Southern Powerhouse set to leave the north in its wake

Southern Powerhouse set to leave the north in its wakeNow that's what you call a powerhouse
As research suggests the Northern Powerhouse is anything but, what has the north got to do to close the gap with the thriving south east, asks Dougal Paver.

This blog doesn’t do gloom – and it ill-behoves me to start the week with anything but visions of sunlit uplands, much less share caution.  So you will forgive me the premise for today’s article, dear reader, as it is offered in the cause of progress.

First, we should recognise that the Centre for Economic and Business Research’s latest findings seem on the money.  Namely, for all the relative success of Leeds, Manchester and Liverpool in developing higher-value business clusters and sorting out their city centres, their progress lacks the pace and pep of southern cities, and so they are falling further and further behind, relatively.  And unless we acknowledge this fact, then the policy-making needed to right that will go awry.

All credit to the Conservatives for their Northern Powerhouse agenda, then.  Businesses, the media and government in its many forms have bought in to it to show alignment with central government, as alignment is where the money lies.  And so in double quick time it has become manifest in pronouncements, policy and aspiration.  Overlay the regional devolution agenda, which is targeted largely at northern conurbations – outcome: more money – and you have a civic and business cadre fully on board with the government’s direction of travel.  That’s smart politics.

The reality, of course, is different.  First, the sort of investment carrots being dangled by government in the form of infrastructure, such as HS2 and HS3, are long term and their ‘fixes’ will, by definition, take many years to bear fruit. Second, the need to sort out the public finances has already put the breaks on flagship initiatives such as HS3, which is hardly encouraging, shall we say.

And finally, there’s the small matter of the continued huge imbalance between infrastructure spending in London compared with the major northern cities.  As HS3 gets shelved, there’s a genuine prospect of Crossrail 2 in London.  See the problem?

Some suggest this is symptomatic of the Tories’ southern bias and of how unrepresentative the party is.  No votes for them in the north, after all.  The fact that you can drive from Penzance to within 20 miles of the Edinburgh city boundary entirely through Conservative-held parliamentary constituencies suggest that may be a lazy (and unhelpful) stereotype.

Nevertheless, the imbalance in infrastructure investment clearly works against the north but the infrastructure issues faced by the south east are no less problematic, and yet it continues to thrive.  If it’s such a traffic-choked hell-hole then why do businesses continue to invest there?  Why do they put up with its disadvantages and head south without any government incentives and in spite of the claimed advantages of now-thriving northern cities like Manchester and Liverpool?

Because they make more money down there.  The south’s relative wealth and dynamism feeds itself – and the relative absence of such, by comparison, in the north undermines it as investment decisions made by private companies favour following the greatest opportunity.

Put another way, the south’s economic advantage is now so deeply entrenched that it will take some seismic event – a discovery or technological leap of some sort – that is centred on the north for it to ever begin catching up.  Without some new economic power source, the notion of a Northern Powerhouse is mere puff – a clever piece of spin to distract us from reality and make us believe that we can reassert ourselves fully in today’s British economy.

The good news is that that power source does exist in the north and does have the potential to utterly transform our economy.  And the Conservatives, alongside the trades unions, are fully supportive of it and taking political risks to get it off the ground.  Average salaries in this industry, plus the skills-levels required to sustain it, are off the scale in relative terms and it would deliver vast import substitution and a whole new tax base that has the potential to transform the UK’s trade performance.

We use this product every day and our two key suppliers are not particularly reliable partners – one a gangster state, the other with scant regard for the environment and the sorts of social freedoms we value so highly in this country.

The North’s economic fix, dear reader, lies with shale gas.  Are you willing to cut through the trail of fog laid by its opponents and back the unions and the government and support its extraction?  If it’s a Southern Powerhouse you want, then just deny the north the opportunity presented by shale.