A 'Northen Big Bang'
The Northern Research Group (NRG), with the Centre for Policy Studies (CPS), has published a report “A Northern Big Bang”. Authored by Jake Berry MP of the Lancashire seat of Rossendale & Darwen since 2010, and Nick King, who is a Research Fellow at the Centre for Policy Studies. Both are originally from the North West.
The report highlights the need for investment in the North of England. The challenge that the authors face is to get the legislative changes needed through a parliament where the majority of members are not from the North. It will be a difficult path for party managers to plot. One would hope that, where possible, there would be cross-party co-operation for the benefit of the region. But, that is beyond the remit of this comment piece. This piece is to offer a number of suggestions that may be of benefit to the process.
The first of these is to acknowledge three sectors of the economy. These are the public sector; private sector and community sector. The omission of the third of these, particularly when referencing the area of the UK which saw the foundation of the World Wide Co-Operative movement does seem bizzarre. The UK Social and Community Enterprise movement is an increasing player in local economies and has the advantage of retaining and circulating surplus income within those economies. Indeed, this is referenced and encouraged in the Social Value (Procurement) Act which has been on the stature book since 2013. As far as this report is concerned it may as well not be there!
The report makes a case for the re-instatement of capital allowances. These were abolished in 1982 yet do have a place for encouraging investment. The report makes it clear that these allowances will need to be geographic specific to have the desired effect in the North. They will encourage investment but, as the overwhelming majority of the community sector does not pay corporation tax (due to governance structures) this proposal will have minimal impact on sector investment. It may be possible to attract investment via leasing agreements where the lessor claims the allowances and discounts the rentals (as was the case when capital allowances were previously in force) but the VAT levied on lease agreements will negate much of the benefit. As the change in capital allowances will require legislation we suggest that the same legislation allows a zero rating of VAT for registered charities; companies limited by guarantee; CIO and CIC operating within the qualifying geographic area.
There is no reference to training and employment readiness – an area of the economy where the community sector has, historically, had great success. There are reports that some 750,000 EU citizens have left the UK during the pandemic. This will leave a huge gap in the workforce. Many of the issues highlighted in the report have led to multi-generational household worklessness. Investment, to tackle this, will be needed in order to address the work force gap. Yes, there will some benefit from internal UK migration. Where this has taken place in the past the effect is less than anticipated.
Finally, there is a reference to potential investment that can be unlocked from DC pension schemes. If this strategy is seen as contrary to well established risk strategies within the pension industry, how will this impact on the personal liability of charity trustees in the event of a pension scheme becoming under funded? Whilst one would hope that this is a hypothetical question it will have to appear on the risk register for community bodies that employ people and introduce an extra layer of professional advice that is currently not needed. The NEST pension scheme is seen as a sensible default option and more than adequate for needs. Care needs to be taken to ensure that this government created scheme delivers the risk level option desired by community directors/trustees. We live and employ in the communities that will be affected by complications arising from this matter.
We have invited Rt Hon Jake Berry, to speak at a to be arranged seminar and hope that he will accept the invitation. In the meantime please read the report and let Mr Berry know of your views.
The Levelling-up Agenda
Across the UK, there are deep-rooted inequalities reflected in income, skills, living standards and life expectancy. These inequalities are so vast that the UK is recognised as one of the most regionally imbalanced economies in the industrialised world. As the UK embarks on its independence from the EU, tackles climate change and embraces the Fourth Industrial Revolution (IR4.0), these trends have the potential to expand divisions further, unless harnessed to provide economic opportunities.
A systemic change is required to ensure that the North West maximises its potential and the “Levelling up Agenda” provides a pathway to success. The Northern Research Group (NRG) is a group of 50 or so Conservative MPs who have big ideas for a “global Britain”, envisaging the North as an attractive landing pad for foreign investors, new business, highly paid jobs and international trade. The government have recognised this with the levelling up fund – a £4.8 billion investment, across the country.
To promote investment, cities, towns and surrounding areas need to be attractive places to work and live. The levelling up fund can support smaller towns to revive local business and rejuvenate a sense of community. This is especially important for rural towns and coastal villages considered “left behind”, in comparison to the development we see in major towns and cities. And, this is where the VCFSE sector has a part to play.
Many community facilities are operated by VCFSE bodies. A large number have suffered from a lack of investment and, in 2020, lacked income to meet day to day expenses – let alone embark on an upgrade. The being a good place to live agenda is one that the sector can lead on.
The North is home to a strong manufacturing base. The manufacturing sector provides a significant portion of the UK economy, contributing over 10% of domestic product, and totalling 44% of the UK’s exports, which translates to a £273 billion contribution to the UK economy. As the world undergoes a fourth industrial revolution, it is vital that the sector receives supportive policy and financial investment via the levelling up fund, in order to innovate and compete globally. If the North has a world-leading manufacturing industry that has embraced IR4.0, the region will see the creation of jobs, new skills and private investment. Again, this is where the VCFSE sector has a part to play.
There are reports that suggest that unemployment, in the UK, has not increased at the project rate resulting from Covid. Undoubtably the furlough scheme has assisted in this. But there are indications that a lot of migrant workers, from the EU, have returned to their country of origin if they have been made redundant or furloughed. This will have an effect on the ability of industry and commerce to “bounce back” when the upturn comes. The VCFSE sector is well placed to reach “the hard to reach” who will likely to be crucial to recovery of the economy. Those engaged in training and job readiness sectors are encouraged to ascertain the skills that will be needed, in the main workforce, going forward. The levelling up fund could be a route towards funding premises improvements to enable this.
The levelling up fund will also support physical connectivity in the North. The region has a number of airports with potential to connect the North on a global scale; however, these airports and surrounding communities require investment to capitalise on their potential. A “hub-and-spoke” approach is being advocated to connect business hubs and demonstrate the ease of connectivity, making the region a more attractive place to do business. There are regular announcements of new logistics parks being planned for the North West. How can sector partners engage with the training requirements for these – or even operate cafes etc for hauliers?
2020 taught us that we are more adaptable and resilient than we thought and accelerated changes to the way we work and live more in one year than had been the case in the previous five years. The North West has the potential to seize opportunities created from agendas such as increased home-working and online shopping to provide the perfect environment for present and future generations to want to live, work and play in.
Andrew Rainsford
VSNW with acknowledgement to Rob Elvin, Squire Patton Boggs, Manchester.