Thom Brooks: The biggest worry in the North East is the cuts that are coming next

Durham University's Thom Brooks on what we didn't hear about in George Osborne's Autumn Statement - the cuts that are still to come

Anthony Devlin/PA Wire Chancellor George Osborne
Chancellor George Osborne

George Osborne’s final Autumn Statement for this Parliament was drafted clearly with a crucial general election this spring in mind.

There were expected investment in roadwork, including the creation of a dual carriage way for a 13-mile stretch of the A1 between Newcastle and Ellingham.

Osborne also announced a continuing freeze on fuel duty and abolishing Air Passenger Duty for children under 12 from the first of May – only a few days before the general election takes place.

News such as investment in the A1 is good news for our region, but many argue it should go further – literally – by making the A1 a dual carriageway through to Edinburgh.

Likewise, the government’s support for the ‘Northern Powerhouse’ is welcome rhetoric – although much of the investment appears headed for Greater Manchester.

It remains crucial that the North East is recognised in word and deed as part of this investment so that we do not lose out to other regions in the North of England or to Scotland as greater powers are devolved to it.

The main headline from Osborne’s budget statement is the planned change to stamp duty on homes costing more than £125,000.

This may have a limited impact on the North East as many of the homes in our region are on average below this threshold and so not subject to stamp duty anyway. For example, average house prices are £120,545 in Newcastle and £85,438 in Sunderland. Families purchasing properties worth the average cost of a London home - about £510,000 – stand to save £4,900.

Serious economic concerns remain. While unemployment is less, the problem is that many of the new jobs are low wage and part-time.

Those in work have continued to endure pay freezes or no meaningful pay rise. These factors contributed to a shortfall in the government’s budget of about £21bn – about half of it in income tax. The government’s relief for businesses taking on apprentices under 25 years old is welcome news, but much more remains needed to support reforming relevant funding mechanisms to make it more effective.

The biggest concern for our region is the cuts we can expect next. The Office for Budget Responsibility predicts that if the Tories deliver on their pledge to protect spending on schools and hospitals we should expect significant cuts to public services of about 57% less than in 2009/10.

Hannah McKay/PA Wire Chancellor of the Exchequer George Osborne
Chancellor of the Exchequer George Osborne
 

There have already been substantial cuts to local councils and public services in our region which have caused difficult and sometimes painful decisions.

However, the majority of the government’s cuts do not kick in until after the May election.

But worse still the full scale of cuts needed remains unclear. This is likely to put even greater pressure on our local councils which have struggled already under existing cuts – and these are not of the scale many predict we will face soon.

So while there is some welcome news that will benefit our region, it coincides with heavy costs conveniently timed for after the 2015 general election.

We can hardly blame the Chancellor for drawing up a budget aimed to win votes this May. But we must ensure the North East is firmly rooted in the government’s plans to develop the ‘Northern Powerhouse’.

The government should also be as clear about the cuts we can expect as they are about the investment they promise. Otherwise, voters may come to see this budget as a cynical attempt to win votes by trumpeting a few goodies to distract the public’s attention from deep funding cuts on the horizon.

Thom Brooks is Professor of Law and Government at Durham University.

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