inspire BUSINESS WEST – CONNECTING BUSINESSES COMMENT & OPINION


Keeping you up-to-date with the latest political policies and decisions that affect South West businesses


Business confidence in the West falls in the final months of 2016


Business West’s local business survey found that business confidence fell by seven per cent in Q4 of 2016, to reach the lowest reading recorded in the survey in recent times. This marks a steep decline from the final quarter of 2015 – falling 19% year on year. There were however signs that the regional economy was performing better than the third quarter of the year. UK sales and orders and export sales and orders all rose between quarter 3 and quarter 4, whilst hiring was in positive territory. This chimes with national surveys that have highlighted recent stronger performances in manufacturing and services. However, comparing the year-on-year performance, 2016 saw declines in all categories, except export orders and current workforce. The survey shows that events in 2016 are


still hanging heavy on business sentiment – with companies facing critical uncertainties around the nature of the UK’s post-Brexit relationship with the EU in particular. At the same time it highlights some of the upsides of weaker sterling and a strong national and local employment market. Matt Griffith, director of policy at Business West, said: “Business confidence took a sharp dive downwards in the last part of 2016. The last time confidence was at this level was just after the 2012 ‘omni shambles’ budget. In contrast the wider economy currently looks more resilient than predicted – however sterling volatility and underlying concerns about the outcome of Brexit negotiations may be unnerving businesses over future economic conditions. “With the long-term growth performance


of the UK economy projected to ease in the next two years and with inflation expected to rise, 2017 will be an important year for business. It is vital that Government continues to support measures to drive infrastructure investment in transport, housing and business support. It is equally important that Government moves to shore up business confidence given the level of uncertainty in the economy."


14 insight MARCH/APRIL 2017


A need to tackle the housing shortage


By RUPERT CALLINGHAM


prices and rents are pricing more and more people out of the market and placing a growing strain on budgets. Yet while plans to tackle the housing crisis have become a staple of successive governments, house building levels have remained stubbornly low for decades. The Government's White Paper – ‘fixing our


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broken housing market’ – acknowledges the scale of the problem and sets out proposals to speed up the rate of development. Many across our region will be hoping this translates into meaningful action on the ground – not only those currently struggling to get a foot on the housing ladder, but those with an interest in the success of this area’s businesses and economy. A lack of a sufficient supply of well-located and affordable homes has major repercussions for business. If housing costs are too high in an area, firms will find it more difficult to attract and retain the talent they need. If the problem becomes acute, it can place a drag on economic growth, with prospective employees and employers alike opting for competing areas better able to accommodate an expanding workforce. This is a major challenge for the West of England, where housing is becoming increasingly unaffordable, particularly when measured against local wages. There’s plenty of anecdotal evidence out there of local companies which have struggled to recruit and hold on to staff because of high housing costs. The measures within the Government’s new


housing strategy may go some way to speeding up the planning system and helping the housing market work more effectively, though few are calling it radical. With no consideration of the way different markets work across the country or specific obligations for areas experiencing particularly high pressures, ultimately the


e all know that we need to build more homes in this country. Increasingly unaffordable house


Government has left it up to our leaders locally to plan ambitiously for the level of housing we need. Unfortunately, in our region, this has not been happening. The West of England is in the midst of developing a Joint Spatial Plan to guide where and how many homes are to be built in the region over the next 20 years. It’s a big piece of work which will have major implications for housing affordability in the future, but the current proposed numbers simply aren’t as ambitious as they could be. Work which Business West has commissioned by the respected housing market economist Professor Glen Bramley spells out some stark warnings over the likely consequences of the authorities’ current approach. Bramley’s model shows that if


the authorities stick to their current plan, house prices will continue to rise relative to incomes and the affordability of both home ownership and renting will deteriorate. Alarmingly, Bramley shows that little more than a quarter of under- 40s will be able to afford to buy a home


in the local area by 2031, dropping from nearly 70% in 2002. A Brownfield-first approach to housing


development is essential and welcome, and it’s right that the Green Belt should be preserved as far as possible. Given the pressures we are under, however, there’s a strong case for revisiting the Green Belt in certain locations close to transport infrastructure and jobs, and where land is of low quality. This is actually far more sustainable than landing major developments miles away from the main urban centres, and needs to be looked at seriously. We must also make sure that a balance is struck in our urban areas between developing Brownfield sites for housing while leaving enough room for the offices, depots and factories needed by business. However the picture changes nationally, it’s


clear that local leaders must take responsibility for meeting the housing challenge. Failure to do so will come at a huge price for our residents, businesses and the regional economy.


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