The State of Britain

The gap between the NE’s tax take and public spending increases, the unemployment rate still a UK outlier, and trains dominate economic developments

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the NE had a deficit of £10.7bn, a larger shortfall than the £10.2bn recorded in 2018. The North West, at £20.1bn, had the largest deficit in the UK which compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the NE’s deficit was £4,027, larger than the £3,852 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall per person at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; the other seven regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in the NE was £36bn or £13,560 per head, an increase on the 2018 figure of £34.8bn. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

The NE collected £25.2bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in the NE increased by 5,000 to 80,000 between September and November 2019; the jump of 0.4% took the overall rate to 6.2%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The NE rate of 6.2% is a UK outlier with the next nearest at 4.3% in London, the West Midlands and Yorkshire and the Humber.

The South West had the highest employment rate at 79.8% which compared with 71.4% in the NE. UK employment was estimated at 76.3%.

NE average property prices recovered after a big fall last month. Prices increased by 0.7% during November 2019 to £130,712, which took annual growth to 1.4%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

On transport, the Office of Rail and Road (ORR) is investigating Network Rail over its poor service on routes used by commuter favourites Northern and TransPennine Express. Network Rail owns and operates rail infrastructure in England, Wales and Scotland.

The ORR said the proportion of scheduled train stops made on time in the last 12 months up to 4 January by Northern was 55% and 41% by TransPennine Express. This compares to the national average of 65%.

Early in January, Transport Secretary, Grant Shapps, announced he was evaluating a proposal from Northern Rail for options for continuing its franchise after the minister said the firm had the finances to continue only for a number of months. Then he surprisingly followed through and nationalised the firm, which consequently threw the Transpennine franchise into sharper focus.

On HS2, the Department for Transport and HS2 Ltd did not allow for all uncertainties when estimating initial costs the National Audit Office (NAO) has said. In 2015, HS2 was due to cost £56bn but a leaked government report suggested the total could reach £106bn. At this cost the decision whether to proceed or not will likely be taken at Prime Ministerial level next month.

Still on trains, Darlington council wants to highlight the town’s rail heritage ahead of Stockton and Darlington Railway’s bicentennial celebrations in 2025. The railway was the world’s first passenger line to use steam locomotives when it opened in 1825. Funding of £20m from the Tees Valley Combined Authority to create a world-class visitor attraction has been secured.

Further north along the line in Newton Aycliffe less positive train news, up to 250 jobs could be lost at the Hitachi plant which makes intercity trains for Avanti West Coast. Opened in 2015, the facility employs c900 people and was awarded a £350m contract to assemble 23 trains last month but earlier lost out on a contract for the Tyne and Wear Metro.

Administrators Deloitte have said 53 jobs will be lost in Crook, County Durham, after they could not find a buyer for iron and steel castings producer the Bondshold Group. The firm was established in County Durham in 1868 and only two years ago was one of the UK’s fastest-growing for international sales.

The closure of a Nolato Jaycare factory in Portsmouth with the loss of 115 jobs is likely to benefit the firm’s other plant in Newcastle. The medical packaging firm said the relocation would cost c£2.8m.

Tesco Bank is to create 20 jobs in Newcastle as part of an investment in online banking. This adds to 20 roles created when the bank announced Newcastle as the home for a technology hub in November. The company is recruiting test, software and systems engineers, systems architects, solution designers, project managers, and IT and business analysts.