The Northern Echo’s Level Up campaign is now starting its second year. We have just had our first live event of 2023, at Thorn Lighting in Spennymoor, where a panel of experts and an invited audience talked about Investment and Devolution
Decision-makers from across the North East brought together by the Northern Echo's Level Up campaign shared their experience on investment strategies and discussed one of the most important investment decisions the region has ever made - the LA7 devolution deal.
Backed by a wave of content online and in print, the Level Up campaign is run in partnership with a team of business leaders to call for investment and jobs for the North East.
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With Northern Echo Business Editor Mike Hughes chairing, the panel was made up of leaders from those businesses:
- Peter Snaith, a partner at Womble Bond Dickinson
- Stephen Gill, Global Account Executive at Cummins and a member of Tees Valley’s Local Enterprise Partnership
- Tom Lonsdale, Knowledge and Research Executive at the North East England Chamber of Commerce
- Elizabeth Scott, Cabinet Portfolio Holder for Economy & Partnership at Durham County Council
- Louise Taylor, Director of Corporate Strategy and Assurance at believe housing
- Nolan Gray, Director of the Teesside Freeport
To start the event, we heard from Amy Harhoff, Durham County Council’s Corporate Director for Regeneration, Economy and Growth about the council's Economic Strategy and how it will help grow the region's £9bn economy after a county-wide consultation process.
Amy told us about the thinking behind the strategy: “We've got some really important major companies like right, the one we're at today, that are very, very important strategic employers. But we've also got a large number of businesses employing smaller workforces, but that are important to us collectively. So when we think about what we need to do, we need to account for that entire landscape.”
Amy said valuing the County Durham economy at £9bn was only a starting point.
“What that figure shows is actually a deficit in what we should achieve as economy, when you look at national averages for our population, we should be closer to £12billion or £13 billion in productivity, and that's a year on year figure. So it's really important that we target our measures to be able to uplift that.
“We are as big in local authority terms as Bradford, Manchester or Sheffield. But our geography is very different - a rural economy where they are not. So that means particularly our interconnectivity - transport between areas - is more dispersed. So that's one thing we need to focus on.”
Amy said there were five Ps in the strategy – Productivity, People, Places, Promotion and Planet, and added: “We as a council take a very open and commercial approach to supporting investments.
"We know that investments need our support in different ways, whether that's applying for infrastructure funding to support some of those market failures and vulnerabilities, or the way that we offer business support, and you'll see many of my colleagues in the room here today from Business Durham - a team dedicated to supporting existing businesses in the county and attracting inward investment.”
Amy also talked about the hugely important devolution deal that County Durham has just signed up to: “It's incredibly exciting what this offers is, by way of funding, so a £4.2 billion package for the North East, which includes £48million per annum for investment funding. It includes housing funding, but it also includes a range of policy levers that give us greater control potentially over key aspects. I think what it fundamentally does is it gives more control to the North East to define its destiny to make its investment decisions locally.”
The Level Up panel of experts then discussed how their sectors looked at carefully-targeted investment as a way of progressing through so much economic uncertainty.
Peter Snaith said there was a mixed picture for inward investors: “Some totally get the fact that distance matters and we need to be trading with EU partners, but others are seriously concerned about the fact that there is that regulatory divide between using us as the stepping stone into Europe.
“But broadly speaking, despite those challenges, the UK is still seen as an important entry point because of the sectors around clean growth and there is a real difference in terms of what we've got up here in terms of the fundamental underpinning of that with renewables and renewables technology.
“Also, I think one of the areas that does really well in the North East but we don't see it as much is the Life Sciences side of things. There are a lot more inquiries in terms of Life Sciences and supply chain businesses looking at the North East as an area to come into.”
Cummins in Darlington is literally a driving force for the global group, and Stephen Gill told us investment was a constant.
“The product that we supply to different applications and different regions of the world naturally gives us a resilience and a hedge to issues that we may see locally. So to give an example of that, if we see a slowdown in the UK economy, you may see less goods getting moved around. That means less trucks, that means less engines. But then at the same time in China, you may see the government of China putting economic stimulus in that drives construction, and as a result, you need more construction equipment, equipment that requires more engines.
“We're building 300 engines a day - around about 75,000 engines this year. So really good for Darlington. But it would be remiss of me not to mention the headwinds, because there are economic headwinds, macro economic challenges, and we're seeing inflation and cost pressures with our raw material. For the long term investment plan, we don't see a silver bullet, no one solution fits all. So we're making a diversified range of investments across the various products. So that includes hydrogen combustion engines, hydrogen fuel cells, batteries, electrolysers.
“Hopefully, by the end of this year, we will have our hydrogen test facility. In terms of investment there, we're talking about 2030 and beyond, we're not only talking about now, we're not talking about a few years, we're talking well into the future.”
For a wider view of the region, Tom Lonsdale said ‘nowcasting’ was a way of checking the temperature of Chamber companies.
“What we saw throughout the year was quite a mix. We've seen a high level of concerns around those key issues like energy prices, inflation and staff costs have been consistent, really high levels that are almost unprecedented. And then as a result of that, we're seeing quite a low business confidence. But then equally when you look a bit more in depth into the data, what we're seeing is how businesses in the North East are reacting really resiliently to that with innovation.
“I think we've got that attitude because we've had to do things on our own in the past. So when you look, for example, at energy, over 90% of businesses are concerned about energy costs. But then in this quarter, we saw that 82% had taken action to reduce that which is almost 10% up from the previous quarter. So we're saying that as the higher energy costs are more instilled in the long term, businesses are working collaboratively to overcome these challenges.”
From Durham County Council’s point of view, consultation was key as they built their economic strategy, as Elizabeth Scott outlined: “This isn’t the council strategy – it has to always be the county strategy. We want businesses to think about how they can contribute to that strategy. So it's all about buy-in and ensuring that we're checking back as well. Are we on the right track…are we heading in the right direction?
“We are working with business partners to think about what is going to be needed in that sort of a timeframe, and how can we be the enabler, the facilitator that can help take things forward.”
Elizabeth said she was “cursed with optimism” and added:
“When we're bringing investors here into the county or into the region, we need to be saying ‘let's have lunch at the museums and see the beauty of Teesdale and Weardale. It's not just about numbers on the page, people make investment decisions with the heart sometimes. So we've got to get the whole piece right.”
That ‘whole piece’ centres around the people who are living here and moving here, and how they feel about the region. Over at believe housing, Louise Taylor said they were far more than a bricks and mortar organisation.
“We obviously have big decisions to make around our investment strategies and properties for our communities that people want to live in. So it's about people feeling safe and getting good service, they know where they are when they walk out of that door, and whether they're proud of that area.
“So I think we've got plans about improving our stock, but then also about our operation model in terms of how we deliver it to the people there. We've done a lot of work around cost of living and understanding what the challenges are.
“With that in mind, we have plans to develop 2,000 homes by 2026. We’ve also got 18,500 current properties that we are maintaining and working with SMEs and larger providers to make sure we continue to provide opportunities within the region.”
Talking about whether housebuilding was on track, believe’s Development Director Kate Abson answered from the audience: “I think for us in terms of where we are, we're not there yet. We know that from the work that we do with Durham County Council in terms of the affordable housing need - just across the county, not the wider North East - that there are not the number of affordable homes that we need. So our strategy is very much about how we start to close that gap.
“Also there is the investment in existing homes because there is a huge need there as well, looking at the decarbonisation agenda and making those properties more cheaper to run for some of the lowest income levels. These are people who are struggling with the current cost of living, sometimes just to put food on the table.
“So there's a whole balance for us across a range of different things. But certainly we're closing the gap.”
One of the most high profile attractions for investors is the Teesside Freeport and Director Nolan Gary said it was part of a united force affecting regions all over the world.
“It is based in Teesside, but this is the region’s freeport so it's really important we all get behind it,” he told the audience.
“There are 2,500 freeports around the world and what the freeport movement in the UK is trying to do is attract inward investment into the UK in the first instance, because predominantly our whole economy here is dominated by SMEs with one or two very large businesses on top of that.
“The beauty of this Freeport is it will bring new large scale investment that the whole SME economy can work with.
“If you look at the North East, from Berwick to North Yorkshire, I think it's something like a sixth of the landmass, so we have scale that is unrivalled but as a consequence of that scale, sometimes what we're doing is anonymous. So we have to keep getting that message out.
“For instance, in China, the biggest social media channel is WeChat. Now, I'm not sure of many businesses in the North East will be on WeChat. But if we want to get investors from China to come here, we've got to embrace that and look at how we put our messages across internationally.
“Are we translating anything that we say about the region? If not, we’re not embracing all the opportunities for ourselves.”
After lunch, Amy Harhoff was joined by Peter Caine, Quality Director at Black+Decker who are based just across from Thorn and Peter Arthy, Operations Director at Thorn Lighting, to talk about the North East Devolution Deal uniting local authorities in Newcastle, Gateshead, Sunderland, North Tyneside, South Tyneside, County Durham and Northumberland.
Amy set the scene by saying: “We were all waiting for the guidance and the white paper on levelling up, which came out in early 2022. And as part of that, Government got a number of options on the table. So for ourselves and for the other six partners, we have to go through a process to make sure that we were doing the right thing for the communities that we all represent.”
“Inevitably, that takes some time, to negotiate to make sure that we're doing the right things, but also for us to be able to collectively negotiate with Government. And what that resulted in is a deal for the North East, which is the largest per capita in the country and the largest in the country. So I think what can say is that hopefully it’s worth waiting for, because we've now got to the end of this part of the process.”
Peter Caine said there were three aspect for Black+Decker: “The first one is the political aspect – but I’ll just stay well away from that, if you don't mind. The other two aspects are running our business - how are we successful for the business? We've got a real rich history in County Durham on this site. So we've been here for 57 years on this particular site and we've been a big business. We have 3,500 employees on a site of 58 acres.
“I'm really interested in devolution to help me sell my business to American colleagues to build Spennymoor back up again with those great skills in the North East. I’m looking for the devolution deal to help my business after a very difficult time with Brexit, and anybody that's working internationally probably has the same kind of challenges.
"So we think this is a great opportunity to work closely with the county, but also closer with the whole devolved area to actually push our business.
“The third aspect is how we give opportunity to folks in the area and when I look at all the indices for the county, and I look at the challenges we've got, something's got to change, we’ve got to break through that Matthew Principle of accumulated advantage which generally means if both of your parents went to Oxford, you will succeed and probably go to Oxford or Cambridge. But the concept also says the poor, and the infirm, get worse.
“So my passion is not the political passion - it is running my business better, more efficiently, more effectively so that we can give kids in County Durham and the North East, the chances that I was lucky to get.”
Peter Arthy agreed that politics were not the important factor in the devolution deal.
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He said: “I've lived 60% of my life in the South East and 40% of my life in the North East, and one thing I learned is perceptions are always wrong. So the people in the South think the wrong things about the North and the North, the wrong things about the South. So for me, one of the strengths of this deal is that it will allow people in the North East to spend money and investment and have more control for people here.
“For me, the second point really is that I think we felt we have been a little bit constrained by the borders of county government. We try to talk to people within the county, but just the other side of the A1 with the Nissans of this world and other manufacturing companies, we don't really feel that we have such an affinity with them.
“So from that perspective, I think it should bring the whole North East area closer together in communication in business, and my desperate hope from this is all the businesses in the North East will trade more with businesses in the North East. Because that's where the potential is.”
A quick show of hands from our audience overwhelmingly backed the devolution deal. The hard work starts now, but the Level Up event proved that the support is there.
If you want to add your voice to the Level Up campaign, contact ryan.fenwick@localiq.co.uk
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