Budget 2016: Yorkshire business leaders react to the year’s first economic statement

In George Osborne’s eighth Budget, which was delivered Wednesday 16th March, he proclaimed that the government is “making the Northern Powerhouse a reality and rebalancing our country”, and that “the devolution revolution is taking hold.”

But do we finally think that the government will deliver economic balance prosperity in our region?

With the first major economic statement of 2016 now over, Bdaily sought after the reactions and views of business leaders in Yorkshire, and discovered that there was an unanimous acceptance the Chancellor’s announcements on improvements to transport links in the north, specifically the approval of HS3 which will enhance connections between Manchester and Leeds.

Richard Wright, executive director of Sheffield Chamber of Commerce, said: “The Chancellor has claimed this is a Budget for working people. I admire his objectives but, as in every Budget and Autumn Statement I’ve ever known, the devil will be in the detail which we will read later.

“The tax-free personal allowance rise is a good way to benefit the lower paid. One of the major problems the world faces is too much of the wealth is in too few people’s hands. If you want to keep money moving around, give more to the less wealthy.

“It is well known that international tax rules are not fit for purpose in our modern world of multi-nationals. But it’s not necessarily about them paying more tax, just paying it where they generate the revenues. Whether anti-tax avoidance and evasion measures will raise £12bn by 2020 is, of course, another question.

“The Chamber is very pleased to hear about corporation tax falling to 17% by April 2020. Businesses have taken a hit with the Apprenticeship Levy and Minimum Wage so they need some good news. Support for oil and gas industry is welcome, too - they’ve had a hard time and we will need North Sea opportunities in the future.

“We are equally pleased that the small business tax relief threshold is being raised. For a City Business Region like ours - where the vast majority of companies are SMEs - that will certainly help.

“The Chancellor’s references to the Northern Powerhouse and commitments to key business infrastructure projects are positive but we need action on them now. The green light for HS3 between Manchester and Leeds shows just how important it is for us to get our HS2 station in the right place in the Sheffield City Region - otherwise we could get left behind economically.

“Elsewhere in transport for our region, the announcement on the new trans-Pennine road tunnel is only the feasibility study at this stage but welcome nonetheless. We must keep the pressure up on the links between Manchester and Sheffield - both road and rail.

“The Chancellor says the government is ‘acting now so we don’t pay later’ and ‘putting the next generation first’. Amidst all the rhetoric I do agree that we have to plan more around the longer term and not just the next election. Ignoring reality is never an option but you have to react in the right way.”

Simon Higgens, CEO at rail services provider ISS Labour, which is owned by Yorkshire-based SPS, commented: “Although the budget’s announcement focuses on a small area of northern rail network, its importance should not be underestimated.

“Not only will HS3 improve the connection between the North’s two major cities, it will generate jobs and attract further investment into the region, providing a welcome boost to both the rail sector, and the northern economy as a whole.

“However, it’s also important to recognise that more immediate developments to rail infrastructure, including electrification and improvements in rolling stock, are just as vital. If we’re to keep people moving, we need the government to ensure it continues to show a commitment to the short and medium term projects that are just as important as flagship schemes such as HS3.”

Geoff White, RICS policy manager, North & Midlands, said: “It was a good Budget for the Northern Powerhouse.

“In backing the National Infrastructure Commission’s High Speed North proposals, George Osborne is putting in place a twin track programme to secure improvements in the short term and to plan for more in the future.

“There will be short term gains through improvements to the rail network, such as the electrification of the Manchester –Leeds link, and improvements to congested road such as the M62, M1, A66 and A69.

“The commitment to invest in long term plans for HS3 and the Trans-Pennine road tunnel will be welcomed by commuters and businesses in the north. As well as improving travel times across the region and encouraging economic growth, the infrastructure projects will create jobs and bring increased wealth.

“While the Chancellor has stressed that he is putting the next generation first, the people living in the Northern Powerhouse will want to cut traffic congestion and journey times as soon as possible. The sooner the work is completed, the faster the Chancellor’s aims for a rebalanced economy will be realised.”

Geoff also highlighted specific announcements within the Budget that will boost the North of England, including £30m extra funding for Transport for the North, agreement on elected mayors in Manchester, Liverpool, Tees Valley and Sheffield, and the go ahead for flood resilience works in York, Leeds, Calder Valley, Carlisle and across Cumbria.

He added: “The boost of a £700m fund for flood resilience schemes is a recognition by the government that much more needs to be done in preparing for the future effects of changes in climate and is very welcome.”

Leigh Taylor, regional director for Lloyds Bank Commercial Banking in Yorkshire and the North East, also echoed the joy with the Chancellor’s announcements on a Northern Powerhouse.

Leigh stated: “It’s good to see the Chancellor reaffirm his commitment to creating a Northern Powerhouse in today’s announcement, with the promise of improved transport links in our region.

“Cities on the other side of the Pennines are already feeling the positive effects of Northern Powerhouse investment but its impact is yet to be felt across Yorkshire’s urban and economic centres, with inefficient transport links acting as a barrier to growth.

“Addressing the transport issue should result in a stronger network of cities in the North and will be an important step towards rebalancing the economy away from London.

Penny Marshall, regional director of the Institution of Civil Engineers in Yorkshire and Humber, commented: “The confirmed financial backing for vital transport projects in Yorkshire and the Humber is excellent news.

“The next step should be to underpin this commitment with an integrated plan embracing a mix of ambitious, transformational projects alongside smaller scale investments.

“If the plan can be developed swiftly, it will maintain confidence in the vision and enable the benefits to be felt sooner. Increased funding for flood defences in Leeds, York and the Calder Valley, along with a four lane M62, and high speed rail between Yorkshire and Manchester, will be particularly welcome in the region.

“While the headlines are focussed on important large projects, the upkeep of our existing infrastructure – from flood defences to local roads – should not be forgotten. We await details on any local authority cuts and the impact on maintenance budgets, and will continue to encourage a shift from reactive patch-up work towards a ‘whole life’ approach to infrastructure investment.”

Mark Perkins, managing director at SES Engineering Services Ltd, added: “We welcome the large scale infrastructure improvements announced by the Chancellor today including a £140m plus investment into Crossrail 2 and High Speed 3 along with proposals for a TransPennine tunnel linking Manchester and Sheffield.

“As a UK-wide business, enhanced regional connectivity is key and this major initiative should be the foundation of real economic growth and development in the north; something our sector will be a key enabler of.

“The skills agenda is still a concern and whilst I believe the industry should be responsible for its own development framework it would be helpful for the government to push investment in skills and training higher up the political agenda.

“There is real growth momentum in the sector and skills and resourcing are fast becoming the potential blocker of growth. Our industry is key to the recovery and growth of UK PLC so rebalancing our skills framework and attracting sustainable levels of trainees and apprentices is vital for everyone.

“Similarly it is vital that Government sticks to its guns on BIM implementation and uses that influence on these major projects. They have the potential to be the catalyst of a more technology driven approach to construction and engineering which is essential if we are to compete in an increasingly globalised marketplace.

“The next five years certainly looks bright for UK infrastructure, let’s hope that the reflected benefits of these developments are really felt in the wider economy and industry.”

Giles Taylor, KPMG’s head of Property & Construction in the North, concludes this roundup by looking at how an increase in infrastructure spending in the North of England could affect the property market.

Giles said: “The announcement that hundreds of millions are due to be pumped into infrastructure in the North of England will be welcome news to international property investors, for whom committed connectivity across the region and with the wider UK is a significant tick on their wish list.

“While property investors from the likes of Asia and the Middle East have been interested in the Government’s narrative around the Northern Powerhouse, they have been waiting for the words to be backed with action and financial commitment to improve the region’s infrastructure before making large scale investments.

“The issue for these investors has been end user demand for property across the North – the scale of appetite simply isn’t as high for housing or for commercial property as they are used to in London or the South, because the ecosystem of infrastructure hasn’t been there to create an environment which attracts the end user in significant numbers.

“However, with HS3, improved road links and a trans-Pennine tunnel all garnering the Chancellor’s support, occupier demand for homes and business in the surrounding areas will rise, which we can expect to attract international property investors looking to place their money outside of the capital’s heated market.”