Boris Johnson has indicated there might be a future for the Northern Powerhouse

By Bridging Loan Directory 14th August 2019

Almost five years to the day since George Osborne first announced the “Northern Powerhouse” in a speech at Manchester’s Museum of Science and Industry, Boris Johnson stated his commitment to completing the project’s flagship component: a high-speed rail link running between Manchester and Leeds. “I want to be the PM who does with Northern Powerhouse Rail what we did with Crossrail in London” said Johnson.

Not too long ago, the Northern Powerhouse seemed a more all-encompassing strategy than simply building an East-West rail network. It comprised a number of different strategies including upgrading digital infrastructure, devolving power to local authorities and injecting greater levels of financial investment into the region.

The plan was for these improvements to bring an overall boost to the North, both economically and politically. Five years later, it’s clear that some progress has been made. Indeed, Experience Invest is continuing to work with developers in the construction of residential and semi-commercial properties in places like Liverpool and Newcastle. However, it’s important the government does not let Brexit dominate its policy agenda. At this critical juncture, Johnson’s government needs to pursue policies that help make the North more dynamic and prosperous.

How has the Northern Powerhouse developed?

Since 2014, the Northern Powerhouse project has undeniably had an evident impact on the region’s economy, most substantially by creating jobs and encouraging outside investment into the region. A recent report published by the Institute for Public Policy Research (IPPR) North indicates that a greater level of attention and investment has had a positive impact. According to the report, there are 34,000 more jobs in professional, scientific and technical jobs, plus a further 54,523 jobs in manufacturing roles. Employment has also increased by approximately 7% in the North compared to the UK average of just over 6%.

It also revealed slightly higher economic growth in the North than the national average, with a 10.7% rise during this same time period, compared with 10.6% for the UK as a whole and 9.7% for the UK excluding London.

However, for all the gains, the Northern Powerhouse has not been without its shortcomings. In particular, transport spending has failed to reach the promised levels, a fact highlighted in the IPPR North report. To put this into perspective, transport spending in the North only increased by £149 per person in real terms since 2014, which is less than half of the £330 per person increase seen in London. Unsurprisingly, this has led to a decrease in the quality and reliability of transport. Approximately 5% of all transport services were either cancelled or over half an hour late in 2018-19.

Crucially, this figure includes the bread and butter transport services that are essential to ensuring a thriving local economy. If the government is to truly reiterate its commitment to the Northern Powerhouse, then it needs to fund improvements to transport and infrastructure at all levels and not just the high-speed rail links that will generate headlines in London.

What needs to be done to reinvigorate the Northern Powerhouse?

While Boris Johnson’s determination to “turbo-charge” the economy by refocusing on the Northern Powerhouse is laudable, it remains to be seen whether his enthusiasm will be followed by a sustained level of investment.

Ultimately, the levels of investment required cannot be provided by government alone. The private sector has an important role to play in facilitating the development of the North. Indeed, private developers have already begun constructing new-build developments in high-growth cities like Liverpool, Manchester and Leeds.

All the region needs now is for these green shoots to be supplemented by clear government leadership and the necessary investment to ensure that Northern towns and cities can cope with the coming influx of homebuyers and investors.

To this end, further devolution is required to elected mayors and local leaders who are invested in the future of the region. Indeed, business leaders have long called for the mayors of city regions to be able to control taxation and planning as well as transport.

While self-determination ultimately holds the key to unlocking the potential of Northern cities like Liverpool, Manchester, Leeds and Hull, it is for national government to co-ordinate a cohesive push for greater investment into the region. That’s why I was delighted to see Boris Johnson talking up the role of the Northern Powerhouse in driving the nation’s economy forward, and hope his vision for the North translates into policy.

Jerald Solis is the Business Development and Acquisitions Director at Experience Invest