Created 28th February 2022

By Neil Hart

Group managing director, Bradley Hall

As the pandemic subsides and Boris & Co become all partied out, levelling up is now taking centre stage. More announcements are being made even more questions are being raised as to whether this allegedly transformative initiative launched by the Government will actually serve the North East and our people.

The levelling up agenda remains conveniently vague but admittedly the ’12 missions’ outlined seem attractive. But objectively and realistically – will they work for our region? With little-to-no targets to decrease unemployment and child poverty, two very problematic issues for which the North East is worst in the UK, it begs the question of whether the true fundamental issues which continue to spiral within our communities are actually being addressed.

The chancellor said that the government would provide “an unprecedented economic boost across the UK”, creating better pay and greater pride in our communities. Our region’s strengths and weaknesses are fairly bespoke and solutions for one will unlikely work for another. Perhaps the government is taking too much of a broad overview, instead of drilling down into what will create the results we need for each of our regions.

It has been reported that Durham could be one of the first local authorities to receive a county deal including more powers moved from London to the council, with the North of Tyne mayoral area joining forces with Gateshead, South Tyneside and Sunderland.

Part of the Levelling Up plan included handing power and resources to local leaders. As it stands now do all of our local leaders have the capability to identify issues, create solutions and apply the desperately required changes we need to address the economic issues we are facing. Are they equipped to handle an unprecedented amount of responsibility and accountability?

On the face of it, it certainly seems as though the North is being left out in the cold yet again. ‘Levelling up’ our communities, or more accurately evenly ‘levelling them out’ and sharing the prosperity doesn’t look like it’s a priority. It’s hard to trust a government which has continued to betray us so much over the past few years especially. The fact that the vast majority of areas which were awarded a share of the first £1bn of funding, 39 out of 45, went to conservative constituencies – including Rishi Sunak’s affluent constituency of Richmond and Yorkshire - gives us just a hint of nepotism. As a mainly labour-led region I fear that if this continues our issues with worsen.

To be fair, the lack of funding for the region doesn’t seem for a lack of trying. Bid writing projects are costing our local authorities a huge amount to submit, with many being unsuccessful. The Northern Echo revealed that Durham County Council spent the most out of any North East local authorities, totalling an eyewatering £163,575 – which actually proved to be money well spent as they were awarded £20m to go towards over £30m of works. In total, over £300,000 was spent by councils in outsourcing bid-writing.

Controversial ‘Non-mainstream media’ outlet, Byline Times, revealed that the North East of England won only five of 105 funding opportunities in the first tranche of the Government’s Levelling Up Fund – also revealing that only 5.8% of the first £1.7bn is being invested by the scheme in the North East.

This happened despite the North East needing it most – with the region consistently having one of the highest levels of deprivation, the lowest average incomes and high poverty rates. The region also has one of the lowest GVA ratings per hours worked in the UK – the exact issues which the government is said to want to resolve with the Levelling Up initiatives.

In other statistics, the most recent ONS report on disposable income revealed that “while on {the national} average, each person had £30,256 available to spend or save; the North East had the lowest at £17,096, which compares with a UK average of £21,433.”

Now, bear with me as I go around the houses slightly to reach my point. We’ve had several announcements made regarding significant factories launching in the region, which will secure thousands of direct, indirect and induced jobs during construction and following launch. Britishvolt is one of two major UK battery manufacturing projects that has secured approximately £300m in funding so far, alongside an expansion of an existing plant at Sunderland owned by China’s Envision that supplies to Nissan. The plant will employ about 3,000 workers when it is at full capacity in around 2028. The first batteries are scheduled to start production in 2024 to take advantage of rising demand ahead of the UK’s 2030 ban on new cars without a battery.

Another recent announcement has included the latest Amazon factory in Tees Valley. Amazon has not yet confirmed the number of jobs at the Teesside site, but it is now believed up to 1,300 permanent and a further 1,000 seasonal roles could be created.

Even when we look deeper into fantastic announcements like the Freeport in Teesside, unravelling the facts the Office for Budget Responsibility said that in October 2021: “given historical and international evidence, we have assumed that the main effect of freeports will be to alter the location rather than the volume of economic activity.” So will this just shift activity from the Port of Tyne to the new Freeport?

Our research has shown that according to www.checkasalary.co.uk the average production worker salary in the North East is £20,341.63 which is fairly in line with the national average production worker salary £20,557.98.

Based on a single person, taking into account rising living costs, and based on average rents of £578 in the region, plus average bills including council tax, gas and electric bills, TV licence, water, an average food spend of £175 per month, the average finance cost of a car and filling the tank totals £1,281. The average ‘take-home’ monthly wage for a North East production worker is £1,458.02, leaving approximately £177 disposable income per month – £2,124 per year.

New figures from the Office for National Statistics show that the North East’s unemployment rate in the three months to the end of December 2021 were 5.6%, a fall of 0.1% from the previous reading but well above the national average of 4.1%. The number of people claiming unemployment benefits in the region was 84,045. I suspect that, given the thousands of roles which will become available across the new factories in the North East, that it will attract workers from other areas of the country. This then provides another challenge in regards to overpopulation and housing in a market that is already suffering from high demand and low available stock.

Charity End Child Poverty Overall, revealed that in the North East the child poverty rate has risen by over a third, from 26% to 37% over five years, moving from just below the UK average to the second highest of any region. A third of the overall increase happened in the latest year (2019/20) with many low-paid workers pushed below the poverty line by the freeze in their in-work benefits.

This really doesn’t feel like we’re ‘levelling up’.

A key part of the solution could be more skilled and well-paid jobs which will come from more investment in innovation and education. One of the factors which have been attributed to the productivity gap is huge difference between what local governments and universities spend on research and development across regions. London spends more than twice as much as the North East, with Scotland, East and the South East not far behind. The worrying part is that the latest plan announced in February 2022 promises to have only 200,000 more people a year completing high-quality skills training in England by 2030.

So, the question is – are we levelling up or just painting over the cracks? The tough reality of the above is that systemic challenges and issues have built up over generations, many of which will take decades to unravel and won’t be resolved by creating low-paid job opportunities.

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