Unshackle our economy

Gordon Brown was today urged to prioritise investment in the North-East and unshackle the region's companies to boost prosperity as he takes over as Prime Minister.

Gordon Brown

Gordon Brown was today urged to prioritise investment in the North-East and unshackle the region's companies to boost prosperity as he takes over as Prime Minister.

North-East business chiefs said the new Prime Minister must channel major investment into the region's "sub-standard" transport network to fight congestion - such as that on the A1 Gateshead Western Bypass - and to "unleash" an economic boom.

Proposals to modernise the Tyne and Wear Metro and a new light rail network for Tees Valley are vital, according to an open letter sent to Mr Brown by the North-East Chamber of Commerce (NECC).

In the letter, NECC president Maggie Pavlou said: "Put simply, we urge your new Cabinet to prioritise investment in the North-East's economic infrastructure and unshackle its dynamic private sector to deliver the jobs, wealth and prosperity that is increasingly the signature of this region."

She added that while outgoing Prime Minister Tony Blair had represented a North-East constituency in Sedgefield, the chamber had never believed its priorities were just of local concern.

"Now, with the Government under your leadership, we urge you therefore to take a fresh, objective look at some of the practical policy options which would enable the North-East economy to play its full part in driving UK growth," said the business leader.

Miss Pavlou also wished Mr Brown good luck in his new job - which he takes today - and invited him to pay an early visit to the region to see the dynamic role that business was playing in driving growth and to discuss how his Government could increase the momentum.

The new premier was also urged to scrap moves by ministers to "water down" a regional development blueprint amid warnings the changes could damage economic growth.

Concerns have centred on lack of support for upgrading of the Tyne and Wear Metro, the A1 and East Coast rail line, along with the case for a deep sea container facility at Teesport. The scaling back of employment schemes and "artificial" limits on housing have also been raised in the wake of changes to the regional spatial strategy.

Measures delivering much-needed infrastructure improvements and quicker planning decisions must not be diluted either, while swift action over town hall reform is needed by creating a single unitary authority in County Durham and Northumberland able to offer a powerful voice.

Mr Brown should also tackle the "confusion" surrounding the system for skills and education to create a globally competitive workforce, with NECC research finding better sales skills could add £12bn to the regional economy. Currently, just 79% of adults achieve functional literacy and 72% functional numeracy.

Fiscal policies recognising the region's needs and making it easier for businesses to locate and grow in the North-East should also be developed by the Prime Minister.

It is calling for a roll out of "enterprise zones" already used in Newcastle and North Tyneside to draw in an estimated 34,000 jobs and more than £1bn of private money, potentially to cover the entire region.

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Make classes smaller, say teachers

Cash stuck in the education system should be freed by Gordon Brown to improve schools, says a teachers' representative.

Mick Lyons, the regional representative for the NASUWT union, says money is floating around the system because of rules requiring schools to balance books when it should be used to cut class sizes. He says millions of pounds have gone unspent in the North-East and more than £1bn nationally.

"Our current problem is falling rolls, which is causing redundancies. But the thing he could do is free up some of the money sitting in school budgets doing nothing and make class sizes smaller," said Mr Lyons.

He urged Mr Brown to stop loading more demands on schools, from healthy eating to citizenship, saying: "The pot is going to overflow soon. What do they want us to concentrate on?"

Mr Lyons also hit out at league tables and the "desperation" for exams, with some schools being pressurised into narrowing the curriculum, which endangered the wider benefits of education.

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Councillors contemplate more power

Greater devolution of powers is what town hall chief Sir Jeremy Beecham is looking forward to under a Gordon Brown administration.

Local Government Association vice-chairman Sir Jeremy, who is a Newcastle councillor, says the region might win powers on issues from transport to planning under a review which could be completed within weeks.

It is understood priorities for the sub-national review, which is looking at how to boost regional economic growth, includes "driving" the centre to hand over more powers.

But he said: "The underlying message, which a different variety of policies will have to reflect, is that he takes local government seriously as a partner of central government and not just as a delivery agency for Government."

Sir Jeremy, who is on Labour's ruling national executive, also said Mr Brown's pledge to tackle concerns over housing - and particularly affordable property - were very important.

Moves to invigorate party membership and activity would also be welcome, he said.

Page 2:  Read the full text of the Chamber of Commerce letter

Dear Mr Brown

The North East Chamber of Commerce would like to take this opportunity to congratulate you on your imminent appointment as Prime Minister, and to highlight to you at the earliest possible stage the issues businesses in our region wish to see addressed to maintain the recent excellent economic growth seen here. GVA growth in the North East was 2.3% in 2005 – well ahead of the national average, a trend we hope and expect to see continue with your Government’s support.

Background

The NECC is the North East’s leading business membership organisation, representing 4,500 businesses, on a regional, national and international level.

Although over the past decade the Prime Minister has represented a North East constituency, we have never believed our priorities for this region to be merely of local concern. Now, with the Government under your leadership, we urge you therefore to take a fresh, objective look at some of the practical policy options which would enable the North East economy to play its full part in driving UK growth.

Put simply, we urge your new Cabinet to prioritise investment in the North East’s economic infrastructure and unshackle its dynamic private sector to deliver the jobs, wealth and prosperity that is increasingly the signature of this region. Such investment should be focussed on:

• Developing fiscal policies which recognise the needs of the region and make it easier for more businesses to locate and grow here;

• Improving our transport infrastructure, which serves as the arteries of our dynamic economy; and

• Providing the education and skills foundations to create a workforce which is fully prepared to meet the challenges of a global economy.

Immediate decisions

In the short term, your Government will make decisions on the future of local government in the North East; the Regional Spatial Strategy; and planning policy.

On local government, NECC urges you to press ahead with reforms to the two-tier system in County Durham and Northumberland. Business believes single, unitary authorities across the whole of each county are a necessary step to ensure they have the powerful leadership and effective structures necessary to play a leading role in economic development. We consider it vital that any reform is not delayed.

The RSS has recently been revised by the Secretary of State for Communities and Local Government. Businesses believe many of these revisions could hinder developments needed to boost economic growth, particularly on transport. More fundamentally, we believe its suggestion that the North East can function as a low wage economy undermines the ambitions we have for this region and you have for the UK as a whole. We urge amendments before the final document is adopted.

In contrast, the recent Planning for a Sustainable Future White Paper contains many welcome proposals. We would encourage you to follow through on measures which will deliver much-needed infrastructure improvements and quicker planning decisions, and not allow them to be diluted.

Over the longer term, NECC believes support from your Government on three key issues will allow the rate of growth in the North East economy to rise even higher.

Interest rates and inflation

A key concern highlighted by NECC members in our regular ‘Business Barometer’ surveys is rising interest rates. This is, by nature, a national decision. However, member companies have expressed the view that interest rates represent a blunt instrument which often does not take account of its impact in different regions. For example, the North East has a significantly higher proportion of manufacturing businesses than the UK as a whole, which are capital intensive enterprises. Increased interest rates designed to cool sectors of the economy in the South which are in danger of over-heating can therefore hinder investment in the North East in sectors which need to adapt to a changing international business climate.

One measure to offset this effect which has already been utilised by Government to great success in the North East is the use of enterprise zones around Newcastle and North Tyneside, which are estimated to have helped draw in 34,000 jobs and more than £1bn of private finance. Extending these to other parts of the North East would provide a major incentive for business growth. A radical step to close the regional productivity gap could even be to declare the whole region as an enterprise zone.

Transport

The region’s sub-standard transport network is under intense pressure from rising congestion. NECC has launched its own public transport discount ticket scheme and is encouraging more flexible working hours. However, the A1 Gateshead Western Bypass operates at 167% of capacity at peak times. This has prompted the Highways Agency to object to both business development and housing schemes close to the road – which in practice means across a vast swathe of Tyneside. Capacity improvements on key transport corridors are therefore vital now. At the same time, investment in public transport alternatives, including proposals to reinvigorate the Tyne and Wear Metro system and a new light rail network for Tees Valley, are needed to ensure the rapid increase in car use associated with economic growth is curbed.

There is also opportunity for investment in the North East which would contribute to cutting congestion elsewhere in the country. At present, 60% of southern ports’ traffic heads for the North. Development of a deep sea container facility at Teesport would help significantly reduce this, producing environmental benefits in the process. Plans for these developments must be dealt with promptly.

Skills

You used your Mansion House speech last week to emphasise the need for increased skill levels in the workforce. The North East has further to travel than the rest of the country to hit the targets set by the Leitch Review, with just 79% of adults achieving functional literacy, 72% functional numeracy, and 21% level 4 qualifications. We urge you, therefore, to commit fully to ensuring those outcomes are met in every region. The move to a demand-led focus in skills policy is welcome, but much more work is still required to ensure the confusion felt by employers over qualifications, training providers and funding is overcome. NECC also has misgivings about the current arrangements for sector skills councils. While we are committed to working with them, there is a concern that many cross-cutting skills which are not specific to any one sector will not be covered. Recent research sponsored by NECC found an improvement in sales skills could add £12bn to the North East economy. Yet it is unclear which SSC would be responsible for advocating this type of training.

In closing, we would like to take this opportunity to repeat our recent invitation for you to visit the North East early in your premiership, to witness at first hand the dynamic role businesses are playing in driving the region’s economic growth. We would welcome the opportunity to discuss with you how your Government can help to increase this momentum.

We wish you the very best of luck in your new role as Prime Minister and we look forward to seeing you in our region in the very near future.

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