North East business leaders, industry bodies and commentators have given a resounding welcome to the Chancellor’s Autumn Statement, which has been hailed as a win for SMEs and potentially the North East economy as whole.
Some, however, say more detail is needed before a judgment can be made on whether George Osborne is truly creating a ‘Northern Powerhouse’ or merely setting the wheels in motion for a long-awaited - if undramatic - boost for the region’s business community.
As expected, the statement was big on assistance for small and medium-sized enterprises, with rates relief set to remain for another year, the Funding for Lending scheme being extended. a freeze on fuel duty and a host of other measures set to drive forward innovation, including increases to R&D tax credits and support for first-time exporters.
Infrastructure - including the road and train network - would also to be prioritised and SMEs will no doubt welcome further incentives to take on apprentices.
The statement, perhaps more surprisingly, was also notable for its forward-looking approach to the likes of education and research.
Significant financial support, for example, is being proposed for postgraduate students, while the ‘Northern Powerhouse’, referred to repeatedly in the Chancellor’s speech, will be bolstered by a £250m investment in a new advanced materials institute in Manchester, which would have branches across the North.
For many in North East business, though, the stand-out point will be the promise of a full-scale business rates review.
North East Chamber of Commerce director of policy, Ross Smith, said: “North East business has achieved a great deal in recent years against the backdrop of huge cuts to the public sector.
“We asked the Chancellor to back our businesses with a pro-growth Autumn Statement to help us maintain positivity into the new year and he has done that, to a point.
“The announced business rates review must be a serious review with no options off the table.
“What we have at the moment is a broken system in need of radical and rapid reform.
“I can assure the Chancellor that he does not need to ask NECC to engage with him, as this is something we have been campaigning for many years.
“We have already had one limited review on business rates this year and our members will hope to see something more meaningful this time around – especially given the Chancellor confirmed further increases in the rates during today’s statement, which will be bitterly disappointing for many businesses.”
A number of other measures, such as the additional £45m in support for exporters, would be welcomed, he added, as would the announcement that students seeking to undertake post-graduate study will for the first time be able to access student loans of up to £10,000 to assist with their studies.
“Added to the abolition of national insurance payments on under-25 apprentice employees, these announcements will support the up-skilling of young people in a meaningful way,” he said.
“It is good to hear the Chancellor once more reiterate his desire to create a Northern Powerhouse.
“He was clear in his praise for what has happened in Greater Manchester and how the public and private sector are all pulling in the same direction.
“We echo this and it is time for us to do the same. It is only by businesses, national and local government and the LEPs working together that we can create an environment that stimulates growth across the whole of the North.”
The Federation of Small Businesses in the North East was likewise largely enthusiastic about the Autumn Statement, with regional chairman Ted Salmon saying the Government had “listened to the needs of business, despite tight public finances”.
“The FSB is delighted to see the double small business rate relief remain for another year and a full review of the outdated business rates system, something we’ve long argued for,” he added.
“The £400m released to back the British Business Bank and an extension to the Funding for Lending scheme will provide much needed cash for small businesses.
“For our long term growth, the Chancellor is right to support young people via apprenticeships and to spend on infrastructure.
“Our roads and rail urgently need updating.
“The £15bn he has allocated for roads will upgrade our network and boost growth in our regions.”
On the proposed business rates review, he added: “This urgent review of the business rate system is critical to supporting small businesses.
“The current system is out of date and needs to be put out to grass.
“It’s complicated, opaque, regressive and unresponsive to changes in economic conditions.
“Many of our members tell us paying business rates is their third biggest cost after rent and wages, yet the tax is poorly targeted and not based on ability to pay.
“All businesses will be grateful for this review, but let’s be absolutely clear on what businesses want – fundamental reform of the business rate system.
“The announced package of renewed reliefs will also be essential, as they will help bridge the gap until fundamental reform can deliver the change everyone agrees must now come.”
Small businesses, he added, have been responsible for the majority of the jobs created in the last few years.
However, many FSB members said they struggled to find young people with the skills they needed.
“The National Insurance relief for businesses taking on apprentices under the age of 25 will encourage businesses to take on even more young people and tackle the UK’s skills gap head on,” Mr Salmon said.
“However, this will need to be supported by a reformed apprenticeship framework and funding mechanism that does more to encourage small businesses to invest in developing their workforce through high quality apprenticeships.
“We look forward to working with the Government to ensure this happens.“
Steve Grant, managing director of training firm TTE in Middlesbrough agreed, saying: “Apprenticeships have to be the cornerstone of the development of UK skills for industry.
“Abolishing National Insurance contributions for apprentices under 25 should be a serious incentive to employers and help them play a part in creating a skilled and competent workforce, not only for their businesses, but for the workforce of UK plc.
“We have to ensure that the rebalancing of the economy, which has included strong growth in manufacturing, is sustained.
“This includes ensuring the ongoing training of motivated and skilled apprentices who will form the core of the UK’s future workforce.”
For Greg Wilson, public sector partner at PwC in Newcastle, the student loans for postgraduates would provide a similar economic boost: “The HE Commission reported on this issue in Autumn 2012 and recommended that the Government needed to find a way to help people to take their studies further, recognising that funding was needed to do this.
“Increasing the number of postgraduates carrying out research which can then be converted into value for business, can only help our economy to recover further and keep the UK as a driving force of innovation and growth.”
Also welcoming the contents of the Autumn Statement was The Institute of Directors North East, the chairman of which, Graham Robb, said the organisation would “constructively engage in consultations to secure long-term reforms”.
Bill MacLeod, PwC’s senior partner in Newcastle, meanwhile, said the announcement was “a strong signal of intent and a clear indication of what might be on the cards for the Northern cities”.
To Mick Thompson, office senior partner for KPMG in the North East, some of the new measures meant “access to finance is no longer the brick wall that it was at the height of the recession”, while Allan Kelly, North East chairman of insolvency trade body R3 and a restructuring partner at Baker Tilly North East, the new schemes would hopefull “get growing businesses the funding they need to bridge the gap between potential and success”.
Across a wide array of sectors, in fact, the response from the North East business community was almost unanimously positive.
In commercial property, Richard Turner, a senior director at Newcastle investment agency at DTZ said the industry would be relieved that reforms to stamp duty land tax would only apply to residential property.
In telecommunications, director of the Stockton-based Odyssey Systems, Christine Gilbert, said there was plenty of “good news for people who run businesses, which generate growth and create jobs”.
Mohammed Bashir, founder of Boro Taxis, Teesside’s largest taxi firm, meanwhile, said: “Fuel is the lifeblood of our business and costs such as fuel directly affect customers of taxi firms.
“While we would have preferred a cut in the disproportionate amount of tax levied on fuel, a freeze is welcome news to our industry, especially as some motoring groups had expected a return of the fuel price escalator.”
Douglas Kell, director of the Civil Engineering Contractors’ Association (North East), likewise said the fuel duty freeze would help the sector, as could measures on apprenticeships.
“Otherwise, 50 minutes from the Chancellor produced little for comment for us, and we must now wait for the small print to tell us how soon the improvements promised earlier to the A1 and A19 roads, along with other work promised, can actually go ahead,” he added.
With regards to the crucial oil, gas, nuclear and offshore renewables sectors, George Rafferty, chief executive of NOF Energy, said: “The Autumn Statement has demonstrated the Chancellor recognises the challenges facing the UK energy sector and its skilled and valuable supply chain.
“The oil & gas sector and the hundreds of thousands of jobs it supports are vital to our economy and the UK’s energy requirements; therefore a more agile tax regime will encourage investment and the delivery of offshore operations.
“Once we hear the details of the Chancellor’s plans, I would hope it helps to bring operator plans forward and reinvigorates the pipeline of projects that can be supported by the supply chain.”
“The Chancellor has shown his support for one of the economy’s most integral sectors to help it overcome the effects of falling oil prices and the increasing cost implications of exploration and recovery of difficult to get at resources.
“NOF Energy is also supporting the supply chain by freezing our membership fees in 2015, as companies increase their efforts to secure a proportion of opportunities.”
Ed Cox, director of centre-Left IPPR North think tank, said: “The Chancellor’s continuing emphasis on a northern powerhouse is welcome and reflects the calls of businesses and city leaders for a clear strategy to rebalance the national economy.
“The statement includes some important building blocks concerning science, infrastructure, business rates and devolution that will be welcomed by many.”