Northern companies unsure of Northern Powerhouse initiative

Some 70 per cent of small businesses in the North don't believe the government will create a 'Northern Powerhouse'. 

Image for Northern companies unsure of Northern Powerhouse initiative

Some 70 per cent of small businesses in the North don’t believe the government will create a ‘Northern Powerhouse’. 

The Northern Powerhouse continues to be a flagship policy of the Chancellor, with several major initiatives launched in last Wednesday’s Budget.

However, a study from MarketInvoice of 1,000 businesses suggests few Northern companies actually believe the government can get the job done. 

When asked ‘Do you feel the government is genuinely committed to increasing investment in Northern areas to create a ‘Northern Powerhouse’?’ more than half (56 per cent) responded ‘no’.

Anil Stocker, co-founder and CEO of MarketInvoice says, ‘Clearly the Chancellor still needs to convince Northern businesses that he’s committed to this plan. Scepticism is natural when local businesses have yet to see a brick laid. So far they’ve had to watch on with envy as projects in the South, such as Crossrail, develop at pace. These are the very businesses the Northern Powerhouse will need if it is to be a success.

‘If the government wants to win the support of businesses in the North, actions will speak louder than words.’

Following his original announcement of his Northern Powerhouse plans back in 2014, Chancellor George Osborne has put flesh on the bones by outlining a significant programme of spending in his 2016 Budget. 

Headline initiatives include £60 million dedicated to the development of the new High Speed 3 (HS3) Rail Link between Manchester and Leeds, £75 million to develop plans for a new trans-Pennine road tunnel and £20 million a year of new funding dedicated to the Northern Powerhouse schools.

The poll unveiled further evidence that the Chancellor had lost the faith of small businesses in the region. When asked if George Osborne had done enough for Northern SMEs, only 4 per cent of those polled said yes.

Businesses in the South are far more supportive of the Chancellor’s Northern Powerhouse initiatives. Amongst London-based businesses, three quarters believe in the Chancellor’s commitment to create a Northern Powerhouse.

Todd Hannula, owner of daCunha, says that the Northern Powerhouse is ‘divisive language’. ‘As a business owner in the North, and not from ‘round these parts, it took me only few short years to realise how divided the country is today.

‘By proclaiming that North will somehow be regenerated by a relatively small amount of money from Whitehall, misses the point completely and only works to build up an us versus them culture,’ he says. ‘We need a UK Powerhouse vision that links all the fabulous parts of our diverse economy together.’

Hannula suggests that the funding and vision is too small. The three major investments needed in the Northern region, which are not sufficiently addressed in the Northern Powerhouse agenda, he says are tech infrastructure (wireless coverage, high speed internet), intra-region transport links via train, and South-North connectivity through a variety of transport solutions which are affordable to small business.

‘While the plan covers these three, its vision is small and includes way too many studies because government is unwilling to act on a vision with modest current data,’ Hannula adds. 

Amy Stephenson, founder of Human Recruitment is something of a double edged sword. ‘On one hand, there’s no doubt that efforts to create skilled jobs which will help to attract and retain talented individuals in the north should be welcomed, especially if this is accompanied by employers choosing to invest in the region,’ she says.

‘However, the fact that we’ve already seen the government department responsible for this project relocate from Sheffield to London doesn’t exactly fill me with confidence!’

The Northern Powerhouse project can succeed, but a clear joined-up approach needs to be developed, especially when it comes to the transport infrastructure, Stephenson adds.

‘There’s no doubt that schemes like HS3 will help to reduce pressure on the M62, but it will do little to improve the connections elsewhere in the region.

‘There is a real risk that a two-tier economy will emerge with towns and cities like Sheffield and Rotherham being consigned to being little more than commuter stops, with Leeds and Manchester coming to define ‘The North’ in the same way that much of ‘The South’ is dependent upon London.’

Further reading on business locations

Comments (0)