'˜Focus on skills not HS2' for success in North

The Government's Northern Powerhouse agenda will only succeed if it focuses on boosting productivity in under-performing Northern cities and improving local transport links, an influential report reveals today.

The Centre for Cities group claims that while grandiose schemes like HS2 and HS3 are important drivers for growth, Yorkshire’s prospects would be better served by ensuring the likes of Sheffield and Leeds improved their productivity and skill levels.

The report, Building the Northern Powerhouse: lessons from the Rhine-Ruhr and Randstad compares Northern cities to the regions of Germany and Holland, which the Government has cited as models for the Northern Powerhouse.

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It shows that the success of these areas is not the result of extensive connections between cities in these areas, as is often assumed, with commuting links actually little better than in the North of England.

Instead, the economic vibrancy of these regions is driven by the strong performance of their individual cities, which are 40 per cent more productive than counterparts in the North.

The research shows that Leeds is the most productive city in the UK, with a GVA rate (Gross Value Added per worker) of £46,575 in 2011. However, Sheffield did not make the top ten, coming in at 11th place with a GVA rate of £42,217.

The report in particular looks at the skills gaps in Northern cities, with only three – York, Warrington and Leeds – in the UK top 20 in terms of the number of residents educated to degree level.

Nearly half of residents in Reading have a degree, against 34 per cent of people in Leeds and 32 per cent of people in Sheffield.

It says that strengthening transport networks within Northern cities is a bigger priority than inter-city links, saying: “While improving train connections between cities such as Manchester, Leeds and Sheffield will help economic development, the research suggests that boosting transport links within cities will have a bigger impact on improving productivity, by enabling people to access jobs across their wider city-region more easily.”

The finding is particularly prescient for Leeds given the recent collapse of the decade-long battle to bring a trolleybus scheme to the city. It also calls for more city-region governance, arguing that important policy decisions should be at City Region level. While South Yorkshire has agreed a devolution proposal, a deal for the rest of the region remains mired in internal divisions.

Alexandra Jones, chief executive of Centre for Cities, said: “The Government’s initiative has the potential to have a huge impact in addressing the North/South divide, but only if it maintains its original focus of boosting productivity in major Northern cities such as Leeds and Sheffield.”

Sir Nigel Knowles, Chairman of Sheffield City Region LEP, said: “This data is further evidence of the importance of devolution for the Sheffield City Region so that action can be taken locally for the benefit of the regional economy.”