The pace of economic growth across the North East is set to slow over the next 12 months, according to research from PwC.
Growth of 2.5% across the region this year has largely been driven by consumer spending rather than exports, investment or public spending, and the report’s authors warn that consumer spending cannot continue as it has been.
Consumers have dipped into savings over the past two years causing the household savings ratio to fall steadily.
PwC’s report forecasts that North East growth will slip back to 1.9% as consumer spending across the UK falls.
Bill MacLeod, PwC’s senior partner in Newcastle said:
“Consumer spending growth has been relatively strong for the past two years despite weak average earnings growth. This has been due to strong employment growth, increased income tax personal allowances and low mortgage interest rates, all of which have stimulated consumer spending.
“We expect the proportion of household spending on essentials like housing costs and utilities to rise steadily and account for more than a quarter of total consumer spending by 2020.
“In addition, as lending increases and interest rates go up the proportion of financial services spending, excluding mortgage interest is also expected to increase to around 13% of total household budgets by 2020.
“We estimate that, across the UK, real household disposable incomes will have grown by around 1.4% in 2014 – but that’s around 2% less than average household expenditure and there is little indication of that gap closing.
“These increased household spending pressures will further put further pressure on families, particularly if real wages don’t begin to catch up with inflation.”
PwC’s report suggests the service sector will remain the main engine of growth in the region, and the UK as a whole, as manufacturing is hampered by stagnation in the Eurozone.
Source – Newcastle Journal, 14 Nov 2014
Rail campaigners have called on the Government to give Northern train services a once in a decade chance of investment.
Transport groups have said it is time services such as Northern Rail benefited from the same approach which has handed cash to rail in London and the south east in recent decades.
The Campaign for Better Transport has warned that a Government consultation on the future of Northern Rail and Trans Pennine Express looks set to do little to improve east-west links to and from the North East.
They say the plans as they stand give “only a vague indications of when the outdated 30-year old train diesel Pacer train will finally be replaced,” raising the possibility rail operators will not be forced to make much needed improvements.
In its consultation document on the new franchise the Government makes clear that it will accept limited rolling stick improvements if the cost would mean money diverted from other services.
The Department for Transport document says: “We firmly believe the rolling stock on Northern services needs to be improved so that passengers recognise a step change. But the more expensive the trains (and brand-new trains are likely to be the most expensive option of all), the harder it will be to justify current service levels where demand is low, and to afford to improve services where demand is increasing.”
The Department for Transport also makes clear that new operators would be allowed to cut back on off peak services, including reducing the number of trains calling at less popular stations.
There is some good news for Northumberland, with the Ashington, Blyth and Tyne line looking set for a return thanks to Northumberland County Council cash.
But while Ashington-Blyth and Tyne is mentioned, schemes like the Leamside reopening though the south of the region are not and potential operators wouldn’t need to consider them in their bids.
Also causing concern is a clear expectation that the northern services will not attract significant investment.
Campaigners say that the consultation is missing an sign that a new operator will be forced to invest in trains, track and stations. “This is a counterpoint to the investment-heavy approach to growing the railways used in the South East,” the campaign group said.
Stephen Joseph, chief executive at the Campaign for Better Transport, said: “The North East’s railways are at a junction. The Government is talking about trade-offs with the winners potentially getting newer trains and better stations while the losers could end up with higher fares and reduced services. Getting real investment into rail is essential to the region’s economy and we’ll be working with others to campaign for railways in the north to get the kind of support other parts of the country have seen.”
The Government consultation runs until August 18.
Source – Newcastle Journal, 23 June 2014
A new super council will be formed on April 1, allowing the North East to compete for millions of pounds in Government funding.
After months of internal rows and territorial battles, the North East’s seven council leaders have secured Government backing to form a Combined Authority.
The move means, for example, that decisions over major transport and jobs investment in Northumberland or Newcastle must be made only after the views of the other council leaders have been taken into account.
There will be no changes to local councils, with voters still electing their local councillor and the same group collecting bins and looking after those in care.
> But we won’t get to vote in matters directly involving this super council ?
But behind the scenes the North East Combined Authority will be seen as the lead voice for the region in Whitehall.
The seven leaders, and their chief executives, will share decision making over skills, transport and investment, have the chance to secure control over any devolved Government budgets and a say in how the region bids for the £2bn Government Growth Fund.
> And no doubt they’ll also share an extra wad in their pay packets.
Cities minister Mr Clark has told MPs he thinks it is “a huge advance in the North East” and called for council leaders, MPs and other jobs groups to come together to formally discuss with him the next steps for the region.
> And will we – those most affected by any decisions – have any input ?
Former regional minister Nick Brown recently secured a series of regular meetings with the cities minister amid concerns the region’s case was not being heard in parliament.
Last night he told The Journal: “If we want access to the money we have to comply with the Government’s preferred structures, and it is very important that members of parliament are involved and can represent their constituents.”
The combined authority sees Durham County Council, Gateshead Council, Newcastle City Council, North Tyneside Council, South Tyneside Council, Northumberland County Council and Sunderland City Council form a legally binding structure with the power to borrow cash and the responsibility to share risk.
Simon Henig, the Durham council leader set to chair the combined authority, said: “Working together is the best way to promote jobs and growth and to secure devolution of funding, powers and responsibilities from Government.
“We share ambitious plans for the future of our area and we are determined to work together to deliver them.
“We are therefore delighted to receive today’s news from Cabinet Office and look forward to the necessary formalities being progressed so that we can launch on April 1 this year. This is an important and exciting moment in our history and we are ready now to deliver on our ambitious plans.”
Hopes of forming a combined authority had appeared slim earlier this year when Sunderland Council had halted the process amid concerns that Newcastle would hold too much influence.
Ministers, civil servants and council officials put pressure on Sunderland to drop its objections, but it was only once leader Paul Watson secured a stronger negotiating hand on the leaders’ board that it could go ahead.
There were then further delays when Sunderland decided to hold out for a multi-million pound investment package from the Government for Wearside before going ahead.
This Sunderland City Deal, set to see some £50m spent on a new business park based around Nissan, is now in the final stage of negotiations.
> So it’s all decided, signed, sealed and delivered. You had no input, it doesn’t appear you’ll ever get the chance for meaningful input… but then, this is all about the really important people, like councillors and businessmen. Business as usual, in fact.
Source – Newcastle Journal, 06 March 2014
Parts of the North East’s cultural heritage could be put at risk as the Government seeks to end its responsibility for historic sites.
Ministers are part-way through plans to reform English Heritage and create a charitable arm responsible for the National Heritage Collection.
The Government hopes that an £80m cash injection will mean the quango no longer needs taxpayer support.
But concerns have now emerged that the moves will see properties put at risk as the reformed English Heritage struggles to pay for all its assets.
In the North East, English Heritage is responsible for key tourism attractions such as BelsayHall, Lindisfarne Priory, Warkworth Castle and Dunstanburgh Castle.
As well as those flagship sites there are many others which, while contributing to the overall worth of region’s heritage, do not individually draw in large numbers of visitors.
Culture ministers have been warned of the potential downside of their reforms in a joint response by the region’s 12 local authorities.
The Association of North East Councils has said it wants to ensure the changes do not create a situation in which only the sites which generate the most revenue are protected, instead of the entire collection.
And former regional minister Nick Brown has added to the warnings. He said: “The Government’s proposal has two obvious flaws. The loss of expertise will be damaging in the long run because the advice from a well informed independent authority will no longer be there.
“Secondly, our country’s heritage should not be reduced to a historically themed version of Disneyland. It should be preserved, treasured and valued for present and future generations.”
Urging caution of the unknown costs involved, the Association said: “This is an ambitious plan, with yet another organisation competing for the same sources of commercial and philanthropic funding as similar organisations.”
The councils said: “In the North East there is concern over the protection of historic buildings that may not necessarily generate large amounts of income and instead rely on a subsidy, yet are nonetheless key to the collection and bring in wider economic and social benefits to the local community in terms of tourism.”
The Association added: “Similarly, it is of concern that some sites may require such a level of investment to make them more popular and revenue generating, that the charity may seek to divest itself of responsibility for them. We would not wish to see detriment to any part of the collection solely on the grounds of financial viability and fully expect the new charity to demonstrate that it is the sector lead in conserving the Heritage Collection.”
Already across the North East there are nearly 300 properties on English Heritages At Risk register, properties which for decades have struggled to attract sufficient funding.
Grant Davey, leader of Northumberland County Council said: “There’s a worrying lack of detail in this consultation which compounds the feeling that this is just another attempt by the coalition to scale back the state, this time in the area of heritage.
“Northumberland has a rich and varied tapestry which tell the story of this county over the ages and it is a worry that the Government simply wants to open up English Heritage to the market. The Government needs to make the case for their proposed changes and I’m afraid I’m not convinced.”
Former Newcastle Council leader Lord Beecham, a one-time regional member of English Heritage, said there were concerns that the changes were akin to “privatising out heritage.”
A DCMS spokesman: “The Government’s plans to create a new charity, to be called English Heritage, to manage the National Heritage Collection will not involve disposing of or downgrading any buildings or sites. Quite the opposite, in fact.
“The £80m investment will be used to enhance and improve the Collection, helping to secure its future for generations to come.”
> Of course it’s now generally forgotten that in it’s early days our unelected coalition government made a determined attempt to sell off the nation’s woodland into private hands.
Source – Newcastle Journal 18 Feb 2014