The accelerated development of the North of England – dubbed the Northern Powerhouse – has hit the roadblock of a lack of clear strategy, finds a recent BDO analysis. To make concrete moves to bolster the area, Prime Minister Theresa May recently announced a more material regional strategy and released more than £550 million in funding.
Northern Powerhouse
The North of England – broadly made up of the North West, North East, and Yorkshire and the Humber of England – had economic output of around £289 billion in 2015. In a bid to unlock the region's further potential, estimated at £34 billion in GVA, the Northern Power House idea was launched by George Osborn – then the Chancellor of the Exchequer – in 2014. The initiative was to focus on bolstering the region's economic strength by, among others, improving infrastructure, increasing innovation, keeping skilled workers and supporting regional businesses.
While efforts to create a clear vision for a regional transformation continued into 2016, with the launch of George Osborn's Think Tank, the Northern Powerhouse Partnership (which generated considerable interest from major businesses), a recent study by advisors questions whether the impetus behind the idea is being sustained.
The study, completed by BDO and digital agency The Eword, shows that of a sample of 100,000 online searches, 'Northern Powerhouse' searches have dropped by 18% year-on-year. This is in stark contrast to the more than 1,000% increase of the idea over the year following Osborn’s announcement
According to BDO, one cause for the loss of interest may be that there is a lack of clear or concrete actions flowing from the idea, resulting in “Northern Powerhouse fatigue.”
Industrial strategy
Prime Minister Theresa May in January announced a host of plans for the North, including £556 million in funding for the region to 'encourage' future growth. The plans, in addition, propose funding, among others, for the Goole Intermodal Terminal, to improve connectivity between across the North; and funding for the International Advanced Manufacturing Park in Sunderland and South Tyneside, which is projected to create 5,000 jobs.
Ed Dwan, Partner and Head of BDO in the North West, says, “We welcome the industrial strategy […] as ambiguity has been causing people to lose interest in the Northern Powerhouse concept, which could have proven a missed opportunity for businesses across the region.”
He continues: “Clarity about the shape and practicalities of the Powerhouse, and how collaboration will be fostered across key northern cities should help boost business confidence. This could create renewed interest and conversations among companies.”
Chris Hearld, Chairman of KPMG in the North, adds, “More broadly, the Prime Minister’s blue-print for the country’s industrial strategy offers some welcome clarity of the national picture as our region continues to play its part in addressing the productivity puzzle that grips the UK. It is particularly heartening to see that the first three of the ten pillars that make up the new strategy are innovation, skills and infrastructure – all elements that we see as being key to the growth of the north and an overall rebalancing of the UK economy.”