Whether or not the Northern Powerhouse brand survives the recent change of leadership in government, it remains the case that a focus on productivity outside the capital city is the biggest economic challenge facing our nation.
With a population of 15 million and an economy worth £300bn – twice the size of Scotland – the North of England is too big to be ignored. If the North was able to halve the gap between its own economic output per head and the national level, then its economy would be £34bn bigger.
Infrastructure investment oils the wheels of economic productivity. To this extent, it is no surprise that the most productive region of the country – London and the South-east – is also the region that has received the lion’s share of infrastructure expenditure in recent decades.
Souht-east spending dwarfing North
The amounts spent on Heathrow Terminal 5, tube upgrades and Crossrail all dwarf infrastructure spending everywhere else in the country. Despite the rhetoric of the previous chancellor, this looks set to continue.
Analysis of the current National Infrastructure Pipeline shows that we are planning to spend nearly £1,900 per person on transport infrastructure in London, compared with just £270 per person in the North. The £4.6bn left to spend on Crossrail is more than the total expenditure planned for the Northern Powerhouse.
This is not to begrudge London of this important investment. The nation needs a strong London and there is merit in the argument that we cannot afford it to grind to a halt.
“Commuter travel between Manchester and Leeds is 40 per cent less than might be expected between two similarly sized locations in Europe”
But where investment in the capital does little more than mitigate congestion, investment in the North could fire up a new era of Northern prosperity.
There is a compelling argument that the success of big cities like London or city-regions like the Rhine-Ruhr in Germany are built upon large, well-connected labour markets.
But commuter travel between Manchester and Leeds is 40 per cent less than might be expected between two similarly sized locations in the rest of Europe. And unlike in London, for most people in the North, moving jobs requires moving home, creating a big drag on labour mobility.
Thankfully, this is now well recognised and in the past two years Transport for the North has made rapid progress in developing a Northern Transport Strategy that will soon publish its key investment priorities, expected to total more than £50bn.
With various spending rounds on the horizon, the government has a unique opportunity to realise the North’s latent potential.
By upgrading its appraisal processes and adopting a ‘North First’ approach to investment, the UK economy could be firing on all cylinders rather than constantly propping up an ailing economy with massively expensive mitigation schemes in the capital.
Ed Cox is a director of IPPR North and member of the Business North steering group