Tuesday, 19 August 2014

The Northern Powerhouse could prove far more than a slogan

The politics of regional policy tends to sway from one end of the spectrum to the other as opposition parties win and then lose general elections. The 2010 general election, for example, saw a Conservative ‘localism’ agenda that promised to sweep away of Labour’s ‘centralising’ regional tier. The 2015 election promises to be a little less adversarial, however, as a consensus appears to be forming around the north, around the importance of cities, and around the importance of city regions.

Consider, for example, that the last few months has seen:
  • Conservative Chancellor George Osborne’s ‘Northern Powerhouse’ speech in June, which ‘starts a conversation about serious devolution of powers and budgets for any city that wants to move to a new model of city government - and have an elected Mayor’;
  • Labour peer Lord Adonis’ Review Mending the Fractured Economy: Smarter State, Better Jobs, which set out reform to empower city and county regions; and 
  • Liberal Democrat Deputy Prime Minister Nick Clegg’s launch of ‘Northern Futures’, a ‘call to arms for ideas on how to create a vibrant Northern hub so it can compete with the biggest cities around the world.’ 
We have also see recently a strategic proposition for transport in the north, ‘One North’, led by the city regions of Leeds, Liverpool, Manchester, Newcastle and Sheffield and the next few months promises no let-up to this devolution frenzy. 

In September, the Government’s chief scientific adviser, Sir Mark Walport is expected to publish a new Science & Innovation Strategy.

In October, the chairman of HS2, Sir David Higgins, will present updated plans for trans-Pennine HS3 railway links.

In November, as what is believed to be the centrepiece of the Autumn Statement, the Chancellor will follow up his ‘Northern Powerhouse’ speech with plans to give towns and cities greater control over their budgets.

It is the extent to which control really will be handed over that it is likely to provide some separation between the main political parties in the run up to the election, but the direction of travel is a clear one and the investment opportunities and benefits that this agenda present for the property and construction in our cities, especially our northern cities, are very exciting. 

International evidence shows that investing in infrastructure is essential to competing in the global economy and driving economic growth. Yet, as the IPPR has pointed out, for a highly developed country, the UK has underinvested in major infrastructure networks, and according to the World Economic Forum, is slipping down the world rankings in terms of infrastructure provision (WEF 2013). Further, investment spending is out-of-balance. Treasury figures project London’s per capita publicly supported infrastructure spending to be around £5,426 per resident. For the North West it is £1,248 per resident, Yorkshire and the Humber is £581 per resident and the North East is only £223 spent per resident (HMT 2014). 

Treasury figures also show that the economy of the north of England has grown by 3.9% a year over the past 18 years, which is lower than the 4.4% achieved by the UK as a whole. If, as Jim O’Neill, Chairman of the City Growth Commission, points out the northern growth rate could be raised to the national level it would add some £56bn in nominal terms and £44bn in real terms.

Politics and the pressure on the public purse will ultimately define the commitment to the devolution agenda (it should be noted that the new London Infrastructure Plan 2050 includes a £1.3 trillion shopping list…), but if the Government of whichever hue does commit to support the regions where needed, and devolve powers and responsibility where possible, then the recovery from recession could be longer and stronger than the continued clinging to the coattails of London and the South East.

This piece was written for Construction Manager magazine.

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