Tag: England

CHANCELLOR AT THE CROSSROADS

 

 THE CHANCELLOR’S NOT FOR TURNING?

 

 

Ted Heath remains a hate figure for many Tories. Two reasons for this are well known. He took us into Europe and he conducted the longest sulk in political history when he was deposed by Margaret Thatcher. The third, less publicised reason, was the economic U turn he performed midway through his government in the early seventies.

 

In 1970 Heath came to power with a right wing agenda to deregulate and make a transfer from direct to indirect taxation. Rising unemployment knocked him off course and his Chancellor Anthony Barber reflated the economy. The resulting inflation was controlled by an incomes policy which led to the miners strike, the three day week and the Conservatives lost the 1974 election.

 

When Margaret Thatcher faced a similar economic crisis early in her premiership, she was not for turning and became a heroine of her party. Such a status is never likely to be available to David Cameron and George Osborne but next week they do face a similar situation. The cries to modify the austerity and borrow our way out are deafening. Labour point out that as the economy flat lines we are borrowing more anyway.

 

I don’t expect the Chancellor to ease up. The Budget is likely to include fuel duty relief and more spending on infrastructure but I expect a broadly neutral budget as ministers cross their fingers and hope that the economic course on which they are set, works.

 

There are economic indicators which support the Chancellor’s approach, the mortgage market is easing, business start ups are growing and unemployment is down.

 

It is worth reflecting on that last point. It is one of the outstanding features of this recession. In Heath and Thatcher’s time, unemployment rocketed up as the economy slumped. Why hasn’t it happened this time. It is partly because the figures mask the fact that a lot of people are part time or under employed. Workers have been prepared to suffer wage freezes and reduced hours to keep their jobs. The trade unions, once able to bring down governments, are whispering from the sidelines. Sad but true, strikes are not really an option in the 21st century.

 

HUHNE PAYS PRYCE, NICHOLSON DOES NOT.

 

One of the many reasons why people are turned off from politics is that the great and the good generally don’t pay with their jobs when things go wrong.

 

If a brickie builds a dodgy wall and it falls down he gets sacked. If a car mechanic does a shoddy job on your vehicle; same fate.

 

But when it comes to police officers failing to pick up on complaints about Jimmy Savile or health disasters like Mid Staffs, none of the people at the top lose their jobs.

 

The glaring example is Sir David Nicholson, head of the strategic health authority which covered Mid Staffs. Now head of the whole NHS for England, he has defied repeated calls to resign.

 

Just occasionally justice is served as we saw this week with Chris Huhne and Vicky Pryce, but this does not detract from the need for people who take high salaries to walk the plank if things go wrong.

NUCLEAR INDUSTRY CRISIS IN NORTH

 

 

The nuclear industry is a vital part of the northern economy, but recent events have cast a shadow over its future.

 

The vote by Cumbria County Council to reject deep storage of nuclear waste and the decision of Centrica to abandon plans to build new reactors in the UK raises major questions for an industry that the North has great expertise in.

 

From the hi tech skills being taught at UCLAN and Manchester University’s Dalton Institute to the “difficult” end of dealing with the waste legacy at Sellafield, from the uranium enrichment plant run by URENCO at Capenhurst to a string of supply chain companies across the North, we are looking at a major industrial asset.

 

There are two major issues. The need to build a new generation of nuclear power stations to avoid a UK energy gap in the 2020s and a solution to the long term disposal of radioactive waste.

 

On the latter issue, the government’s reaction to the decision by Cumbria Council to pull out of the exploration of underground sites seemed remarkably casual. Ministerial reaction was to say the search goes on as if there are a queue of other local authorities across England waiting to host the toxic legacy of 60 years of nuclear power generation.

 

The fact is that Cumbria is the only county in the country where there is the remotest prospect of building a consensus to locate a deep storage facility for nuclear waste. Actually that conclusion needs refining. It is only in West Cumbria, around Sellafield, that there may be public support. Copeland District Council voted to continue exploration and there is talk of them now going it alone.

 

It would require a change in the law as Cumbria County Council is the superior planning authority, but in the national interest this should be explored.

 

Cumbria councillors are facing elections in a couple of months. That brought its own pressures, along with a strategy by some anti nuclear campaigners to “scare the crap out of them”. But the vote still leaves the nuclear waste in place.

 

Now the government should concentrate on exploring for a site in West Cumbria so that this part of the work of the nuclear industry in the north can regain momentum and they should give Copeland Council the guarantee that they could pull out of the project at a late stage. Cumbria councillors claim they were not reassured on this point.

 

Now we come to the other issue which has implications across the economy of the north. After years of burying its head in the sand the Blair government acknowledged that we would need a new generation of nuclear power stations. This was good news for the North and Manchester University was quick to spot the opportunity to start training a new generation of nuclear engineers.

 

But forward momentum has been slow, partly because of the balance of risk to be taken by the private and public sector and the agreed price for electricity generation from the power stations.

 

Centrica’s decision to withdraw means no major UK company remains involved in plans for new nuclear reactors in England. The government point to Hitachi’s purchase of the relatively new UK nuclear power company, Horizon, as evidence of confidence in the UK nuclear industry by the Japanese.

 

For the sake of jobs in the north, we need rapid progress on plans for nuclear power stations and deep storage.

 

THE TOWER OF LONDON

This historic building has been at the centre of my thoughts this week for two completely different reasons.

 

The discovery of the bones of Good King Richard is inevitably linked to the story of the Princes in the Tower. There is no proof Richard killed them by the way. Instead the king should be remembered for being a damn good governor of the North of England. We could do with him now. However I must remember this is principally a business blog in the present time.

 

Even with that in mind, the Tower of London loomed up this week because the Liverpool Embassy in London is located near the Tower. Liverpool in London, to give it its more correct title, is a project to give entrepreneurs from the city a base to work from and to signal a confident Liverpool open for business.

 

It opened its doors in Royal Mint Court two years ago and the original backers of the project could have been heading for the Tower if some of the critics had been proved right. A gimmick that won’t last would be a polite way of summing up the reaction of the sceptical.

 

In 2011 the inspiration for the idea came from Guy Wallis a senior partner in the Liverpool offices of the business law firm DWF. It was backed by our own Frank McKenna and Joe Anderson, the leader of Liverpool Council.

 

Two years on the project has generated £1m additional sales for Liverpool companies, and attracted £20m of new investment. Those are the hard figures but it is in the intangible networking opportunities that the project has justified its funding by the council and private sector. £58 pounds return for every £1 invested according to its backers

 

The ringmaster is Chris Hayes, the Liverpool in London manager. He arranges quarterly networking events, dinners and hundreds of one to one meetings between Liverpool business people and potential clients in London. You can use the facilities free for a day but Chris Hayes wants people to sign up to the business club thereafter.

 

The private sector have stepped up to a limited extent to back Liverpool in London but it is still a 70/30 split in favour of the city council. As we know the authority is facing mega financial pressures and it would be handy if more firms came on board. That said Mayor Joe Anderson was in upbeat mood when he spoke at a second anniversary event for the embassy this week.

 

He announced that funding was secure through the next two years and he hoped for a couple of years after that, but he wanted more people to use the facilities at Royal Mint Court. He sees Liverpool in London playing a vital part in getting over the good news about major capital projects happening in Liverpool and hinted that a major announcement was imminent on the £5.5bn Liverpool Waters project.

 

A number of Liverpool business people spoke of their practical experience of using the facility in the capital. John Porter of Crosby Associates told of his success in developing the mobile app used by the London Chamber of Commerce and said it was as a result of having a base in the capital.

 

Liverpool Vision are strong supporters of the project and their flamboyant CEO Max Steinberg says Liverpool in London will be crucial to the projection of next year’s International Festival of Business being held on both sides of the Mersey.

 

Our own Frank McKenna pleaded for more positive coverage of this and other projects in the local press which he claimed was sometimes sabotaging jobs coming to the city by its coverage.

 

The event ended with Guy Wallis reflecting on the success of his vision and hoping that Mayor Joe Anderson could meet Mayor Boris Johnson on Tower Bridge to mark the success of Liverpool in London. So come on Boris you owe us that.

 

 

NORTHERN CHALLENGE FOR THE CHANCELLOR

THE IPPR REPORT

“Northern prosperity is national prosperity”, that’s the title of an excellent document published by the Institute For Public Policy Research (IPPR North) ahead of next week’s Autumn Statement. If the Chancellor implements its recommendations, the North can play its rightful part in pulling the country out of the slump.

 

Addressing the gross imbalance in the UK economy between the North and the South East, the report claims halving that output gap would increase national income by £41bn.

 

The economic proposals include a British Investment Bank with £40bn capitalisation, but with regional allocations, a plan for a new body to take over the Northern Rail Franchise and devolution of welfare to work funding to local councils.

 

On the constitutional front IPPR (North) favours metro mayors for West Yorkshire,Greater Manchester and Merseyside. It also favours two bodies to encompass the whole North of England, an Innovation Council and an annual convention of the 11 Northern Local Enterprise Partnerships.

 

This concept of bringing the whole of the North together chimes with a report published a year ago by the Smith Institute.

 

The abolition of the Regional Development Agencies was an act of supreme folly by the incoming government in 2010. Ministers seem to acknowledge that now as they seek to beef up the Local Enterprise Partnerships. But there is probably no going back to the pattern of Yorkshire Forward, One North East and England’s North West. IPPR (North) are right that we need to bring together the collective strength of the whole of the North.

 

My only regret is that the report has a democratic deficit. The people must be given a chance to elect a Council of the North so they can have a say in what is being done in their name. The presence of indirectly elected councillors would not be enough.

 

The report also highlights the importance of plans for the Liverpool Superport and Atlantic Gateway. Amidst all the gloom there are teams of people across the North West trying to cash in on the government’s commitment to infrastructure as a way out of the economic downturn. One of the biggest projects is Superport and Atlantic Gateway.

 

It has three components. A deep water terminal in Liverpool to take the larger ships that are now coming through the widened Panama Canal. The multi-modal Stobarts freight depot at Widnes and the new bridge across the Mersey linking Runcorn and Widnes.

 

Beyond that Peel Holdings have plans for port facilities all the way up the Manchester Ship Canal and with the Northern Hub rail improvements in Manchester expected to upgrade rail movements across to Leeds and beyond, we have a framework on which jobs and prosperity can be hung.

 

To be fair The Chancellor has pump primed some of these projects with government cash. Now we have to hope that the boost of infrastructure development isn’t overwhelmed by continued pessimism amongst bankers, investors and the public at large.

THE AUTUMN STATEMENT

This is the time for hard pounding by Chancellor George Osborne when he makes his autumn statement next Wednesday.

 

The 2010 optimism that the economy would be on the turn by now has disappeared as the Bank of England cuts its growth forecast to 1%. The Bank is also predicting that inflation won’t fall to the government’s target of 2% until the middle of next year. That forecast should ensure that Mr Osborne cancels the planned increase in fuel tax at least.

 

The UK’s economic prospects have deteriorated since the Budget. This is most starkly illustrated in the fall in tax revenues the Treasury is receiving and also the higher welfare payments that are being paid out.

 

This is where Labour is on the attack accusing the Chancellor of digging himself into a hole that is counterproductive to getting the economy moving again. There is still some political capital in the Tories reminding people that ex Labour Minister Liam Byrne left office saying there was no money left; but not much.

 

The Tories and Lib Dems have been in charge of the economy for two and a half years now and the measures in this autumn statement will cast a long shadow towards the next election.

 

We are used to local councils across the North from Leeds to Liverpool crying foul when cuts are made in Town Hall budgets. But this year they really do seem to have a case. Having already made drastic savings, demands for further economies will bite into front line services. In Wirral for instance leaks suggest the entire Town Hall staff may be asked to reapply for their jobs.

 

The Institute For Fiscal Studies is predicting that austerity could last until 2018 and if this Autumn Statement is going to be a tough one, what can we expect? There’s speculation that the maximum tax-free annual pension contribution will be cut from £50,000 to £40,000 and there could be further increases in stamp duty on the sale of properties worth over £1m. However there is a real battle going on about the possible introduction of new council tax bands on high value houses. The Daily Mail claimed recently that Osborne and Lib Dem leader Nick Clegg favour the move but the Prime Minister is resisting.

 

The Lib Dems are desperate that if they are to be associated with an austerity statement, they will be able nonetheless to show some evidence of their “fairness” agenda. This may come with an announcement that the income tax personal allowance will be raised to £10,000 by April 2015. That’s a month before the General Election when the voters will get their chance to decide if all this economic pain has been worth it.

 

ANNE McCARTNEY: A WARRIOR FOR DEMOCRACY

At the Livercool Awards I had the pleasure to meet Anne McCartney. She works for Price Waterhouse Coopers in Shipley near Leeds. Anne is a keen supporter of the new Downtown Leeds project.

 

On polling day for the West Yorkshire Police and Crime Commissioner elections she was staffing a temporary polling station in a rough area of Leeds. A generator provided heat and power so that the few could vote in the election. However the generator expired, plunging voters and polling staff into darkness. The Town Hall was consulted by Anne but didn’t know what to do to keep the wheels of democracy turning.

 

Anne did. She set up a temporary polling station in her car until power was restored. That’s democracy in action. Well done Anne