North East leaders react to Spring Statement

Chancellor Rachel Reeves squeezed the welfare budget, reiterated her promise to slash the administrative budgets of Government departments and boosted defence spending in her Spring Statement, as she attempts to address the dramatic slowdown in economic growth and kickstart the economy.

And while the Chancellor was lambasted by her political opponents for having “tanked the economy” and being forced into an “emergency budget” to “clean up the mess” created by her autumn budget, the response of the North East’s business community has been mostly positive.

In particular, the Chancellor’s announcement that an extra £2.2 billion will be spent on the UK’s defence over the next year, taking defence spending closer to the Government’s new target of 2.5 per cent of GDP, has been welcomed as an “opportunity” for the North East. 

Dr Arnab Basu, chief executive of County Durham-based Kromek, which secured a £2 million Ministry of Defence deal last year and is known for wearable radiation detectors used by security forces to foil terror plots, said: “The increase in defence investment and the Government’s commitment to innovation-led growth are welcome developments.

"The creation of UK Defence Innovation, backed by an initial ringfenced budget of £400 million, and the move towards faster, more agile procurement processes have the potential to create significant opportunities for the UK’s technology sector.”

Dr Basu’s view was echoed by Tania Cooper, chair of the North East STEM Foundation, who added: “This push will inspire our young people to pursue careers such as scientists, engineers and technologists. 

“There also are lots of STEM-related career opportunities in the defence sector, which will be created on the back of the £2.2 billion boost received in this statement.” 

And North East mayor Kim McGuinness, whose husband serves in the Royal Air Force, also welcomed the opportunities that increased defence spending would bring.

She said: “Today’s investment in the country’s defence and security is not only crucial for our national security in a world that is becoming more dangerous, it’s an important opportunity for our regional economy. 

“From North East workers manufacturing the machines of today, to our innovators designing the next era of defence technology, we stand ready to play a leading role. 

“I am working with ministers to bring Government defence jobs and investment here – from AI research to manufacturing jobs – to create opportunity and growth in the North East.”

Meanwhile, the Chancellor’s announcement that she will plough £625 million into the training of up to 60,000 bricklayers, electricians, engineers and carpenters over the next four years to revive its efforts to build more homes, even if it is likely the Government will now fall short of its manifesto pledge to build 1.5 million homes by the next general election, was viewed as “positive” and a “potential game-changer” for the North East.

Rhiannon Bearne, executive director of policy and representation and deputy chief executive at the North East Chamber of Commerce, said: “It is positive to see support for a new £625 million package to boost construction skills, alongside new apprenticeship and adult education support.

“This reflects calls made in both our Local Skills Improvement Plans delivered on behalf of the Department for Education and will help the region play a full and active role in delivering the Government’s housing and infrastructure ambitions.”

This view was reinforced by Ian Atkinson, partner at Womble Bond Dickinson in Newcastle and Teesside, who added: “The announcement of the £625 million package for skills in construction, expected to provide up to 60,000 new skilled workers, is a potential game-changer for the industry.

“This investment will help bridge the skills gap, ensuring we have a qualified workforce to meet the growing demand for housing and infrastructure projects.” 

Mayor McGuinness also commented on Ms Reeves’ decision to support the Forth Yards development site, in Newcastle.

She said: “We're building more homes right across the North East and it's great to see the Chancellor back my plans for 5000 new homes on the Forth Yards site. 

“We're showing that if we're given the right tools, the North East can get on with the job, in County Durham, in Sunderland, in South Shields and now in Newcastle.

"The site we're talking about here is land that has been left mostly unused for 20 years, a wasted opportunity for our region on the banks of the Tyne and close to the city centre.

“It is exactly the kind of site we should be putting houses on.  

“Now, we'll create jobs building up the site for homes where families can lay down roots for the future.”

Others were simply grateful that there were no surprises or tax increases announced in the statement, with businesses still coming to terms with the hike in National Insurance contributions and business rates that were announced in the autumn budget.

Rain Newton-Smith, chief executive of the CBI, said: “Weaker growth this year is a serious setback but not a surprise given the burden businesses are shouldering after the budget. 

“The Chancellor has kept her promise to business, made at our conference, not to raise the burden further, and focus on the efficient delivery of public services.” 

This sentiment was reiterated by Stephen Patterson, chief executive of Newcastle NE1, who added: “There were no surprises in the Spring Statement, and we are pleased that the Chancellor didn’t make any dramatic new announcements on taxation. 

“Businesses across Newcastle are bracing themselves for the tax rises already announced in the autumn budget. 

“The 1st of April will be a cliff edge for many businesses. 

“The rise in the business rates, minimum wage, National Insurance contributions, and a lowering of the National Insurance threshold create an extremely challenging environment for business.

“We now need a period of stability for business and reassurances that there will be no more tax rises planned for later this year.”

However, Zoë Billingham, director of IPPR North, was more cautious in her view of the Chancellor's Spring Statement, warning that the benefit cuts announced, which it is estimated will leave more than three million families £1720 on average worse off by 2030, would be felt most profoundly in the North East.

She said: “The world is changing – international instability has forced the Government to make stark choices at the UK’s Spring Statement. 

“Who pays the price of increasing costs is critical. 

“One thing hasn’t changed: regional inequality. 

“Public spending remains skewed – London gets £2,747 more per person than the North. 

“And history tells us that when spending cuts come, they are not felt evenly across the country: the North too often takes the hardest hit. 

“These are inequalities that have led to poorer health outcomes for people in northern regions. 

“It is no accident that the region with the highest percentage of people in need of our social security safety net – whether this is because they are disabled or on low incomes – is the North East of England.”

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