Deloitte-hosted discussion looks at the powerhouse’s raison d’être and its future.
In on the discussion (from left)…
Sandy Needham, chief executive, West & North Yorkshire Chamber of Commerce.
John Mothersole, chief executive, Sheffield City Council.
Ian Stewart, chief economist, Deloitte.
Sean Beech, office senior partner, Liverpool, Deloitte.
Richard Bell, practice senior partner, North West and regions managing partner, Deloitte.
Martin Jenkins, practice senior partner, Yorkshire and the North East, Deloitte.
Debbie Mullen, head of Yorkshire corporate banking, Barclays.
Roger Marsh, chairman, Leeds City Region Local Enterprise Partnership.
Stephen Hall, office senior partner, Newcastle upon Tyne, Deloitte.
Tony Reeves, local authority advisory partner, Deloitte.
Sarah Day, managing partner, DLA Piper (not shown).
By Naomi Rainey
The Northern powerhouse has been pitched as a way of solving the perennial problem of the North-South divide, but is how the challenge is viewed part of the problem?
Talk of the North-South divide tends to pay little regard to the strengths of the Northern region: its natural assets, its people, its diversity. While there is no doubt the North’s contribution to the UK’s coffers is lower than it should be, it still holds its own – and, as Roger Marsh, chairman of Leeds City Region Local Enterprise Partnership often says, were the North an independent nation, its output would place it just outside the top 20 economies of the world.
So is pitting the North against the South – which includes one of the biggest global centres of finance and enterprise – a distraction from the real task at hand? “The idea that we will close the gap between the North and the rest of the UK is a problematic challenge,” according to Tony Reeves, local authority advisory partner at Deloitte.
“When you’re comparing yourself with anything that has London and it’s not in your side of the equation, you have a problem.”
Leading a round-table discussion hosted by Deloitte in Leeds last month, Mr Reeves noted that the debate is not about closing the gap. Instead, it is about whether the North can tackle its productivity problems, improve output and boost economic inclusion through better collaboration. “The answer to that is definitely yes,” he said.
The discussion, attended by business representatives from across Yorkshire, made it clear that the Northern powerhouse should not be considered a shortterm project. Deloitte chief economist Ian Stewart – by his own admission an “outsider” from London – noted that regional differences are not just an issue for England.
“If you look around the industrialised world,” he said, “the difference in performance of different regions in the same economy is staggering.” Although regional variations are persistent, Mr Stewart added, they can and do change, but success in such projects takes time.
John Mothersole, chief executive of Sheffield City Council, said that there was a risk of being judged hastily. “I think the danger of the Northern powerhouse is too much is expected of it too soon,” he said. “It would be great if it took ten years, but it’ll become a 30-year project.”
While this may be a frustration to some, Mr Mothersole said that focusing on incremental gains year-on-year in output will leave people “quite surprised” about how much progress can be made.
For Roger Marsh, understanding where you want to end up is essential. “In 25 years’ time,” he said, “what are our aspirations for success? If the answer is we want to bake a chocolate cake called the Northern powerhouse, let’s make sure we don’t set up to make a doughnut.” Engaging businesses could be difficult if the “what” is not accompanied by the “how”, he added.
DLA Piper managing partner Sarah Day, however, suggested that leaders should not dictate the recipe, rather ensure that the right ingredients and environment were there to allow “all the good Northern values” of entrepreneurialism and hard work to flourish.
So what are these right ingredients? Transport has remained a strong focus throughout the Northern powerhouse debate, with the extension of HS2 and better east-west connectivity through an eventual HS3 high on the agenda. The Government’s announcement in the November autumn statement that Transport for the North will be given a statutory footing further solidified the importance of infrastructure to the Northern project.
But, as Barclays head of Yorkshire corporate banking Debbie Mullen noted, the success of – and the need for – better transport is dependent on having a population that uses it. “You actually need people to travel on the transport network,” she said, “so how are you going to attract them to our region? That comes down to education, hospitals, even things to do.”
There was a consensus that education and skills presented significant hurdles. Debbie Mullen said that what firms really wanted from the Northern powerhouse was the power to address the skills gap, while Tony Reeves argued that it could become a platform to overcome the “fragmented” skills structure in the UK.
But how do you create a joined-up skills agenda when the current devolution deals provide few powers relating to pre-16 education? Roger Marsh said this was the place where the skills challenge starts, the opportunity to inform, enthuse and empower young people towards bigger aspirations.
Despite a lack of local power over education, good work is already being done by bringing business and education together. Sandy Needham, chief executive of West & North Yorkshire Chamber of Commerce, pointed to the University Technical College (UTC) at Leeds that is due to open in September.
Developed in conjunction with University of Leeds and employers including Clarion, Siemens and Unilever, Leeds UTC follows Sheffield UTC, which opened in 2013. Both will enable teenagers aged 14 and above to study technical courses designed to meet the skill needs of enterprise.
“Why is this different?”, Sandy Needham asked. “It’s because you’ve brought business people together with educationists.” She added that strides have also been made in apprenticeships across professional services, led by the legal sector, but innovation through university collaboration must become a core part of the strategy as the North is “really missing out” due to a lack of partnership between its higher education institutions.
Ultimately, the North needs to be bold in directing the skills agenda, Sarah Day said. “Don’t wait for them to build it – you build it, you influence what you can. It’s always easier to ask for forgiveness instead of permission.”
Good local initiatives must be backed up by scale as a means of raising productivity across the North, Tony Reeves added. He suggested that another statutory body – Skills for the North, perhaps – could be the way forward in enabling pan-Northern skills strategies.
Alongside longevity and the major themes of transport, skills, innovation and housing, the powerhouse must have a story to tell. The North has to make a coherent virtue of its differences and strengths, rather than tell a divisive tale of competition.
“The Northern powerhouse for me is not a place,” John Mothersole said in conclusion. “It’s a project, focused on the Northern, under-utilised asset base. We should be selling the economies that we have and using the Northern powerhouse to get the tools to do the job for those economies to fly.”