The State of Britain

The North East posts the highest unemployment and lowest growth rates in the UK despite benefitting from the highest per person public spending in England and Redcar flagged as an example of regional unfairness in the business rates system

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Growth in the North East fell by a fifth to 0.8% in the year to March 2019; the second lowest growth rate in the UK according to estimates from ESCoE. At 2.7% and 0.7% London and Northern Ireland had the highest and lowest growth rates in the country respectively. The East of England was the most improved region of the UK with growth accelerating from 0.9% to 1.9%. The UK growth rate for the same period was 1.5%.

Unemployment in the North East was unchanged at 69,000 between January and March, at 5.4% it was the highest in the UK. At 2.4% the SW of England had the lowest rate in the country. The UK unemployment rate stands at 3.8%.

In March, average earnings in the North East increased to £560 per week. London had the highest average earnings of £762 whereas the Northern Ireland had the lowest of £513. In the UK average earnings grew by 3.3% or by 1.5% after inflation.

North East average property prices fell by 1.1% to £123,046 during the month which meant annually prices dropped by 0.8%. In comparison, UK prices dropped by 0.2% to £226,798 during March which cut the annual growth rate to 1.4%, although transactions were up by 1.4%.

In its estimate of regional public spending and regional tax revenues in 2018, the ONS has concluded the North East had a deficit of £9.7bn. This compares with London which had the highest surplus of £34.3bn. On a per person basis the NE’s deficit was £3,667, the third highest in the UK and the largest in England whereas London had the highest surplus of £3,905 per person and Northern Ireland had the biggest deficit per person at £4,939. The only areas of the UK to run surpluses were London, the south-east of England and the east of England. At a national level, the UK had a deficit of £636 per person which splits into deficits of £106, £2,452, £4,395 and £4,939 for England, Scotland, Wales and Northern Ireland respectively.

British Steel has been placed into liquidation, putting 5,000 direct jobs and 20,000 indirect jobs in the supply chain at risk. Of these there are c800 direct jobs in the NE largely on sites at Lackenby and Skinningrove. The company was transferred to the Official Receiver because the company did not have funds to pay for an administration. The Official Receiver says that good progress is being made towards finding a buyer for the company.

There was also disappointing news in Gateshead when passport and banknote maker De La Rue launched a strategic review of its business following the loss of its passport contract to Franco-Dutch firm Gemalto. Gemalto bid c£260m which compared to the £400m contract awarded in 2009 to De La Rue. The company employs around 600 people at the Gateshead factory. Whilst one of arm of the state, the Passport Office, cannot be blamed for seeking value for money for the tax payer and no doubt adhering to EU procurement rules, the stats above, which evidence the NE’s poor performance in terms of growth, unemployment and fiscal deficit, suggest good reasons why other arms of the state should consider interventions to ensure projects like this come to those parts of the UK which clearly need them. Without knowing the details of the contract negotiations it is impossible to know, of course, whether some form of state aid was available to De La Rue and if it had been offered, whether this would have made any difference.

Better news in Billingham, where food firm KP Snacks has invested £6m in its factory as it celebrates 50 years of production on the site. The plant, which makes Pom Bears and McCoys, has opened a new pellet production facility creating about 25 new jobs and taking total headcount at the factory to c750.

On regional transport, LNER has unveiled the first of 65 new Azuma trains which will run on the East Coast Main Line, initially serving Wakefield, Doncaster, Peterborough and London. The trains, which are modelled on the Japanese bullet train, are being assembled at Hitachi’s plant in Newton Aycliffe, County Durham.

Work on a new railway station on the Durham Coast Line has started. The £10m station, at Horden, near Peterlee, should serve c70,000 passengers a year for through services to Newcastle, Sunderland, Hexham, York, Carlisle and London. The project is being funded by Durham County Council, the North East Local Enterprise Partnership and a £4.4m government grant. Upgrading of the Metro line in the Gateshead area has been completed with the installation of 2,300 new railway sleepers and 8,000 tonnes of new track ballast as part of the £350m Metro all-change modernisation programme.

In the air, passengers using Newcastle and Durham Tees Valley airports had an average delay of 14 minutes last year, the joint 11th worst in the UK according to the Press Association. The worst UK airport was London Stansted and the best was Belfast City (George Best) with an eight-minute average delay.

Regional development projects this month included the opening of a new £3m creative centre in the Grade II-listed former post office building in Hartlepool. The centre contains 28 units, with a mix of studios, workshops and office space and is a joint project between Hartlepool Borough Council, the Tees Valley Combined Authority and The Northern School of Art. Newcastle’s St Nicholas’ Cathedral has been awarded £4.2m lottery funding towards a £6m renewal project which will include staff, volunteer and visitor facilities being created beneath the cathedral hall. It is hoped the project will attract 100,000 visitors to the cathedral annually.

Stockton council has agreed to buy Wellington Square shopping centre for a reported £7m in a growing trend of council interventions on the high street. The deal includes 50 units which will be managed on the council’s behalf by Knight Frank. The council is borrowing £30m in an effort to regenerate sites in borough town centres. In Wearside, the council is now solely in charge of the regeneration company tasked with transforming local communities. Siglion, which was set up almost five years ago, was charged with projects on a number of key sites in Sunderland, including the former Vaux site, Seaburn’s seafront and a series of housing developments.

The CBI has cited Redcar as an example of how the current business rates system is entrenching regional unfairness. The closure of the steelworks four years ago saw a rise in unemployment alongside a significant drop in property prices which means firms in the area now pay business rates up to 20% above their rateable value.