Major plans for Lincolnshire could be put on hold as the economy suffers short term pain, but local business chiefs are optimistic the county will pull through eventually.
Lincolnshire County Council’s portfolio holder for environment and economy Councillor Colin Davie did not specify which projects could be in danger, but agreed that a perfect storm of COVID, the ending of Universal Credit bonuses, energy crisis and others were about to collide to the detriment of the economy both nationally and locally.
“The short term is flashing red,” he said. “The outlook is challenging, but the long term future is full of optimism.”
He said: “We’ve got significant growth, businesses are reporting their order books are really good, but they also are reporting really significant challenges, particularly around labour, and particularly around rising costs and difficulties with supply chain.”
Rising manufacturing and energy costs spiking nationally
Manufacturing orders have grown by 7.5% nationally, but Councillor Davie said the inflated prices of materials would be passed down to consumers in the country.
They include the cost of steel, which has gone up by 65% and timber by 100%. In general material costs last year rose by 20.1%.
On top of this, businesses now face rising energy costs due to reasons including a mix of fuel shortages and rising prices internationally.
Some energy companies face collapse, while businesses and residents are due massive hikes in their bills.
“That’s going to feed through quite clearly in rising costs to the end user. So if you’re building one house, you’re going to have a least 20% extra money to find to pay for it to be completed. If you’re building a huge commercial development, then you could be really challenged.”
He was confident projects which had already started were budgeted for, but warned projects that had not yet started and had been budgeted pre-COVID would “be the ones that are really challenged.”
This could include, he said, grant funded projects such as those listed in various town deals, or which had received Greater Lincolnshire Local Enterprise Partnership funding where contingency plans may not be able to meet the increases.
He was critical of governments’ previous over-reliance on renewable energy and not having a balanced energy mix, adding “the whole thing is a total mess”.
Universal Credit was only temporary, but job market improving
Cllr Davie pointed to the shortage of HGV drivers in some industries, as well as supermarkets paying higher wages to delivery drivers.
Despite the caution over the outlook, however, Councillor Davie agreed Universal Credit should be temporary, adding: “COVID has cost £500bn so far and someone’s going to have to pay for that.”
He indicated that it was not all doom and gloom: “It’s not just energy costs rising, people’s wages are rising too because those in work are now in a position to move around and dictate where they work.
“We’ve got as many vacancies in our county right now as there are people unemployed, so it is a work person’s marketplace, they can dictate where they work, and to a large extent what they now get paid.”
Lincolnshire still “very attractive” to investors
Elsewhere, Councillor Davie was even more positive, particularly around projects such as the 3,200 new homes in the Western Growth Corridor in Lincoln.
“Land prices in a place like Lincolnshire are relatively low compared to other parts of the country and we do have a lot of space to grow.
“There is a clear demographic change underway, with people wanting to live in nice places, work from home, commute to the office a little bit and Lincolnshire is very attractive — we’ve got some very fast rising house prices in the county,” he said.
“So big schemes like Western Growth Corridor, subject to meeting all our objections… There is no reason why that scheme was still not a viable proposition.”
He acknowledged there were still challenges around providing homes for young people and reiterated previous points about a need to reinvent High Streets to provide more housing, as well as making homes environmentally friendly.
Despite all the issues outlined above, however, Councillor Davie was confident the county “was a place of optimism”.
“If we can manage the next few months carefully, it will be a place that comes out of COVID and moves forward as a greater place and a greater economy.”
Post-Brexit and post-COVID “optimism”
He said Brexit, which has continued to rumble on in the background, had created “opportunities for manufacturing products within our own borders”.
“We are embarking on, after Brexit and after COVID, a march for this country to be a global player.
“We’ve got lots and lots of foreign investment inquiries into Lincolnshire.
“I also want Lincolnshire to have a presence on the global stage, so as government announces trade deals with different parts of the world, we will be looking to work through the government departments, and talk to those individual trade deal areas about what opportunities Lincolnshire could offer their investors.
“Lincolnshire will be global Lincolnshire, alongside global Britain.”