Making a case for members ahead of spring Budget

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The Chamber’s latest column for The Journal by Marianne O’Sullivan, policy manager.

The Chancellor has announced that there will be a spring Budget on 6 March, where he will outline the government’s tax and spending plans.  

The Budget will be important ahead of a potential general election this year, with the government set to announce changes to tax policy.  

The Chamber has written to the Chancellor ahead of the Budget to highlight the key asks from our members across enterprise and growth; people and work; education and participation; an international North East; and green innovation. 

Feedback from our members in our quarterly economic survey has shown that business confidence is improving in areas such as UK orders and export orders. More firms are looking to grow their workforce, but staff costs remain a concern for businesses. Despite increasing business confidence, inflation remains significantly above the Bank of England’s 2% target, putting pressure on the UK economy.  

Recognising this pressure on businesses, we have made the case in our Budget submission for reforming and reviewing business rates policy to support North East businesses directly, as well as committing to multi-year funding settlements to provide councils and other public agencies with long-term financial certainty. 

We have continued to make the case for the reopening of the Leamside Line which was notably absent from the government’s major set of rail announcements at the end of last year. Reopening the line will increase capacity on the East Coast Main Line and open up opportunities for Metro expansion to Washington. The new Metro link would generate over £90m per year in economic benefits to the region.  

The submission also called for further education funding and a more flexible apprenticeship levy which would allow employers to invest in a greater range of accredited training. As well as investing in skills, we have also focused on health-related tax incentives for SMEs, which would enable them to provide access to additional healthcare and better occupational health support for their staff, helping to reduce ill health and economic inactivity in the region.  

We will continue to raise the priorities of our members ahead of the Budget and upcoming regional and national elections. 

Read our submission letter to the Chancellor here

The North East Culture

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Knowledge manager, Tim Marsden’s latest column for the journal.

In my last Journal column back in March, I spoke about the importance of ‘place’ and the role that culture had in my moving to the North East in the first place.

In the intervening time, I’ve had the privilege of travelling around our beautiful region to meet members and see their facilities, and to understand a little more about why the North East really is such a wonderful place.

We are rightly proud of our region’s history and our cultural offerings. We also continue to evolve – and this can be seen right across the North East. This was recently evidenced to me when I had the opportunity to meet with the Discovery Museum in Newcastle, and then with Sage Gateshead.

It was fascinating to learn about some of the history of our region, including around mining and transportation (particularly of coal) and the significant role this has played in the formation of the North East we know today.

As we did in February 2021 when the last shipment of coal left the region, we are seeing huge amounts of change in the North East as we transition to greener, cleaner fuel sources.

We see change too, across the region’s broader cultural locations. Whilst the economy still faces some difficult headwinds and revenues might not yet be back to pre-pandemic levels, culture continues to play a key role in our daily lives.

Alongside the significant social, health and wellbeing benefits culture provides, it has a critical role to play in achieving economic growth and upskilling ambitions for the UK as a whole.

The museums, galleries and music venues right across the region continue to offer impactful services and attract inward investment opportunities (nationally and internationally).

We have a proud history here in the North East. In the past few months alone, I have seen that we are evolving, and it has proven to me that as a region, we are resilient.

I have every faith that we can and will continue to adapt, showing resilience, innovation and a collaborative spirit, no matter what challenges lie ahead.

As your Chamber, we will continue to provide you with the knowledge, network and expertise you need to grow your business. We are committed to harnessing the collective strength of business in the North East to make the region stronger, fairer, and the best possible place to live, work and grow.

Growth Means Funding for Skills, or at Least it Should

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Callum George, Policy Adviser, North East England Chamber of Commerce

I remember as I wrote my last column in October, there was next-to radio silence in terms of education policy. Being optimistic, I told myself “Well, at least things will quieten down before Christmas”. Fast forward eight weeks and we have a new Prime Minister, a new budget and a new focus on education. I’ll be honest ­­– there are better ways to get into the Christmas spirit.

We know that schools are getting more funding, which – despite not being in line with inflation – is a step in the right direction. But part of me can’t help but think we’re forgetting about an entire group of pupils who needed more funding two years ago, and still aren’t getting it now. Of course, I’m talking about college students.

The Autumn Statement provides no new funding for colleges, which are the backbone for further education in the UK. We know that funding per college student has already fallen significantly since 2010. Even before recent economic headwinds, funding showed no signs of returning to the levels of twelve years ago.

Almost one in four young people aged 16-18 in the North East aren’t in long-term education, employment or apprenticeships. When you take this, lack of funding and increasing costs, you have the perfect storm for colleges to deal with.

In a time when colleges face huge pressures, you can only applaud the effort and dedication they have towards young people. I’m already incredibly proud of the work our colleges do in the North East and the role their learners will play in taking on the challenges of the future. As a Chamber, we’ve always supported our colleges, and have campaigned for more investment in skills and education.

It’s not news that businesses across the North East are struggling with staff shortages. For a lot of businesses, big or small, they will be relying on trainees and future talent to fill those gaps.

The government has said that it will be reviewing further and technical education, that colleges are responsible for delivering. More funding for colleges would be a positive approach to reducing pressures to deliver on targets. This would help learners thrive and businesses find new, driven employees and apprentices.

A key word the government has coined in the last few months is “growth”. Just imagine the potential for growth in the North East if colleges had more funding, with the vision of making the region a better place to live, learn and work.

Chamber president on the current cost of living

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Andrew Haigh, CEO, Newcastle Building Society and Chamber President

It is distressing to think that much like the pandemic, the current cost of living crisis will in some way touch every individual and family across the North East. For some in our region, who are already amongst the most economically challenged in the country, the consequences will inevitably be severe.

Both individuals and businesses are facing difficult choices and the decisions we make will inevitably have significant impact on others. The challenge for businesses is to find a path that best serves customers, colleagues, communities, and other stakeholders in the present, while also ensuring a long term sustainable future for the organisation. Like many others in our North East business community, at Newcastle Building Society we are determined to make choices where we can, which will have a real and positive impact for our region.

Last month I was in Knaresborough, North Yorkshire, as we officially cut the ribbon to Newcastle Building Society’s new community branch inside the town’s library. The branch opened to customers earlier in the summer and has been warmly and enthusiastically received by the local community which had previously been left with no financial services provider in the town.

The argument presented by banks abandoning our high streets is that branches are too costly to run and that people don’t want to use them anymore.  We’ve made a choice to listen to what our members want, and to find new and different ways to provide accessible and local financial services by partnering with like-minded people such as the local library service.

Given the cost of living conversations that we are all having, I can’t think of a more important time to give our communities the option of accessing face-to-face financial advice. Money matters can feel complex but at a time when people will really benefit from professional guidance and information, having a friendly conversation in your local branch could help inform decisions and make all the difference.

Our branch community rooms remain a place to go for a friendly welcome, in a warm space and a dedicated area for local community groups to meet, spend time, and enjoy a hot drink together, all free of charge. 

We’ve made other big choices too. Since the Bank of England started increasing the base rate at the start of the year, every one of our variable rate savers has benefitted from a better rate and we continue to explore ways to do even more.

As well as looking after customers, as a significant employer in the region, we’ve also chosen to support our colleagues with their own ongoing cost of living and energy price challenges. This included bringing forward part of next year’s pay review to October with a further review next year and as a Real Living Wage employer, we were proud to be an early adopter of the new benchmark as the salary entry point for the organisation.

What’s important for organisations like Newcastle Building Society is that we continue to be mindful of the support we can provide to our region, because even if those opportunities may individually appear small, they each make a positive difference to someone and collectively they will have an impact. 

While there are significant challenges ahead for us all within the business community, such is the character of the region that I know we will do what we can to keep applying fresh thinking to difficult situations and seek to make the right choices for the benefit of our customers, colleagues and the communities of which we are all part.  

Two Farewells

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Arlen Pettitt, Knowledge manager, last column for The Journal

This column is a farewell. A farewell on two counts.

I give no apologies for the sentimentality which follows.

It’s a farewell because I leave the Chamber this week after six years, making this the last of these columns I’ll write.

It’s also a farewell because I lost my dad on 22nd May.

His name was Tony and I learnt most of what I know about the world of work from him.

He was a great example with a tremendous work ethic, a firm moral compass, and an unerring determination.

When I was eleven, he started his own business and soon had me working school holidays doing data entry or filing, emptying the bins or cleaning the loos.

He gave me my first proper job when I was eighteen and for the next three years I got to watch first-hand how he conducted himself.

Not many reading this will have known him or worked with him – I feel sorry for you, that’s your loss.

So, in my final column, I want to pass on his advice.

  1. Always be the best prepared person in the room

You don’t have to be the smartest person, or the quickest on your feet, if you know your subject as well as you can and know why you’re at a particular meeting or event (you’d be amazed how often people don’t know this); extra points if you also know why everyone else is there too.

  • Take pride in and encourage other people’s success

This isn’t only a fundamental part of any client or customer relationship, but it’s also incredibly important for the people you work with. Make an effort to give people their first opportunities and enjoy seeing what they go on to do.

  • Be realistic and honest

It seems easier to promise the world or to hide mistakes, but it’s better to be transparent. Tell people what you can do and tell them if something goes wrong – go with a solution in hand or open ears to find one together.

I try, and often fail, to live that advice.

But, in six years at the Chamber, like those three years working with my dad (and the 35 years with him as a father), I know that I’ve grown.

I remain a fair distance short of the example he set, but I’ll try to get a bit closer every day.

More support is needed

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Marianne O Sullivan, policy adviser, North East England Chamber of Commerce latest column for The Journal.

The Government has announced that all UK households will get a grant which will reduce their energy bills by £400 from October. This is a welcome step in supporting people through the cost of living crisis.

It’s positive to see some support for households and further help offered to the most vulnerable households facing rising energy costs. This is especially important in the North East  where we have seen the UK’s biggest increase in child poverty from 2014/15 to 2019/20.  The cost of living crisis is likely to have a further negative impact on vulnerable households so the targeted support is welcome.

However, more support is needed for businesses to prevent further inflationary pressures in particular for SMEs who are struggling with rising energy costs and no price cap.

Companies are facing an increase in this expenditure but also rising prices in raw materials and staff costs. In our last Chamber Economic Survey 89.3% of respondents said they were  concerned about energy prices, this is a particular concern for the North East manufacturing sector and energy intensive sectors. The British Chambers of Commerce (BCC) has reported that 62% of businesses cite soaring energy bills as a driving factor in them raising prices.

Unless steps are also taken to ease business costs, they will likely feed into the inflationary pressure on the economy and lead to further price rises having a negative impact on households in the region.

Along with the BCC we have been campaigning for a  reduction in VAT to 5% on businesses’ energy bills to directly alleviate some of the pressure to raise prices. 

Ahead of our next Economic Survey we will be running roundtable discussions with members across the region to discuss what they are doing to reduce their energy usage/costs including investing in renewables, more energy efficient equipment, or trying to change employee behaviours. This will help us to gather information on what businesses are currently doing and what support they need to help them reduce energy consumption.

We will continue to work with our members and the BCC to campaign for a VAT reduction in businesses energy bills and further support from Government to reduce the cost of doing business.

Our view is that there needs to be an emergency budget to break the inflationary cycle. 

John McCabe’s first column for The Journal as CEO

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This is my first Journal column as Chamber chief executive and February is the perfect time to share my views on issues that are important to me on a personal and professional level.

There are a series of important dates this month that resonate with our work to help the region embrace fairness and grow. The first of these is LGBT History Month. We are campaigning to have an inclusive business community where everyone has the chance to develop their careers and businesses without prejudice.

I have proudly championed the power of good work since starting my role and encouraging diversity is at the very heart of this approach. There is untapped potential and power in our region and we need to make sure everyone has the chance to release it.

It’s been great to see some prime examples of potential shared far and wide over the past National Apprentice Week. My own career started with a similar scheme at Northumbrian Water This was a fantastic way to learn on the job, with supportive, more experienced colleagues. The tales about the talent of young people and their desire to succeed have been truly inspirational over the past week.

As well as young people we are also very aware of the need to support women’s career paths. There are some true trailblazers in the North East and through our Inspiring Females and Women’s Leadership Forum we are making sure everyone can hear from great role models and their peers.

We’re so grateful for the time and support senior businesswomen give to the next generation coming through our companies and organisations. There was plenty to celebrate on International Day of Women and Girls in Science last week, with more to look forward to on International Women’s Day next month.

There is still work to do to make working life a level playing field for all. Covid has shown there are still major discrepancies between caring responsibilities and the gender pay gap is also far from being closed. Our toolkit to help to create a fair pay structure is a great place to start if employers want to know more about this.

Perhaps I can finish with a thought for tomorrow, Thursday, which will be Random Acts of Kindness Day. A very smart and thoughtful woman once told me ‘you catch more flies with honey than with vinegar.’ She’s right and I’ll thank her for the advice when we both get home from work later.

Restrictions, ‘R’ numbers and (alleged) rule breaking

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Restrictions, ‘R’ numbers and (alleged) rule breaking. It all feels painfully familiar doesn’t it?

You’d be forgiven for thinking we might have been able to enjoy this Christmas without worrying about a virus that emerged almost two years ago, but Omicron clearly has other ideas.

For our pubs, restaurants and other hospitality businesses this new wave will be a bitter blow to take. There are stories everywhere of cancelled bookings and no-shows.

While the public’s trepidation is understandable, each cancellation represents a loss to a business that has been through the wringer over the past couple of years.

Before Omicron, our region’s economy was bouncing back reasonably well, but alongside Covid there are other headwinds gathering.

Inflation is now over 5%, which not only hits living standards but also reduces business margins, pushes up the cost of raw materials and could well lead to a rise in interest rates.

Supply chains continue to be squeezed, with major delays affecting a number of sectors and fears over staff shortages due to Covid.

While across the rest of the country unemployment rates are falling, ours has remained static in the latest figures released this week.

I appreciate this isn’t the cheeriest message to be giving as we head into the festive period, but if we want to make a success of 2022 then it’s only right to know what we’re up against.

If our businesses can once again show the tremendous resilience they demonstrated earlier in the pandemic, then there’s no reason to think these challenges can’t be overcome.

If Government can show leadership by providing both clarity on measures to combat the virus and further support to businesses affected by those measures, then we can hopefully look towards the end of the current crisis.

If everyone in the North East can demonstrate the sense of community we’ve seen in recent years and support local businesses where possible, then we will lay the foundations for a continued recovery.

Despite all of the challenges I’ve mentioned above, I also see and hear an enormous amount of positivity and good news in our region. Many businesses are growing and recruiting. We are still seen as an attractive place to invest.

If we’ve learned one thing since March 2020 it’s that this region succeeds when it works together. I’ve no doubt that will be demonstrated yet again over the next few months.

The Government need to find a solution for the shortage of gas

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Rachel Anderson, Assistant Director of Policy, latest column for the Journal

You’d be forgiven for uttering an exasperated “what fresh hell is this” and pulling the duvet back over your head this morning.  Just as it seems we might be emerging from the pandemic and there is a smile on travel agent’s faces, the next crisis comes galloping over the horizon and we’re suddenly short of gas.  Before we chop up the furniture, let’s be clear, we’re probably not going to run out, but our gas is costing us on average two and a half times more than it’s costing our European counterparts, as gas is still a major part of our electricity generating capacity it’s less the sunlit uplands and more the unlit ones.

But this matters, it really matters.  Businesses have faced unprecedented pressures over the last 18 months and to be hit by such large rises in energy prices as they are trying to pull themselves back into profitability feels like a an almost impossible task.  Following every recession, it is often the recovery period which proves the most difficult for many companies as cashflow is king and finding the resources to meet the upturn in demand can be difficult with credit lines stretched.  A restaurant re-opened following two lockdowns facing increased wages due to staff shortages, difficulties in the supply chain, not least due to a CO2 shortage caused by the increased gas price, they will perhaps also be beginning to pay back Government loans taken through the pandemic might be forgiven for just closing the doors and walking away. 

But also to be considered is when those energy price hikes hit the general population, what happens to spending amongst the population?  Less disposable income means less spend and a significant slowdown in the economy in just those sectors hit hard.  Energy prices affect most companies, only the ones who have invested in green technologies escaping the fluctuations and reduced profit margins knock on into wage rates and can affect investment plans.  Longer term, the need for a coherent energy strategy is writ large but this is an emergency in the shorter term which will require a robust response.    

Knitwear manufacturers and candle salesmen may well see an upturn in business; but joking aside there are some bumpy times ahead and once again we look to the Government to find solutions not only to the UK’s supply problems but also to support our storm battered businesses once again. 

Get Britain moving again…

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Tom Kennedy, Chamber policy adviser, latest column for The Journal

As restrictions ease and people get used to some more ‘normality’, we are all of a sudden moving much faster than only a few months ago, returning to town centres, visiting friends and families and venturing further afield on holidays. 

There is, however, one group who are struggling to move around to the same extent as the rest of us – Heavy Goods Vehicles (HGVs) and logistics providers. The fallout of both COVID and Brexit has led to a chronic and well reported shortage of HGV drivers meaning that businesses are struggling to transport their goods when they need them. 

Every day businesses are reporting that they are having to delay shipments or cannot get their needed materials until a driver has been found. This is having an impact for a vast range of businesses from advanced manufacturers to food and drink producers, resulting in widely shared pictures of empty supermarket shelves. 

This comes at an already difficult time for internationally trading companies, as the fallout of the UK leaving the European Union continues to present traders with new and substantial challenges – a survey of Chamber members earlier this year found that around two thirds of traders had experienced logistics issues in 2021. With changes coming to the way the British border operates later this year, trading companies will need to know that there is a reliable supply of drivers to move their goods. 

The measures put in place by Transport Secretary, Grant Shapps, to allow HGV drivers to drive for longer hours without breaks, are not sustainable long-term solutions. In order to get goods moving again, the fundamental obstacles to growing the supply of drivers will need to tackled, including making the job more attractive to younger workers – 33% of HGV drivers are set to retire in the coming years – and addressing the high cost of obtaining a HGV license which puts many workers off. 

If our national and regional economies are going to move beyond recovery and flourish, this most-pressing issue will need to be addressed. Getting Britain moving again will need to be more than just going to restaurants and cafes, but ensuring supply chains remain resilient and shops remain stocked.