A new report published today by the Northern Powerhouse Partnership (NPP) and Arup shows the Humber remains one of the UK’s most significant industrial clusters. Its strengths in clean energy, chemicals and advanced manufacturing are central to the UK’s future economic growth and decarbonisation ambitions. 

The State of the Humber report looks at region’s economic structure across both banks of the Humber Estuary, comparing how different sectors perform in terms of productivity and geographic concentration with the national average. 

The analysis finds that the Humber’s clean energy sector has both higher than average productivity and prevalence in the region, with electricity, gas and steam supply showing productivity levels well above the UK average. The area’s chemicals and pharmaceuticals sector is also highly concentrated, with employment levels more than three times the national average, highlighting the Humber’s position as a nationally important industrial cluster. 

These sectors form the backbone of the Humber economy, underpinning major national supply chains while providing a platform for future growth in offshore wind, hydrogen, and carbon capture to enable industrial decarbonisation. 

The report also highlights opportunities to unlock further growth: expanding smaller high-performing sectors and increasing productivity in areas that employ a large proportion of the population but could be lag behind in output. 

The report sets out three priorities for policymakers and industry to unlock the Humber’s next phase of economic growth: 

• Protect the Humber’s mature industrial clusters, particularly chemicals and clean energy, through investment in innovation, skills and supply chains. 
• Boost productivity in foundational manufacturing sectors, such as machinery and vehicle manufacturing, through technology adoption and programmes similar to the successful Made Smarter initiative. 
• Grow areas of the economy which have higher productivity but are employing less people than the national average 

Alongside the economic analysis, the report also highlights the wider conditions needed to support investment in the Humber, including grid infrastructure upgrades, water security for industrial expansion, environmental permitting reform and long-term flood resilience for coastal communities. 

Paula Walsh, Executive Director EIMEA, Arup, said: 

“Arup is committed to the long-term regeneration and economic uplift of the Humber, playing an active role as a technical integrator, key regional stakeholder and collaborator.  

We strongly support the priorities set out in the State of the Humber report and stand ready to help drive the next phase of clean growth, productivity and resilience across this nationally significant industrial heartland.” 

Aglaja Schneider, Joint UK&I CEO for Siemens Mobility, said: 

 “The Humber’s position as one of the UK’s leading industrial clusters comes as no surprise to us. Our investment of up to £240 million in our Rail Village in Goole, Yorkshire reflects our strong confidence in the region’s future. Built on a bold vision to create a world-class rail manufacturing hub, the facility will bring up to 1,000 jobs to the East Riding of Yorkshire and support around 1,700 supply chain opportunities, further promoting localisation. With a clear pipeline from government, businesses like ours will have the certainty needed to continue investing and deliver the next generation of rail travel right here in Britain.” 

Graeme Davies, EVP CCS, Harbour Energy said:  

“Viking CCS has the potential to play a pivotal role in transforming the Humber into a world‑leading industrial region, supporting high‑value jobs and skills development. The State of the Humber report highlights the region’s defining industrial strengths of which Viking CCS is a part. We look forward to continuing to progress the project – which is at a strong state of readiness and maturity – with our key local partners to unlock its economic benefits.” 

Henri Murison, Chief Executive of the Northern Powerhouse Partnership, said: 

“The Humber is one of the UK’s most important industrial clusters, with real strengths in energy, chemicals and advanced manufacturing that are central to the country’s economic future. Our analysis shows that these sectors are not only significant in scale, but among the most productive parts of the regional economy. 

“But the opportunity now is to build on those strengths. That means backing clean energy and industrial decarbonisation, addressing long-standing gaps in research and development, and supporting businesses to move further up the value chain. 

With the right investment and policy framework, the Humber can play a leading role in driving growth, strengthening the UK’s industrial base and delivering the transition to a more sustainable economy.” 

Notes

• The State of the Humber was produced by the Northern Powerhouse Partnership in partnership with Ove Arup & Partners Ltd. 
• The report analyses sectoral productivity and geographic concentration across East Yorkshire, Hull and Northern Lincolnshire using ONS data, including the Business Register and Employment Survey and GERD datasets. 
• About Arup: Arup is a global built environment consultancy providing advisory and technical expertise for our clients across more than 130 disciplines. We create safe, resilient, and regenerative places. www.Arup.com 

Read the report here:

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The work on decarbonisation in the North assesses the scale, structure and productivity of the net zero economy, drawing on company-level data from The Data City, alongside official employment and GVA statistics. Together, the findings show that net zero activity contributes a larger share of economic output in the North than it does nationally, underlining the region’s central role in delivering the UK’s energy transition.

Across the North as a whole, the net zero economy already supports around 140,000 jobs and generates more than £13 billion in gross value added (GVA), accounting for just over a fifth of Great Britain’s total net zero output. While net zero employment intensity in the North is broadly in line with the national average, the sector contributes a higher share of regional output, reflecting the region’s concentration of capital-intensive activity linked to energy generation, industrial decarbonisation and strategic infrastructure.

However, the analysis also shows that net zero activity is unevenly distributed across the region. In a relatively small number of places, clean energy and industrial decarbonisation already account for a substantial share of local employment and economic output. In others, net zero activity is present but plays a more marginal role within larger and more diversified economies. This uneven geography matters for growth strategy, because different parts of the North occupy different economic roles within the net zero economy, from large-scale energy assets and industrial decarbonisation to employment-intensive supply chains and services.

The North East: an embedded net zero economy

In the North East, net zero activity is already deeply embedded in the regional economy. Of all cities and towns in the North, Sunderland has the highest proportion of its economy driven by net zero-related activity, reflecting the scale of clean energy, advanced manufacturing and industrial decarbonisation underway in the region.

Baroness Elliott of Whitburn Bay, Chair of the Northern Powerhouse Partnership, said:

“Business is gearing up to make sure that the growth strategy for the North is as ambitious as the Chancellor has set out it will be. The highest priority, as shown previously by Northern Powerhouse Partnership and Durham University Business School, is innovation, which could add at least £72 billion within a decade.

In addition, the energy transition is already making a major economic impact, including in the North East where Sunderland has the highest proportion of its economy driven by net zero activity of any place in the North. If making the North a leader in the energy transition isn’t front and centre in growth strategy, how can we expect the National Wealth Fund or GB Energy to deploy more of their investment in the North if the Treasury hasn’t clearly instructed them to do so as the evidence shows they should.”

Cllr Michael Mordey, Leader of Sunderland City Council, said:

“To be crowned the net zero capital of the North is a reflection of the longstanding work of Sunderland City Council and all our partners.

From electric vehicle and battery production to retrofitting buildings to cut fuel costs, we have been creating jobs in Sunderland, not just reducing carbon emissions.

Reform is campaigning in local elections across the country, including here in the North East. I worry that if they’re elected they will introduce Trump-like climate change denial policies that will harm our local economy. We will only continue to attract these well-paid jobs if we keep a Labour council in Sunderland in May.”

Kim McGuinness, Mayor of the North East, said:

“This analysis makes one thing absolutely clear: the North East is not just part of the UK’s green energy future, we are leading it.

With unrivalled access to the North Sea, world-class innovation and a brilliant workforce, we’re already racing ahead with plans to double the number of green energy jobs in the North East.

I want kids across our region to know that green energy means a good job for them, and we’ll make sure they have the skills to get it.”

The Humber and the east coast energy system

The analysis highlights the Humber as one of the most economically significant net zero economies in the North. Net zero activity in the Humber accounts for around 4–5 per cent of total economic output, well above the national average, reflecting the concentration of energy generation, industrial decarbonisation, ports and strategic infrastructure along the east coast.

Andrew McPhillips, Chief Economist at the Northern Powerhouse Partnership, said:

“The data shows that net zero is already playing a significant role in parts of Yorkshire and Lincolnshire’s economy, particularly in the Humber where clean energy and industrial decarbonisation account for a much larger share of output than nationally. Far from being about speculative future growth, it reflects activity that is already economically embedded. The challenge now is ensuring that with proper coordination across the Humber, investment, infrastructure and skills keep pace so that these places can continue to deliver productivity and growth as the transition accelerates.”

Richard Gwilliam, Director at Drax, said:

“This report underlines that the net zero transition is already an important part of the North’s economy, supporting investment, productivity and high-value jobs. Large, capital-intensive energy assets play a critical role in regions like Yorkshire and the Humber, but realising their full economic potential depends on long-term certainty and coordinated investment. Getting this right can help anchor growth in the North while delivering the emissions reductions the UK needs.”

Zac Richardson, Offshore Delivery Director for National Grid, said:

“Electricity networks are playing a critical role in supporting growth across Yorkshire and the Humber, where energy-intensive industry and cleaner energy are central to the regional economy. Through the Great Grid Upgrade, National Grid is investing to increase network capacity and connect more clean power, including through major projects such as Eastern Green Link 2 and Yorkshire GREEN, while supporting jobs, skills and the UK supply chain needed to deliver this vital infrastructure.”

Across the Pennines: supply chains, services and delivery

Across the Pennines, spanning North and West Yorkshire and into the North West, net zero activity is embedded within larger and more diversified economies. While the sector represents a smaller share of output than in more energy-intensive regions, its scale and breadth make these areas central to delivery. Employment-intensive supply chains, manufacturing, construction, professional services and innovation across Greater Manchester, Merseyside, Lancashire and North Yorkshire underpin net zero investment across the North, supporting projects from industrial decarbonisation to renewable energy deployment.

Paul Swinney, Chief Economist at The Data City, said:

“Across the North there are a whole host of companies innovating to help the UK meet its net zero targets. Using our data, the Northern Powerhouse Partnership are able to show both the scale of this, and what this means for jobs and pay.

It is the performance of cutting-edge sectors like net zero that is so important if the North is going to become more prosperous, and our data and classifications now mean we can start to measure the impact of them on the northern and UK economy as a whole.”

Taken together, the findings reinforce a clear conclusion: net zero is already an economic reality for the North of England, not simply a future policy objective. But its benefits are unevenly distributed, and without a place-based approach to investment and delivery, the region risks under-realising the growth opportunity.

The report provides an evidence base to support more effective decision-making, aligning national frameworks with devolved leadership, local economic roles and long-term investment priorities as the net zero transition accelerates.

Read the full Decarbonisation in & beyond the Northern Growth Corridor report here:

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Backed by new economic modelling, it shows that targeted public and private R&D investment into the North’s most promising sectors and clusters would help close the productivity gap with the South and unlock up to £206 billion in additional economic output over the next decade.

The proposals form the centrepiece of Innovation in the North, a major new report published today by NPP in collaboration with Durham University Business School in the House of Commons. The report provides the most comprehensive assessment to date of the North’s innovation ecosystem, mapping cluster strengths across 71 subsectors and evaluating each region’s performance on skills, technology, infrastructure and absorptive capacity.

The report follows the Spending Review announcement earlier this month of limited devolved funding local leaders as part of the wider £22.5bn a year in R&D funding by 2029/30 available through national institutions which could allow for the gap between North and South as the last government to be closed. At the heart of the proposal is a fundamental rebalancing of the UK’s innovation economy to mirror how government has long backed the ‘Golden Triangle’ and doing the same for regions with the capacity to scale innovation and commercialise it as well as up productivity of the wider stock of businesses.

Key findings include:

• R&D spending per capita in the North East is less than half the England average and just a third of that in the East of England.

• Sectors such as clean energy, health, digital and advanced manufacturing are clustered in the North but underperforming in productivity due to lack of support for adoption and scale.
• A pan-Northern innovation strategy focused on diffusion, infrastructure and skills could add £72–£206 billion in GVA over 10 years, even after subtracting business-as-usual growth.

Policy Recommendations

NPP’s overall recommendation is that government innovation funding can deliver productivity growth across the whole Northern economy, particularly the emerging and established clusters in city regions. This means focusing not just on firms producing innovation, but also on increasing the ability of businesses across the economy to adopt and absorb it-especially in areas where growth can be supercharged by wider investment in skills and connectivity through projects like Northern Powerhouse Rail.

The report makes five specific recommendations:

1. Business rates on lab space, particularly to support start-ups and scale-ups, should be reduced in the review of this tax
2. The award of £30 million each in the Spending Review to build on the Greater Manchester innovation accelerator and extend to South Yorkshire, West Yorkshire, Liverpool City Region and North East is welcome. However, across these part devolved funds we need greater levels of ambition, and a total value of £3bn a year across the North to include translational research and diffusion.
3. The Local Growth Fund, which replaces the Shared Prosperity Fund, is to be targeted at the North and Midlands and will help correct the decline in funding since we left the European Union for local adoption by businesses of innovations (specifically SMEs). We strongly support backing regions with agglomeration which in the case of the North includes all those with and awaiting devolution because as demonstrated by the NPIER the sum of the North is greater than its individual parts.
4. Support the catapults as pan-Northern as well as national institutions, to align their funding with the work they would do through innovation deals for northern SMEs and wider place specific activity.
5. Build on the Made Smarter programme to design a series of pan Northern programmes focused on adoption and diffusion explicitly.
    

Professor Kieran Fernandes, Executive Dean of Durham University School, said:
“This report is a critical step in reshaping the UK’s approach to innovation and productivity. The findings show that targeted investment in the North could unlock both regional and national growth, addressing the persistent dilemma of regional versus national priorities. The economic evidence is clear: rebalancing innovation spending is not just a question of fairness, but a national economic imperative.”

Tom Bridges, UK Government and Innovation Leader at Arup, said:
“As an employee-owned firm of more than 18,000 members worldwide – including teams across eight offices in the North of England – Arup is proud to be a major investor in innovation and R&D. We do this through deep partnerships with universities, clients, industry bodies, and a growing network of start-ups and scale-ups.”

“The North of England is uniquely positioned to help the UK realise its ambition of becoming a global science and innovation superpower. With world-class universities, R&D-intensive businesses, thriving start-up ecosystems, established innovation districts, and the momentum of Freeports and Investment Zones, the region has all the ingredients for success.”

“To unlock this potential, we need greater R&D investment in the North, the expansion of Innovation Accelerators, and targeted support from government and Mayoral Combined Authorities — to back innovators and build the labs and facilities they need to grow.”

Jessica Bowles, Vice Chair of NPP and Director of Strategy at Bruntwood, said: “This report shows what those of us working in northern cities have long recognised: our economy is rich in innovation potential – from healthtech and clean energy to advanced manufacturing and digital. The foundations are already in place, but what’s been missing is a strategic and long-term commitment from government to help these clusters scale and thrive.

“Unlocking that potential means backing the North not only with R&D funding but also with investment in infrastructure and skills that support diffusion and adoption. We know that innovation doesn’t happen in isolation – it’s embedded in our places, our businesses and our universities. Devolved, place-based investment and greater control for local leaders are essential if we want to turn that embedded strength into meaningful economic growth.

“Our report shows the North has the assets to deliver, but it needs the tools to do the job.”

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Private sector must be ‘lead player’ in building the North’s net zero economy

Decarbonising the North’s industrial sector can be largely funded by the private sector, according to a new report by business-led thinktank the Northern Powerhouse Partnership (NPP). The report builds on new analysis from Cambridge Econometrics which shows that industrial decarbonisation and reducing emissions from real estate are the sectors offering the highest potential private investment leverage overall. The report suggests that for every £1 of public money invested, at least £4 can be generated from the private sector, demonstrating the substantial economic benefits of these initiatives.

This analysis comes as South Yorkshire’s Mayor, Oliver Coppard announced the creation of SY Energy, a partnership with the private sector and academics that will maximise investment, jobs and supply chain development in the area’s leading clean-tech sector.

South Yorkshire has unique strengths in Small Modular Reactors, Hydrogen and Sustainable Aviation and is aiming to become the natural home for these emerging sectors. SY Energy will work to de-risk investment decisions for clean-tech businesses together with the South Yorkshire Mayoral Combined Authority who will help to attract talent and develop targeted skills programme. Businesses will also be supported to grow and build links with other regions and businesses in the UK and across the world.

Across the North, private funding that can be attracted to industrial decarbonisation includes £15bn across the Humber for bioenergy initiatives with £2bn specifically allocated for carbon capture and storage (BECCS) technology at Draxpower station in Selby. This is alongside £5bn towards HyNet’s hydrogen clusters on the Mersey as well as separate further investment on the Tees.

For the overall net zero economy, it is projected that at least £2.65 could be leveraged for every £1 of public money. This includes a greener transport system and renewables such as offshore wind and nuclear energy. The lowest leverage estimated is in land use.

On a project-by-project basis, areas funded by the new wealth fund will need to achieve a leverage ratio of 1:3 ratio, meaning £3 of private investment for every £1 of public funding. NPP also supports the use of Treasury Guarantees by the bank to invest pension fund monies. This would require no up-front government help, making it easier to exceed the leverage ratio and maximise investment impact.

This new report builds on the Northern Powerhouse Independent Economic Review Scenario, which showed investing in net zero could deliver £23bn more in GVA and over 168,000 additional jobs to the Northern economy. Crucially, this would deliver a much-needed boost to the North’s historically sluggish productivity equal to £1,500 per worker.

The report also warns that the North of England, which produces nearly half of the UK’s electricity, and is home to half the country’s most carbon-intensive clusters, is uniquely vulnerable to a botched transition to net zero. The Humber alone represents 40% of the UK’s industrial emissions.

Instead of offshoring our emissions to reach net zero targets artificially, we need a decarbonisation strategy to protect workers in key industries such as steel. In Scunthorpe the future of two blast furnaces were jeopardised by a failure to deliver a carbon capture pipeline sooner, and the North can’t risk similar mistakes in the future.

The report’s other recommendations include:

1. GB Energy to deliver the UK’s first orders for a fleet of small modular reactors (SMRs)
2. Develop our offshore wind and tidal supply chain
3. Push ahead with carbon capture use and storage (CCUS) on the Mersey, Tees and Humber
4. Retrofit domestic and commercial buildings with heat pumps manufactured here
5. Electrify the railways and produce SAF for the aviation sector

Henri Murison, Chief Executive of the Northern Powerhouse Partnership, said:

“The private sector needs to be the lead player in decarbonising our economy and investing in emerging green sectors.

“Billions in private investment is ready to flood into the North’s net zero economy.

“The North of England bore the brunt of the UK’s last rapid de-industrialisation – which took place without a plan to protect workers – which is why we need to stop artificially reducing emissions by moving our heavy industries overseas.

“With the right plan, delivered well, we could use the net zero transition to drive our region’s economy and close the North-South divide for good.”

South Yorkshire Mayor, Oliver Coppard, said:

“South Yorkshire is already home to the largest clean-tech cluster in the UK and at the forefront of nuclear tech, hydrogen and sustainable aviation fuels. We’re leading the way on Small Modular Reactors, with Rols Royce SMR recently selecting South Yorkshire as the home of their new, multi-million pound, SMR facility.

“SY Energy will build on these strengths and make our region the natural home of clean-tech businesses, both nationally and internationally. We’ll do this by bringing the sector together to maximise investment, jobs and supply chain development

“SY Energy will support businesses, working collaboratively to increase manufacturing capacity and capabilities of local supply chains through attracting talent and improving local skills provision. It will also support businesses to grow and expand and help build links across the industry nationally and internationally

“As the report from the Northern Powerhouse Partnership makes clear, the transition to net-zero can be accelerated and help us create bigger and better local economies – if we work together to unlock the potential of the private sector.”

Tracy Brabin, Mayor of West Yorkshire, said:

“Here in West Yorkshire, we’ve invested over £200 million in green projects, working with partners to deliver warmer homes, greener businesses and better public transport options. But to truly deliver at scale and at speed, we must now work in lockstep with the new government and the private sector, to empower our green sectors and revolutionise our region.

“By partnering with businesses and industry, we’ll create a greener, more secure region for future generations”.

Steve Rotheram, Mayor of the Liverpool City Region, said:

“As the UK’s Renewable Energy Coast, the Liverpool City Region has an enormous role to play in developing the net zero economic and driving national growth.

“Our Mersey Tidal Power scheme is the largest tidal energy project in the world, capable of powering up to 1 million homes for more than 120 years. Working hand in hand with national government and the private sector, we can deliver on Great British Energy’s promise to make Britain a clean energy superpower.

“For too long in our history, the North has been left behind when it comes to national investment in infrastructure and innovation. From our green jobs and skills plan and work to develop pioneering projects like HyNet and Glass Futures, I’m confident that we will be front and centre in the Green Industrial Revolution.”

Mark Burton, Lloyds Baking Group Ambassador for Yorkshire, said:

“In the North of England, we are at a critical juncture in advancing our Net Zero economy. Northern businesses have consistently led in innovation and progress, and their steadfast commitment to sustainability not only drives economic growth but also ensures environmental stewardship.

At Lloyds Banking Group, we are proud to support this ambitious strategy, fostering collaboration with businesses and communities to unlock private sector investment and generate sustainable growth. By investment and generate sustainable growth. By investing in emerging sectors like small modular reactors, hydrogen, and sustainable aviation fuels, and supporting key supporting initiatives such as carbon capture and storage and retrofitting buildings, we can transform challenges into opportunities.

“Together with government and industry partners, we are set to build a resilient, sustainable Northern Powerhouse that is not only sustainable but prosperous for generations to come”.

Rolls-Royce SMR’s Government and Corporate Affairs Director, Alastair Evans, said:

“This report demonstrates how infrastructure projects can successfully ‘crowd-in’ investment – a model we have used to establish and grow the Rolls-Royce SMR business.

“Our future domestic growth will be spurred by our success in the Great British Nuclear small modular reactor (SMR) selection process, with an announcement on successful technologies expected before the end of the year. Our success in this selection will unlock enormous potential for investment in the north and beyond.

“Rolls-Royce SMR already has its headquarters and regional office in the North West and recently announced an investment of up to £15+ million in a module development facility in Sheffield, so is already heavily committed to building the North’s net zero economy.”

Here is a link to the analytical report: FINAL-Net-Zero-Analytical-Report-

And here is the link to the Cammmbridge Econometrics report: Public-private-investment-splits

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Tackling disparities in education is essential for growth, with 29% of long-term disadvantaged pupils receiving workless benefits at age 22, according to new research from the Northern Powerhouse Partnership (NPP) and FFT Education Datalab.

These young people were around five and a half times more likely to be in this position than those who had never been eligible for FSM (5%). 

Long-term disadvantaged pupils are 23% less likely to go on to be in long-term education or employment in early adulthood than their more well-off peers. This is the case in every English region apart from London, where disadvantage was found to have markedly less impact.

While the capital has the highest levels of long-term disadvantage – pupils eligible for free school meals (FSM) for 80% of their school career – students from these backgrounds were only 16% less likely to be in study or work at the age of 22 than those who had never been FSM-eligible.

69% of long-term disadvantaged pupils in London went on to long-term education or employment, compared with just 54% in the North East, which has the second highest level of long-term disadvantage (12%).

Evidence suggests that this is related to ethnic disparities in academic attainment amongst long term disadvantaged children. The report found that disadvantage had hardly any impact on students from Chinese backgrounds, and only a small impact on those from Black African, Indian, Bangladeshi, Pakistani and other Asian backgrounds which have high concentrations in the capital.

In contrast, outcomes among White Irish, White British and Irish Traveller backgrounds and, to a lesser extent, those from Mixed White/Asian and Mixed White/Black Caribbean backgrounds, were significantly lower for those from these least well-off backgrounds.

Previous research from NPP has found that there far greater concentrations of disadvantaged pupils from these high-impact ethnic groups in the North of England, leading to a substantial north-south divide in education.

The proportion of this year’s GCSE results at Grade 7 or above in the North East and Yorkshire and Humber was 22.4%. In London it was 32.6%.

Delivering his Autumn Statement, Jeremy Hunt said that “being pro education is being pro growth”.

Michael Gove wrote in the Times during the Conservative leadership contest in summer that “Central to unlocking potential and improving productivity is further reform of our education system. Our biggest challenge remains the attainment gap between rich and poor.”

Long-term disadvantaged pupils were around half as likely to be undertaking degree-level study as those who had never been eligible for FSM (24% vs 46%).

Lord Jim O’Neill, vice-chair of the Northern Powerhouse Partnership, said: “These disparities in education outcomes are a serious barrier to productivity and growth, particularly in the North of England, and we need solutions now. 

“A centralised, Whitehall-diktat approach to the education challenge is doomed to fail. The Opportunity Area programme – one of the only attempts to deal with this issue – was partially effective because it offered bespoke, locally-led solutions in areas facing the biggest challenges. However, it was still nowhere near bespoke enough nor was there enough ambition. Its apparent successor, education investment areas (introduced earlier this year), comes with no local control.

“Poorly-targeted policies and meagre funding will only lead to more lost opportunity and squandered potential. Metro mayors and local leaders more widely would be far better placed to have funding control over these decisions. I call on the government to open their minds and consider the real ways of solving multi-faceted local education challenges.”

Anne Longfield CBE, Chair of the Commission on Young Lives and Former Children’s Commissioner for England, said: “Our education system is still leaving too many children behind, locking them out of future learning and career opportunities. 

“The economic case for education investment has never been stronger and this needs to be built into our plan for growth. 

“It’s vital we repair the damage done during the pandemic to our young people’s mental health, as well as to their learning. We also need to make sure we’re preparing them for the jobs of the future, such as in digital or the net zero transition.

“Joined-up solutions which tackle interconnected issues such as health and housing in tandem are the best chance we have of closing the long-term disadvantage gap for good.”

Fiona Spellman, CEO of North of England education charity SHINE, said: “It is deeply disappointing to read yet more evidence of the growing divide between the educational attainment of children in the North compared with their peers from other parts of the country.

“Levelling up means nothing if it doesn’t deliver fair opportunities for children. This research shows the scarring effects which long-term disadvantage can have on future life chances.

“Long-term disadvantaged pupils are almost a third less likely to go on to be in long-term education or employment in early adulthood than their more well-off peers.

“Given the concentration of these pupils in parts of the North, it is crucial that areas of disadvantage are given the resource and the ownership locally to tackle the issues facing their communities.”

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Foreign direct investment (FDI) into the Northern Powerhouse has rocketed 72% in the last five years despite dropping across the rest of the UK, according to new analysis of fDi markets data by the Northern Powerhouse Partnership (NPP).

FDI into the North rose from $25.4bn between 2012-16 to $43.7bn between 2017-21. By contrast, FDI into Greater London dropped 23% over the same time period, from $43.4bn to $33.4bn.

Our new report ‘The Internationalisation of the Northern Powerhouse’ also found that the North increased its share of overall FDI into England, from 19% in 2012-16 to 33% in 2017-21.

This rise means that the region – which makes up roughly 28% of England’s population – is now punching above its weight and drawing in more inward investment on a per capita basis.

Data showed this growth is supporting employment opportunities in the region, with the number of jobs created in the North from inward investment rising from roughly 52,600 in 2012-16 to 62,100 in 2017-21 – an 18% uplift.

The rest of England saw a rise of just 1% over the same time period, while Scotland, Wales and Northern Ireland all saw drops of -19%, -41% and -37% respectively.

Foreign investment into renewable energy in the North of England has increased from $6.95bn between 2012-16 to $20.25bn 2017-21 – a 193% rise – in a major win for the net zero transition.

Other industries which saw growth over the same period were electrical components (799%), chemicals (269%) and biotechnology (694%), reflecting Northern comparative advantages in sectors such as advanced manufacturing and materials.

Industrial sectors in the Northern Powerhouse receiving the greatest value of FDI 2012-21

The North’s success in attracting inward investment can be largely attributed to policies in George Osborne’s original Northern Powerhouse strategy, which saw a much bigger focus on promoting Northern projects to foreign investors, with the then-Chancellor leading trade delegations overseas, including to Asia, with Northern city leaders.

The North has seen a 7% growth in FDI from Asia over the past decade, while this dropped by 56% for the UK as a whole.

A skilled labour market was cited as the biggest driver for attracting investment, followed by proximity to markets or customers; domestic market growth; transport infrastructure; industry cluster and technology and innovation.

NPP is calling for central and regional government, alongside the private sector, to collaborate better and deliver a five-fold increase in investment to promote Northern projects overseas.

Metro mayors should be given the automatic ability to create at least one freeport or other investment-based enterprise zone, the report says, following the success of tax incentives in projects such as Teesworks in the North East.

Lord Jim O’Neill, vice-chair of the Northern Powerhouse Partnership, said: “The mission to put the Northern Powerhouse on the world map has been a resounding success and a huge amount of credit should go to the genuine cross-party effort between central government and northern civic leaders to make this happen. 

“We have been particularly successful in Asia – while the rest the UK has seen FDI from Asia plummet $28bn, 56%, over the last five years, it’s gone up 7% in the North. I often felt that the Northern Powerhouse concept was better understood by investors in Asia than it was among politicians and financiers in London.

“This is proof of the North’s economic potential, especially in innovative and green industries. If the rest of the world sees it, then our own government should be putting us front and centre of their growth strategy.”

Jonathan Reynolds, shadow business secretary, said: “There are fantastic industries and opportunities across the North of England but the Government are failing to make the most of the successful innovation that is happening here.

“This report is great news, but we must build on this success with long term consistent plans that businesses can invest alongside. Labour’s Industrial Strategy will support investment, innovation and offer the certainty northern business needs to prosper.”

Jessica Bowles, Strategy Director at Bruntwood, said: “These latest figures may come as a surprise to many, but not to those of us in the North who are witnessing first hand the rapid pace of change and innovation here. The North is full of entrepreneurial people, fast-growing companies and revolutionary ideas, so it is exciting to see the global investment market respond to this and commit to the regions here. 

“But we’re ambitious, and we don’t want to stop here. We will continue to collaborate with private sector partners and local and regional governments to ensure the North is being showcased on the world-stage to encourage further investment and the subsequent growth of our regional ecosystems.”

Read the full report below.

The post The Internationalisation of the Northern Powerhouse appeared first on Northern Powerhouse Partnership.

08.02.22

Before there was the Northern Powerhouse there was the City Growth Commission, an inquiry launched in October 2013 into the underperformance of the city regions of the UK.  Chaired by leading economist Jim O’Neill, who went on to be appointed Commercial Secretary to the Treasury and a member to the House of Lords, it soon secured the interest of then Chancellor George Osborne, who saw an opportunity to close the longstanding north-south divide and, in so doing, drive up UK productivity as a whole. 

It was Osborne who coined the phrase ‘Northern Powerhouse’ in a speech in the Power Hall at Manchester’s Museum of Science and Industry in 2014.

Poor connectivity is a huge factor in why northern productivity lags behind the rest of the UK. Unreliable and infrequent public transport links mean that it remains impractical for businesses in Greater Manchester to recruit talent from a city as near as Bradford, placing a significant constraint on labour market formation. Furthermore, inadequate digital infrastructure is holding back economic growth in many northern towns. One fast-growing business in Halifax has had to open secondary sites in Leeds for this very reason.

Our analysis shows that there is still a significant productivity gap between the northern core cities and the UK average, although it is slightly narrower in Leeds and Manchester than in Newcastle, Liverpool and Sheffield. This reiterates the necessity to develop the Northern Powerhouse as an economic project – at a time when the Treasury’s commitment to levelling up is not as strong as it needs to be to close the north-south divide for good.

There are, however, some positive signs. Many northern towns are feeling more of a benefit from their proximity to a core city.  While core cities still have higher productivity per worker than their surrounding travel to work areas (TTWAs), that gap is now closing in the majority of cases.

However, the scarring effect of de-industrialisation has inhibited the economic power of many places – a point made by the University of Manchester’s John Holden, among others.

In West Yorkshire, all of Leeds’ surrounding geographies have now caught up the UK average – but Wakefield and Castleford has seen the slowest productivity growth in the region, in large part due to de-industrialisation. Meanwhile Harrogate – which has no industrial scarring – has seen the highest uplift in productivity.

We remain most concerned for those economies furthest away from a Metro Mayor. Workington and Whitehaven, for example, have seen relative productivity decline. We need to accelerate a Metro Mayoral deal for Cumbria for this very reason, if we’re to unlock the economic potential of assets such as Sellafield. Centralised economic policy-making cannot and will not close the productivity gap. 

Read the full report below:

The post From Industrial Revolution to Northern Powerhouse appeared first on Northern Powerhouse Partnership.

Towns are helped – not hindered – by links to nearby cities, according to our new report.

Levelling up northern towns must focus on helping local people access well-paid, skilled jobs in order to drive up wages and productivity, primarily through devolution to Metro Mayors to invest in transport infrastructure, education and skills, as well as innovation backed by government. 

Since the 2019 General Election, there has been significant political discussion on ways to improve the fortunes of so-called ‘left-behind’ towns such as Workington. Much of it has focused on short-term, superficial changes that address problems of these towns in isolation – rather than in the context of their wider city region.

This report looked in detail at the economies of Bury in Greater Manchester, Goole on the Humber and Blyth in the North East, three places each with its own unique economic strengths and challenges. 

Transport connectivity, such as the Metrolink tram in Bury or Goole’s advantageous position on the M62 corridor, was found to have played a vital role in connecting people to job opportunities, while helping businesses to tap into a wider talent pool. 

The average weekly wage of somebody working full time in Bury was £532 in 2020, above the £491 earned by workers in nearby Rochdale but significantly below the £600 per week earned by those working in Manchester. 

However, the picture changes when looking at those who live rather than work in these places. Full time workers that live in Bury earn an average of £591 per week compared with £509 for residents of Rochdale and £538 for residents of central Manchester, indicating that many of Bury’s residents are commuting out of the town, in many cases into central Manchester, to the higher productivity and higher paid jobs.

Improving education and skills levels was also found to be critical to unlocking opportunities for local people, both in their hometown and in the wider city region.  

The green energy revolution represents a huge economic opportunity for Blyth – but this depends on local people acquiring the necessary skills to take jobs in sectors such as off-shore wind, alongside greater investment in R&D and a better rail connection to Newcastle.  

Jessica Bowles, Head of Strategy at Bruntwood, said: “Levelling Up means just as much of a focus on our left behind towns as it does our city centres. It will only be through harnessing their combined strengths that we can reduce regional inequalities. 

“There is an almost limitless potential in our towns waiting to be unlocked through the power of this agglomeration. It will mean pooling town’s existing strengths with each other, building on them, and then better linking them with neighbouring cities. 

“The communities within our towns have a bigger role to play in their futures too. Peoples’ pride and desire to see their towns thrive is a powerful tool that can be leveraged by strong local leadership.   

“This report provides a vitally needed blueprint towards realising this vision. This is an important piece of work in the wider context of Levelling Up, and it shows that the North knows what’s needed to solve its challenges. We now just need Whitehall to listen.”

The post Life in a Northern Town appeared first on Northern Powerhouse Partnership.

Our new report calls for local leaders to be given more responsibility for the NHS to improve health outcomes, deliver long-term change in the economy and level up.

Levelling up health outcomes through locally-led, integrated health and care services would help to close the long-standing productivity gap between North and South.

As part of a devolution agreement signed with then Chancellor George Osborne in April 2016, Greater Manchester took control of £6bn of public money to oversee its own health and social care and established a £450m Transformation Fund to radically improve health outcomes.

Sir Richard Leese, Leader of Manchester City Council and Deputy Mayor of Greater Manchester, says that “devolution provided an unprecedented opportunity to address health inequalities”, allowing them to “[break] down organisational silos” to address “root causes of ill-health”.

George Osborne, Chair of the Northern Powerhouse Partnership, said: “Putting more power into the hands of mayors and local communities can make a reality of levelling up.

“The NHS remains too centralised. In Manchester we took the big decision to devolve control of the NHS.

“Now we should follow suit across the Northern Powerhouse and beyond. Serious NHS devolution is the next frontier in levelling up.”

There are also calls for a greater focus on developing the North’s health innovation ecosystem, one of the ‘prime capabilities’ identified by the Northern Powerhouse Independent Economic Review in 2016.

Businesses including the consultancy Arup say there are huge economic opportunities to be explored across the North in the development of vaccines, health informatics, as well as medical devices and prosthetics.

COVID-19 has shone a light on health inequalities in the UK and there is a growing need to tackle challenges such as the UK’s ageing population, poor social mobility, more children living in poverty and high unemployment post-COVID.

Tom Bridges, Arup’s Leeds Office Leader, said: “To support levelling-up the government needs to get behind the north’s dynamic health innovation ecosystem – starting with greater devolution and driving an increase in investment.

“Through supporting the supply of new lab and business space for med-tech firms, building a drug discovery and vaccine cluster, tackling some of the north’s major health challenges and backing innovation districts in our city centres, we can make a huge difference to the health and economic prosperity of the region.”

Read the full report below.

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