THE Chancellor has been told his Budget was “a missed opportunity” for the North East.
Despite good news for thousands of workers in their tax bills and help for small businesses, there was little to cheer on the wider regional picture, business leaders said.
As unemployment rates in the North East were again revealed to be the UK’s highest, many were looking for a Budget which would stimulate growth across the region.
Instead, MPs, businesses and unions hit out at a pay cap for public sector workers, a promise of extra infrastructure cash only after 2016 and a warning that councils and police would only be spared further cuts for a single year.
Instead of immediate cash handouts for regional projects, George Osborne decided to focus on individual tax measures.
As a result of income tax changes, another 14,000 people will be not pay the tax in the North East, and other 931,000 will be handed a tax cut in their 2014 pay packets.
That change will follow on from income tax reductions set to come into effect next month, in which thousands of workers will see immediate increases in their take-home pay.
Liberal Democrats in the coalition have taken particular credit for the move, making it a core commitment in their coalition negotiations back in 2010.
Business in the region will also benefit from the new Employment Allowance, which will take £2,000 off the National Insurance bill of every employer, with 25,000 employers in the North East benefiting and taking 15,000 out of having to pay any tax on jobs at all.
Hexham Conservative Guy Opperman said: “This is fantastic news for businesses in the North East. The Employment Allowance will make it easier and cheaper for firms to hire people.
“An employer could hire four people working full-time on the minimum wage without paying any National Insurance. These and the other business measures are exactly what businesses need to grow.”
But for others there was little to cheer. Ed Cox, head of think tank IPPR North, said: “The headline measures will do more to further inflate house prices and childcare costs in London and very little to boost regional economic opportunities.
“Meanwhile, further public spending cuts – not least in pay and benefits - will have a continued deflationary impact on many Northern towns and cities.”
Former regional minister Nick Brown said the budget “lacked imagination”.
The Labour MP for Newcastle east said: “There is nothing in this for the North East, it is very disappointing. The key problem is that there is nothing here to stimulate private sector growth.”
The former cabinet minister added: “It is not sustainable to keep public sector pay rises at a below inflation 1%, eventually that system will break down.”
But former Newcastle Council leader Lord Shipley said the Budget would be welcomed by small businesses and families.
He said: “The federation of Small Businesses has strongly welcomed the Chancellor’s announcements. They will be extremely helpful to the North East.”
