Lancashire business leaders broadly welcome spending review

Lancashire business leaders have given a guarded welcome to Chancellor Rishi Sunak’s spending review which set out the scale of damage the coronvavirus pandemic will cause the economy and measures to get the UK back on track.

Wednesday, 25th November 2020, 5:14 pm
Updated Wednesday, 25th November 2020, 5:20 pm

The Chancellor warned the economy is set shrink by its largest amount for 300 years and Government borrowing reach levels previously unseen in peacetime.

He said there would be lasting damage with the economy shrinking by 11.3 per cent in 2020 and not recovering to pre-crisis levels until the end of 2022 while unemployment is forecast to hit 2.6 million by the middle of 2021.

Borrowing is forecast to hit £394bn this year, equivalent to 19 per cent of GDP.

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Chancellor Rishi Sunak leaving Number 11 to deliver his speech

He said: “Our health emergency is not yet over. And our economic emergency has only just begun.”

The dire state of the public finances mean many public sector workers will see their pay frozen while the overseas aid budget is being slashed by billions of pound, but he outline a series of announcements designed to help the recovery.

He unveiled a nearly £3bn Restart programme to help get people back into work. For those in work, the national living wage will increase by 2.2 per cent to £8.91 an hour, a new £4bn fund available for projects across the country and a new UK infrastructure bank will be based in northern England.

The UK Shared Prosperity Fund – replacing European Union funding – will reach around £1.5bn a year.

Mike Cherry

The Lancashire-based Federation of Small Businesses’ national chairman Mike Cherry, said: “The economic forecasts outlined today are stark. Our hopes of recovery will hinge on the success of small businesses.

“A government which claims to be pro-enterprise had very little to say today about the importance of business and private sector job creation.

“This Spending Review was a missed opportunity to help small business owners – not least those who have been excluded from support measures.

“We need to see far more from this Government where reducing tax on enterprise, facilitating start-ups and bringing down operating and employment costs are concerned.

Steve Fogg

“That said, commitments to a new UK infrastructure Bank, Levelling Up Fund and UK Shared Prosperity Fund are good to see. We’ve always said that replacing EU funding for business support would be critical as we move to a new relationship with Europe, and our recommendations have been taken on board.

“The announcement of measures to aid the sharing of apprenticeship levy funds with small firms down supply chains marks an important step forward.

“The Government has listened to the expert Low Pay Commission where the National Living Wage is concerned, and that marks the right approach.

“We should also remember that previously thriving small firms have had to take on significant borrowing to keep the show on the road and pay for safety measures. Come the Spring, when repayments start to fall due, many will be extremely stretched. A pro-business Budget at that juncture will not just be important, but essential.”

Steve Fogg, chairman of the Lancashire Enterprise Partnership said: “The reforms for assessing public spending on projects should start to prioritise those in the North and help to ensure Lancashire is able to benefits from these reforms and secure the funding it needs.

"The launch of the £4bn Levelling-Up Fund is intended to ensure funding for local infrastructure is allocated to those projects which local areas actually want.

“Along with locating the new UK Infrastructure Bank in the North, these announcements are an encouraging start and reinforces the government’s commitment to levelling up the regions, but we still have a long way to go to levelling-up."

Transport for the North Chief Executive Barry White said: “The Government’s review concludes what we have long said - that the way investment decisions are made needs to change. Not only were the previous rules outdated and overly reliant on a formulaic cost-return calculation, but they would actively undermine the ambition to ‘level up’ poorer regions.

“The Green Book update could bring a fundamental change to the level of investment in the North. Focusing more on benefits to communities; how projects underpin key objectives like levelling up or decarbonisation; and how schemes can bring transformational change, is all extremely helpful.

"It means that decisions can be taken based more on the wider benefits that they’ll deliver for a town, city or region, breaking the cycle of investment decisions automatically favouring the most prosperous areas of the UK such as London and the South East.”

Spending review points at a glance:

Public sector workers will have their pay frozen in 2021-22 but NHS workers and those earning less than £24,000 will still get increase of £250

Unemployment predicted to hit 7.5 per cent in mid 2021, with 2.6 million people jobless

The UK economy is set to shrink by 11.3 -per cent this year

It will not recovering to pre-crisis levels until the end of 2022.

Overseas aid budget is to be cut by about £4bn

A new £4bn “levelling up” fund will pay for upgrading local infrastructure across UK

The Government will borrow an eye-watering £394bn this year, equivalent to 19 per cent of Gross Domestic Product

£3bn Restart programme to help get people back into work.

National living wage will rise by 2.2per cent to £8.91 an hour

£27bn to be spent on economic infrastructure in 2021-22 and a new UK infrastructure bank in the North of England

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