THE BLOG

A Bold Government Would Use The Budget To Truly Unlock The Northern Powerhouse

12/10/2017 17:16
Stefan Wermuth / Reuters

A long-standing question around the Northern Powerhouse has been 'Is it real?' often followed by 'What's the actual government support?'

The joining of 36 signatories, from across the North's leading fields of health, academia, industry, innovation and research, in a letter to the Times earlier this week calling to support the Northern Powerhouse Partnership's Powerhouse 2050 report, demonstrates that yes, it is a reality.

The Northern Powerhouse can be delivered across four clear prime capabilities: Advanced Manufacturing & Materials, Energy, Digital and Health Innovation. Across the four, the North is home to international-class assets, expertise, research and businesses that are distinctive, highly productive and competitive at national and international scales.

The Northern Powerhouse Independent Economic Review (NPIER) 2016 found that the economy of the North has the potential to be around an extra £100bn (15%) bigger - with the potential for an extra 850,000 jobs and a 4% increase in productivity - by 2050.

The 2050 agenda will be delivered - by business, academia, innovators, local government -but the scale and pace of that delivery, and its ability to galvanise the Northern economy, will be fundamentally linked to the scale of central government commitment.

Strategic investment aligned to the four prime capabilities has the potential to unlock real growth in the North of England and to address inequality.

Take health innovation, an analysis of health research funding (2014) suggests the North receives only 13.5% of total funding across the UK and in most recent National Institute of Health Research Biomedical Research Centre funding allocation of £816m, the North received 6.7% of the total while the 'golden triangle' of Oxford, Cambridge and London received almost 83%.

Modest investments in the North, along similar lines to that of the private sector who are already investing proportionately at greater levels than the public sector would be likely to pay off for the whole of the UK.

There has been a huge amount of political change over the past 18 months, from Brexit to the snap general election, the underlying current of which is a loss of trust and a perception that government has failed to deliver for large swathes of the UK population outside of the South East. In particular if you look at the North, and how it voted on Brexit, a message was sent to the centre of government that it's certainly not been delivering for them.

Yet what government has done in the last two years is focus on the result, Brexit, rather than tackling the underlying cause - the lack of proper job creation outside the South East and the lack of infrastructure, for example choosing HS2 over HS3, things that the North are calling out for.

The complaints are legitimate - and the under-investment in the North means the UK underperforms as a whole. Compare this with Germany, seven of the eight biggest cities outside London perform below the national average in terms of GDP per person; in Germany the eight largest cities outside Berlin all consistently outperform the national average.

The discrepancies translate across all fields, for example if business start-ups in the North had the opportunity to set up at the same rate as London, the GVA of the North would be £1.8bn higher.

The Autumn Budget is an opportunity for Theresa May and her government to change this and to make a commitment to rebalance the British economy. The Northern Powerhouse 2050 provides a framework for how they can do this in the North, something the Midlands Engine and South West of the Country would do well to follow.

The long term potential in the North is 850,000 new jobs by 2050. The early stage requirements to get there, outlined in the 2050 report, are achievable. This is a realistic investment.

The North, and its leaders as evidenced by the letter in the Times on Monday, will continue to do their best for the region. The 20 signatories which are members of the Northern Health Science Alliance (a partnership of hospitals, academic health science networks and universities which pre-dates the Northern Powerhouse) have been committed to this pan-northern working for six years now.

The question is will central government be bold enough to step up alongside the leaders in the North, to fuel the powerhouse to achieve its potential?

Comments

CONVERSATIONS