Business chief warns of regional divide ‘obsession’

John Longworth, the new Director General of the British Chambers of Commerce, also urged the Government to consider diverting cash from “sacred cows” like the NHS to fund transport improvements if the economy needs a new stimulus.

Ministers should focus on helping business to thrive across the country rather than throwing public money at particular areas – such as parts of Yorkshire which faces losing large numbers of public sector jobs – because it “rarely works in the way it was intended”, he added.

In an exclusive interview with the Yorkshire Post at the Liberal Democrat conference in Birmingham, Mr Longworth said the Government could still do more to help the private sector such as extending a national insurance holiday for new firms and rolling it out across the country.

While urging Ministers to stick to the deficit reduction plan “without blinking an eye”, he said that if global events led to a “significant” downturn in the UK economy the Government should consider measures to help business” – such as infrastructure projects – funded by cutting Whitehall spending in other areas rather than borrowing more.

He was speaking as Business Secretary Vince Cable painted a strikingly bleak picture of the economy, describing the current crisis as “the economic equivalent of war” and warning of a squeeze on living standards for years to come. He said his aides had complained his conference speech contained “grey skies” without any “sunny uplands”, but insisted he would “only tell it as I see it”.

“The truth is that there are difficult times ahead, that Britain’s post-war pattern of ever rising living standards has been broken by the financial collapse,” said Mr Cable, who insisted he was “positively committed” to the coalition despite claiming the Tories would never have reformed the banking system. Mr Longworth, who took over at the organisation two weeks ago, said it was time for more optimism, although he described the economy as “fragile”.

Since the coalition came to power employment levels have recovered quicker in the South East than in Yorkshire and the North – an issue highlighted in the Yorkshire Post’s Give Us a Fair Deal campaign – but Mr Longworth cautioned against simply throwing money at particular parts of the country.

“Direct Government support for business rarely works in the way it was intended. That includes regional. If we can create an environment in which business can prosper, it will help the nation as a whole as well as regions like Yorkshire.”

He backed the Government’s planned £32bn high-speed rail network – which will link Yorkshire to London. “Even things that benefit Yorkshire are good for the whole country just as things which are good for the country benefit Yorkshire. It all hangs together. There are cultural differences but we are obsessed about the North-South divide in a way that’s just not right.”

Adam Marshall, director of policy at the Chambers, backed the stance, adding: “We should be focusing on absolute growth in every part of the country not relative growth one part of the country against another.”

Mr Longworth said a National Insurance holiday for new firms – exempting new companies outside London and the south east from paying contributions for the first ten employees for a year – should apply across the country and apply for three years, helping the private sector to create jobs.

He warned it was “likely” there would be a lag between the wave of public sector job losses and the private sector being able to plug the gap but urged the Government not to rethink its spending cuts. “It’s absolutely vital we stick to delivering the deficit reduction programme, without blinking an eye.”