North East missing most jobs targets

The North East’s progress towards most of its economic targets went into reverse last year, hit by the twin shocks of Covid-19 and Brexit, according to figures on the Evidence Hub on the North East Local Enterprise Partnership’s (NELEP) website.

Total jobs, better jobs, the employment rate and the economic activity rate all saw falls in the first nine months of 2021. Of the region’s other economic targets, private sector jobs were already in gradual decline between 2019 and 2020 (latest available).

The productivity picture alone among NELEP’s targets was better. Though still lagging the rest of England excluding London in 2019 (latest available), the gap in gross value added (GVA) per hour worked was slightly narrower than a year earlier.

Progress towards all NELEP’s targets can be viewed on its website.  

Now NELEP leaders are waiting anxiously for politicians, national and local, to act on the twin issues of levelling up and devolution.

NELEP chief executive Helen Golightly told the organisation’s annual meeting this week that North East political leaders were in talks with the government about securing more devolution for the region.

‘The LEP have always been and continue to be really supportive of devolution into the region’, she said. ‘It’s very, very important to be able to make local decisions where we are much more familiar with what we need in the region. I think that’s absolutely critical, and we will support our political colleagues as much as we can to take that agenda forward.

‘I know colleagues are talking to government at the moment around how they can potentially get more devolution on the back of the White Paper that is due to come out in terms of levelling up’.

NELEP leaders have themselves been in contact the government about the much-anticipated Levelling Up White Paper but appear little the wiser as a result. Ms Golightly said: ‘The Levelling Up White Paper is due out maybe next week, maybe the week after. We will see what government do and we are keen to understand that and also to understand what the levelling up agenda is.

‘We had a meeting with government officials yesterday setting it out, but we haven’t had any real insight in terms of what the content says’.

NELEP is also uncertain of its own future funding following the ending of the Local Growth Fund, and of its own future role in the light of a government review of  LEPs and the completion of its ten-year strategic economic plan in 2024, coinciding with the scheduled date of the next general election. This website reported on December 7 that LEPs might be scrapped.

REPORTS

This week’s NELEP annual meeting provides a good moment to consider both NELEP’s own annual ‘Our economy’ report and a report on the impact of Covid-19 and Brexit on the North East economy which NELEP produced with New Skills Consulting Ltd and Ortus Economic Research Ltd.  

The NELEP/New Skills/Ortus report says: ‘The UK’s exit from the EU has affected the regional labour market, although the full impacts will still take some time to unfold, and it is very difficult to disentangle the effects of EU exit from those of the pandemic. The key impact appears to be staff shortages in sectors that previously employed a significant number of EU workers (such as agriculture, food and drink manufacturing, hospitality, construction, and health care)’.

NELEP chair Lucy Winskell, writing in the introduction to the ‘Our Economy’ report says: ‘As we have responded to the disruption created by Covid-19, considered long term changes in public policy, including our departure from the EU, and looked ahead to an agenda focused on decarbonisation of the global economy and levelling up domestically, we have continued to look carefully at what the data is telling us and are committed to continue to do this’.

According to a NELEP statement: [‘T]he impact of Covid-19 on business and the labour market has been significant. Some sectors, including retail, culture and hospitality, have seen severe changes. Local, regional and national intervention has had an impact in protecting businesses and jobs, but the impact now many of these support measures have ended is unclear. Inequalities within the region have been exacerbated by the pandemic too, with employers in many industries struggling with skills shortages.

‘The reports also include data showing that the region’s engagement with the global economy is changing, with the impact of EU Exit creating barriers to trade and the future trading environment still evolving’.

According to the NELEP/New Skills/Ortus  report, the pandemic and Brexit have resulted in significant changes in patterns of business, work, education, travel, and leisure activity which, if sustained in the long-term, will have important implications for the future of the regional economy.

The evidence, say the authors, points to a number of key opportunities, challenges, and changes now confronting the North East economy.

Opportunities include investment in key sectors such as advanced manufacturing (especially automotive and electric vehicles), low carbon energy, health and life sciences, and digital technology; inward investment; infrastructure improvements; capitalising on international trade opportunities; and locking in digitalisation and productivity improvements

Challenges include the need to support recovery in some sectors such as hospitality and leisure; high street retail; arts and culture; tourism; skills shortages; securing finance for business investment; supporting international trade; tackling rising inequality; supporting young people; addressing digital exclusion; enhancing digital connectivity and infrastructure; re-purposing town and city centres; and a renewed focus on growing the business base through start-ups.

The pandemic has brought some changes to which the regional economy will have to adapt – homeworking and hybrid working, including online meetings; changing patterns of transport and movement; the changing nature of some job roles; environmental concerns; growing domestic tourism; changing attitudes to workforce health and wellbeing; and concerns about quality of life and quality of place.

Richard Baker, strategy and policy director at NELEP, said: ‘The economic shock has accelerated a number of opportunities for the North East, with growth and new jobs in some of the key areas of strength and opportunity we have been focused on – in energy, life sciences and digital industries for example.

‘Many firms across the economy have changed their operational models, with rapid deployment of digital technology, changing approaches to delivery of goods and services locally and growth in online exporting. There are genuine opportunities for the region to drive forward greener businesses and to drive productivity.’

COMMENT

While Covid-19, if not its management, may be seen as a natural phenomenon, the other uncertainties afflicting the North East economy are not. Brexit policy, delays to levelling up and its likely inadequacy, and the abject failure to secure comprehensive devolution are all having an adverse effect and are all firmly in the control of politicians, national and/or local. They are failing the region.

Ministers led by Levelling Up Secretary Michael Gove have still given no clear indication when the much-delayed Levelling Up White Paper will be published, leaving regional leaders, both political and business, in the dark about what to expect as a basis for regional economic development going forward. What is more, the worry must be that when the White Paper is published funding for it will be limited to what has already been announced and the focus will be on relatively small civic improvements. These are welcome but far from enough.

Meanwhile, if regional politicians are moving towards the devolution deal that the North East needs, uniting councils north and south of the Tyne, they are not saying so in public. More than five years after the region’s seven councils split over the issue of devolution they remain divided along the line of the river, depriving themselves of government funding and holding back the economic development the area needs.

Maybe they are talking to each other and the government about a new devolution deal through the medium of the LA7 group of local authorities (Northumberland, North Tyneside, Newcastle, Gateshead, South Tyneside, Sunderland and County Durham), but if so, they are not letting their voters in on their proceedings.

The only information the public gets about this essential matter of regional governance, so important to the economy, is the occasional opaque aside, as given at this week’s NELEP meeting, or comes from North of Tyne Mayor Jamie Driscoll – the only local politician apparently prepared to mention the subject at all in public. The LA7 group itself meets in private and publishes no agendas, reports or minutes, as this website has complained before.

This is no way to conduct public business in 2022. With the regional jobs market under-performing again, North East voters are entitled to expect better from their politicians. It is time for them to emerge from their private LA7 meetings and explain what they are doing to bring devolution to the entire region.