Tag: Living Wage

THE COST OF BREXIT

 

THE EXIT FEE.

Extreme Brexiteers may rail against the figures, but the fact is we are going to pay a heavy price if we exit the European Union. That is the most important message from the Autumn Statement Some of us hope public opinion will change and we can yet halt this madness. But as it stands we are heading out and the Chancellor has spelt out the consequences of Brexit.

£59bn of the staggering £122bn of extra borrowing is directly attributable to Brexit according to the Office of Budget Responsibility (OBR). Because of that borrowing our debt to gross domestic product is set to peek at 90% in 2017-18. The weaker pound caused by the Brexit shock is forecast to lead to a 5% increase in food prices next year. A real problem for the Just About Managing.

AT LAST A MOVE AGAINST PENSIONERS ?

Perhaps it has been lost a little amidst the analysis of the immediate impact of the Autumn Statement but Philip Hammond this week flagged up a major area of controversy for the next parliament. The triple lock on pensions is to come under review. Rightly so, whilst some pensioners still struggle, most have never had it so good, to coin a phrase. In any case it is the young burdened by tuition fees, job uncertainty and the inability to buy a home that must be top priority for government in the third decade of this century, if not before. The problem is that up to now the elderly vote in larger numbers than the young. In the next parliament ministers will have to be courageous. I think pensioners will get the point but well done Mr Hammond for preparing the way for a change of policy.

NORTHERN POWERHOUSE.

At one point it looked as if George Osborne’s pet project was going to be quietly forgotten by his successor. However there was enough support for devolution to force the Chancellor to input significant funds into the Northern economy. £3bn for northern local enterprise partnerships in growth deals, a £400m investment fund to support smaller businesses and £60m in development funding for Northern Powerhouse Rail.

Areas about to elect city region mayors like Liverpool City Region and Greater manche4ster will get new borrowing powers. There is talk of a municipal bond to aid infrastructure investment. The continuing failure of Leeds to resolve the elected mayor issue and avail itself of these incentives is notable.

Specific road improvements include the highly congested part of the M60 near Worsley, the Waterfront Link in Warrington and dualling the A66 in the North Pennines.

MIXED PICTURE FOR BUSINESS.

The big challenge for business in the North is productivity. Nationally we are 30% less productive than the Germans and the North lags well behind London. A Productivity Investment Fund will help. There was relief that the increase in the Living Wage was modest and a welcome for the further cut in corporation tax. Some wanted a VAT cut to mitigate rising inflation but that wasn’t going to happen, nor apparently reform of business rates.

HAMMOND’S DEBUT.

There is widespread dismay that the Chancellor did not address the growing adult social care crisis but overall Philip Hammond showed himself to be a safe pair of hands on his début. He is not as close to the Prime Minister as George Osborne was to David Cameron but nor is there the ruinous rivalry of the Blair/Brown years.

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NORTHERN POWERHOUSE AND PRODUCTIVITY.

 

For years business has moaned about our poor productivity figures in the North. So what are we actually going to do about it?

The North West Business Leadership Team(NWBLT) have come up with some practical suggestions but also some stark analysis of the scale of the problem. People in this country work some of the longest hours in Europe but our output is below the average of the G7. Although we have recovered from the 2008-12 recession with growth reasonably healthy and unemployment and inflation low; productivity has remained flat. The NWBLT warn that if this remains the case as the Living Wage comes in, unemployment will be on the way up again.

Manchester is seen as the heart of the Northern Powerhouse yet it still has big problems with its in-work productivity which is £8.2 bn below the UK national average, the greatest shortfall of any of the core cities. As NWBLT Chief Executive Geoffrey Piper recently pointed out only Cheshire and Warrington are above the national average in the North. Manchester’s problem is due to poor skills levels of course, but also shortcomings in transport. Manchester is getting a reputation for chronic congestion on the roads and trains. Recent announcements may address the latter but regarding the endless traffic jams, do you hear murmurings about another attempt to introduce congestion charging?

The NWBLT feel that the vision of a Northern Powerhouse as a truly competitive global economy will remain a distant dream until productivity is improved. So they have come up with some sensible, but quite tough policies. One is to link early introduction of the Living Wage directly to enhanced training for relevant qualifications. Another is to channel government research and development money into Performance Bonds and remove it from under=productive assets. The NWBLT want a Regional Productivity Index to measure performance every quarter by Local Enterprise Partnership area; and they want support for the national Productivity Leadership initiatives on process efficiency, digitalisation and working practices.

Juergen Maier, the Chief Executive of Siemens UK is chair of the NWBLT and wants urgent implementation of his report because he sees caution returning among business leaders. This is due to a number of factors including volatility in the Chinese economy, Middle East conflict and uncertainty over the E.U referendum. Maier believes there are other domestic factors that are unsettling business including the implementation of the apprenticeship levy on larger firms, cuts in industry support and the need for a stronger narrative about the aims of the northern Powerhouse beyond transport.

The Chancellor clearly shares Maier’s analysis of the economy. In November at the time of the Comprehensive Spending Review, George Osborne was bullishly confident that he’d repaired the roof while the sun was shining. Perhaps it was the floods or a fear that he had induced complacency, that has lead to his current reminders that the austerity programme is far from over.

Whatever the prospects for the Northern economy in 2016, they will be improved in the long term if everyone if everyone implements the NWBLT report” Unlocking our Potential: Solving the productivity puzzle.”