Is it time for the North to finally take back control? On 23 June 2014 the then Chancellor of the Exchequer, George Osborne, gave a speech at the Museum of Science and Industry in Manchester, in which he called for the creation of a Northern Powerhouse. It was this seminal speech that re-ignited a hunger for devolution in the North, and specifically the creation of what can arguably be called the first city region in modern terms. Since then, devolved cities and their adjacent regions have been gathering pace all over the UK, each with a renewed sense of vigour and purpose, and each with a city region mayor acting as a voice and pivot for newly devolved funds and power.
There still exists a real divide between the North and South, and devolution is only a small part of the solution.
So, in December 2016 The Northern Powerhouse Partnership was launched as a leading voice for business and civic leaders across the North. The organisation is still chaired by former Chancellor George Osborne, and co-chaired by devolution champions Lord Jim O’Neill and Professor Juergen Maier, and continues to lobby to close the North/South divide and unwrap the untapped economic potential of the 15 million people of the North. Business Connect Magazine were very keen to catch up with Chief Executive of the Partnership Henri Murison who shared the following: “Could the North finally be starting to take back control? No, I don’t mean Brexit (but more on that later) – I mean devolution. For many years devolution was rarely discussed outside local government. Recently, however, something has shifted. Businesses are seeing the benefits of empowered local leadership for their own priorities. Activists are becoming louder in their calls for decision-making to be brought closer to communities. They want locally-led, joined-up policy-making that understands the unique opportunities and challenges of each city region.
“For decades, politicians and civil servants in Whitehall and Westminster dominated but now mayors are in the ascendancy. At the start of December, Gordon Brown, Keir Starmer and Rachel Reeves came to Leeds to unveil Labour’s plans for devolution, which they said would constitute ‘the biggest ever transfer of power from Westminster to the British people’. It was a big moment, one which signalled an opportunity for genuine political consensus. A few days earlier Jeremy Hunt had told the Northern Echo, ‘I want to explore what we could do where we’ve got really inspired local leadership to set elected mayors and council leaders free… our structures in the UK are very centralised and usually it ends up with someone having to come and ask the Treasury for something.’
“Both Labour and the Conservatives have devolution at the heart of their offers to close the North/South divide. The remaining question is who is better to deliver on those promises?
“Of course, this isn’t a new idea. A number of prominent politicians from across the political spectrum, including David Miliband and Michael Heseltine, have long been advocates for devolution and wider decentralisation. Most recently, when George Osborne was Chancellor, he signed a series of ground-breaking devolution deals with city regions across the country, creating the first metro mayors in 2017. Global cities have powerful city governments’ he said, and if we wanted to build the Northern Powerhouse as an International brand, if we wanted to give each place ‘the different specific things it needs to get growth going’, then we needed a champion for each place – a mayor. Many of that first generation of mayors are now in their second term. While still somewhat hemmed in by Whitehall, there’s no denying they’ve had an impact, whether in bringing down bus fares or improving skills provision.
“And they’re only just getting started. The M62 Mayors Andy Burnham, Steve Rotheram and Tracy Brabin have been joined down the M1 by Labour’s Oliver Coppard in South Yorkshire – together they’ve been a powerful coalition fighting for better rail infrastructure, including Northern Powerhouse Rail across the Pennines. Meanwhile, Tees Valley Mayor Ben Houchen is a rising star in the Conservative Party, bringing his own brand of Johnsonian boosterism to the region.
“There’s a new mega-deal on the cards for the North East, where my own political career and ambitions started (and ended). While the region already has a mayor, this would create a much bigger, more substantive coalition of councils together into one economic entity. Elsewhere in the North, a new devolution deal for York and North Yorkshire could see a new mayor handed £540m in gainshare funding over a 30-year period. Access to this funding has to be one of the most compelling reasons for councils (and voters) considering becoming a metro mayoral authority.
“Breaking the dominance of Whitehall is also hugely important for making sure the idea of Global Britain becomes more than just rhetoric. While researching our report into inward investment this year, we found that the North’s story was one that International investors recognised and understood, one they could work with. That strategy seems to be working – foreign investment into the Northern Powerhouse has soared 72% in the last five years. Who should decide where buses or trams go? Who should decide what skills we need to be equipping our workforce with, in order to fit the needs of local businesses? Who knows where investment for local research and development assets would be put to best use?
“In the new year the Northern Powerhouse Partnership will take a closer look at fiscal devolution – both the opportunities and challenges it raises. Clearly, it would see reductions to what the Treasury itself receives, and we need the right stabilisers in place for areas with the lowest tax revenues. After all, if ultimately we want to become less reliant on Whitehall, we must be able to pay our own way. I want to make the case for devolution as a transformative economic policy, as well as a path to genuine political reform, with metro mayors helping reconnect people to power.
“Which brings me back to Brexit. When the UK voted to leave the European Union in 2016, it went much deeper than just a disdain or distrust of Brussels, stoked by the money of those like the businessman Paul Sykes. It was about a feeling of powerlessness which had built up over decades, of being ignored by the powers that be who think they know better. Post-Brexit, that feeling hasn’t gone away, not least because the promises made by those like Johnson turned out to be ones he himself couldn’t keep. If we want to heal divisions, we need to empower communities and reconnect them to a sense of shared destiny, over which they can have a proper say. People must feel able to change their destiny, rather than just accept it. This is the only way to fix our broken political system and truly ‘take back control’.”
The Internationalisation of the Northern Powerhouse
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. The 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.
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, dropping 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. Vice-chair Lord Jim O’Neill 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.”
Find out more: northernpowerhousepartnership.co.uk