Bristol has the strongest economy per capita outside of London. So can it steal political focus to rival the Northern cities as a regional power?
“We need a Northern powerhouse, too.”
In a speech late last year, chancellor George Osborne outlined his vision for the economic future of the North. “Not one city, but a collection of Northern cities – sufficiently close to each other that, combined, they can take on the world,” he argued.
Source: Land Registry
With a new agreement now in place to give Manchester and Sheffield full control of their transport and skills budgets, the economic debate has begun to shift away from London to focus on the North with little more than two months to go until the general election.
Alongside devolution, High Speed 2 is poised to provide huge economic stimulus for the Northern cities it will connect.
But what of the urban hubs that won’t be connected by high-speed rail and that fall outside the chancellor’s grand plan for a Northern powerhouse?
The city region of Bristol, which includes Bath and North-east Somerset, has a £25bn economy and a population of around 1m – meaning it has the highest-value economy per capita outside London and the South-east.
“Bristol doesn’t tend to shout about itself as much as it should”
James Durie, Bristol Chamber of Commerce
It was one of the fastest-growing cities in England outside of London in 2013/14 in terms of business growth and innovation, and has had a directly elected mayor, George Ferguson, since November 2012.
Bristol also recorded the highest increase among nine leading UK cities in office take-up in 2014, according to commercial property adviser GVA.
So if Bristol is succeeding in securing business growth and new office development, can it rival the likes of Manchester as a regional powerhouse?
One reason Bristol has struggled to the attract as much attention as Northern cities is its inability to “punch at its weight”, according to British Chamber of Commerce director James Durie.
“Bristol doesn’t tend to shout about itself as much as it should, in comparison with somewhere like Manchester, which shouts a bit louder,” he says.
There are two major issues that have so far stopped Bristol reaching its potential.
Stunted housing growth
The first is housing.
While the city’s housing stock has grown year on year since 2009, the rate of growth has slowed down over the same period.
In 2010, housing stock in Bristol and Bath grew by 1.1 per cent, but this slowed to 0.8 per cent in 2012 and again to 0.5 per cent in 2013.
This is against the trend of some northern cities such as Liverpool, where housing stock growth has risen consistently over the past three to four years.
And house prices are now growing ahead of the national average, especially in Bath and North-east Somerset, putting pressure on the market.
Part of the problem is a lack of available land in the city, according to Mr Durie.
“There are real tensions in getting politicians to meet the needs of housebuilding in the Bristol and Bath area – we’re not building enough homes,” he says.
“We need to make more land available and make sure the planning system works for us.”
He says the slowdown in housebuilding could “limit [Bristol’s] ability to get the economy to grow”.
“We’re not allocated the right land in the right places for homes,” he adds.
However, its appears the housing pipeline in Bristol may have finally turned a corner.
Between July 2014 and February 2015, plans were approved for 78 new privately funded housing projects, according to construction intelligence unit Glenigan, comprising nearly 5,000 homes with a total value of nearly £400m.
This represents significant growth compared with the period from December 2013 to July 2014, when just 57 projects entered the pipeline, accounting for around 1,900 homes and a total value of £134m.
“We’ve seen big interest from the private rented sector in developing large housing projects,” says Invest Bristol and Bath head of inward investment Matthew Cross.
“There are the same problems that we’ve seen everywhere: housing growth has been slow to get going, but there’s a big pipeline.”
Projects back under way
The commercial sector is offering similar growth potential, with high-profile but previously stalled schemes such as Finzel’s Reach in the city centre now back under way.
Finzel’s Reach is valued at £100m by Glenigan and the 384-flat scheme has now finally got off the ground, having secured planning permission back in 2005.
The progress of other major commercial developments is less encouraging.
Plans for a £33m office and residential mixed-use development on Provincial Place in the city centre have stalled, having been put on hold in January this year.
More high-profile still is the redevelopment of a former Rolls-Royce site on Gypsy Patch Lane, north of the city centre.
Plans for the £96m project comprise a hotel and business park, but after gaining planning approval in the summer of 2012, the proposals were put on hold in December 2013.
However, the scheme is now getting back under way with new funding streams, according to local sources.
“Stalled schemes getting back under way show the potential that Bristol has to grow, [as well as] the interest we’ve been having from investors,” Mr Cross says.
“It’s not just UK investors; we’ve had lots of interest from Europe and from sovereign pension funds, plus we’re starting to see investors from China looking seriously at projects in Bristol.”
This potential has already been demonstrated in the successful delivery of he £35m Two Glass Wharf project.
One of the first high-value speculative office developments to be built outside London post-2008, it was announced last year that PwC would move into the building during the course of 2015.
“We’re seeing investors from China looking seriously at projects in Bristol”
Matthew Cross, Invest Bristol and Bath
Commercial and General’s scheme for a new eight-storey office building at 111 Victoria Street is also at the pre-tender stage.
Skanska’s flagship office development at 66 Queen Square – the firm’s first office scheme in the UK for which it is acting as developer as well as contractor – has now been completed and already been put on the market.
Skanska UK managing director of development Andreas Lindelof says the company “sees Bristol as one of the hotspots for investment” outside of London.
“We feel Bristol punches well above its weight in terms of commercial development,” he says.
But it is the lack of investment in infrastructure that could prove a stumbling block in encouraging commercial and housing development, according to Mr Durie.
“There’s a big concern among the business community about infrastructure investment – we’re not building sufficient infrastructure, and the current infrastructure is groaning,” he says.
A lack of public funding has been a critical driver behind this, he argues.
“In terms of funding, Bristol might not have got the money it’s always wanted in the past – beginning to close that public funding gap for infrastructure will make a huge difference.”
Bristol missed out on HS2, which will bring millions of pounds of work to contractors in Birmingham, Manchester and the North.
“Bristol punches well above its weight in terms of commercial development”
Andreas Lindelöf, Skanska
Manchester has also benefited from large public funding for its Metrolink tram system, which will be expanded further as part of a £470m investment over the next five years.
Compared with these levels of investment, Bristol’s public funding seems relatively small; yet there is still a strong pipeline of work.
“We might not have HS2, but the Great Western line is being electrified and that will cut journey times to London – we want to build on that,” Mr Durie says.
“Temple Meads has the potential to be a huge western hub and a gateway to cities such as Cardiff and linked with Swindon and Oxford.”
The £700m investment in the electrification of the Great Western line will include an overhaul of Temple Meads station in the city centre and is due to be completed in 2018.
Mr Cross argues that this investment is “just as significant as HS2, in terms of infrastructure”.
“The key thing is that it will be done sooner – all the work will be finished for the redevelopment before HS2 has even started,” he points out.
“Redeveloping Temple Meads will bring huge commercial development – planning is already well under way.”
Mr Durie does however admit that “the challenge as always is to prove the viability of projects”, warning it is not always possible to “get schemes to work”.
There are challenges to be met, but the pipeline is there to drive growth and attract contractors and investors to the city, according to Mr Durie.
“As a city we’ve been successful – but it’s a question of how you manage that success to attract more investment.”