The Spending Review delivered Wednesday by the Chancellor George Osborne produced a mixed reaction from the North East Chamber of Commerce (NECC).
Although announcements confirming details of the apprenticeship levy and reconfirmation of commitment to transport infrastructure were welcomed, the region’s largest business organisation was disappointed at the lack of substance around the Northern Powerhouse.
In response to the review, NECC Director of Policy, Ross Smith, said: “Today’s Spending Review was the opportunity for the Chancellor to put meat on the bones around the Northern Powerhouse and to confirm how the North East can play a significant part in it. The devolution deals announced last month were a big step towards this. However, what we heard today has mostly been said before and there was not enough to confirm real economic change.
“What we had hoped to hear was a significant and lasting change in measures affecting the pattern of government investment and to direct private investment to the North East. A series of initiatives badged under the Northern Powerhouse brand, while welcome, are not enough to achieve this.
“We are pleased that a significant number of smaller businesses will not be required to pay an apprenticeship levy and support is available to those who need it, although we look forward to hearing more details on this in the future.”
Devolution
The Chamber was pleased that by the end of this parliament, local government will retain 100% of business rate revenues to fund local services, although there was concern that some regions may be at a competitive advantage.
NECC Head of Policy and campaigns, Jonathan Walker, said: “While we agree that local government should have greater autonomy and influence over the tax and spending decisions that impact them, we are concerned changes to the business rate system and phasing out of the main grant to local government will see a significant reallocation of funding from the north.
“For local authorities that are struggling financially there will be little incentive to reduce business rates, while wealthier authorities, such as those in the south will, which could potentially place them at a competitive advantage over their northern counterparts. We await further details on local government finance so that we can fully understand the implications of these changes.
Tax
With small businesses being set to benefit from personalised digital tax accounts, removing the need for annual tax returns, Mr Walker added: “NECC has long-campaigned for an overhaul of the business rates system. We look forward to the outcome of the review and hope to see the delivery of an effective and fair approach to business rates.”
Housing
The Chancellor announced the doubling of the housing budget and outlined a five-point plan for housing, including a plan to deliver 400,000 affordable homes and further reforms to the planning system.
NECC policy advisor Rachel Travis welcomed the news but raised concern around the affordable rent market. She said: “The emphasis placed upon greater levels of housebuilding and the ambitious housing targets announced by the Chancellor is great news.
“However, we are concerned the Government has focused almost exclusively on homeownership, while neglecting support for the provision of affordable rented housing, for which there is particular demand in the North East.
Energy
The Autumn Statement committed an investment of at least £250m over the next five years to a nuclear research and development programme, while DECC’s innovation programme will be doubled to £500m over five years to reduce the costs of decarbonisation and improve our energy security.
In response, NECC Head of Policy and Representation, Rachel Anderson said: “Funding to support innovation in energy supply and reduce the costs of decarbonisation is needed; however, given recent decisions to end or reduce subsidies for onshore wind and solar, there is a lack of a clear government strategy or policy direction. This impacts the confidence of the sector and can negatively influence investment decisions.
“While we welcome confirmation that Energy Intensive Industries will continue to be exempt from certain charges, for instance the Renewable Obligation, there is no mention of measures to tackle the underlying issue of high energy costs or the lack of a long-term energy strategy.”
Employment and Skills
The Government announced further details of the rate and scope of the Apprenticeship Levy. The levy will be set at 0.5% of an employer’s total pay bill and will be collected by HMRC via PAYE with employers receiving an allowance of £15,000, meaning the levy will only be payable on pay bills in excess of £3,000,000.
The news that NECC members who pay less than £3m in wages will not have to pay the levy was welcomed by NECC policy advisor Paul Carbert. He said: “The Government must now ensure that small and medium businesses are provided with adequate support to hire and train apprentices. The effective implementation of the proposed digital Apprenticeship Voucher scheme will also be crucial to the success of the levy.”
Transport
Further announcements were made in the Budget on the role of Transport for the North (TfN). These include establishing TfN as a statutory body with an addition of £30m funding over three years, the introduction of Oyster-style smart ticketing across the area and the production of an interim report listing transport scheme priorities by the time of the autumn Spending Review.
“NECC welcomes a statutory footing for TfN, but it is crucial that all areas of the North East stand to benefit, including the Tees Valley,” said Mr Walker.
“We will be working on producing a list of transport priorities for the region in order to influence the work of TfN and the Government later this year.”
