Memorandum from the Greater Manchester
Chamber of Commerce (NW 14)
SUMMARY
— Greater Manchester Chamber (The Chamber)
is the largest Chamber of Commerce in the UK representing 5,300 member
businesses who employ over 1/3 of the total
workforce throughout the Greater Manchester conurbation.
— The Chamber Chief Executive, Angie Robinson,
was nominated to represent Chambers of Commerce North West on
the Joint Economic Commission.
— The Chamber has supplied several papers
and pieces of research relating to issues that are impacting business
as a result of the downturn in order to represent the private
sector view. This data represents both the regional chambers view
in addition to that relating directly to businesses based within
Greater Manchester.
— The Chamber has developed its own specific
action plan—"Action for Business"—to address
the impact of the downturn both from a lobbying and representation
aspect as well as identifying and developing specific services
and activities for which there are currently provision gaps within
the Greater Manchester sub region.
— The Chamber has engaged with the RDA
to work on addressing service gaps and taken this a step further
to identify possible sources of funding to address this. Funding
has been agreed for some provision however several months into
the process funding has still yet to be received and the process
has been dogged by the inability for prompt response from a government
led agencies.
— Other joint work with regional and sub
regional partners has taken place but the delivery of services
to directly help struggling businesses has been the area of most
frustration.
1. The effect of the economic situation on
the region; including the effect on different sectors and on different
sub-regions.
1.1 The current economic downturn has had
varying degrees of impact across various sectors and sub regions.
1.2 In Greater Manchester the pattern of
impact followed that experienced at a national level with the
construction sector and its support industries first hit, followed
by the financial and professional services then retail and manufacturing.
1.3 Feedback from members has been mixed
on the direct impact of the downturn with a range of responses
reflecting businesses that have really struggled to the point
of insolvency to others that are still, at present, looking to
recruit.
1.4 For those looking to recruit this has
been an opportune time to pick up quality staff at potentially
lower cost from an expanded, available labour pool however the
complaint that some employees still lack basic skills is still
the most common issue raised.
1.5 For those members facing financial difficulty
the response has been to employ shortened working hours, scale
back on investment plans and drastically cut costs.
1.6 Access to bank finance has been an issue
though not always as serious as sections of the media made out.
In Chamber surveys approximately 60% of respondees stated that
their relationship with their bank had stayed the same with only
a small proportion stating that it had worsened. Feedback and
evidence indicates that banking problems stem from the lack of
knowledge and accurate publicity around the introduction of the
EFG scheme. Having said that some individual cases of seemingly
excessive fees and rates and strange security/collateral arrangements
have been evidenced.
1.7 The current major issue facing business
is the increasing difficulty of getting paid on time with increasing
evidence of companies taking unilateral action to extend payment
terms thus impacting on the whole supply chain.
1.8 There is deep concern regarding taxation
issues including the increase in NIC contributions due in 2011;
the ongoing impact of the removal of empty property rate relief;
the re-introduction of the 17.5% VAT rate in January 2010 and
the lack of creative solutions that could use the taxation system
to help businesses retain staff rather than force redundancies.
2. The effectiveness of Northwest Regional
Development Agency in assisting businesses in the current economic
downturn
2.1 As part of its "Action for Business"
document, first published in November 2008, the Chamber identified
several gaps in current provision for direct support activity
to business. One support project has been agreed with others still
in the pipeline however the time taken to obtain approval for
this including funding has been measured in months. The project
mentioned was approved with a view to commencing in April yet
as at this week the contract has not been received from NWDA,
adding an unnecessary two month delay. Consideration of two other
projects appears hardly to have started despite being raised with
NWDA in early February. Whilst assistance such as the project
that has been approved is more than welcome the timescale needs
to be much quicker to reflect the speed of the downturn and ensure
that in an environment whereby business survival can be down to
a matter of days, necessary survival activity can be put in place
in a prompt and effective fashion. The issue seems to be that
the NWDA is or should be a strategic body and is not capable of
delivering to the front line in times of emergency. At all times
it needs to be a springboard not a sponge, ie adding value and
impetus rather than retarding it and in a time of crisis it has
in the respect mentioned above proved to be the latter.
2.2 On a regional scale Chambers of Commerce
North West prompted by a GM Chamber initiative has worked with
NWDA to highlight the issues facing business around trade credit
insurance. Pressure has been put on government for action on this
issue and after initial scepticism within and delay by Whitehall
announcements were made in the Budget that steps would be taken
to address this issue. The delay in this has been at central government
level with shared frustration at a regional level. The NWDA was
effective in supporting our campaign in this respect
2.3 Regarding central regional funding sources
these are adequate but feedback from business shows that the awareness
of and access routes to these funds needs improving. The Chamber
has put information regarding these funds and other support mechanisms
on its website. One of the difficulties is the extra layer of
communication caused by having national, regional and local structures
3. The response of the Joint Economic Commission,
established by the Regional Minister in November 2008, to the
economic downturn
3.1 The JEC has made some steady progress
in co-ordinating several key projects within the North West and
also acting as a catalyst in bringing forward some projects that
seemed to have stalled. One of the main benefits of attending
JEC has been the ability for member organisations and representatives
to meet and work under the auspices of the JEC which in some cases
has been beneficial in acting as an update mechanism on latest
initiatives.
3.2 The Chamber has been involved with JEC
in supplying several pieces of research focussed on the relationship
of business with their banks as well as supplying regular updates
of the Quarterly Economic Survey.
4. The capacity of the Government Office for
the North West, Government agencies such as Business Link, Learning
and Skills Council, and Jobcentre Plus, and other partnerships
between Government agencies, local government and the private
sector, to respond effectively to the economic downturn.
4.1 The capacity of the above organisations
has been mixed in identifying what some of the issues are formulating
adequate and timely responses. What has become evident is the
capacity for these organisations to work effectively on a sub-regional
basis to deliver an adequate response and service at the real
heart of local communities. There are strong linkages between
the Chamber and local authorities and we have co-operated on the
10 day payment campaign and continue to work closely on procurement
issues. So whilst at a local level the relationship has strengthened
in difficult times there is also a feeling that the reverse is
true with regionally focused organisations which have had to work
hard to catch up.
4.2 The Chamber has played its part in identifying
and starting work to address gaps in local service provision.
What has been frustrating has been the length of time taken from
agreement to action/implementation of a service to receipt of
identified and agreed funds. This has had an ultimate knock on
effect of delaying vital services.
4.3 As already evidenced the downturn affected
different sectors and geographical areas at different times. As
most of the action in response to this took place under a regional
framework this resulted in, what seemed at times, a lack of coherent
action.
5. The usefulness of Government initiatives
such as Real Help Now, in providing support and enabling access
to finance, for businesses in the north west
5.1 After what seemed a slow start this
message has become more coherent however there are still ongoing
issues about getting the message across and out to businesses.
This issue has been identified and picked up on by the Chamber.
HMRC Payment Support Service has been broadly welcomed by the
business community and is seen as the best example so far of effective
government action.
6. Whether the approach of regional Government
and its agencies during the current economic situation strike
the right balance between short term need and planning for the
future.
6.1 The Agency is good at strategic planning
but it is not designed for delivery, nor is it close enough to
the businesses in a major conurbation like Greater Manchester.
There is a danger that the action at the end of a strategic planning
process is to start planning the next one rather than implementation.
Implementation is best left to those local delivery agencies that
are much closer to businesses.
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