January 2023 Journal Column

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Latest column for the Journal

We have seen from the latest employment statistics for the North East, a loosening of regional labour market with a slight increase in unemployment.

We know from our most recent quarterly economic survey, that staff costs are one of employers’ main concerns going into 2023. If unemployment rates and financial pressures continue to worsen, businesses may also need more support in maintaining their current workforce.

As businesses are facing a tough economic climate, at the Chamber we have worked with industry experts to gather knowledge, practical advice and tools for businesses on how to weather the challenging economic headwinds, including easy-to-use online resources, money myth-busting and guides on accessing business grants, all in one place.

Nearly seven in ten UK employers believe staff performance is negatively affected when employees are under financial pressure. We have included advice on supporting carers in the workplace as well as how to signpost employees to financial advice and ways to tackle in-work poverty.

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. We have included advice on business finance covering retaining staff and recruitment, accessing grants and managing energy costs.

The government has also announced its energy bill discount scheme for businesses, which will provide very welcome extra support for manufacturing firms, but there are other areas which are not supported to the same extent, such as hospitality and retail, education, housing and health.
 
Energy costs are still a key concern for businesses, in our latest quarterly economic survey around 90% of businesses said that inflation and energy prices remained the top two concerns. What we now need is government to support business initiatives to drive down energy prices and become more energy efficient, as well as investing in energy production in the North East.

We have also recently seen the collapse of Britishvolt, which is extremely disappointing news for the region. The North East remains a fantastic place to invest in the creation and growth of businesses, and the new devolution deal for the region has a strong focus on net zero and energy innovation. We must learn the lessons of the Britishvolt experience and work together as a region to welcome future opportunities that produce quality jobs, and ensure they are brought to fruition in the North East.

Mental Health: Let’s Look After Our Workforce

Written by

Callum George, policy advisor, latest column in The Journal.

August marks exam season, with results coming through for A-Levels, GCSEs, BTECs and VTQs (Vocational Technical Qualifications). Whilst many A-Level students will be nervous, yet excited, to enter higher education, we have also seen the great success of new vocational courses. The first cohort of T-Level students is something to celebrate, in which pupils can be proud of the 92.2% overall pass rate they achieved. This is great news for businesses which are willing to use the next generation for experience-led, innovative ideas.

A big part of celebrating these achievements is recognising the extraordinary pressures put on young people’s education during the pandemic. And rightly so! As I write this column, I can still remember working from home as I am now, but with my sister in the other room trying to prepare for A-Level exams she might- or might not- sit. Pupils who toughed out some of the challenges of online learning and have gained results that allow them to achieve their dreams, deserve huge credit.

However, challenges in the workplace remain. The labour market in the North East is buoyant, with lots of job opportunities for people who are actively looking for work. But as businesses in the North East know far too well, skills and staff shortages in key sectors are hampering their productivity. Here at the Chamber, we have found that 65% of businesses in the North East are worried about staff shortages. This is affecting existing employees who are taking on the burden of extra work. Mental health problems, including stress, are one of the biggest reasons for employee absence.

With that in mind, do businesses have a part to play in caring for their employee’s mental health? Absolutely.

The tightness of the labour market means that employee retention is crucial. So, tackling employee well-being head-on is vital. Fair pay, supporting a good work-life balance, and open and supportive conversations about mental health and resilience to stress are all areas where employers can have a big impact. At the Chamber, we have highlighted this as part of our Good Work Toolkit, which is available on our website https://www.neechamber.co.uk/wp-content/uploads/2021/11/Good-Work-Toolkit.pdf.

Recognising the importance of mental health in the workplace can lead to retaining great talent in North East businesses. It can also help other people, who have been out of work due to mental health issues, to move from economic inactivity to having all the benefits that come from good work with great employers. I hope that the North East can become a shining example for employee wellbeing, with our many fantastic businesses leading the way.  

We need to evaluate the region’s ability to produce and store power

Written by

Jack Simpson, international services executive, latest column for The Journal

It’s almost too hard to pick an issue to write about in this week’s column. From cost of living to geo-political instability, political leadership to Glastonbury. However, I want to be a bit more optimistic, and look at the North East’s role in the energy challenge.

According to our first Economic Survey of 2022, 89% of businesses were concerned about Energy prices. Socially, the North East has a higher than average UK fuel poverty rate, ranging 12-15%. As people and business are forced to make tougher choices on spending, it severely restricts growth, prosperity and health.

Following rising inflation, ongoing Ukraine conflict, and increasing demand, we need to evaluate the region’s ability to produce and store power to relieve the burden on business and people alike.

The region is already a leader in innovation of sustainable energy, attracting names such as BP and GE in recent months, but these are current short term research projects, an important piece of course, and compliments the dedicated workforce and skillsets of the region.

However, we need to ensure that this goes beyond innovation, that the region can manufacture and produce energy beyond the research board. Utilising energy enterprise zones, like Blyth’s Catapult, to foster SME growth is key for the regions long term energy goals.

Not to mention, the added economic boost to the region as a whole by attracting and developing energy innovation in the region. The North East LEP believes subsea sector alone, key to offshore wind, is worth 150,000 jobs and £1.5bn a year.

Port of Blyth has announced its own innovation zone in Bates Clean Energy terminal, acting as a hub of hydrogen, power generation and storage innovation, while on Teesside we have GE new blade facility opening.

We can also utilise the new service economy to support smarter energy distribution. Demand for energy is ever increasing, think about the rise of Electric Vehicles for example, so better use of data allows controllers to make smarter decisions based on local demands and regional capacity when directing energy.

The North East can also be a testbed of better energy policy. Across Gateshead, data is being used to influence policy and deliver low carbon energy to homes, while Chamber partners Thirteen, are working to install new home technologies to potentially save households 30% on their energy bills.

By targeting and developing net-zero energy network, we would create a more sustainable, resilient and prosperous North East.

The North East has the highest unemployment rate

Written by

Marianne O’Sullivan, policy adviser, latest column for The Journal.

From the latest employment statistics the North East continues to have the highest unemployment rate and the lowest employment rate across the UK. We are the only region to have experienced slight decreases in jobs and employment overall from November 2021 to January 2022.

The North East also remains the region with the highest economic inactivity rate in England – too many people have left our workforce altogether. The North East economic inactivity rate stands at 24.8%. This compares to a national rate of 21.3%. According to the ONS people aged 50 and over have seen the largest increase in economic inactivity out of all age groups. This is having a large impact on the workforce and adding to labour shortages.

In the longer term there needs to be a focus on skills shortages as this is playing a significant role in limiting growth. We need to make the most of talent in the region to allow everyone to access opportunities. The North East is a leader in sustainable energy with the potential for more jobs around a green recovery, the region needs to have the training in place to encourage people into growing sectors in the region.

Apprenticeships are an important route for younger people and for people looking to change careers, they have been highlighted by the Government’s Social Mobility Commission as a key route into employment as well as employers needing to widen their talent pool.  

We are working with employers, education providers and the Government to tackle the skills gap in the North East. Our upcoming linking business with education event in July will help to share best practise from businesses and discuss how they can effectively engage with education providers.

Our Good Work Toolkit has highlighted how employers can offer staff training and progression opportunities in the workplace.  This is complemented by our further toolkit focussed on ensuring women, in particular, can progress in their careers.

We have some work to do to catch up with the rest of the country but it is certainly not down to a lack of determination and tenacity.

There is so much potential in the North East and with the right support for our employers and education providers we can start to narrow this persistent employment gap.

We need every single person in the region to be able to succeed and become part of our success.

The north east and Ukraine…

Written by

Rachel Anderson’s latest column for the Journal.

The Chamber can occasionally get a bit too caught up in numbers, we deal with a lot of statistics, huge amounts of data and frankly most of it, whilst important, would send a glass eye to sleep. We’ve got data on employment, trade, imports, exports, construction, transport, housing. We even know how much wine the North East drinks each year – spoiler, it’s a lot.

Sometimes we think we are clever with statistics and have a handle on the impact of events. For example, when war broke out in Ukraine, we watched with horror and, as it’s our job, we looked how it might impact the North East economy. Our trade statistics said our direct imports and exports with Ukraine were relatively small. What our numbers don’t tell us is how the conflict and the hugely interconnected trade networks we are part of, mean that the conflict comes much closer to home than any of us realised.

We all watched on with emotion as the siege of the Mariupol steelworks raged, there’s not much left of it now. Different steelworks around the world specialise in shaping steel differently, our plants in the North East make pipes (Hartlepool), girders (Lackenby) and wire (Skinningrove). Let me tell you about Mariupol. It was a very efficient works and specialised in rolling metal sheets more than 20mm thick. Those sheets are primarily used in making heavy vehicles, earth movers, diggers etc. Those men holding out in Mariupol made the steel used in Birtley, Peterlee and Stockton.

We’ve also heard a lot about Ukraine’s agricultural capability especially wheat and sunflower oil. Commodities unable to leave Odessa won’t be arriving in Gosforth, Berwick or Middlesbrough where our pasties, pastry and pies relied on it. We didn’t pick this up initially because commodities such as wheat and oil are traded in third party markets and in Dollars which hides origins – it is only now we’re finding out how much we are really tied to Ukraine.

Thirdly, I’d invite you to look around the room you are in and see how much Ukrainian neon gas is around you. Yes, that’s right, unless you are reading this in a newspaper in one of the outside loos at Beamish, you’ll probably have some. Neon gas is a key component of semi-conductors in cars, mobile phones, computers, household appliances. Ukraine produced 75% of it – in plants in Mariupol.

Statistics they can tell what you want to know; but they don’t tell you even half the story.

Photo by Yehor Milohrodskyi on Unsplash

Two Farewells

Written by

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

Written by

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. 

“It’s not great, is it?”

Written by

Rachel Anderson’s latest column for the Journal.

It’s not great, is it? I know there are so many things not great now that even two sentences into this column you still don’t have much idea what bit of “not great” I’m talking about. Is it the parties, the lacking legislative programme, levelling you can only see with the Hubble telescope, war, or its fellow equestrians famine and pestilence (not now Monkeypox)!?

Or is it the “not great” impacting on much of the population the seemingly unstoppable rise in the cost of living? This being a business column, I need to talk about how “not great” looks for businesses. Now I know many of you will not take much time out of daily living to spare a thought for FTSE 100 company Directors and the hardships they face, but I am going to flag up that for small company owners responsible for the livelihoods of their workforce and their families, people who they know well and are colleagues and often friends, a time like this can be lonely and incredibly stressful.

As a Chamber we track the economy and our Members are pretty honest with us about what is happening behind the scenes. We are seeing rising bills (no energy price cap for businesses), transport costs, raw material costs and wages creeping up. All of this on the back of a weakened cashflow following the pandemic. Until this quarter, businesses were telling us that customers were being tolerant of price increases, but that picture is starting to change. Small companies must balance all of this and make the payroll at the end of the month.

Then there’s the human side of all this. Experience of the last recession tells us that when the economy tightens workers feel the pressure and the consequences of that often play out on the shop floor. Employers were the first line of response in dealing with mental health issues, financial problems, disputes between employees over money and even hunger. Whilst employers learned from the last downturn and run kinder workplaces where employees can access support or be signposted, but many still try to cope with issues alone.

In modern times it takes a very special skillset to run a company and I take my hat off to those who are in the thick of it but make a plea – ask for help, don’t try to cope with “not great” on your own.

International Women’s Day

Written by

Marianne O’Sullivan, Policy Advisor latest column for The Journal

With international women’s day this week, and with many firms reporting difficulties in recruiting and retaining staff, employers need to look at what they can offer to female employees o help them to progress in the workplace.

The Chamber’s Women’s Leadership Forum has been focussing on reducing the gender pay gap in the North East.  It has produced a toolkit for businesses with some ideas of how businesses can start to take steps including prioritising training and mentoring activity and looking at recruitment processes.

At the Chamber we’ve also recently had Sharon MacArthur ‘Miss Menopause’ deliver training to managers with advice on how to create a menopause-friendly workplace. This can include allowing flexible working to help women who are experiencing irregular sleep patterns and access to quiet spaces with a cooler environment.

Improving access to childcare is also key  to supporting women to progress in the workplace. The Chamber has recently written to Government highlighting the need for changes to childcare including lowering the age at which children are eligible for subsidised childcare, ensuring both parents have access to properly paid parental leave and increasing the amount of paternity leave.

Analysis by the Women’s Budget Group suggests that an investment in free childcare would create 1.7 million full-time jobs and increase women’s employment by 6.4%. In a 2021 survey of more than 20,000 working parents only a small number  (16%) of women said childcare had not affected their seniority or income at work.

The theme for this year’s international women’s day was gender equality for a sustainable tomorrow. A survey from PwC in 2021 showed that 63% of respondents supported investment in green jobs but just one fifth (20%) of women believe they have the skills they need to work in a green job, compared to nearly one third (31%) of men.

We need to ensure that women are able to access green jobs in the future by removing barriers to adult education and training opportunities. The Government’s recently published Levelling Up White Paper includes a mission to increase the number of people undertaking high quality training, including women in these opportunities will be essential in creating a balanced workforce in the future.

In the Chamber we are continuing to do our best to highlight what can be done to support and develop women in their careers.  We will all be missing out on so much talent if we don’t help everyone reach their potential.

The Government needs to support businesses to achieve their global ambitions

Written by

Jack Simpson, International Services Executive, latest column for The Journal

Recovering stronger is a shared regional ambition, not just for our football, but for our economy. Key to this will be our ability to maintain and expand international trade, and establish our presence as Global Britain.

The North East is a historic powerhouse in international trade From manufacturing 50% of world ships in 1900, to leading the way in car manufacturing and renewable technologies in 2022, we have always been an innovative an forward thinking region.

So too with recent challenges in international trade. It has been one of the hardest periods for global traders, dealing with pandemic shutdowns, Brexit border changes and supply chain restrictions

But I have been impressed with the global community’s innovation and resilience, and now regional traders, indeed, for the first time since 2019 recent regional trade figures show a stabilisation in total trade, with a 2% rise in exports to the EU for the first time since 2021.

Research from Durham University predicted a 9% decline in economic activity, stabilising around minus 3-5%, from our Trade Agreement EU Exit. The sudden drop due to adjustment to new trading procedures, stabilising below normal levels due to new permanent barriers locking businesses from opportunities.

The recently released Levelling Up White Paper outlined the Government’s vision to “spread opportunity and equality” across the country, i.e close the gap between London and rest of England.

Sadly “export” is only mentioned 20 times in the 332-page paper, and while it highlights UK’s small 10% of businesses exporting, it offers no strategy for the future. Global businesses have been proven to pay more, innovate more and generate more income than domestic rivals, and is surely an open goal to “level up” regions such as the North East.

The North East is the most reliant region on EU trade, it receives 60% of exports for 50% of imports- geography dictates this core fact won’t change.

Those regional trade figures shows UK total trade 11% behind pre-pandemic levels, whilst North East is 14% behind, in which our trade to the EU lags 20% behind. Essentially, the North East is being left behind in international trade.

Therefore, we need Government to support businesses achieve their global ambitions in a more competitive and restricted environment. Traders often tell us the hardest market to sell is the UK, indicating it is access, not appetite, harming UK brand trade.