The Northern Research Group (NRG), with the Centre for Policy Studies (CPS), has published a report “A Northern Big Bang”. Authored by Jake Berry MP of the Lancashire seat of Rossendale & Darwen since 2010, and Nick King, who is a Research Fellow at the Centre for Policy Studies. Both are originally from the North West.
The report highlights the need for investment in the North of England. The challenge that the authors face is to get the legislative changes needed through a parliament where the majority of members are not from the North. It will be a difficult path for party managers to plot. One would hope that, where possible, there would be cross-party co-operation for the benefit of the region. But, that is beyond the remit of this comment piece. This piece is to offer a number of suggestions that may be of benefit to the process.
The first of these is to acknowledge three sectors of the economy. These are the public sector; private sector and community sector. The omission of the third of these, particularly when referencing the area of the UK which saw the foundation of the World Wide Co-Operative movement does seem bizzarre. The UK Social and Community Enterprise movement is an increasing player in local economies and has the advantage of retaining and circulating surplus income within those economies. Indeed, this is referenced and encouraged in the Social Value (Procurement) Act which has been on the stature book since 2013. As far as this report is concerned it may as well not be there!
The report makes a case for the re-instatement of capital allowances. These were abolished in 1982 yet do have a place for encouraging investment. The report makes it clear that these allowances will need to be geographic specific to have the desired effect in the North. They will encourage investment but, as the overwhelming majority of the community sector does not pay corporation tax (due to governance structures) this proposal will have minimal impact on sector investment. It may be possible to attract investment via leasing agreements where the lessor claims the allowances and discounts the rentals (as was the case when capital allowances were previously in force) but the VAT levied on lease agreements will negate much of the benefit. As the change in capital allowances will require legislation we suggest that the same legislation allows a zero rating of VAT for registered charities; companies limited by guarantee; CIO and CIC operating within the qualifying geographic area.
There is no reference to training and employment readiness – an area of the economy where the community sector has, historically, had great success. There are reports that some 750,000 EU citizens have left the UK during the pandemic. This will leave a huge gap in the workforce. Many of the issues highlighted in the report have led to multi-generational household worklessness. Investment, to tackle this, will be needed in order to address the work force gap. Yes, there will some benefit from internal UK migration. Where this has taken place in the past the effect is less than anticipated.
Finally, there is a reference to potential investment that can be unlocked from DC pension schemes. If this strategy is seen as contrary to well established risk strategies within the pension industry, how will this impact on the personal liability of charity trustees in the event of a pension scheme becoming under funded? Whilst one would hope that this is a hypothetical question it will have to appear on the risk register for community bodies that employ people and introduce an extra layer of professional advice that is currently not needed. The NEST pension scheme is seen as a sensible default option and more than adequate for needs. Care needs to be taken to ensure that this government created scheme delivers the risk level option desired by community directors/trustees. We live and employ in the communities that will be affected by complications arising from this matter.
We have invited Rt Hon Jake Berry, to speak at a to be arranged seminar and hope that he will accept the invitation. In the meantime please read the report and let Mr Berry know of your views.
