North East needs capital investment

Jul 9 2010 James Ramsbotham, chief executive, North East Chamber of Commerce

ONE of the most welcome, but overlooked statements in the recent emergency Budget was the commitment by the Chancellor not to make further cuts into capital budgets.

It wasn’t a headline-grabbing statement like a 2.5% VAT increase, but it’s critical for our regional economy.

Of course, we shouldn’t get over-excited – all we were promised was no more cuts on top of the cuts already announced by both the new Government and the last one.

But it was an important recognition that investment in infrastructure is one area of Government spending well worth safeguarding.

NECC believes infrastructure spending should be a top priority despite the huge pressure on the public finances.

This is because the challenges which require top quality infrastructure are increasing, an SME-dominated business community cannot make these investments without public support and the level of provision now will affect returns from the North East for UK plc for years to come.

So far from the new coalition we’ve had good news – maintaining investment in the Tyne and Wear Metro – and bad news – cancellation of a new hospital in Tees Valley and of school building programmes.

We were already braced for local authority capital budgets falling by more than £800m in the next three years – which potentially equates to 17,000 construction jobs.

Now we’re making the case for critical road improvements to be maintained.

The Transport Secretary, Philip Hammond, has announced all projects currently being planned by regions are under scrutiny, and we cannot assume previously announced spending will go ahead here.

This puts a number of North East projects at risk. Of biggest concern to NECC are upgrades to four junctions on the A19, either side of the new Tyne Tunnel.

These improvements will radically improve north-south links in the region, in particular between the main urban areas of Teesside, Wearside and Tyneside. They will also relieve pressure on the A1 Gateshead Western bypass, creating an alternative route around the east of the conurbation.

Without them, the second tunnel could cease to be effective within a few years, as congestion is simply shifted to the next junction along.

This kind of cut would save cash in the short term only to cost billions in lost productivity later.

The Government was right last month with the theory of maintaining capital investment. Now we need to see it applied in practice to the North East economy.

For information on Constructing Excellence in the North East, tel: chief executive, Catriona Lingwood, on 0191-3740233 or catriona@cene.org.uk.