Enterprise could thrive if we seize opportunity

Jun 23 2010 by Andrew Hebden, The Journal

EXPECTATIONS had rarely been so modest. As we gathered around the television to watch George Osborne deliver his slash-and-burn Budget, those with the North East at heart inevitably feared the worst.

And so, perhaps, all the preamble about the dire need for blood-sucking austerity measures worked. Certainly, as I reviewed the Budget from a business perspective at least, I was left feeling not devoid of hope, but even a little encouraged that the needs of the region had not been totally forgotten.

We all knew that the North East was vulnerable to the pending, swingeing cuts to the public sector.

And we also knew that it was too simplistic to say that this would represent a “helpful” rebalancing of a regional economy too dependent on the public purse. There are plenty of innovative and successful private enterprises that depend heavily on public sector contracts too. We knew, too, that the grisly detail of where the axe might fall was likely to be contained in the Autumn spending review rather than in the Budget.

So what I was looking for was a cause for optimism. If the public sector in the North East is to shrink, then I wanted to know how the Government was proposing to help the private sector fill the void left behind.

And we got an answer that was, perhaps, more comprehensive than we might have expected.

A commitment to publish a paper aimed at tackling regional economic difference. An innovative idea to exempt new businesses in the regions from £5,000 of National Insurance for the first 10 workers. A new growth fund for regional capital projects, with no further cuts to existing capital projects. And relief for entrepreneurs from the capital gains tax hikes.

As one entrepreneur remarked to me shortly after Mr Osborne sat down, the North East should jump at this opportunity to market itself as a place for entrepreneurs to set up in business – and thrive.

We already know that the North East is a great place to do business, with its fantastic quality of life, excellent universities and relatively low-cost base. Now we can add some more real financial incentives to that list. It is a compelling case for any bright entrepreneur. We should get on with the advertising campaign immediately (provided that the budget hasn’t been cut, of course) because you can be sure other regions will be.

Granted, some uncertainties remain. We’d have liked, for example, a clearer indication of the Government’s plans to stimulate the much-talked of revival of manufacturing.

And the freeze in public sector pay coupled with a rise in VAT is a threat to consumer spending that could yet derail the recovery and will certainly be a cause of concern for those in the already-struggling retail sector.

So, this was not a good news Budget for the North East and there are many people in this region that will be counting the cost this morning.

But Mr Osborne cannot be accused of delivering the hurt without the hope, especially for those regions which he knows are going to take most of the pain from the cuts.

One critic Tweeted during the Budget yesterday that the statement was typically Tory in that it was pro-business. The implication was that those who work in the public sector or who rely on state benefits had been hard done to, whilst the men in suits were being looked after.

Such an analysis is too simplistic. Regions such as the North East need a plan for ensuring their economies will thrive long into the future. Yesterday’s Budget at least recognised that, even if it didn’t provide all the answers.

Andrew Hebden is head of business at NCJ Media