Following the global banking collapse, with its impact on the UK’s finances and the consequent credit crunch, it was always clear that the UK’s economy would have to be built around a growth strategy.
Whereas the UK economy was growing healthily until the middle of last year, the Conservative-led coalition’s focus on debt reduction rather than growth has seen a significant slowdown in the UK economy to just 0.2% growth in the last year. The latest economic reports from the USA, together with troubled economies in the Euro-zone, simply compound the problems. Although manufacturing exports have shown a small increase, they cannot make up for a lack of demand in the UK economy.
Now we learn that the government’s flagship policy to promote growth and job creation in our region is set to cost more in administration and red tape than it has given in support for new businesses.
In his first Budget last June, the Chancellor George Osborne announced that a £1 billion 'national insurance holiday' to help new business starts-ups would help 400,000 new firms in the UK – equivalent to around 45,000 businesses in our region.
But since the scheme was launched last September only 645 firms in Yorkshire and Humberside have benefitted – just 1.5% of the number promised by the government. The position isn’t any different nationally, with just 5137 firms benefitting. With an average benefit per business of £2,000, that means around £10.3 million has been paid to businesses – less than the £12 million the Treasury says the scheme will cost to administer.
To put it bluntly, this keynote scheme – which the Government was relying on to promote new businesses and economic growth – has simply flopped.
Our region has been hit hard over the last year by stealth tax rises and spending cuts that go too far and too fast. The government has also abolished our regional development agency, and the resources being made available to local enterprise boards are pitiful by comparison.
Of course any help for businesses in our area should be welcomed. But this scheme has been a huge disappointment. It comes at a time when any national and economic recovery has been choked off by the government’s own economic policies.
The Chancellor, George Osborne, seems increasingly complacent and out of touch about the state of the economy. This is only compounded by the revelation that he’s paying more than £1000 a night for his holiday accommodation in the USA.
We urgently need a plan for jobs and growth to get the economy moving - which would get the deficit down for the long term - and to get the banks lending to small businesses again.