The last few weeks of coronavirus restrictions have put a big strain on relations between northern leaders and the Government. It’s no surprise that questions have begun to be asked about whether the Northern Powerhouse is still for real. We believe that it has never been more needed. But it urgently needs a reset, with a new deal between the North and the Government about managing the COVID winter, building the recovery and levelling up the North.
The original powerhouse idea was about how cities and towns across the North could collaborate to create the scale to match London and other major regions across the world. This was a positive vision, about how a region of 15 million people, with core industrial and sector strengths would then be better able to attract investment, drive innovation and close the productivity gap. A similar proposition lies behind the Midlands Engine and the Western Gateway. To achieve this potential, big investment was required in infrastructure and in skills and education, all underpinned by devolution to mayoral combined authorities, giving local leaders the levers that shape local and regional economies.
Some of this agenda has been delivered. The commitment to infrastructure spending has improved substantially and 60% of the North’s population will be covered by metro mayors by next year. But devolution has so far transferred very few service budgets, as coronavirus has revealed, and there has been nothing like the transformational spending required on education and skills.
The North of England has been hit disproportionately hard by COVID, with higher case levels, big rises in unemployment and the brunt of local restrictions. Even before the recent Tier two and three measures, two out of three people in the North were affected by local restrictions, compared with one in 140 in the South. Many local economies in the North feel like they are on a knife edge. No wonder northern leaders have warned of a ‘levelling down’ effect.
Grant Schapps said last week, at the Great Northern Conference, that he wants the North to own the Northern Powerhouse. What’s needed to deliver this is a new partnership with Government, as called for by the Convention of the North. This needs to be cross departmental, backed from the very top of Government. Trust should be at its heart, with mayors and leaders entrusted to manage more of what matters through further devolution. And it means filling in the devolution gaps across the North in North Yorkshire, Lancashire, Cumbria and Cheshire.
However, while these would be welcome moves, they aren’t enough to shift the dial sufficiently on levelling up. That requires a much more substantial transfer of investment and spending. If the Government genuinely wants to reunite the country then it must will the means as well as the ends. Lord Kerslake’s 2070 Commission has put a figure on the minimum additional investment that would be required to make levelling up a reality, £150bn over the next 10 years.
This should be split between increased funding for locally run skills, employment and community support programmes and the establishment of a Northern Powerhouse Investment Fund, overseen by northern leaders. The investment fund should be run on patient capital and impact investment principles (focusing on the long-term generation of broad economic value and returns), so that it supports good, sustainable, businesses and jobs. It should be centred on the North’s core economic assets and future growth opportunities, such as those highlighted by the Prime Minister when he promised a clean energy revolution led by wind power, and green hydrogen innovation and production.
Throughout the pandemic we have heard repeated references to the spirit of the Second World War. What kept people going then wasn’t just sacrifice but hope. Only true partnership and investment on a large scale can significantly change the trajectory of the North’s economy and create more equal opportunities for its people.
As we enter what will be for many a very grim winter, we need a clear commitment to avoid the social and economic scarring of mass unemployment and a plan for levelling up, that gives hope for a better future for the north. That’s how the Northern Powerhouse can achieve its potential.
Ben Lucas and Mike Emmerich are founding directors of Metro Dynamics