Partnership could lead North East out of recession

A RECENT report from the New Local Government Network (NLGN) is at the same time both illuminating and thought- provoking.

A RECENT report from the New Local Government Network (NLGN) is at the same time both illuminating and thought- provoking.

Entitled ‘Capital Contingencies: Local capital finance in an era of high public debt’ through it the think tank warns that dramatic budget deficits could plunge Britain back into an era of crumbling infrastructure.

And what is the case for the country as a whole in these sorts of circumstances goes double for the North East because as everyone knows as a region we are physically and metaphorically at the end of the queue.

The nub of the report is that the credit crunch will cause a ‘tsunami of public sector recession’ from next year onwards and this will severely hit investment in road and rail, school buildings, housing, regeneration and public facilities. It says that capital expenditure will halve from £44bn to £22bn by 2013/14.

NLGN is concerned that this could lead to a decline in growth and hamper modernisation of public services but clearly the problems will go much wider than that.

Without the required new infrastructure and the maintenance of existing facilities new regeneration and development programmes will be a non-starter and existing projects could fall into decline.

The proposed remedy for this is for local authorities to raise their game when it comes to raising revenue.

Hear, hear, say I, and the NLGN report goes on to outline some interesting ideas such as a new lending approach which treats Private Finance Initiatives on a level playing field with other capital finance models and use of council reserves to finance regeneration.

However, we all know the temptation will be to treat certain sectors of the community – such as the business sector – as a cash cow when it comes to raising local taxes.

All I’d say at this point is that local authorities must be careful not to bleed business dry, but to work with them in real partnership, to learn from them and help them to generate greater turnover and share in the resultant profits.

Finally, I’d ask our politicians to think hard about a national plan. Clearly, there are parts of the country that are over-heated and straining under the yoke of over-development whereas others like the North East that have capacity just waiting to be developed.

Simply divert resources and encourage companies to locate in the North through fiscal measures and in a relatively short while we’ll be holding our own.

Kevan Carrick is a partner at JK Property Consultants LLP and a policy spokesman for RICS.

 

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