The State of Britain

The UK’s first special economic area moves forward in Teeside, the North East records the highest unemployment rate in the UK and fears that the ‘Whey Aye Wheel’ will dazzle pilots

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Unemployment in the North East rose slightly by 1,000 to 71,000 between December and February; an uplift of 0.1% to 5.6% – the highest in the UK. The SW of England had the lowest unemployment rate in the country at 2.6%. The national unemployment rate stands at 3.9% and UK average earnings grew by 3.5% or by 1.6% after inflation.

North East average property prices fell by 0.4% to £125,397 during the month which meant annually prices fell by 0.8%. In comparison, UK prices dropped by 0.8% to £226,234 during April which cut the annual growth rate to 0.6%.

Middleton Hall, near Darlington, possibly the largest retirement village in the UK, has been sold to an employee trust owned by its 190 staff. The first in its sector to be owned by its employees, Middleton Hall becomes one of c300 UK firms owned by its staff. On regional retail, Beales department store in Hexham is to close with the loss of 71 jobs. Citing increased costs such as business rates the firm said it was no longer viable to operate in the town. Also the Stockton branch of Debenhams was named as one of 22 shops to close as part of the restructuring by its new owners.

An £80m infrastructure project, likely to have significant economic benefits, is the removal of the toll barriers on the Tyne Tunnel. The toll booths on the north side of the river will be replaced with number plate recognition cameras which will reduce peak time queues. The cameras, when combined with roadwork improvement, will introduce welcome economic efficiencies on both sides of the Tyne; c40,000 cars use the tunnels every day. The North East Joint Transport Committee has agreed to start formal talks with tunnel operator TT2. Also on the A19, the £75m three year project to create a triple decker junction on the coast road next to the Silverlink estate has finished on time; c35,000 vehicles are expected to use the new road.

North East rail services were severely disrupted this month when ten trains were damaged by faulty electric cables. Travellers experienced delays on a long stretch of the line from the north-east to London. More positively an extra train an hour will run between Newcastle and Carlisle as part of Northern’s new timetable. Investment will also go into train refurbishment and station improvements.

On regional development, Newcastle’s attempt to ‘outwheel’ the London Eye and build Europe’s largest observation wheel is continuing. The 140m’Whey Aye Wheel’ is part of a planned £100m development on Newcastle’s Quayside but the developer is being asked to consider alternative sizes because of fears the wheel could dazzle pilots or create a collision hazard for light aircraft. In Northumberland, the County Council has given its own developer, Advance Northumberland, a £3m grant and a £4.7m loan to move forward its Portland Park project- aimed at regenerating Ashington town centre – after it was deemed not viable for the commercial sector. The development costs c£8.7m will be worth c£5.5m when completed. More council interventions, this time in Middleborough, where the council will pay £840,000 for land intended for a snow centre. The council plans to sell the land to developers Cool Runnings NE who will build the Subzero centre. Also in Hartlepool, a collaborative project between Hartlepool Borough Council and The Northern School of Art to build a 30,000sq ft production studio at a former bus depot has been approved. The Northern Studios will feature a soundstage and could be used for large film and TV productions. The studios would also be used by students at The Northern School of Art.

The former Redcar steelworks is likely to become the UK’s first Special Economic Area (‘SEA’) when its status is approved by Parliament later this year. This will mean the South Tees Development Corporation (STDC) will collect business rates and rent in the area which will be reinvested in cleaning up the site. Aimed at international investors, SEAs are more common in India and China and typically go further than the model proposed at Redcar, with more liberal taxation, trading, quotas, customs and labour laws. A report by Redcar and Cleveland Council has estimated the area will bring in £340m of rates over 25 years. This revenue would be shared equally between the council and the STDC – with 50% of the rates reinvested in the 4,500-acre site.

The difficultly in balancing the need to attract international investors to Redcar with moving the project forward is highlighted by the compulsory purchase proceedings which have begun to bring the Teesside steelworks back into public ownership from international investors – three Thai banks. The banks have had control of the 870-acre plant since it went into liquidation in 2015. Negotiations with the STDC have ’broken down’ in a dispute over the land’s value. Tata Steel Europe sold the steelworks site to Sahaviriya Steel Industries (SSI) in 2011, retaining the adjacent 1,420 acres; ownership of that land was transferred to STDC in February.

A mayor of the new North of Tyne Combined Authority (NTCA) has been elected. The authority covers three councils north of the River Tyne, Northumberland, Newcastle and North Tyneside. The NTCA is the ninth to be created under the Local Democracy, Economic Development and Construction Act 2009 but unlike some other combined authorities it does not have control over transport or housing; it will focus on skills and adult education, employment, investment and business support. This devolution deal is supported by a Government fund of £20m a year over 30 years. Although this money is the second-highest offered to a combined authority, it is feared the NCTA will have insufficient scale when competing with larger combined authorities for government resources.