Britain’s chancellor, or finance minister, George Osborne was crowing last week during his budget speech, taunting opposition politicians by exclaiming: “We put the power in the ‘Northern Powerhouse’ ”.
But northerners themselves are somewhat sceptical that talk of a Northern Powerhouse will ever come to anything.
The plan is to make the north of England an economic driver to rival the capital and the south. By focusing on the core cities of Liverpool, Manchester, Leeds, Sheffield and Newcastle, the government wants to add a potential £44 billion (Dh252.53bn) to the northern English economy.
However, the region has hardly been kicking its heels waiting for London to spark a revival – and the UAE has become almost as important for the local economy as the mandarins in the capital.
When flights started from Newcastle in the north-east to Dubai in 2007, Emirates was carrying exports worth £20 million a year. It now carries exports worth £300m a year, says James Ramsbotham, the chief executive of the North East Chamber of Commerce, despite the worst UK recession in living memory.
Paul Woolston, a former senior partner at PwC who leads the region’s local enterprise partnership, says: “The trade between Dubai and Newcastle is a real success story and we can do a lot more on the back of it.”
The area is known for car production – it makes one-third of all the UK’s cars – but some of the products that are exported to Dubai and beyond include high-value biopharmaceutical products; finely engineered, time-critical parts for the oil exploration industry; parts for the sub-sea sector; and other high-value perishable goods.
The daily flights to Dubai also include tourists and business executives.
“We say that we fill up the back of the plane, the front of the plane and the belly of the plane,” Mr Ramsbotham says.
Ecco Finish Solutions, a company in the north-eastern city of Middlesbrough that makes specialist fire protection and safety equipment, is typical of some of the region’s fast-growing exporters focusing on the UAE.
The company, founded by Keith Miller, recently hit the £5m turnover mark. Mr Miller is increasingly travelling to Dubai and is soon to make his 12th business trip to the UAE in 12 months. He has set up a Dubai-based joint venture company, Ecco SPT Equipment, which intends to supply products throughout the region, including Kuwait, Iran and Iraq.
It is stories like this that perhaps add to London’s sudden interest in the north. The Northern Powerhouse proposals began under the previous coalition government but are now firmly positioned under the Conservative banner. There is even a new minister for the Northern Powerhouse – the Stockton South member of parliament James Wharton.
Mr Osborne believes that putting more funding into science and innovation projects, devolving new budgetary powers to northern local authorities and improving transport infrastructure and transport connections across the north of England will make the region prosper – and the rest of the country will benefit along with it.
The government’s urgency in wanting to fire up the north’s various economies was in part explained this month by research from the Centre for Cities think tank.
It showed that the Manchester, Leeds and Birmingham city regions are all generating below the national average in tax revenue in relation to their working populations. If they managed the national average they would raise an extra £9.4bn a year for government coffers, the report said.
However, the Northern Powerhouse plans have been criticised for being empty rhetoric from a party that largely originates in and is elected by the south. While there has been much fanfare about investment in infrastructure projects, there is little to show for them so far.
The central tenet of the plan is to improve transport connections across the north and to London and the south. The main plank of that is the £38.5bn Network Rail project to improve rail infrastructure.
That took a hit when the planned electrification of northern and north-south rail lines was shelved last month because of spiralling costs.
Guy Grainger, the chief executive at the property consultancy JLL, says the country is missing an opportunity by not improving access between the capital and cities such as Sheffield and Leeds.
He points out that foreign investment into the UK regions is increasing and that cities are fighting to get their share of it.
“In the last year, capital flows in to the UK [outside London] amounted to £28bn, a 70 per cent increase on the previous year,” he says.
“This is a healthy trend, and it is cities rather than countries that are now competing for investment.
“Cities that can develop integrated strategies encompassing the local council, business community and higher education institutions will be best placed to sustain long-term success,” he says.
In addition, there is US$32 trillion of funds under management by institutions, private equity firms and sovereign wealth funds looking for long-term investments, Andrew McFarlane of Colliers International, an advisory company that opened an office in Liverpool in January, told the Financial Times. That gives a “‘once-in-a-generation chance” to build the infrastructure needed in the north, he said.
Another bone of contention is that the Northern Powerhouse project requires all northern councils, mostly Labour-controlled, to sign up to having elected mayors – which does not go down well in all quarters.
Last week’s Northern Powerhouse budget pitch involved a promise of partial devolution to Liverpool, Leeds, Sheffield, the Midlands and Cornwall (which is actually in the south-west).
But the most concrete plans were reserved for the Greater Manchester area, with a devolution deal worth more than £1bn. The new mayor will also take charge of a £6bn health and social care budget. Other northern cities were doubtful of policymakers’ commitment.
“If the government is serious about rebalancing the economy to create growth across the country, instead of concentrating it in London and the south-east, they need to put the substance behind their rhetoric,” says Julie Dore, the leader of Sheffield city council.
Mr Woolston says issues such as statutory mayoral elections and devolution have muddied the waters.
“Northern Powerhouse is starting to mean a number of different things and is being confused now with the concept of devolution,” he says. “This is a worry because it diverts people’s time and attention. We [in the enterprise partnership] want to stick with our strategic economic plan which is great and enduring.
“Connectivity across the north is important, but just as important is our connectivity to the Middle East, the United States and Edinburgh,” Mr Woolston says.
“Our push is for economic growth.”
business@thenational.ae
