North is lagging behind but small firms can drive growth

I PICKED up two matters last week that have an impact on our property sector.

I PICKED up two matters last week that have an impact on our property sector. Both are economy-based.

First, we are lagging further behind in the growth stakes compared to London and the South East.

It’s not new and maybe it’s not even surprising but it is a fact – the latest figures from the Office of National Statistics make clear that the North/South divide continues to widen.

Secondly, Centre for Cities, a well-respected charity focusing on economic reporting, has published a new report Size Matters: The importance of small firms in London’s economy. It calls on city leaders to unleash the potential of the capital’s small firms.

What has this to do with our region, I hear you ask? I find it useful to look at what others are doing and see if we can learn, adapt and adopt for our wellbeing.

Centre for Cities is responding directly to the data in the report but I can’t help think that this should be a national message and one that the North East should respond to immediately.

The report finds that small firms, those with fewer than 50 employees, are playing an increasingly important role in city economies across the UK over the past decade.

On average, small firms accounted for 96% of all businesses and just over half of all jobs in UK cities in 2010.

The statistics make stark reading; while the number of small businesses in the UK’s cities has grown by 43% since the year 2000, the number of large businesses has fallen by 30%. It is clear that it will be small businesses which lead the economy to new growth.

It is also clear that small business growth policy formulation by both national and local government needs to be far more targeted to produce the required results.

We could certainly adopt the findings of the Centre for Cities’ report for the North East.

It makes some excellent recommendations in various areas which could be applied quickly and effectively in our region, with a joined-up approach.

I make no apology for lifting these and putting them into a North East context.

National and regionally, policymakers should prioritise policies, which improve the business environment for small business- to-business firms:

Recommendation 1: Public sector bodies with property should work with business accommodation and service providers to review their property assets and ensure appropriate spare buildings and space is made available to small firms.

Recommendation 2: Local authorities should seek to safeguard business accommodation occupied by small firms.

Recommendation 3: The North East Local Enterprise Partnership should use ‘super- connected cities’ funding to prioritise the provision of ultra-fast broadband and services to commercial property suitable for small firms in both urban and rural areas.

Recommendation 4: Improve procurement practices to put firms of all sizes on a level playing field. Rolling out CompeteFor (a free service that enables businesses to compete for contract opportunities linked to major public and private sector buying organisations) across all tiers of government would be an excellent way to do this.

In places where the business base is large but predominantly made up of small business to customer firms, a different approach is needed:

Recommendation 5: Strike a balance between policies that directly seek to improve the business environment for small business-to-customer firms and quality of place policies such as housing, public realm improvements and crime reduction schemes.

Recommendation 6: Remove unnecessary regulations that hamper small business-to- customer firms by, perhaps with the NE LEP working with the Better Regulation Delivery Office.

Recommendation 7: Adopt a varied approach to planning, allowing commercial developments in areas that are becoming part of the core’s fringe area.

Thirdly, for local authorities where the business base is relatively small, the following approach should be taken:

Recommendation 8: Adopt flexible policies that focus on improving quality of place and supporting business where there is growth potential.

This will help maintain the local customer base which small business-to-customer firms rely on and reflects the primary role these places perform in the North East economy.

I consider that we could gain great strength and much greater added value by coalescing the economic development departments for each of the NE LEP seven local councils and driving the changes that are needed to build demand for property in our region and thus achieve greater prosperity.

And on that note, may I wish all readers a very Happy Christmas and prosperous New Year.


David Whetstone
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