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Coffee House

Austerity hits home in the North East of England

28 December 2012

2:07 PM

28 December 2012

2:07 PM

Have you personally suffered from George Osborne’s spending cuts? Your answer depends largely on where you live. I’ve witnessed both over the past few days. This Christmas, I’m enjoying my first prolonged stay away from London in some time and the impact of austerity in the North East has really struck me.

First to note is spending cuts in local government. In this part of the world, the public sector is a vast beast. The Guardian reported in 2010 34 per cent of the total employment in Newcastle upon Tyne is in the public sector, one of the top 15 councils in the country. The authorities of Sunderland, Northumberland, North Tyneside and Darlington all have above-national average employment in the public sector. Therefore the news in the Autumn Statement of another £445 million of spending cuts to local government in 2014-15 is another unwelcome development.

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One friend who works in a council underlined to me how hard the Tories are going to have to work to win over public sector workers in time for 2015. Over a drink on Christmas Eve, I made the mistake of praising  Eric Pickles. My friend wasn’t quite so taken with the Communities Secretary: ‘That damn Eric Pickles, he’s a maniac! He’s destroying this country and there’ll be nothing left of my department when he’s through. I can’t wait for early retirement,’ he cursed angrily.

The second is the effect the squeeze is having on local businesses. Earlier this year, the North East had an 11.5 per cent unemployment rate, the worst in the country. Despite the slight upturn in the economy, it was still 9.5 per cent in August to October compared to 5.7 per cent in the South West. Wandering through the Metro Centre yesterday — Europe’s biggest shopping centre created from the Thatcher government’s enterprise zones — I saw that shop after shop was either closed or closing. The usual throng of Christmas bargain hunters was in evidence, but the patrons were mostly browsing or heading for the heavily discounted chain stores. It’s not just smaller business either – my local Natwest branch is closing and when I asked why, I was told it was a ‘streamlining of the business’.

In the London bourgeois bubble that I inhabit day-to-day, it is easy to forget the effects of austerity on the ground — mostly because the capital remains the economic powerhouse of the country. But a walk around my hometown is a stark reminder the private sector has struggled to take up the slack from the reeling back of the public sector, while the worst of the spending cuts are yet to come.

This also presents a political problem. The Tories, who still have a serious image problem in this neck of the woods, will be given another Northern thumping at the next election unless they can prove that good times still lie ahead for the region. For once, the Conservatives’ outlook is not entirely hopeless. Director of Policy Exchange Neil O’Brien, who wrote our cover feature on the North-South divide, will join the government with a focus on policy development in 2013. One can only hope he will inject some new ideas targeting those strivers beyond the Tories’ natural territory.

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