A Powerhouse driven by its own steam

As businesses gather in Manchester for what is the biggest Northern Powerhouse convention yet to be organised, the naysayers seem to be coming out in force. The two-day convention and exhibition brings together a wide range of stakeholders – largely businesses – who are intent on exploring the business opportunities that might be on the way with the chancellor and city leaders championing the potential of the northern economy. There are clearly some serious questions about economic futures at the present time, but commentators need to be more circumspect than to deride a big idea that could drive not just northern but national prosperity for generations to come.

The principal criticism aimed at the chancellor is that current evidence points to ongoing and serious problems with the northern economy. This week, for example, Yvette Cooper and her Centre for Changing Work claimed the Northern Powerhouse was a ‘regional flop’, on account of the disparity in hi-tech start-ups between Old Street in London and Yorkshire. The digital economy represents a crucial opportunity for northern business, and deserves the kind of thinking and rigour that Cooper’s new thinktank will no doubt pursue, but it is foolish to pour cold water on the entire Northern Powerhouse narrative on the basis of one set of statistics. Transforming the northern economy is a long-term initiative: we can’t expect to see a century of imbalance reversed overnight, and it will take many years for its broad intentions to bear fruit. Instead of lobbing grenades into the debate, senior Labour figures would do far better to set out the indicators by which they believe progress could be measured and the milestones they’d like to see along the way.

Another criticism is that this is all a ‘leap of faith’, lacking proper evidence – words uttered by new Transport for the North chairman John Cridland, but then used out of context by the BBC. It is unsurprising that critics want to seize upon the slightest hint of woolly thinking when it comes to major investment. Treasury modelling has been skewed in favour of investment in the capital, with self-fulfilling formulae driving favourable cost–benefit appraisals for London schemes. Cridland’s point was more profound: if we are to turn around the economic fortunes of the north of England, we need the kind of vision exercised by our Victorian predecessors. They could see the benefits of large-scale investment in inter-city and local connectivity without the benefit of elaborate appraisal mechanisms. And even today, where more comprehensive appraisal techniques are applied, the case for investment in the North is compelling, as the competition for recent railway franchises has shown.

There are particular concerns regarding northern transport plans. Transport for the North has made rapid progress during its short lifespan, and many will be looking forward to the latest iteration of the Northern Transport Strategy due out in the coming weeks. But officials bemoan the fact that plans are much less developed than those of Transport for London, with scheme development still some way behind the likes of Crossrail 2. It is important to remember that Transport for London has had many years to work up its agenda and pipeline, balancing its smaller schemes with its grand plans, developing relationships between boroughs, transport agencies and with central government officials. Such processes are hard to rush, and large institutions such as Network Rail and Highways England need to redeploy staff teams to support scheme development in the North. The new Northern Transport Strategy will be another step forward, and the chancellor – and his National Infrastructure Commission – must respond accordingly with shrewd investment in short-term, smaller-scale ‘easy wins’ while building capacity to bring online the transformational projects we need to see by 2030.

Other critics argue that the focus on transport alone is not enough. This week Sir Michael Wilshaw highlighted the challenges facing secondary schools in Manchester and Liverpool, suggesting that if they are not improved the Northern Powerhouse will ‘splutter and die’. This is absolutely right. International evidence shows that a focus on skills and innovation is critical to reversing years of industrial decline. There is little evidence of any appetite in government to devolve responsibilities for education or 16–19 skills, though new metro mayors might be able to exercise some leadership in these matters. And the lion’s share of the innovation budget remains tied up in pursuing world-class excellence in the ‘golden triangle’ rather than unlocking innovation potential in the North’s eight research-intensive universities.

Perhaps the most pernicious criticism, though, is that the Northern Powerhouse is simply political sloganeering by a chancellor with his eye on Number 10. The BBC recently ran a story on the finding that two-thirds of northerners had never heard of the powerhouse. Flip that figure on its head, though, and the fact that a third had heard of it probably makes it one of the most widely known government programmes in recent history. But assuming the worst here, the best way for those in the North to overcome Osborne’s ego is for northern leaders to take ownership of the agenda themselves. IPPR North is proposing a Great North Plan – a more holistic, autonomous approach to driving the northern economy – that better reflects the kind of economic strategies seen across other successful European regions. City leaders need to work much harder to foster greater public interest and support for the visions they have for their combined authority areas and beyond. But over the next two days, what makes the UK Northern Powerhouse conference so important is that business leaders can themselves develop their own agenda for Northern prosperity. The Powerhouse must now start to be driven by its own steam.