North East leaders urge Government to act on child poverty

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Three North East organisations have written a joint letter to Government demanding action on child poverty levels in the region, including wider access to free school meals.

North East England Chamber of Commerce, VONNE (Voluntary Organisations’ Network North East) and the North East Child Poverty Commission state there is an urgent need to address growing levels of child poverty.

The letter said: “If Government is serious about its levelling up agenda, this requires concerted action to make sure children and young people in our region can access opportunities and have the same life chances as anyone else.”

Carol Botten, Chief Executive, Voluntary Organisations’ Network North East, said “Increasing levels of child poverty in the North East is a key concern of many organisations, agencies and communities within the North East. This was an issue before Covid and will be only be exacerbated by the economic impacts of the pandemic. The Government needs to act now and act fast to address child poverty and improve outcomes for the most disadvantaged children in our region.”

The North East Child Poverty Commission has set out a number of recommendations for Government including increasing housing assistance in line with inflation, retaining the £20 uplift in Universal Credit past April 2021 and extending free school meals to all families in receipt of Universal Credit.

Jane Streather, Chair of the North East Child Poverty Commission, said “It’s clear that – even before family incomes across the region were devasted by Covid-19 – the North East urgently needed a new, comprehensive Government strategy to end child poverty, and this terrible pandemic has made the need for action more pressing than ever before. This letter is a united, cross-sector demand from our region to Government to act now.”

Also included in the letter was End Child Poverty coalition research which showed the region has seen the UK’s largest increase in child poverty over the last four years from 26 per cent to 35 per cent.

James Ramsbotham, Chamber Chief Executive said: “This increase in child poverty is shocking and likely to rise even further due to the economic impact of Covid as the region now finds itself with the highest unemployment rate, the lowest employment rate and the lowest average hours worked of all British regions.”

“Those in lower paid and less secure employment have been more affected by the crisis than those in more secure forms of employment. Children from low income families are more likely to experience worse physical and mental health, do less well in school, and have fewer opportunities in the future.”

“If the Government is serious about the levelling up agenda for regions like the North East, we need to see both urgent and ongoing action to tackle child poverty and protect the most disadvantaged in society from the immediate and longer-term economic impacts of Covid. Children in the North East need to have access to the same opportunities and life chances as children elsewhere in the UK, otherwise levelling up has failed.”

View the letter in full here.

Colleges week

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Colleges Week has allowed us to celebrate our region’s excellent colleges and the important role they play in the North East. Colleges are engines of opportunity and offer people in our region the chance to reach their full potential. What is more, they help ensure that our region’s workforce have the skills that businesses need to succeed.

Whilst this week has shone a spotlight on the important role further education colleges play in our local community and economy, we have a long way to go in ensuring that the importance of colleges is recognised by policymakers. In the last decade, per-student funding has fallen by 12% in colleges, whilst funding into adult education has fallen by 45% in real terms. Successive years of disinvestment in the sector has disproportionately impacted people in the North East, with 50% of pupils in the region progressing into an apprenticeship or learning at a further education college, compared to just 26% of pupils in London.

The pandemic has highlighted the vulnerability of young people and less qualified adults in economic downturns, as well as the important role colleges will play in the economic recovery from Covid-19. Colleges will be instrumental in supporting school-leavers into their first jobs, helping redundant workers back into the workplace or into new careers and ensuring that the skills needs of our rapidly changing economy are met.

This Government has been vocal in its support for colleges and its desire to see renewed focus on the further education system. Whilst the Government’s recent announcement of the Lifetime Skills Guarantee and £1.5bn cash injection for capital improvements are a start, much more needs to be done level up the further education system. With the FE White Paper on the horizon, now is the opportunity for Government to put its money where its mouth is and outline increased and long-term college funding agreements, more power for regional authorities to target local skills needs and a real commitment to life-long learning and training.

We must ensure that the further education system is fit for purpose and able to deliver the upskilling and reskilling of the workforce needed for the North East to truly “build back better”.

Chamber calls for local resources to keep North East businesses open

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North East England Chamber of Commerce has demanded the immediate provision of funding and resources to help local authorities in the North East get on top of Covid outbreaks and to prevent a costly escalation to Tier 3 rules.

In a letter to Ministers Chamber chief executive James Ramsbotham said: “While we acknowledge the recent changes to business support schemes, no amount of funding can fully prevent the harm that would be caused by mandatory closures under Tier 3. With case numbers appearing to stabilise, we have a moment of opportunity to get this crisis under control.

He stressed the need for immediate support and resources to tackle local outbreaks and prevent escalation of the pandemic.

He said: “Local authorities in our region have worked tirelessly to tackle Covid and demonstrated huge initiative in engaging Government early to discuss public health restrictions. We have also worked closely with them to provide reassurance and guidance to our businesses. For their part, businesses have done everything possible to make their environments safe for both staff and customers, often at huge expense.”

James Ramsbotham was clear in his letter the solution for tackling Covid-19 was more regional autonomy.

He said: Time and again during this crisis it has been shown that blanket national policies are no substitute for local knowledge and control. Test and Trace is failing to deliver at a local level and it is ludicrous that further support to control outbreaks and establish local contact tracing is tied to a move into Tier 3.

“We therefore ask that you engage immediately with political and business leaders across the North East and provide all the resources required to address local outbreaks, vastly improve test and trace provision and prevent business closures.”

Full copy of the letter available here.

Rishi Sunak announces new support schemes

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New business support announced for businesses told to legally close in further lockdowns by Rishi Sunak

New business support announced for businesses told to legally close in further lockdowns

Extended Coronavirus Job Support Scheme

The government’s Job Support Scheme (JSS) will be expanded to protect jobs and support businesses legally required to close their doors as a result of local or national restrictions. Businesses will receive grants to pay the wages of staff who cannot work – protecting jobs and enabling businesses to reopen quickly once restrictions are lifted. The Government will support eligible businesses by paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.

Under the scheme, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions. Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of 7 consecutive days. The scheme will begin on 1 November and will be available for six months, with a review point in January. In line with the rest of the JSS, payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December. Employees of firms that have been legally closed in the period before 1 November are eligible for the CJRS.

Cash grants for businesses

The government is increasing the cash grants to businesses in England shut in local lockdowns to support with fixed costs. These grants will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously. This could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, bowling alleys and many more.

The Chamber will update with further details of these schemes once released by government, including whether there will be additional support for the self-employed.

Previous support announced in the in the Winter Economy Plan

New job support scheme

  • Allows employers to keep workers in roles on shorter hours
  • Employees need to work and be paid for at least a third of their usual hours
  • The Government will then cover another third so employees will receive 2/3 of their pay
  • The level of grant will be based on the employee’s salary capped at £697.92 per month
  • All SMEs are eligible larger businesses will need to prove a reduction in turnover
  • This scheme will be open to firms who haven’t previously used the furlough scheme
  • Businesses brining people back from furlough will also be eligible for the job retention bonus
  • Businesses will not be able to issue redundancy notices to employees on the Scheme throughout its duration

This scheme will help to retrain jobs in the region, but this scheme will not cover people on zero-hour contracts or those without regular hours. Heavily impacted sectors such as arts and tourism are also still unable to operate due to public health restrictions which prevent people returning to work. This scheme will provide limited support to those unable to return to a third of their usual hours.

Pay as you grow

  • More time and flexibility to pay back bounce back loans over 6-10 years and the option to suspend repayments for up to 3 months without impacting credit scores
  • For SMEs using the coronavirus business interruption loans there will be a Government guarantee of up to 10 years to give firms longer to repay loans
  • A successor to the loan guarantee scheme will be announced in January

Self-employment income support scheme

  • The Government is extending the self-employed grant until 30th April 2021
  • An initial taxable grant will be paid to cover 3 months’ worth of profits for the period Nov to Jan next year up to a total of £1875.
  • An additional grant will be paid for Feb to Apr 2021

Tourism and hospitality

  • The Government is cancelling a planned increase in VAT from 5 to 20%, and is keeping a lower rate of VAT of 5% for hospitality and leisure firms until the 31st March 20221

Self-assessed income tax

  • Self-assessed income tax bills can be spread out over 12 months

VAT deferral

  • Businesses who deferred their VAT will not have to repay this in a lump sum at the end of March. They will have the option of a re-payment plan. The VAT total can be split into interest-free payments over 11 months.

We recognise that cashflow is a large issue for businesses so helping businesses to repay loans will be beneficial.

However, there is a lack of support for start-ups and encouraging newly formed businesses in these measures who will be crucial for the recovery.

Support for businesses to retrain staff especially around digital sills is still needed as many businesses move more online.

We still need to see funding and support for local testing to ensure we have a functioning track and testing system in the region .In order for the education, health and private sector to recover we need local access to quick and accurate tests.

Rishi Sunak confirms increased levels of support

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Chancellor Rishi Sunak announced new measures today following increased pressure from local authorities and business organisations for greater levels of support to areas in Tier 2 lockdown. Below we outline the much welcome new measures available to businesses and the self-employed.

Job Support Scheme improvements

The Job Support Scheme, replacement for the Furlough Scheme, is set to come into effect on 1 November. The original scheme would have seen employers paying a third of their employees wages for hours not worked and required employees to work at minimum of 33% of their normal working hours. The government contribution would have been paying employees 33% of their hours not worked to top up payment.

The updated Job Support Scheme now consists of:

– Employees now required to work only a minimum of 20% of their hours down from 33% – allowing staff to work one day a week if needed

– Employer contribution for hours not worked is now 5%, down from 33%

– Government contribution is now up to 62% of employee wages for hours not worked, taking much more of the burden from employers

This means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Employers will continue to receive the £1,000 Job Retention Bonus. The Job Support Scheme for businesses legally required to close remains unchanged which is:

Businesses will receive grants to pay the wages of staff who cannot work – protecting jobs and enabling businesses to reopen quickly once restrictions are lifted. The Government will support eligible businesses by paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.

Increased grants for the self-employed

The announcement increases the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750.

This is a potential further £3.1 billion of support to the self-employed through November to January alone, with a further grant to follow covering February to April.

New business grants for businesses affected by “High” level lockdown restrictions

Increased pressure sees the Chancellor announce more support for businesses most affected by “High” Tier 2 restrictions. The extra support sees Cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas. These grants will be distributed by local authorities and we will update with more detail once these have been released for further clarity.

These grants will be available retrospectively for areas who have already been subject to restrictions, and come on top of higher levels of additional business support for Local Authorities moving into Tier 3.

If you have any concerns or queries, please email [email protected]

Chamber Response to Chancellor’s Statement on New Measures

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Jonathan Walker, director of policy, North East England Chamber of Commerce said:

“We’ve been clear that previously announced support measures were not sufficient to protect jobs and businesses subject to new restrictions. Therefore, we’re pleased that the Chancellor has listened to us and accepted this argument.

“Government has also recognised that we’ve been under tough restrictions in the North East for many weeks now and the backdating of support will help many struggling businesses. However, we are concerned that significant economic damage has already been done. The new support will help going forward, but we still need a bold strategy to ‘level up’ our region to stop Covid from further exacerbating inequalities.

“While we welcome this new financial package, businesses are tired of the constant uncertainty and secrecy surrounding Tier 3 restrictions and negotiations. We need sufficient resources locally and an effective test and trace system to tackle Covid outbreaks early, alongside meaningful engagement with the region’s business community.”

Chambers of Commerce challenge PM to meet five business tests for Covid restrictions

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In a letter to the Prime Minister, British Chambers of Commerce Director General, Dr Adam Marshall, BCC President Baroness Ruby McGregor-Smith and Chamber CEOs from across the United Kingdom set five business tests that must be met to limit the impact of Coronavirus restrictions on businesses and jobs and take a long-term approach to tackling the pandemic.

The letter from the Accredited Chamber Network – which collectively represents 75,000 firms of all sizes and sectors across the UK employing nearly six million people -comes following a week of increasing, regionally tiered restrictions, with more severe ‘circuit breaker’ restrictions under consideration, as the country battles a second wave of the pandemic.

Dr Marshall, Baroness McGregor-Smith and the Chamber Chief Executives challenge the Prime Minister to meet five business tests for current and prospective Coronavirus restrictions:

  1. Are the restrictions evidence-based and targeted effectively?
  2. Are the restrictions clear and do businesses have time to prepare?
  3. Is support for businesses commensurate with the impact on them?
  4. Will the time that the restrictions are in place be used to significantly improve the Test, Trace and Isolate system?
  5. Is there a clear process for increasing and decreasing restrictions?

The letter reads: “While the recent announcement of an enhanced Job Support Scheme will assist some firms, Chamber members tell us it will not be enough to stave off mass redundancies and business failures.”

There is also a clear warning that improving the government’s ailing test and trace system is the only way to get a grip on the virus over the long term and prevent economic paralysis. The letter reads: “The need for additional restrictions cannot be blamed on a lack of care by hardworking people in businesses across the country. Instead it represents a failure of the Test and Trace system, which must be urgently improved and expanded.”

Chambers are clear about the consequences of not meeting the tests.The letter continues: “These tests must be met – to avoid serious damage to business and consumer confidence, and potentially catastrophic economic consequences. We must preserve our economy in the immediacy, while also laying the foundations of future growth. Failure to do so will undermine any broader efforts to ‘level up’ left-behind parts of the UK.”

The letter concludes:“The Coronavirus is not going away anytime soon. The government must waste no more time in setting out a clear strategy to keep the economy functioning, while protecting public health over the long term.”

View a copy of the letter here

Chamber’s response to Prime Minister’s statement

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Jonathan Walker, policy director, North East England Chamber of Commerce said: “It is welcome news that for the time being businesses in our region are not being closed. ​However, we are deeply concerned that significant additional support to get on top of this crisis appears to be linked to an agreement to move to Tier 3.

“Government needs to be working with local leaders and providing areas with the resources to prevent them from being escalated to a higher tier. Test and trace is simply not up to the job at the moment and must be rapidly improved.

“Businesses are being put through intolerable and constant pressure about whether they are going to be asked to close at short notice. This is not acceptable. They need to be consulted with by national and local Government to ensure we all work closely to combat this pandemic. This will also allow us to play our part in getting the important messages out to our local communities.”

Chamber response to Government support measures

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Jonathan Walker, policy director, North East England Chamber of Commerce said: “This announcement comes in anticipation of further severe restrictions on business in our region yet we still have no confirmation of what those will be. Businesses want to play their part and to get them on board Government must support its decisions with clear evidence as to whether closures are the most effective solution to this crisis. Otherwise there will be a perception that they are simply shooting in the dark.

“Specific support in the event of closures is both needed and welcome. But these measures won’t protect every job or preserve every business that is under threat. Government must continue to work with companies in these hard-hit industries as well as providing a much better test and trace system, to ensure they are able to survive.

“Businesses need certainty. Following the announcement of these measures now we must know how long they will be in place and when we might see restrictions lifted.

If we are to get through this in the best possible shape North East businesses must have news on Government measures via proper channels. There must be no more leaked announcements but instead the proper communications and consultation our companies deserve.”

Chamber Economic Survey launched

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The latest Chamber economic survey launch has revealed North East companies are facing an increasingly difficult time with the furlough scheme masking looming unemployment problems.

Speaking to members about the results Jonathan Walker, Chamber director of policy outlined the precarious position of the North East economy due to the impact of the pandemic.

He said: “Our members reported their main barriers to success were the recession created by lack of demand. We also found an increased level of uncertainty around Brexit with concerns surrounding the type of deal yet to be secured with the EU and the potential paperwork and barriers which may result. Other difficulties in the survey were due to an inability to access Government support because of eligibility issues.”

Conducted in association with Durham University Business School, Professor Richard Harris from the University also spoke at the launch on the theme of North East productivity and levelling up.

His research has shown London is the most productive part of the country (in terms of total factor productivity – i.e., the productivity of all factors of production, not just labour) with the North East total 60% of the London rate. In terms of scaleup firms (defined as those firms achieving 20% p.a. average growth in turnover over 2013-18 that had 10 or more employees and/or £15m in turnover in 2013), labour productivity in the North East LEP area was 17% of the London productivity level and Tees Valley LEP’s figure was 12%.

In respect of Covid-19 Professor Harris outlined there will be some major issues that impact on productivity including supply chain problems with lack of access to usual suppliers, reduced demand and cash-flow or funding problems.

His findings also indicated there is also likely to be lower investment in innovation, research and development and process innovations, reduced exporting and more on-shoring.

He said his findings showed clearly foreign-owned businesses in the region, which exported were significantly more productive than UK-owned companies without any international trade.

This led on to his views of Government’s levelling up promise. He said: “Levelling up is not about making all areas of the country equal; it’s more about helping our region to increase its own rate of growth. We need to unlock the North East’s potential to make our economy more successful so it can be higher in relation to London’s economic base.”