Will UK's Northern Powerhouse project avoid Brexit derailment?

The Northern Powerhouse was the catchy brand name that former UK chancellor George Osborne gave to prime minister David Cameron's bid to create an economy in the north of England to rival London and the wider south-eastern region. His vision included devolving new powers from Whitehall, improving transport links and creating new regional mayors to act as figureheads for their regions.

The UK’s vote to leave the EU, and the departures from office of Mr Osborne and Mr Cameron, had raised questions about the future of the project. But new prime minister Theresa May has pledged to press ahead with it, promising to “help the great cities and towns of the north pool their strengths and take on the world”.

To this end, she has appointed Andrew Percy, MP for the Yorkshire and Lincolnshire constituency of Brigg and Goole, as minister for the initiative. He told fDi: “The Northern Powerhouse remains a crucial part of this government’s ambition to create a country that works for everyone, with economic growth shared up and down the country.

“The continued strength of the Northern Powerhouse depends on government, local communities and industry joining forces, and I look forward to working with the partnership.”

Pitching to China

The powerhouse has been heavily promoted across the world and the brand holds some international recognition. Last November its ‘pitchbook’ was launched in China, highlighting £24bn ($31.16bn)-worth of high-value investment opportunities across the region.

FDI within the Northern Powerhouse region has grown by 127% in the two years since the initiative was established according to government figures, and the May government has committed a further £15m to support its trade missions. “Our assets offer a huge window of opportunity to investors and alongside the Department for International Trade [DIT], we are working with local partners within the Northern Powerhouse to produce a new investment portfolio to showcase regeneration and infrastructure investment opportunities,” says Mr Percy.

“We will continue to support and fund enterprise zones across the north with the 17 already established, attracting more than £1.3bn of private sector investment since 2012, and we’re backing local business through local growth deals, with an investment of £2.8bn in deals in the north. A new round of bidding is under way, with up to £1.8bn of further funding available.” 

Transport strategy crucial

Strengthening transport links across the region remains a priority, according to Mr Percy. “We’ve already invested £13bn and established ‘Transport for the North’ to drive forward plans to support economic growth. We’re backing this with £50m over the course of this parliament," he says.

“We are providing a further £300m to support key transport schemes, including Northern Powerhouse Rail (HS3), and strategic improvements to the M62 [motorway] and the Trans-Pennine tunnel [road project]. We will be publishing a single plan for transport investment in the north by the end of 2017. This will bring together HS3, HS2, ambitious plans for [rail] stations, and the significant investment already under way.”

In August, the DIT released figures showing that overseas investment created 13,698 jobs in the regions that fall within the Northern Powerhouse area, securing 332 projects from foreign investors in 2015-16. The number of inward investment projects for north-west England was 151, with 7715 new jobs created, while north-east England saw 77 projects and 2991 new jobs created. Yorkshire and the Humber benefited from 104 projects, which resulted in 2992 new jobs being created. Since 2010, 72,065 jobs have been created in the area as a result of overseas investment.

Manchester moves up

Manchester is still northern England's star attraction, with a recently published IBM Global Trends Report showing that for the first time it has broken into the top 10 cities globally for investment.

Tim Newns, chief executive of Midas, the Greater Manchester inward investment agency, says: “Manchester has seen the largest economic growth for any city outside London [in the UK], sometimes even outperforming London. But it’s an engine for growth and a catalyst for growth in other parts of the north of England.

“There has been a maturing of relationships and policy initiatives across all the cities in the north, even before the May government expressed that shift in focus to embrace all the key cities.”

Mr Newns says while the project had a strong advocate in Mr Osborne, he is pleased that support has not fallen back. “After what is effectively a change in government, there is a ‘getting to know you’ period, which we look forward to,” he says.

Connectivity a priority

Currently the Northern cities are in the process of implementing findings from an independent economic review they commissioned, which was completed in early 2016.

“Connectivity is crucial for trade and investment flows and there has already been significant investment into Manchester City Airport,” says Mr Newns. “Direct flights increase FDI flows by 25% to 30%. We are the gateway to the north – there are direct flights to all major US cities and also direct routes to Hong Kong and key cities in China and Singapore, ditto the Middle East which in turn opens up Australia and India.

“Foreign investors have overcome the psychological block they used to feel, that they had to be based in London. Manchester is now seen as a global city – and a large factor in this had been our improved air connectivity, and global brands associated with Manchester: our two football clubs, the BBC and Manchester University.” 

Opening doors

In Yorkshire, Roger Marsh, chair of Leeds City Region Enterprise Partnership, says: “A lot of speculation has been made of changes to the promotion of the north through the Northern Powerhouse since Brexit. However, the strength of the location has not altered. Over the past two years we have seen global recognition for the Northern Powerhouse, and subsequently the north's offer to investors. When I’ve spoken with colleagues from across the city region and the north, they have talked of the brand’s strength overseas growing, and helping to open doors for investment conversations.

"From Leeds City Region’s perspective, we feel the responsibility for the promotion of the north through the Northern Powerhouse should not rely solely on government. We feel it is the collective responsibility of the public and private sector alike from across the northern regions. The role of the new minister, Mr Percy, is important as it highlights the north’s united approach to rebalancing the UK economy and [it also highlights that the goal] to delivering good growth is shared by this government."

Martin Venning, director of the UK Northern Powerhouse Conference and Exhibition, the biggest gathering of northern businesses in the UK, says Mr Percy must secure investment from stakeholders within the region to support growth and jobs.

"Mr Percy needs to act fast to ensure we don’t lose momentum on any of the actions that have already been taken," he says. "The Northern Powerhouse Economic Review made it clear that if we get it right, then the northern economy can expand by an extra £97bn and 850,000 jobs by 2050. But if we get it wrong, then the north will be cut further adrift from the hothouse economy of the south-east."

The 2017 UK Northern Powerhouse Conference and Exhibition takes place on February 21 and 22 at Manchester Central.