There was much for North East business to welcome in the Spending Review setting out the government’s plans for the coming four years and announced by Chancellor Rachel Reeves, according to the North East Chamber of Commerce.
The region certainly needs help, especially to reduce the number of people aged 16-64 who are economically inactive – not in work and not looking for work. Latest figures coming from the Office for National Statistics (ONS) just a day before Reeves’ statement show the inactivity rate at 28.1%
Among measures of particular interest to the North East announced by the Chancellor, in addition to “neighbourhood trailblazer” grants for three deprived communities on Teesside and in Newcastle previously reported here, are –
- £1.2bn a year by the end of the spending review to support over a million young people into training and apprenticeships;
- A new £39bn ten-year Affordable Homes Programme to support housebuilding, specially for social rent;
- an additional £10bn for financial investments including to be delivered through Homes England to crowd in private investment and unlock hundreds of thousands more homes for working people;
- a fourfold increase in Local Transport Grants by the end of this parliament;
- the conclusion of a review of the Treasury’s Green book, the government’s manual for assessing value for money; the new Green Book, said Reeves, will support place-based business cases and make sure no region has Treasury guidance wielded against them.
The Chancellor’s statement follows others recently, such as £15bn in transport, including the extension of the Tyne & Wear Metro to Washington and almost £1bn for Tees Valley.
North East Chamber
On Tuesday the ONS reported that the number of people in the North East aged 16-64 who were economically inactive in February-April was 28.1%, the highest in the UK and the biggest increase since the previous three-month period, while the number in employment was 68.2%, the lowest in the UK and the biggest quarterly fall.
John McCabe, chief executive at the North East Chamber of Commerce, said: “While today’s [Wednesday’s] announcement reflects difficult choices, there is much for North East businesses to welcome, particularly the renewed focus on regional growth and investment.
“We are encouraged by the commitment to devolve more power and funding to local areas, the creation of a new long-term Local Growth Fund, confirmation of investment in transport and housing, and new funding for 350 communities with the greatest potential and opportunity. Backed by important changes to the Treasury’s funding rulebook, including the introduction of ‘place-based business cases’ to better assess local benefits, these changes represent a serious and sustained shift in how regional investment decisions are made, something the Chamber has long championed.
“Support for infrastructure, clean energy and training – alongside action to tackle child poverty and improve public services – directly responds to our members’ calls for a stronger, fairer North East. These priorities matter because they underpin workforce participation, business resilience, long-term competitiveness and inclusive growth, the foundations of a strong region.
“It is right that the government is investing in the skills system, supporting digital transformation and backing sectors with high growth potential. Reaffirmed funding for regional transport schemes, including confirmation of plans to progress Northern Powerhouse Rail, is also a welcome step towards improving connectivity across our region.
“With economic inactivity still a major challenge in the North East, there is a careful balancing act to ensure reforms to departmental budgets and welfare policy do not undermine local efforts to help people into good work or support thriving communities.
“Today’s settlement sets the tone for the forthcoming Infrastructure, Industrial and Trade strategies, later this month, where the detail will matter. The Chamber will assess these plans alongside departmental spending commitments to make sure government funding matches its ambitions, especially for our members in the North East.
“This review sends a strong signal of intent: delivery will be key. We will continue to make the case for a stronger, fairer North East and work with national and regional members, stakeholders and partners to turn policy into progress.”
Economically inactive
In response to the ONS figures on employment, unemployment and economic inactivity, Jessie Kelly Baxter, Senior Policy Advisor at the North East Chamber, said this week that the inactivity figures were “a sobering reminder that the North East economy continues to face ongoing challenges in engaging and retaining its workforce.”
“Unemployment levels have decreased by 0.1% for those aged 16 and over and now stand at 5%. While this is a move in a positive direction, the figure still sits 0.4% above the national average… While we know our region is a good place to work, and devolution is bringing new opportunities and funding, these figures highlight the importance of continued, integrated action to overcome persistent structural barriers.
“The Chamber is committed to ensuring more individuals across our region are included and supported in the workforce. This month, we concluded our Workplace Equity Task and Finish Group, resulting in a strong set of actions and recommendations that we hope will make a tangible difference in helping people access and thrive in the North East labour market.
“This is why our Knowledge Programme is focused on ‘people’ for 2025. Addressing economic inactivity starts with understanding and tackling the barriers individuals face when entering, staying, and progressing in work. This July, we will also welcome businesses, charities, and other key stakeholders to an Inclusive Employment event that will explore what it means for businesses to embed inclusive recruitment practices.
“Our continued work on two of our region’s Local Skills Improvement Plans (LSIPs) will also soon see the launch of an Inclusive Recruitment toolkit. This will support businesses across the North East to recruit from a more diverse pool of candidates in more equitable and inclusive ways.”
