I think there is good reason to be optimistic as we emerge from this pandemic and this budget I think serves to support my optimism
This region needs to seize the moment
Why am I optimistic?
Well, the growth figures quoted by the OBR confirm what many of us on the ground see and feel - The seeds are there for a strong recovery.
Think about it – billions of pounds have been magically created by the government inventing debt and placing it in the markets underwritten by us the taxpayer. They have then pumped that money into our economy. I think the chancellor has been very generous with it. Perhaps too generous
It has been unprecedented
Individually through furlough and support for the vulnerable and deprived
And in help for Businesses with grants, loans and tax holidays and deferment
Clearly some of the money will have gone overseas buying all that PPE and kit you might remember. All the sort of stuff we didn’t make over here, but a lot has gone into individuals’ pockets and UK plc’s bank accounts and balance sheets.
We’ve not been able to spend it in the pub, restaurant, theatres and cinemas or on holidays. And there must be a surge in demand coming. Personally, I cannot wait to get to the bar and drink a proper pint or have a meal out with my wife or take a holiday. Many of you will be like me.
The chancellor wants us to spend it – and the long lockdown is only serving to increase our appetite. I think it will turn in to corporate profits and I think he will then have a tax take.
That alone however will not balance the books
He’s not wrong in saying he wants to claw back all the debt. But Equally clearly, he realises he cannot have much of it back anytime soon.
And when he says he wants to balance the books; I think George Osborne paid off the last of the war debt only a short while ago. And I think there is a case now for carving out the structural Covid debt and having a long-term plan for that.
He is sticking to election pledges which restrict his options to collect personal taxes and he’s aiming at corporation tax where he is right you only pay it when you’ve made the profit.
Now within the economic outlook and this is interesting for business
Inflation and interest rates are favourable to individuals, business and the chancellor. Interest rates in my view cannot go anywhere anytime soon, and a modest degree of inflation would help lessen his longer-term liabilities although he cannot admit that and the BOE still have to answer if they go either side of 2% inflation - which I think they will
This position on interest rates should encourage businesses to invest and investors to invest in Business and income generating assets and that should drive an increase in inflation.
So I think it’s a good time to invest and I’ve never personally known a time where you can perhaps be as confident on interest rates.
He clearly has in his mind - that he needs to boost the economy first - alongside continuing generous support schemes - before implementing his tax take to demonstrate his fiscal stewardship. And - That makes sense to me.
I am pleased he seems to understand it would be foolish to increase capital gains tax as that would stifle entrepreneurship, corporate activity and growth
I am pleased to see continued support for the housebuilding sector with his announcements on stamp duty and his new mortgage guarantee scheme. The economic effect of greater house building activity has been proven time and again
Introducing the Capital Allowances Super Deduction for two years will drive investment – in my view, this does make sense – it should also help improve future productivity here in the UK which lags some other economies and which we need post Brexit
I think he is right to band the planned changes to corporation tax to allow small businesses to retain more cash to grow
He clearly has level up on his mind with some positive announcements as part of that strategy. The investment bank in Leeds, the freeports, the Treasuries new campus in Darlington. And something for all the devolved nations – so hopefully we avoid the instability of a Scottish referendum in the short term
Hopefully Nicola Sturgeon won’t therefore get her way
It looks like “fuel up the economy, get all those that will still have jobs back to work – then tax us to a greater degree”
But don’t let’s kid ourselves - you’re not going to pay off our gargantuan national debt for decades.
My advice to business is take the opportunities now on offer and make hay because I think the sun will shine.
Where I’m interested is how this plays out locally
Locally we have many problems that need to be fixed
What will this region look like in five or ten years’ time? We ought to debate that – what’s the vision and how do we get there
Will our local economy be bigger or smaller
Will we be retaining our young talent or will they feel it necessary to go to other parts of the UK or elsewhere to achieve their dreams
I believe growing our local economy is key to solving so many of our social problems
Central to the solution – is we need a bigger local economy, we need growth and for that we need local leadership, investment, skills and jobs
How do we rebalance jobs in this area – moving from a very big and heavy reliance on the public sector jobs to a growth based private sector
In my simplistic view it is a strong private sector that pays for those public sector services we all need and ideally you want a surplus on top
Here we need much greater growth of sustainable businesses and jobs to generate more local prosperity. Now Government is not going to do that, that is up to us - government just sets the framework within which we have to work and compete.
I think the current economic environment and this budget does that
So it is up to us
We are good locally at creating entrepreneurs – that might be because if you can make money round here you should be able to make money anywhere
The budget specifically included some positive stuff for our region – how do we max on that
75m for the Able Marine Park on the South Bank – is great news why because the port monopoly needs to be broken and we need competition on the Humber.
Next Freeports – the principle is great, its been proved to work elsewhere in the world and it could be great news, but at the moment I would er caution until we understand how this opportunity can be tailored to maximise money staying round here, local wealth and job creation
The chancellor understands the need for Skill’s with his announcements on more flexible apprenticeships and the real value of training for real and sustainable jobs. This area needs higher skilled higher paying jobs with the wage earner then desiring to spend some of that money here.
His support for the hospitality arts and leisure sectors is welcome and I hope that will help these sectors recover and grow. They employ a lot of people fully and part time. And We have a great county tourism offer capable of improvement and growth
The pandemic has driven us even more in to the arms of people like Jeff Bezos. A lot of our northern cities and towns are now donuts. People living and shopping on the outside and little going on in the inside.
Our city centre and some of our local town centres need seriously re-purposing. His announcements on town deals could be a major support for this but I don’t think they go far enough
Its too late to fight this we need to run with it and government will need to support with investment. The private sector will only join in with that support. Our High Streets are important community spaces. There is a big job to be done here, we need some fresh ideas on how we use our high streets
Here I think the opportunity is this government understands it needs the northern voter and wants to keep red wall seats. We need to ride that bus.
In summary a good budget – much along the line of what was possible - and what was needed
Locally the big question is WHATS THE VISION and are we going to grasp the opportunities