No deal Brexit could have far-reaching detrimental impact on Stevenage
PUBLISHED: 08:30 01 February 2019
There is a raft of significant problems a no deal European Union exit could cause for Stevenage, including negatively affecting the £1 billion regeneration plans, care provision and the borough council's housing stock.
And it is the most vulnerable people in the town who will be hardest hit, Stevenage Borough Council’s Executive heard at a meeting last week which outlined the potential impact on the town in the event of a no deal EU exit on March 29.
Stevenage voted to leave the EU in the 2016 referendum, but Hertfordshire’s Local Economic Partnership (LEP) has concluded that, while there are some positive opportunities from EU exit, negative economic consequences are predicted in every scenario at county level.
The LEP has identified industries with the greatest supply chain risk due to trade and customs disruption with the EU as being chemicals, pharmaceuticals, aerospace, automotive and financial services. Aerospace employment is particularly concentrated in Stevenage, with 1,300 employees.
Business rates form a significant proportion of the council’s income, so the relocation of any of the major businesses away from Stevenage would have a detrimental impact, particularly considering the council has ringfenced business rates gains to support its regeneration plans.
The potential for prices to rise as a result of depreciation of sterling, trade tariffs, and labour cost increases is likely to affect household real incomes and welfare, with low income groups and deprived neighbourhoods being particularly vulnerable.
Bedwell and the south-eastern part of Bandley Hill are identified as particularly at risk as they are among the most deprived parts of Hertfordshire, identified in the Index of Multiple Deprivation 2015 analysis by the Ministry of Housing Communities and Local Government.
SBC’s report to its Executive said: “This situation is reminiscent of the period following the recession in 2009, when price rises led to reduced real incomes, with associated impacts on financial hardship and consumer spending.
“That period also saw an increase in the number of benefit claimants in Stevenage, and may be repeated if the EU exit leads to rising levels of unemployment in the town.”
The impact of a no deal EU exit on the pound may result in higher borrowing costs in future. The council’s Housing Revenue Account - for managing and maintaining its housing stock - includes significant borrowing over the next few years and this could have a negative impact.
SBC’s report says: “The council’s key priorities incorporate significant investment plans for Stevenage, including town centre regeneration, an ambitious new build housing programme and major improvements to the council housing stock. “Delivery of these plans could be impacted in the event of a no deal by rising contract values, land value fluctuations and the ability to retain contracts in an economically unstable environment.”
It continues: “In the event of an economic downturn and rising prices, employment levels and real incomes could be impacted. Households on low incomes and welfare benefits are likely to be especially hard hit by rising inflation and the increased cost of basic goods and services. This can be expected to result in increased demand for council services.”
Economic conditions directly affect investor confidence and construction activity and, in the event of an economic downturn, it may also become more difficult to meet local planning targets to deliver new homes and jobs.
Herts County Council has reported that about 16 per cent of the care workforce in Hertfordshire is from the EU and there is evidence that the decision to leave the EU has already impacted the county’s homecare workforce.
There are concerns that, following the EU withdrawal, it may become more difficult to fill careworker positions with workers from outside of the UK and this could in turn impact on Stevenage residents and the support required by vulnerable council tenants.
SBC leader Sharon Taylor said: “The council will work with our partners to ensure the impact of Brexit on our community is closely monitored and we are ready to respond quickly should that be necessary.
“We have a meeting with all our partners from the public, private and voluntary sectors early in March to discuss the latest situation and will consider with them whether to set up our economy taskforce.”