Transport and the Economy - Transport Committee Contents


Written evidence from the North East Chamber of Commerce (NECC) (TE 94)

The North East Chamber of Commerce (NECC) is the North East's leading business membership organisation and the only regional chamber of commerce in the country, representing more than 4,500 businesses located in Northumberland, Tyne and Wear, Durham, and the Tees Valley. Our members are drawn from all sizes of business across all sectors and employ about 30% of the region's workforce.

Since the publication of the Eddington Report in 2006 the UK's economic conditions have changed dramatically. At the beginning of 2009, following two quarters of negative economic growth, the UK economy entered into a recession which officially lasted 12 months, however the impact of the slowdown is still very much evident for many businesses.

The recession was catalysed by a systemic crisis within the financial services sector which rendered credit markets inoperable, yet also had roots in global trade and currency imbalances which have come to reflect the changing nature of the global economy within which the UK now competes.

UK economic output fell by roughly five percent during the two years between 2008 and 2010. Public sector net debt is 56% of UK GDP in 2010 with expectations that it will rise further before peaking during 2012-13.

The economic situation has improved following interventions by successive Governments worldwide to underwrite key financial institutions and stabilise credit markets, thus reinforcing an important pillar upon which rests all business activity. However the recovery is embryonic and thus fragile.

Public spending is currently under review, the government has outlined clearly its intention to eradicate the balance of the public deficit by 2014. NECC maintains that all spending decisions that impact upon the chances of UK economic recovery and growth must be taken with great caution - transport infrastructure falls within this category.

Transport infrastructure directly impacts upon the capacity businesses have to generate wealth - it is vital that investment and spending priorities reflect this.

Investment in the North East's transport infrastructure must be protected as spending cuts are considered in the coming months and years. The money that is available must be clearly targeted at improvements to strategic links which open up access to national and international markets for businesses.

Strategic road connections to the North East remain sub-standard, with the region still not linked to the national motorway network. This must be addressed. Of immediate importance are junction upgrades on the A19 on both sides of the second Tyne Tunnel, which have been accepted into the current regional spending programme, and as the only elements of the strategic road infrastructure included should be seen as the top priority within that.

Investment in high speed rail should provide a network ensuring maximum economic benefit across the UK, including to the North East. A clear timetable for connecting different regions must be produced before the first phase is started to avoid skewing investment decisions. The North East must be linked to new high speed services from day one. However, capacity on the current East Coast Main Line will face severe pressure in the next decade so measures to address this cannot be put off.

International trade has been a vital component of North East economic success in recent years, so connections to gateway airports and ports must be strengthened. Air passenger duty threatens this as the extra cost burden will put the biggest pressure on more marginal flights to regional airports.

NECC welcomes the increasing opportunities that are arising for businesses in the arena of low carbon transport. In order to ensure that these opportunities are realised related infrastructure must be put in place as soon as possible to provide support for the emergence of this valuable component of North East industry.

NECC BRIEFING: TRANSPORT PRIORITIES, JULY 2010

1.  ABOUT NORTH EAST CHAMBER OF COMMERCE

The North East Chamber of Commerce (NECC) is the North East's leading business membership organisation and the only regional Chamber of Commerce in the country, representing more than 4,500 businesses located in Northumberland, Tyne and Wear, Durham, and the Tees Valley. Our members are drawn from all sizes of business across all sectors and employ about 30% of the region's workforce.

2.  SUMMARY

  • NECC believes that the current spending review is necessary, but also that the private sector will need the very best transport infrastructure in order that it can generate the UK's economic recovery;
  • Following the spending review, improvements to A19 junctions around the Tyne Tunnel must go ahead as planned given the project's strategic importance to the North East economy, and given that the scheme brings with it a benefit to cost ratio of 5:1;
  • Investment in further infrastructure projects that demonstrate clear value for money must be ongoing, with regional aviation and low carbon vehicles playing an increasingly valuable role in the North East economy;
  • Increasing capacity on the east coast mainline to cater for rising demand and ensuring that it links to a high speed rail network will unlock further growth potential for North East businesses.

3.  BACKGROUND

NECC members consistently highlight transport as a key issue to their businesses. In particular, effective links to domestic as well as foreign markets are critical, especially in the North East which is the only region in the UK to enjoy a positive (international) balance of trade.

Continued strategic investment in our transport infrastructure is of critical importance if we are to ensure that vital links to internal and external markets are not jeopardised as spending cuts are implemented. Any money that is available must be targeted at maintaining and building these links.

Strategic road connections to the North East remain sub-standard, with the region still not linked to the national motorway network. This must be addressed. Of immediate importance are junction upgrades on the A19 on both sides of the second Tyne Tunnel, which have been accepted into the current regional spending programme, and as the only elements of the strategic road infrastructure included should be seen as the top priority within that.

4.  SPENDING REVIEW

NECC agrees that the spending review is worthwhile in light of the pressing need to reduce the unprecedented levels of public debt. However the review must take into account the role that businesses will play in generating recovery, employment and growth. NECC believes that the Government should prioritise investment in infrastructure, provide the tools for businesses to improve their performance and remove barriers that impede growth. Pursuing these objectives will enable business to deliver the recovery.

Any loss of funding previously allocated to the region for transport would be disappointing.

The A19 is a project that is of critical importance to businesses in the North East, and has a benefit to cost ratio of 5:1. Ensuring that the schemes which make up this project go ahead must be a priority for the Department for Transport.

The A19 forms part of the strategic road network in the North East. It provides a vital commercial link connecting the Tees Valley, County Durham, Wearside and Tyneside conurbations. The Highways Agency has priced the upgrades to junctions on both sides of the Tyne Tunnel at £284.7 million and projected that the economic benefit will be £1.3 billion.

Improvements to the A19 junctions will ensure that the investment that has already been made in the second Tyne Tunnel will help enable this route to reach its full potential: easing congestion and delivering tangible economic benefits. A further benefit is that upgrading the A19 junctions will ease pressure on the A1 Western bypass and provide an affordable interim solution to this heavily congested stretch of road.

5.  OTHER TRANSPORT PRIORITIES

Investment in high speed rail should provide a network ensuring maximum economic benefit across the UK, including to the North East. A clear timetable for connecting different regions must be produced before the first phase is started to avoid skewing investment decisions. The North East must be linked to new high speed services from day one. However, capacity on the current East Coast Main Line will face severe pressure in the next decade so measures to address this cannot be put off.

International trade has been a vital component of North East economic success in recent years, so connections to gateway airports and ports must be strengthened. Air passenger duty threatens this as the extra cost burden will put the biggest pressure on more marginal flights to regional airports, in spite of the fact that the North East's airports in particular generate roughly £500 million of gross value annually.

Switching to a per-plane system of aviation taxes will place UK airports at a disadvantage to their European competitors, and will have a particular impact upon regional airports due to the smaller loads that they often carry.

The North East has an established automotive industry and supply chain which contribute a vast amount to the regional economy. Low Carbon Vehicles represent a growing opportunity within this sector, with Nissan recently announcing that it is to produce the Leaf electric vehicle at its Sunderland factory. Low carbon vehicle expertise must be supported with low carbon vehicle infrastructure that supports growth in this sector.

September 2010


 
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