Alexandra Jones

The Government must do more to ensure the ‘Northern Powerhouse’ becomes a lasting legacy

The Government must do more to ensure the 'Northern Powerhouse' becomes a lasting legacy
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The recent Queen’s speech, along with the growing divisions in the Conservative Party over the EU referendum, have focused attention on how this Government will be remembered after David Cameron steps down in 2019. Many mentioned prison reform, improving university standards and tackling extremism, as signs of the Prime Minister’s determination to establish his legacy as a social reformer, guided by the compassionate conservatism which characterised his earliest pronouncements as Tory leader.

Less remarked upon, however, was the renewed commitment in the speech to building the Northern Powerhouse, and empowering cities in the North to fulfil their economic potential – another key way in which the Government hopes to leave its stamp long after Cameron has left office. This ambition was also evident in George Osborne’s budget statement in March, in which he confirmed plans for the new high speed train-link between Manchester and Leeds, as part of the Government’s commitment to 'rebalancing our country'.

However, new research by the think tank Centre for Cities argues that, while transport links matter, the Northern Powerhouse will only succeed if the Government maintains its original focus on boosting productivity in underperforming Northern cities and their surrounding areas.

The report, ‘Building the Northern Powerhouse’, compares Northern cities to the Rhine-Ruhr and Randstad regions of Germany and Holland, which the Government has cited as models for the Northern Powerhouse. In particular, ministers have argued that the economic success of these regions is a result of their strong transport links, which enable people to commute between different cities for work – and that improving rail and road connections will have the same impact in the North of England.

Yet the new research shows that inter-city commuting links in the Rhine-Ruhr and Randstad areas are actually little better than in the Northern Powerhouse region today. Instead, their success is driven by the economic strength of their cities and their surrounding areas, which are 40 per cent more productive than counterparts in the North of England.

For example, Amsterdam – the most productive city in the Rhine-Ruhr and Randstad regions – contributed £75,188 per worker to the Dutch economy in 2011. In contrast, Leeds (the top-performing city in the North) contributed £46,575 per worker to the national exchequer in the same year. This suggests that a successful Northern Powerhouse won’t happen unless national and local policy-makers tackle the productivity deficit in Northern cities and their wider regions. More than anything else, that means addressing skills-gaps. For example, only three Northern cities (York, Warrington and Leeds) are in the UK top 20 in terms of residents educated to degree level.

Transport still matters; research shows that transport projects such as HS3, linking Manchester and Leeds, will help to spur on economic development. It’s important that the Government ensures it goes ahead.

Ultimately however, the Government needs to ensure that its Northern Powerhouse policies are helping big city-regions such as Greater Manchester and Leeds to overcome the economic challenges that they face, as these places have greatest potential to deliver benefits for the North as a whole. In doing so, the Government can make a real difference in starting to reverse the decades-long North/South economic divide – and can secure a lasting legacy that will be significant not just in the North but for the UK as a whole.

Alexandra Jones is Chief Executive of the think tank Centre for Cities