Pressure mounts on Osborne to offer North-East an autumnal boost

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1 Dec 2015

Pressure mounts on Osborne to offer North-East an autumnal boost

THE next few weeks could be the most important in George Osborne’s career since he succeeded Alistair Darling as Chancellor of the Exchequer.

If supporters regarded his budget statement in July – the first for a majority Conservative government since 1996 – as a post General Election lap of honour, then he will face a much stiffer challenge when he stands up in the Commons later this month.

Mr Osborne is expected to use the Autumn Statement to row back on support for tax credit cuts that led to an embarrassing defeat in the House of Lords. The proposed cuts would have axed £4.4bn of spending on working tax credit and child tax credit, and were met with fierce opposition in the upper chamber.

This is a big test for the Chancellor – David Cameron’s key ally – whose recent trade trip to Asia saw him encourage Chinese investment in British industry. The visit was widely regarded as a precursor to the chancellor becoming de facto successor to Mr Cameron when he stands down in four years.

But his serious misjudgement over tax credits undermined the Government’s attempt to position itself as friends of working people and left a question mark against Mr Osborne’s judgement. It allowed Labour Leader Jeremy Corbyn to land his first significant blows at the despatch box when he harangued the Prime Minister for failing to give a straight answer on the planned spending cuts.

Clearing up the tax credit fiasco while trying to appear statesman-like is only one of the challenges the chancellor will face to support industry and small businesses.

Dr Stan Higgins, chief executive of Teesside-based NEPIC, is in no doubt about where attention should be focussed.

He said: “The demise of the British steel industry is an example of what happens to companies in fragmented supply chains.

“All UK industry needs an industrial strategy that links supply chains and maximises integration for greatest operational efficiency. Fragmentation leads to higher costs of operation, poorer industrial infrastructure and a lack of understanding of how the industrial jigsaw fits together.

“Consequently here in the UK we cannot easily identify the jigsaw pieces that are missing or becoming dog eared so that they can be encouraged to be replaced and updated. Nor can we recognise how new industries can best be supported to get a best fit so that they maximise energy and materials symbiosis. A country without an integrated industrial policy does not understand nor care much about how national policies will impact on energy pricing, industrial operational costs and what it takes to remain competitive.

“National policy and regulation are drawn up with unintended consequences, how often does this happen in our country? This is in fact is where we are today in the UK. Soon I fear that all that will be left are the service industries and at that point people will begin to realise that there is no one adding value and no money left to cut hair, clean cars and take phone calls.

“We will only make Britain great again when we start to rebuild value creating integrated manufacturing industries such that most of the value created stays in the UK. As a result of the demise of the steel industry supply chain I hope this Government recognises these issues in the autumn statement, but their lack of understanding I suspect will continue to leave UK manufacturing jobs exposed to the cross fire of the global economy with little prospect of tackling these fundamental big picture issues.”

Gareth Thomas, managing director of Icon Plastics, a precision plastic injection moulding firm that employs 42 people at Eaglescliffe, near Stockton, said: “The fact that UK’s economic growth slowed more than expected in the three months to September – down to 0.5 per cent from 0.7 per cent in the spring – has the potential to dent business confidence.

“Therefore, from a business perspective, the Chancellor needs to concentrate on measures in the Autumn Statement that ensure the economic recovery, which had been starting to emerge, spreads right across the country and, in particular, on economic strategies that will have a positive impact in the North-East.

“This is especially important in the wake of the closure of SSI in Redcar and the knock-on commercial effects this will have in the surrounding communities.

“The recent announcement of a devolution deal for Tees Valley was a good start, and this foundation needs to be built on by the Government, but it must not result in an increase in business rates that could force companies out of the area.

“Further investment in road and rail infrastructure is essential. Good transport links can help make the economy stronger and make it easier for employers, employees and the wider population to easily travel from A to B.

“Congested networks, both road and rail, make travelling inefficient and time-consuming – and in business time costs money – and also restricts growth, especially for companies in the North supplying components and parts for automotive and other manufacturers in the South.

“Improved transport links with the rest of the UK, as well as within the North-East itself, will help the region to achieve its economic potential.

“Care also needs to be taken that any fiscal announcements do not add pressure on exporters by further raising the value of sterling. As exporters ourselves, this could force customers to source products local to them.”

Douglas Kell, director of the Civil Engineering Contractors’ Association in the North-East said: “We are pleased to receive the Chancellor’s comments on the appointment of the National Infrastructure Commission. We hope that by referring to National this does not mean only the South and South East.

“We are hopeful that the steady stream of infrastructure work already announced will not be re-announced or even reconsidered by the new commission. And we would give an open offer to the new commission, to assist them in their endeavours and provide them with a clear picture of the North-East’s outstanding needs of infrastructure.

“We certainly hope it is a step in the right direction but will be able to comment further when we have seen the small print and time scales.”

Source: Northern Echo//

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© Copyright. North East of England Process Industry Cluster (NEPIC) 2015