England’s North ‘needs investment, devolution’

Manchester's Media City

A NatWest real estate report on “Building Momentum: The Northern Powerhouse” said the economic success of the North of England depends on collaboration, innovation and investment in infrastructure.

However, the report said that if The Northern Powerhouse strategy was a success, the positive impact on the real estate sector could be significant.

“Focused action on infrastructure and innovation by empowered local government would attract more private sector investment, in turn creating more aspirational jobs across a range of industries, thereby helping to retain more of the thousands of graduates produced in the region each year,” said the report.

“The greater affluence brought to the region by these jobs would, as a by-product, attract more retailers, restaurants and leisure operators to the region, further improving quality of life and creating additional jobs.”

NatWest said the original premise behind the UK Government’s so-called Northern Powerhouse strategy is that the North of England, “with its major cities of Manchester, Leeds, Liverpool, Newcastle, Sheffield and Hull, and a population of 15 million, is not fulfilling its potential.”

NatWest said “The North” produces gross value added (GVA) of £287 billion, compared with £338 billion produced in London from a population of 8.5 million.

GVA per capita across “The North” ranges from £17,400 to £19,900, compared to £40,200 in London.

“While the comparison with a global financial centre may be slightly unfair, the gap in productivity between London and the second largest city economy, Manchester, is wider than the equivalent in any other G7 country,” said the NatWest report.

The NatWest report said that if the North of England’s productivity is to be improved, and the gap with London closed, “the human capital of the region must also be fully harnessed.”

Statistics from the UK Office for National Statistics showed that in the year to June 2013, a net 12,000 people aged 18 to 20 moved to the North from other parts of the country, with higher education acting as a magnet.

However, in the same year, 29,000 people aged 21 to 30 moved away from the North in search of opportunities elsewhere.

“The transition from education to employment is key,” said the report.

“Technical colleges that offer industry-specific courses, and apprenticeships such as the Rolls-Royce schemes in Newcastle, Sunderland and Warrington improve the pool of skilled labour in the region, while incubator hubs such as those at Manchester Metropolitan University help to support innovation.

“For talented graduates, there are an increasing number of opportunities in the North.

“The National Graphene Institute, set up by the University of Manchester, aims to retain leadership in the development of the material discovered by two Manchester-based scientists.

“On the back of this success, the Sir Henry Royce Institute for Materials Research and Innovation, with £235 million government funding, is also being built in Manchester, and will include satellite centres in Sheffield, Leeds and Liverpool.

“The Advanced Manufacturing Research Centre (AMRC), developed by the University of Sheffield in conjunction with Boeing, is a world-class research centre for aerospace and other high-value manufacturing.

“The AMRC is now the anchor tenant at the Advanced Manufacturing Park in Rotherham, a public-private partnership to create a centre for engineering, research and manufacturing.”

The report said that over the 19th century, the population of the North increased from 27% of England’s population in 1801 to 37% at the start of the last century, as the region became a centre of the industrial revolution.

However, by 2013, this had fallen back to 28% as the industrial era gradually gave way to the dominance of professional and financial services centred in London.

“If the North of England were able to fully exploit its potential, it could re-emerge as a centre of the new technological era, creating better opportunities, more robust economic growth and an improved standard of living,” said the report.

“And these gains to the North would not come at a cost to the South.

“On the contrary, the virtuous circle would benefit the country as a whole, by rebalancing the economy, attracting inward investment, improving skills and alleviating the pressure on housing supply in the South East.”

The report highlighted how crucial Scottish-style devolution will be if the North of England is to succeed.

“According to Core Cities, a cross-party grouping of leaders of the major regional cities, almost 95% of taxes raised in cities go directly to central government funds, with just 5%-7% controlled locally,” said the report.

“In Germany, 30% is controlled locally or regionally, in the US 40% and in Canada over 50%.

“Most spending on cities is deployed through a variety of government departments, perhaps hampering the co-ordination at a local level required to maximise the benefit of investment.

“The government has promoted the devolution agenda, but has stipulated that regions must agree to directly elected mayors, to ensure that decision-making is effective and in the interests of the region as a whole.

“Greater Manchester will hold elections in 2017 and has already had some powers devolved from Westminster, including those involving transport and housing, as well as the right to retain all growth associated with business rates.

“Indeed, 10 local authorities have worked closely together under the Greater Manchester banner for years, rendering public expenditure more co-ordinated, and heavily promoting inward investment.

“The results seem evident: in 2012 (the latest year for which such data is available), the Manchester economy grew by 3.8%, compared with 2.0% in London and more than any other major city.

“Other progress has included the establishment of the Greater Manchester Land Commission, which co-ordinates how the region’s publicly owned land can be used to support its wider ambitions – including the need for 10,000 new homes a year.

“Elsewhere, Leeds City Region has demonstrated the potential of co-ordinated action at a local level.

“Its scheme to cut youth unemployment helped thousands of young people find work, achieving a 70% success rate compared with 30% for the equivalent national scheme.

“In the North East, seven councils have come together to create the North East Combined Authority, with Newcastle’s Stephenson Quarter and Science Central developments cited as evidence of the benefits of this co-ordinated approach.

“Significantly, however, if powers are to be devolved on a wider scale, it is likely that the councils of Wakefield, Bradford, Gateshead and Sunderland, for example, may have to accept that theirs will be a junior role to the dominant cities in their regions.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.