A week before the Budget the North East economy appears to be in great shape. Not a perfect 10 but certainly worthy of some admiring comments.
The national economy is in recovery and for once it is a ‘Heineken Recovery’, in that it is reaching parts of the UK that other recoveries haven’t reached.
Here in the North East unemployment has come down, in fact it is falling here at the fastest rate of anywhere in the UK and more people are employed here than ever before; around 1.2 million.
Furthermore, research by the Financial Times has also scotched some myths about regional pay. In the years since the great recession began, pay has been subdued everywhere but when the growth of median wages is examined the North East is remarkable in that it has outpaced the UK.
According to the FT, between 2008-14 annual pay rose in cash terms by 2.5% for a median worker in London, 5.9% across the UK and 9.9% in the North East.
Of course this does not mean that North East workers have been receiving pay rises that beat the cost of living but it does mean that we are no worse off than others.
Examining median wages is interesting because it strips out the massive wages of bankers or hedge fund managers in London. When we in the North East talk to opinion formers and decision makers in London about regional inequality, we need to choose our language with care. The best approach is to talk about our successes and the opportunities our economy presents to investors and entrepreneurs.
For example, as a result of the optimism and hard work of the region’s entrepreneurs one set of data released recently was extremely positive. The North East is now the top region in England for the growth of new businesses. The region now has over 150,000 businesses for the first time. Its business population grew by 12% last year.
Each of the region’s LEPs have made real progress. The abundance of initiatives and programmes designed to help this region grow and compete is too large to mention here; but many are directed at private sector growth, which is critical.
I try hard not to make this column party political, but I am more than happy to support an enterprising and ambitious Labour council. I happily signed a letter urging the Government to assist in trying to find a way through the problems caused by Durham County Council’s local plan being rejected wholesale by a myopic planning inspector.
The plan was a clear vision for County Durham which had deliverable targets for job creation, housing and business investment.
It was knocked back because the inspector’s interim report suggested its jobs projection was ‘unrealistic’ – the logic is that he would prefer timidity!
There is tangible proof that the county council’s optimism is well placed. High profile decisions by firms Hitachi, Atom Bank and Bristol Laboratories to make strong investments in County Durham demonstrate others are willing to back the council’s instincts with hard cash.
People have a right to object to individual schemes but to try and scupper the whole plan is out of proportion to the issue of addressing the need for more jobs and greater prosperity. Where business has an interest, the community as a whole can prosper. Businesses and communities are not on different sides.
Next week I hope for even more from the Chancellor. When Chancellors stand up and announce measures to help businesses, most people glaze over and tune out. Some even think that businesses get too much attention. But if private business isn’t trading, making profits and employing people there is no way of generating the tax revenues for public services.
The Chancellor deserves credit for the way in which he has steered the economy in the last five years and for his ‘Northern Powerhouse’ initiative. He has recognised the case for more transport spending and last month he gave a specific pledge to find ways to help our two airports offset any competitive edge Scotland might promote with its new power to control levels of Air Passenger Duty. Improvements to our road connections are under way and he agreed rail is critical too.
North East businesses will be watching the Budget with more than a passing interest. They want the recovery to solidify and help this region grow. The Chancellor needs to use his resources to boost business, incentivise employees, and get a lid on the deficit. His task will not be easy, and six weeks before an election, his decisions will be subject to more detailed scrutiny than ever before.
Graham Robb is North East Chair of the Institute of Directors and Senior Partner at Recognition PR.