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NECC warns of council cuts

Council spending on major investment projects in the North East is set to plummet more than £800m by 2013, according to figures obtained by the North East Chamber of Commerce (NECC).

NECC’s research shows for the first time the frightening scale of the impending public sector recession which could have an extremely serious impact on the fledgling economic recovery.

The data shows that councils in the region are predicting the amount of money they will spend on major projects will shrink from just over £1.4bn this year to under £600m by the year 2012/13.

NECC is calling for urgent action in light of the figures – compiled from each individual local authority’s budget predictions to 2013 – to avoid the dwindling public sector spending having a catastrophic effect in the North East.

Industry experts estimate that every £1m of public sector infrastructure expenditure creates 20 construction jobs – demonstrating that were council budget predictions not to improve then it could cost the region 17,000 jobs.

Martyn Pellew, NECC president, said: “The predicted decline in public sector spending is truly frightening. The North East, more than other UK regions, is particularly exposed to these cuts and the figures published today by NECC must be a catalyst for action.

“North East councils need to take a more proactive approach to the way they award contracts. It is essential that local authorities make sure that they squeeze the maximum value for the North East out of every penny they spend.”

The figures published today add further weight to NECC’s Buy North East campaign, launched in November 2007 to lobby local authorities to recognise the impact smarter awarding of contracts would have on the regional economy.

The campaign identified that a 1% increase in public sector spending in the North East every year to 2016 would bring an additional 6,000 jobs and £1.35bn in investment to the region.

Mr Pellew added: “European competition rules rightly prevent councils awarding contracts on a parochial basis but this should not be used by officials as a screen to hide behind when considering the local benefits that should come from this level of spending. Intelligent buying recognises the extra benefit when suppliers use local labour and invest in training that greatly improves the skills of people from that particular council area.

This was posted in Bdaily's Members' News section by Ruth Mitchell .