The North was once the economic powerhouse of Britain, and I believe it can be again. Each of the regions and major cities which make up the North retain huge economic strength, as well as a history, culture and quality of life which make them the envy of the world.
But in our changing world, size really does matter. Megacities of 10 million will become commonplace. Cities and regions will thrive only if they can attract a huge diversity of people into a melting pot of talent – developing ideas, innovating in the production of goods, inventing new services, leading the knowledge economy.
Our North of England will be in the premier league of global economies, but only if it looks, feels, operates and believes it is “one economy, one north”. That is why the Northern Powerhouse concept is so important.
But many of those I speak to in the business community across Yorkshire and the rest of the North are unclear what it is all about and are sceptical as to what tangible impact it might have.
That is why KPMG commissioned a report from IPPR North, From Rhetoric to Reality: A Business Agenda for the Northern Powerhouse, to start to look at the Northern Powerhouse through the eyes of business. The conclusions of the report are inescapable. While the North has many strengths, it is currently failing to achieve its full potential. Productivity is lower than the national average, our skills base is weaker, and growth over the last ten years has been slower than in every EU country except Greece.
Strongly contributing to this weakness is a legacy of underinvestment, particularly in the transport infrastructure between the major cities. But if the rhetoric around the Northern Powerhouse is translated into real action, we could unlock the biggest growth opportunity for the North since the Victorian era.
This prize – a rebalanced economy and a virtuous circle of investment, productivity and wealth – can only be attained by significant investment in the region’s infrastructure, our research base and the skills of our local workforce.
At KPMG, we have long been vocal in our belief that investment in our regional transport infrastructure should be the first and foremost priority. And this view is anchored in the vast majority of conversations that we have with other business leaders across the North.
If we cannot better link our cities by road and by rail, develop our urban transport systems to combat congestion, and expand the international gateways of our ports and airports, then the North simply will not prosper.
And it is on this issue that the report makes for stark reading. It found that for the North to match London in terms of per-capita transport infrastructure spending, an extra £33 billion would have to be allocated to the region. And if per-capita spending in the North had equalled the UK regional average over the past five years, then an additional £2.5 billion would have been spent.
Such systemic underinvestment has stifled the region’s economic potential for too long. The good news, of course, is that this is beginning to change. The Transport for the North Partnership is bringing forward a strategy with clear plans for capital investment, alongside Government plans for transport devolution. But warm words and modest funding are simply not enough. Much more ambitious plans must be made if connectivity levels in the North are to even approach those of London or other major conurbations, such as the Randtstadt in the Netherlands.
To this end, the report calls for investment in transport across the North of England, to the tune of £50 billion to create the connectivity necessary to achieve a step change in prosperity.
An investment of this magnitude would in turn trigger a virtuous circle of increased business confidence, private investment, more jobs and a more productive workforce
It is therefore vital that in the forthcoming Spending Review and beyond, the Government follows through on its commitment to the North of England. Otherwise, the Northern Powerhouse agenda risks being added to a long list of failed regional policies such as the Northern Way and the Regional Development Agencies.
And in return, businesses across the region should also play their part. Together, the business communities of the North need to speak with one voice, to work together to make the North great again.
Richard Threlfall is KPMG’s head of Infrastructure, Building and Construction