Annabel Denham: Don't forget Yorkshire when it comes to Northern Powerhouse

Successive governments have tried and failed to tackle the large, and growing, economic disparities between London and the North of England.

Despite their efforts, in 2008 the UK overtook Italy to become Western Europe’s most geographically divided nation.

However, all is not lost: the Northern Powerhouse initiative suggests MPs have finally woken up to the sustained underinvestment – in both resources and democracy – north of the M25.

The Northern Powerhouse combines a genuine desire to see renewal outside the South East with practical solutions to reduce the economic gulf.

By bringing together the cluster of cities in the north of England, its aim is to create an agglomeration with the scale to counterbalance London.

Since the Chancellor’s announcement in June 2014, a raft of interventions have been announced to help turn rhetoric into reality – improving transport connections, backing science, universities and creative clusters and devolving power.

While businesses have by and large embraced the concept, it is not without its critics.

An LSE paper from January described the Northern Powerhouse as “fuzzy”, suggesting that the funding was insufficient to achieve its aims.

Earlier this month, a new film aimed at showcasing the Northern Powerhouse came under fire after failing to mention Teesside or the Tees Valley – home of Conservative Northern Powerhouse minister James Wharton’s Stockton South constituency. This last point feeds into a wider criticism that the Government is focusing too much on Manchester.

The “rainy city” was given 52 mentions in the Chancellor’s 140-page 2016 Budget.

This concern was echoed at a recent Regional Voices round table The Entrepreneurs Network ran with PwC at their offices in Leeds, and chaired by Business Select Committee chairman Iain Wright MP.

Yorkshire entrepreneurs expressed fears that cities like Leeds, Sheffield, Bradford and Hull were being overlooked in favour of their neighbours west of the Pennines.

Mr Wright voiced concerns that the “Northern Powerhouse” might just be “shorthand for the M62 corridor”.

Sam Morgan, founder of cycling kit specialists Paria, noted that Yorkshire “manages to create some spectacular products and services, and the value of all Northern cities to the UK economy should not be understated”.

Indeed, in the five years to 2015, Yorkshire created more jobs than the whole of France. Leeds is the UK’s fastest growing city, with a £56bn economy and a workforce of 1.5m.

Sheffield is a leader in advanced engineering; Hull is in the process of becoming an international centre for renewable energy and healthcare technologies. And Minister for Life Sciences, George Freeman, revealed on Tuesday that life science businesses in the Northern Powerhouse are contributing over £10.8bn to the UK economy each year.

Lawrence Tomlinson, whose Leeds-based LNT Group has an annual turnover circling £100m, questioned the Northern Powerhouse’s ability to have a tangible impact.

“I’m behind the Northern Powerhouse, but it is too Manchester-centric. The Chancellor needs to avoid the trap of creating more ‘City’ like services hubs in the North without developing the real economy and businesses that will drive exports,” he said.

An important part of this, Mr Tomlinson says, will be focusing on skills. Qualification levels tend to be lower in the north of England than nationally and the OECD has projected that in the 10 years from 2012 to 2022, over half of new jobs created in the North will require a qualification at level 3 (equivalent to A-levels) or above.

Yet Yorkshire entrepreneurs worry that our education system has lost its spark of entrepreneurialism. Charles Warwick founder Mark Gardiner thinks we need to strengthen the link between secondary education, universities and businesses so students understand which skills are in demand in their local areas.

The 15 million strong population of the North is far larger than London but it’s not yet punching its weight.

If the Northern Powerhouse is a success, the prize is massive.

In 2014, HM Treasury found that if by 2030 the Government could raise the growth rate of the North to the projected rate for the country as a whole, it would add £56bn in nominal terms to the northern economy; in real terms over £1,600 for each person in the North.

With the North dreaming big again, as long as efforts are diversified away from Manchester and the skills gap is narrowed, we could still make those dreams a reality.

Annabel Denham is Programmes Director of The Entrepreneurs Network.