Government’s former catch up advisor, argued was necessary to support young people to catch up on lost learning.  

Universities 

The Government’s increase in public investment in Research and Development (R&D) to £20 billion will provide a funding increase for the UK’s universities and research institutions of £1.1 billion per year more by 2024-25 compared to 2021-22.  

  • increase funding flexibility to encourage employer investment in training 

There were no significant announcements which would enable this additional flexibility. We considered this an important change to make to enable businesses to engage with a broader range of spending under Apprenticeship Levy rules and adjust how the scheme worked to fit the needs of modern employers. 

  • recognise the damaging economic impact of welfare cuts in our region 

The Budget announced a reduction in the taper rate that applies in Universal Credit from 63% to 55% by 1 December 2021. This is welcome as it will help people working on Universal Credit and keep more money within the region, however those not in work will not feel the benefit.  

  • put in place the necessary business support measures to reduce the impact of future Covid restrictions, including a limited reintroduction of the Job Retention Scheme 

The Government announced business rates relief of 50% for retail, hospitality and leisure sectors in 2022-23. Eligible properties will receive 50% relief, up to a £110,000 per business cap.  

This is positive for businesses in these sectors, however other sectors won’t benefit.  

There was no mention of wider Covid business support packages, or how these might be reintroduced should restrictions return. 

Useful Link

The full Budget document are available here.

Photo by Marcin Nowak on Unsplash

Budget 2021 – what we know so far

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Ahead of the Budget on Wednesday we’ve seen some suggestions in the press on what to expect. 

We made some clear asks, summarised below. 

Based on this weekend’s speculation, we seem no clearer on a definition of levelling up, on the future of the Shared Prosperity Fund and how it will replace EU funding, or on how business support packages could be reintroduced through the winter if Covid cases continue to rise. 

However, there have been some clear proposals on a number of the other points we raised in a letter to the Chancellor last month. 

One of the main expected changes will be an increase to the national living wage from £8.91 to £9.50 from the 1st of April next year. The apprentice rate and the national minimum wages for younger workers under 23 are also expected to be see and increase on Wednesday. 

We’re also expected to see a focus on investment in skills with a £1.6 billion increase in 16-19 education funding, an expansion of T-levels, and a £170 million increase to the apprenticeship budget as well as a more funding for skills bootcamps and to expand the level 3 adult offer. 

In terms of transport there’s an expectation that on Wednesday there will be an announcement of funding for train, bus and cycle projects in particular we’re expecting funding to be allocated to the Tees Valley for the upgrades for Darlington and Middlesbrough stations and improved rail connections. 

But until we see the detail, we won’t know how much of the commitment for the Tees Valley has been announced previously. 

There’s also speculation that the Eastern Leg of HS2 – the section that would travel from Birmingham through Yorkshire and on the North East – could be scaled back. This would be disappointing with existing capacity on the East Coast Mainline is so limited, and when connectivity from our region to other parts of the North and the Midlands remains poor. 

We’re still waiting to see about other major transport announcements like Northern Powerhouse Rail. 

We’ve also seen some reports of £500 million in funding allocated to create ‘family hubs’ which will give support and advice, the £500 million will also include funding allocated to mental health support services. 

Elsewhere, £1.8bn is expected to be allocated for building 160,000 new homes on brownfield sites across the country, along with money for digitising the planning system. It’s uncertain at this stage how this money will be allocated across the country. 

There’s also funding expected to promote electric vehicle production in the North East and the midlands, and some funding for regional museums. 

We’ll wait to see the full details announced on Wednesday but the focus on skills is positive along with the funding for Darlington and Middlesbrough stations. 

The Chamber team will be analysing the Budget tomorrow lunchtime – and we’ll be particularly looking for progress on levelling up, decentralisation, export support, regeneration and Covid support. All of which were missing from this weekend’s leaks. 

In the meantime, the Chamber’s full Budget submission is available here: https://www.neechamber.co.uk/wp-content/uploads/2021/10/Chamber-Budget-Letter-to-Chancellor-Sep-21.pdf 

Photo by Marcin Nowak on Unsplash

Chamber’s Budget Briefing

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​This lunchtime, Chancellor Rishi Sunak delivered his Budget, which included an extension of the main coronavirus business support packages, and significant investment for the region in the form of a new governmental economic campus in Darlington and a freeport for Teesside.

The Chamber’s policy and knowledge team has created this briefing document which summarises the key asks we made of the Treasury ahead of the Budget, the main announcements from today, and offers our commentary on the impacts for the region and its businesses.
If you have any feedback or queries relating to the Budget, please feel free to contact the policy team on [email protected].

Download the Chamber’s Budget Briefing here

Chamber calls on Chancellor to make levelling up a reality

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With a month to go until the Chancellor delivers the Budget on 3 March the North East England Chamber of Commerce has laid bare the challenges regional businesses face and what is needed to support them.  

In its Budget submission the Chamber highlighted the fact that the region has been under some of the most stringent and long-lasting Covid-related restrictions in the UK which had put huge strain on consumer facing sectors such as aviation, retail, leisure and hospitality.  It set out the expectation the Chancellor would maintain vital Covid support measures and also highlights a series of urgent issues that require investment including transport and broadband infrastructure.

Jonathan Walker, Chamber director of policy said: “Prior to the pandemic, the economic, wealth and wellbeing gaps between the North East and other parts of the country were unacceptable.  Covid-19 has only worsened this situation, with the Government’s stated goal of ‘levelling up’ regions such as ours never seeming so important and urgent.”

“This Budget must contain measures that will prevent unnecessary business failures and protect jobs until a recovery can be sustained.  We need to see significant extension of the Job Retention Scheme, with a tapered reduction of support as restrictions are lifted, an extension of business rates support and continued backing of Coronavirus loan schemes.

The Chamber letter said there should be rapid deployment of localised funding through councils for areas that remain in the highest Covid-related Tiers.  It also called for a full review of the range of Government support to ensure it no longer excludes large numbers of small businesses. 

Further demands include Government specifically mandating all departments and arm’s-length bodies to place rebalancing at the heart of their spending decisions.

The Chamber also stressed the importance of continuing talks with North East authorities about further devolution and the relocation of senior civil service roles to the region.

The regeneration of the region’s housing stock and refocussing of town centres are also Chamber priorities to support the North East’s position as a vibrant place to live and work.

The Chamber was established to support members’ international trade and the submission sets out urgent measures needed to ensure businesses are able to export to the EU easily and successfully following Brexit.

Jonathan Walker said: “Our mission is not just to repair the damage done to our economy in recent months. It is to come back stronger. We must correct historic unfairness, tackle inequalities and show the world our full capability. The right investment in our region by Government and businesses alike will deliver huge social and economic returns.”