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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