Bernard Ginns: Tree-hugging might win votes, but it won’t create jobs

Take the Localism Bill as an example. Part of the Prime Minister’s Big Society agenda, this new legislation promises to shift power away from central government towards local communities.

The Government said the bill will make the planning system more democratic and more effective and give local people the power to call referendums on developments.

Conservative politicians such as Greg Clark also believe the Localism Bill can help encourage more civic-minded behaviour. In a speech, the decentralisation minister said: “Planning can in fact be the gateway that gets people involved in civic life. They might start by signing a petition to protect a local tree – they might end up volunteering on a regular basis, standing as a school governor, or becoming a councillor.”

That tree-hugging approach might win some popular support among Middle Englanders, but retailers that operate on a national scale are concerned about the effect that the reforms will have on their business.

Privately, they fear that localism could act as a break on investment and job creation by creating further hurdles in the planning process.

Andy Clarke, chief executive of Asda, said at a recent business event that “our store managers will have to spend more time participating in local decision-making but also have to get on with the job of retailing”. Localism, he said, “has major implications for a business like ours”.

New supermarkets will almost always attract opposition from certain sections of society because some people just don’t like change. But they often end up using the new stores anyway.

So why is the Government so intent on making life more difficult for one of the few sectors actually creating jobs?

Between them, Asda and Morrisons are expected to create more than 13,000 new jobs this year, playing their part in supporting the economy during a time of considerable uncertainty. Putting obstacles in their way does not constitute a business-friendly approach to government.

This is, I’m afraid, yet another example of what Sir Richard Lambert bemoaned as “politics appearing to have trumped economics”.

n NEWS that Yorkshire created jobs at a faster rate than anywhere else in the UK last month supports the anecdotal evidence I have been hearing from the region’s manufacturers.

They are increasing capacity to cope with new orders, driven by improved market optimism and greater client demand.

Not that they are shouting about it. Rather, most tend to go about their business in the quiet and confident way typical of this region.

Confirmation of the increase came from the latest purchasing managers’ index, a usually reliable survey of data collected from a representative panel of companies in the manufacturing and service sectors.

The findings also revealed the second-fasted rise in headcounts in the history of the series.

Phil Hawker, of index sponsor Lloyds TSB, said: “The Yorkshire and Humber region started 2011 in a strong position, with output and new order growth quickening to eight and nine-month highs respectively.

“This led to a strong rate of job creation and employment growth in Yorkshire and Humber remained the fastest of all 12 UK regions.”

The index, compiled by Markit, found the strongest rate of growth among manufacturers.

So far, so good and a welcome piece of news after fears that the UK economy could be heading down again.

But the report did contain some cause for concern – rising costs. It said: “The Yorkshire and Humber region posted the fastest rate of input price inflation of all UK regions in January. Input costs rose at the most marked pace in two-and-a-half years.”

I reckon those costs will continue to rise through the year, heaping more pressure on the Bank of England to hike up interest rates.

Those manufacturers will have to pass on their prices as well, which could erode any advantage they have from a weak pound.

The problem with hiking up interest rates is that it will push many households and businesses over the brink.

Mark Vines, a commercial director at HSBC, told me: “Historically, businesses have tended to fail as we come out of recession. The reason it’s different now is because the base rate is 0.5 per cent. If it was at five per cent we would see level of failures increase.”

Interest rates will go up this year; it is just a question of when. You can expect to see more companies struggling as a result of this inevitable step.