Written evidence submitted by the North East England Chamber of Commerce (LRS0045)
Our Key points are as follows:
1.1 The North East England Chamber of Commerce is a membership organisation and the largest business representative body in the North East of England covering the North East and Tees Valley LEP areas. The Chamber has approximately 3,000 members draw from all sizes of company and sectors of the economy. Our members collectively employ around one third of the workforce of the North East of England. The Chamber also operates the Department of International Trade contract for the Region providing international trade support and advice to the Region’s exporters.
1.2 The Chamber’s most recent Quarterly Economic Survey, which assesses the region’s economic outlook, returned the worst results for three decades (https://www.neechamber.co.uk/uploads/files/blora7OWL2U1blP7.pdf). Figures for the last quarter reached negative territory far beyond what was seen in the depths of the 2008/9 financial crisis. Highlighting that the North East economy was weaker entering the crisis and harder hit during it isn’t being unduly negative. What is needed is substantial and sustained support to tackle long term economic inequalities.
1.3 By analysing the government’s official statistics, both from before the crisis and during it, it’s clear an extra focus is needed to build the region’s resilience and ability to recover quickly. Meanwhile, the national support packages, which have done so much to soften the landing for many businesses, will no longer be available in their present forms. The North East is a region that would work well as a testbed for progressive policy ideas, which could be replicated across other “left-behind” areas of the UK.
What structures exists across the country and how does this compare across different regions?
2.1 North East regional structures include –
How do these different tiers work together to deliver local growth?
2.2 The Tees Valley LEP has become one with the Tees Valley Combined Authority, and this integration has led to an integration of goals carried out across all local authorities under the leadership of the TVCA Mayor and board of advisors, made up of relevant business, education and local council leaders. This varies drastically from structures across County Durham, Tyne & Wear and Northumberland.
How should local structures support delivery of regional growth across England?
2.4 Local structures should work together when it is in their interests and on issues that straddle multiple borders. For example, low-carbon transport solutions will often cover areas across multiple local authority boundaries, so collaborative projects will inevitably produce more coordinated and effective results. Funding for projects such as this could be granted at the regional or Combined Authority level, rather than to individual local authorities, to ensure a joined-up approach that can still be tailored to regional demands.
Do regional or local structures act in the best interests of local priorities and stakeholders or act more as a delivery arm of central Government?
2.5 Currently within the North East region, local structures tend to act as more of a delivery arm of central government. Structures such as our regional and local LEPs and combined authorities are doing the background research to understand the specific regional needs, however there’s a significant missing component in being able to then put this research to the government for schemes, funding and policy decisions to be integrated into the local areas. The Tees Valley LEP is an outlier in that they’re essentially one with the Tees Valley Combined Authority, and its creation allowed further devolution deals, giving greater power and authority to the region to make its own decisions.
What should local authorities do more or less of to achieve these aims?
2.6 There must be trust for local structures, local authorities, combined authorities, and local enterprise partnerships to provide tailored information and campaigns to the regions and to receive the funding and support to do so. Too often in the past, the main responsibility for local structures has been to convey messaging from central government that could have been better suited to the local area, or to try and fill in communications gaps. Better tailored communications strategies can help ensure greater business readiness for certain events and increased knowledge, both of which can help support growth.
Where should government focus its post-Covid-19 levelling up policy to best support regional growth: English regions, core-cities, towns, Growth Hubs and LEPs?
2.7 Government should focus investment on regions with historic economic and infrastructure inequalities such as the North East. The North East, as a region, currently has the lowest Gross Value Added (GVA) per person in the country, producing only 72% of the UK average (Institute for Fiscal Studies, 2020). LEPs should have greater influence over the roll-out of government schemes, in terms of which schemes would bring greater economic development and growth, and how to target those schemes within the local community for maximum impact.
How does each tier of regional or local government engage with delivery stakeholders (such as businesses, education providers, etc)?
3.1 Regional and Local government structures generally engage well with local stakeholders, such as the North East England Chamber of Commerce. The Chamber delivers services for the Department for International Trade as well as being a representative organisation for business interests in the North East.
3.2 Structures such as local authorities and local enterprise partnerships engage with the Chamber and our membership base in a variety of ways. One key way is sourcing feedback from our membership base through Chamber events. As one example, the North of Tyne Combined Authority recently co-hosted a roundtable with the Chamber on the Good Work Pledge, in order to hear the views of the local business community as to its accessibility. In addition, Local Authorities regularly attend the Chambers local area meetings to outline the Council's current focus and to do consultations with members.
3.3 The North East Local Enterprise Partnership has also invited Chamber Policy staff to sit on their advisory boards, for example the Skills Advisory Panel and the EU Exit Implementation Group, to represent the views of local business.
Do different tiers engage in different ways?
3.4 Different tiers engage with the Chamber in different ways depending on their existing relationship with the Chamber, their organisational priorities, and their capacity to engage in widespread consultation.
How could a green economic recovery stimulate local economies and embed upskilling at a regional level?
4.1 The Government have set out targets to become net zero by 2050 however we need an energy strategy that looks at both energy generation and at energy storage and carbon capture technology. The region already has a strong energy sector including the Net Zero Teesside project which is set to become a test bed for hydrogen technology. Further strategies and incentives that encourage investment in the region’s energy sector will help the UK to reach our net zero targets as well as creating new jobs and allowing the North East to contribute to the UK’s economic recovery.
4.2 We are a centre for innovation in wind energy with both onshore and offshore sites. We have the renewable energy catapult testing facility, the new Dogger bank wind farm which will help to supply around 5% of the UK’s electricity demand.
4.3 We also have a strong presence in looking at the circular economy with large energy from waste facilities in Tees Valley. Tees Valley Combined Authority are also looking at the region becoming the centre for industrial carbon capture and storage.
4.4 We have a strong data and research base here looking at research into the impact of climate change on the region and how we can move towards a greener economy. We have Universities doing research into smart cities and how integrated transport and resilient energy networks can create a green recovery.
4.5 The region has a large car manufacturing centre and has the ability to become a centre for innovation in electric vehicles. A strategy on the reduction and diesel and petrol cars and how either grants or incentives can be used to encourage to uptake of EVs post Covid could help to reduce vehicle emissions and help with the car manufacturing sector and battery technology sectors post Covid.
4.6 The region has lots of older housing stock that needs to become more efficient to reduce the region’s environmental impact. This will be a huge task across the country, at a regional level we will need to create a delivery model with businesses involved in insulation and heat pump technology, there will need to be intervention and incentives to allow housing providers, private landlords and businesses to make their properties more energy efficient. Research from IPPR has shown that energy efficient retrofits would be one of the largest creators of jobs helping to employ people in the ‘green’ economy in the North East and will help with reducing fuel poverty with lower income earners spend over three times more than the richest earners as a proportion of their income on their home heating, the majority of which comes from the gas grid, due to living in energy inefficient home. The Committee on Climate Change has highlighted that that the UK’s legally-binding climate change targets will not be met without the near-complete elimination of greenhouse gas emissions from UK buildings (https://www.theccc.org.uk/2019/02/21/uk-homes-unfit-for-the-challenges-of-climate-change-ccc-says/). It is essential that there is a plan for retrofitting housing to take advantage of the opportunity post Covid to invest in meeting our environmental obligations whilst creating new jobs.
4.7 The region is looking at how new methods of construction can be used. The Gateshead Innovation Centre has been set up to look at new ways to solve the housing crisis. Different houses have been built on the site using traditional, modular, and modern methods of construction to compare and contrast performance. The homes also all have electric heating systems to test servicing, running costs and the environmental impact of switching from gas networks. This information will help businesses to make decisions to invest in new methods of construction.
4.8 More investment in creating test beds in the region will be important to allow for innovation and for the private sector to have the information giving them the confidence to invest in new technology. Having innovation funds for LEPs and allowing a higher level of flexibility and an element of risk in these projects will allow for local innovation and help to minimise regional disparities. Current spending models don’t have the flexibility to award risk and innovation.
4.9 A green recovery will have positive health impacts with cleaner air and more active travel as well as the overall health impact of creating new jobs and preventing longer term unemployment.
4.10 The Chamber suggests one answer to help the North East economy get on its feet would be to follow the SSI recovery model which allowed redundant workers to get free re-training and upskilling. Funding to encourage people to start their own businesses was also successful with over 270 new ventures created. Recent reports by IPPR and by the UK2070 Commission have both highlighted the need for just transition fund from Government to be used locally, in the North East this could be directed towards growth sectors such as the energy sector and for retrofitting houses.
4.11 A skills strategy will form a crucial part of any green recovery strategy, we will need to ensure that there are retraining opportunities, placements, apprenticeship, and new job opportunities for people to move into new sectors. We need to ensure that there is flexibility within any skills scheme to suit the needs of the local area, a local skills board would be able to set a local strategy around skills for different sectors in the region. Data from the job retention scheme and other Government support schemes can help to determine which sectors have been impacted the most by Covid and where we need to focus retraining opportunities. Retraining courses could be subsidies in sectors where there is a need/opportunity for growth such as around retrofitting housing or linked to the energy sector.
Which tiers are best placed to provide the leadership of local net zero and skills-based priorities?
4.12 As the economic crisis will impact on businesses ability to administer apprenticeships there might be an opportunity for Combined Authorities to be involved more with training providers in administering apprenticeships with apprentices doing a range of placements at different businesses to gain experience.
4.13 Net zero strategies, which could be led by the LEPs as easier to align two strategies, as opposed to various strategies across all local authority areas. There are already structures in place for an agreement on a political level and to engage with key stakeholders.
Should leadership responsibilities be separate from delivery responsibilities?
4.14 Leadership can set out by LEPs with priorities agreed by stakeholders but will need to set up separate groups around delivery and involve the business community and education providers more. For example - delivery of retrofitting housing will need businesses in the region involved in the retrofitting process, education providers for any training and upskilling and housing providers. Delivery with subgroups focussing on separate areas with a LEP representative on each subgroup feeding back to the leadership team on progress.
How could ‘shovel ready’ growth projects in England drive local growth and jobs?
5.1 Spending on national infrastructure, which has numerous potential ‘shovel ready projects’, is an effective way to drive job growth. However, we need to ensure that these projects create jobs across the UK, particularly the North East region which already suffers from a high unemployment rate and higher competition for vacancies than other regions. In addition, these ‘shovel ready’ growth projects should be quick to deliver and should create easily accessible jobs which don’t require high qualification levels. For projects which have already been announced, for example the Gateshead Quays development or improvements to Middlesbrough Station, local SMEs should be given the opportunity to bid for contracts in order to encourage local economic growth.
How could clustered R&D investment support local growth?
5.2 Another area to look at is how to create Research and Development centres across the UK, the UK2070 commission highlighted this as way to reduce regional inequality. The North East has already got the Net Zero Teesside project looking an innovation around hydrogen, the Helix site in Newcastle focussed on sustainability and Universities in the region working on research around sustainability. Working to develop this base for research and linking this with businesses to develop some of this research will be essential.
How should priorities be agreed across the regions?
5.3 The main thing that must change is the “beauty contest” style competition between regions to access funding and investment. Instead, a collaborative approach would be better to allow all areas of the North East to work together to figure out which priorities will be best for the whole region.
How should the UK Shared Prosperity Fund be specifically targeted to replace EU Funding and address regional inequality?
6.1 As mentioned in the above point, funding and investment allowance should not competitive between regions, and more collaborative as to not create competition between regions, when the whole of the North East requires levelling up. The UKSPF must support economic development and not just economic growth as to have the well-being of our people at the heart of the reason to level up the region. Most importantly, the longer 7-year term that ESIF funding currently runs to should remain, as to achieve long term prosperity and not simply satisfy short term political goals.
What role should local structures play in allocating funding to best achieve regional growth?
6.2 Both regional LEPs (or rather, the NELEP and TVCA) are in the unique position to make decisions based on local economic data and already have structures in place to review the impact of implemented policies. This would then allow funding streams to be flexible and accessible to local community organisations who have the region’s best interests at heart and further knowledge and detail on specific policy areas.
Project Speed will bring forward proposals to deliver government’s public investment projects. How should Project Speed identify and distribute growth opportunities into communities across the country to best achieve its levelling up agenda?
7.1 We need to see how reforms to the Green Book can be implemented to help achieve the levelling up agenda. Previous cost-benefit analysis served to increase investment in areas with already higher levels of productivity and good infrastructure. Looking more at the wider social good of projects and the local benefits including the impact on regeneration, productivity and encouraging more investment in new areas. Ensuring that the Green Book is fully integrated into the levelling up agenda will be essential in ensuring that growth opportunities and infrastructure investment will be fairly distributed.
7.2 Infrastructure can have a positive impact as it can benefit all sectors within a region and level up the whole economy.
7.3 Digital connectivity has also now been highlighted during this crisis as a key part of the UK’s infrastructure, businesses are now increasingly reliant on digital connections to reach customers and staff. Ensuring that all areas of the UK have reliable digital access will be an essential part of the levelling up agenda and ensuring that people will be able to access jobs and training opportunities.
Much of the focus on project speed and infrastructure has been around the ‘shovel ready’ projects. But funding is needed to allow local areas to complete the assessments and the groundwork. Ensuring that structures are in place that support these assessments if deemed locally to be important such as the National Infrastructure Commission, Transport for the North or the Acceleration Council will be important in allowing projects to reach the shovel ready stage and progress.
7.4 Clarity on the role of different structures and how they work together such as the NIC, Transport for the North and the new Acceleration Council and how these structures will feed into Network Rail and Department for Transport long term strategies. This will be essential in ensuring projects progress and deliver the levelling up agenda.
7.5 The North East has faced historic underinvestment in its infrastructure, as part of the levelling up agenda schemes that will improve connectivity and productivity in the North need to be prioritised to help reduce the gaps with the rest of the country. Both the Chamber and the region’s political leaders have been campaigning for increased capacity on the East Coast Main Line to create improved connectivity which will help to create new jobs and training opportunities for people as well as encouraging sustainable travel.
7.6 The northern section of the East Coast Mainline has limited capacity with only one-track north and one track south between Northallerton and Berwick, there simply isn’t enough space for the connections the region needs. With HS2 and Northern Powerhouse Rail also set to join the East Coast Main Line outside of York we need to ensure that these major projects will reach the North East and bring economic benefits to our communities.
7.7 With a united voice from the region on the need for investment and with reports from Network Rail highlighting the benefits of different investment options it needs to be easier for regions to put forward business cases for projects and for Government to ensure that these can be quickly progressed based on the impact on connectivity, jobs and future investment.
7.8 Project speed can also be used to encourage a green economic recovery. Investing in creating a sustainable transport network and the energy and battery technology needed to support this will enable these sectors to grow, creating jobs in the region and help the UK to reach its 2050 net zero targets.
7.9 As well as infrastructure spending the region will need a fair share of any capital investment and Homes England funding. This will help to regenerate areas and encourage further investment in the region.
7.10The planning for the future white paper sets out how local plans can designate areas as growth, renewal or protected and for a new community infrastructure to try to speed up the delivery of development projects. We need to ensure that the growth areas and the Government's national housing requirement do not only create opportunities where there is already growth and high levels of demand. As part of the levelling up agenda we need to look at housing delivery in the North East as well to help our key sectors to grow, as well as new housing we will also need to refurbish older housing to make the region attractive to live in and more environmentally friendly.
7.11 We will need any of the local plans to be aligned with key growth sectors for the region and support strategies around town centres, the possibility of a more regional approach to align some of the local plans would also help encourage economic growth.
What should the balance be between Whitehall decision making and local decision making?
7.12 It needs to be easier for local areas to put forward cases for investment, the new northern transport acceleration council needs to be able to listen to the voices of mayors in the North and progress projects with regional support. There must also be a strong North East voice in pan-northern structures for decision making, not allowing large cities such as Manchester to become the sole idea of “The North”. Regions need to be consulted and included in the Governments decision making process to ensure that any reforms promote the levelling up agenda.
Do we have the capacity and capabilities at local and/or regional level to do this work on behalf of central government?
7.13 Regional and local structures need to be trusted to formulate strategies, receive Government funding then deliver local projects. Investment in electric vehicle infrastructure, active travel, and the delivery of retrofitting houses in the region could all be delivered at a regional level with regional strategies then local delivery groups set up.
Amber Burney, Policy & Engagement, North East England Chamber of Commerce