Northern Powerhouse at a Turning Point: £100 billion at stake for Northern economy

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- First Report of the Northern Powerhouse Partnership and first comprehensive plan put together by the North, for the North

- 200 businesses, civic and academic leaders come together to set out a vision for how to transform the North

- Extra £100bn worth of economic benefit and 850,000 jobs on offer

- Arup becomes latest business to join the Partnership’s Board

 

3rd February 2017

The Northern Powerhouse Partnership (NPP), an independent body launched in September 2016 by the Rt Hon George Osborne MP to bring together the voice of business and civic leaders across the North, is today releasing its first report in Leeds. 

This Report was developed following input from over 200 businesses, civic and academic leaders from across the North. It sets out the major progress already made over the last couple of years in proposals to better connect the cities and counties of the North, and devolve more power to city regions. But the Report goes on to identify what more still needs to be done to build a Northern Powerhouse where more people want to live, invest and set up businesses.

If the steps set out in the Report are taken then the Northern economy has the potential to benefit from an additional £100 billion gross value add over the next three decades, and in doing so an additional 850,000 jobs could be created. Fail to take this opportunity, and the North will fall further behind and the UK economy will become even more unbalanced. 

In order for the North to be more competitive, the report recommends that urgent attention must be given to improving: the performance and aspiration of the North's schools; the quality of adult skills; the east-west transport infrastructure that connects key Northern cities and Manchester Airport as well as its connectivity to the South; fibre and broadband provision; attractiveness to business investment; and the overall level of ambition in its local decision making.

The report also outlines how getting communities to work more closely together will enable the North to become greater than its individual parts and create a prosperous economic powerhouse that has the critical mass to drive a wealth of opportunities.

The NPP will now work closely with the Government as it takes forward its Industrial Strategy to ensure that the future of the North is created, developed and delivered in the North and a rebalancing of the UK’s economy occurs.

According to the NPP, the North has the ability to be at the forefront of much of the country’s innovative economic and political thinking over the coming years – including in areas such as digital commerce, devolution, and educational and healthcare reform.

 

The Rt Hon George Osborne MP, Chair of the NPP, said: “There is a real excitement across the North at present. The Northern Powerhouse initiative, which I launched two years ago, has already shifted the North into a new gear. Over the past few months I have met hundreds of business leaders across the North and visited new investment projects. The Northern Powerhouse is real and together we can transform the economy of the North of England.

“Now we are at a turning point for the North of England. We can either make use of the momentum behind the Northern Powerhouse to really close the north/south gap - or we can let the moment pass, and leave our country divided and the North left behind. Get it right and the Northern economy will be £100bn bigger, with more jobs and higher living standards for all.

“What makes this Report from our Northern Powerhouse Partnership different is that it is a plan of action worked on, developed by and now proposed by the North itself. Across the private and public sector, and across the political parties, we've worked on a common approach. It starts with the listening we've been doing to the voices of many Northern businesses and civic institutions over recent months. 

“Many issues have been raised with us - from transport connections to devolution. But one challenge stood out: education. Our education system, right the way from the start of school to higher education, must provide the next generation with the skills, inspiration and training to fulfil their goals and build our economy.

“There is now overwhelming evidence that attainment at 16 is too low in the North, leaving us lagging behind the UK and international competitors. We also let go of far too many talented graduates. I will be asking a group of leading employers and education leaders to work together with the Partnership to draw on the latest evidence and thinking to examine a number of key issues to put this right.

“As the Government takes forward its Industrial Strategy, which commits significant funding to regions across the North, we need to play our full part, with the infrastructure, skills and leadership to compete fully.”

 

Lord Jim O’Neill said: “It is critical that key transport infrastructure is in place to allow people that live in the Northern Powerhouse to work together as one and not in isolation, and to connect with global markets. But transport infrastructure alone is not sufficient. We also need more ambitious decision making locally, and better high speed broadband. Something that also shines through in this report is that the education system in the North is not currently performing to its potential; in fact it is currently falling behind the South.  We need an education system that promotes and retains talent and we need to gain graduates, not lose them.

“The Northern Powerhouse has generated significant interest and attention over the last couple of years. The strength of this report and its recommendation lies in its focus on decision making for the north, in the north, not in Westminster. It is down to businesses, civic leaders and academics in the north to determine their own future and grasp the opportunities that are available to improve the region.

“I look forward to continuing to engage with leaders across the North, to try and rebalance the economy and benefit the residents of the Northern Powerhouse.”

 

Steve Gillingham, Director of the North, Mace, said: “For the UK to succeed, all parts of the country need to grow. This report provides a blueprint of how the North can truly compete on a global stage by improving our skills base, investing in infrastructure, driving innovation, and delivering devolution. With major infrastructure like HS2 and the third runway at Heathrow underway, we are entering a golden age of infrastructure investment. The next challenge is for the public and private sector to pull together to help the North fulfil its full potential by improving East-West connectivity and the creation of a Northern investment fund.”

 

Justin Kelly, Director, Strategy and Business Development at Siemens UK, said: “It is vital that business and civic society work together to exploit the potential benefits from a properly invested Northern Powerhouse. A well-resourced and connected north – with a forward looking approach when it comes to new technologies will benefit businesses large and small, and ultimately the people that are employed by them. Put simply - a £100bn opportunity for the region is too good to miss.”

The NPP is also announcing today that Arup has joined its Board. Arup joins the other business represented on the Board, including Manchester Airports Group (MAG), Mace, Barclays, Associated British Ports, Drax, Siemens, HSBC, EY, Addleshaw Goddard, Bruntwood and Arcadis.

 

Dave Newton, Director at Arup, said: “The business case for the North is clear. We need to do more to advance our regional towns and cities to build an economic powerhouse capable of rebalancing the UK economy. This report is a positive demonstration of how civic and business leadership from a cross-sector of industries, working together, can bring about a step-change in the North’s performance. We must continue to collaborate and leverage the unique and individual strengths of the region, to drive our collective strategies to transform the North.”

 

Report recommendations

The report’s key recommendations are focused around four themes:

 

1)     Education and Skills

Improving attainment at age 16+

The North must improve educational attainment at age 16 and develop the technical and higher level skills employers need to compete. The North should:

    - Eliminate the gap with the rest of the UK in the percentage of good and outstanding secondary schools – building on the approach recommended by Sir Michael Wilshaw’s 2015/16 Annual Report;
    - Raise attainment at age 16 in English and Maths in the North to be at least the national average, and for the North to be regarded as a leading European region in digital skills at age 16;
    - Ensure employers can access the skills they need to grow by co-investment, and that local people can see the way to develop adaptable skills for the future to achieve their potential.

Retain graduates in the region

The North also currently loses around 30,000 people with graduate level skills every year as students choose to leave the city in which they have studied after their course finishes. The North should:

    - Be a net importer of graduates, particularly in the areas of science and technology in order to support growth in the region’s prime capabilities.

 

2)     Infrastructure and Assets

Faster journey times

It is only by achieving the city-to-city (and city-to-airport) road and rail travel times across the Northern Powerhouse which are aspired to by TfN that we can gain the agglomeration benefits from the North becoming a series of super-connected economies. The North should:

    - Speed up journey times, capacities and reliabilities between major Northern cities and its key gateway airport in line with TfN aspirations.

Leading the way on ultra-fast “fibre-to-the-premises” broadband

Exploiting many of the prime capabilities of the North in addition to promoting the adoption of new technologies and encouraging digital developments will be reliant on the provision of full fibre infrastructure across the region. The North should:

    - Be a leading European region in ultra-fast fibre to the premises broadband.

Centres of science and innovation

Science Institutes, supported by industrial and academic partners, provide an opportunity for the UK to stay ahead in vital areas of research and innovation to ensure growth in both the regional and national economy. The North should:

    - Have at least four major pan Northern centres of science excellence linked to each of the region’s four prime capabilities (Health Innovation; Energy; Advanced Manufacturing/ Materials; Digital.)

 

3)     International competitiveness

Raising rates of start-ups, innovation and exports

Breaking down the barriers to entrepreneurship in the North, making it easier for companies to start up and grow and raising the broader level of innovation and exports will be key to improving productivity rates across the region. The North should:

    - Be the easiest and best place in Europe to start up, develop and grow a high productivity business and have start-up and productivity at least equivalent to the UK average
    - Have innovation and exporting rates at least equivalent to the European average.

Develop further strengths in the agreed ‘prime capabilities’ of the North

The North should set a bold ambition for what our prime capabilities could become globally, for example, the world leading area in Health Innovation; Advanced Manufacturing/ Materials; Digital; and Energy.

 

4)     Leadership

Use devolution to drive faster economic growth

It is vital that the devolution of new powers from central government continues, encouraging new powers for the new mayors and more progress is made on ensuring that the UK can move away from being the most centrally-run economy in the OECD. The North should:

    - Be at the forefront of devolution and innovation, where people can take the decisions that affect their area with new devolved powers. 

Better promote the North globally to investors and as an attractive place to live with a high, and affordable, quality of life

The North’s businesses and public sector, alongside Government, need to raise their collective ambition and voice in front of investors about what can be achieved in the North and what the North can offer. The North should:

    - Be a magnet for people looking to invest, grow a business and looking for an excellent quality of life;
    - Be a place where people compete to invest, driving regeneration and benefiting all communities.

 

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