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Newsroom: Will creating a 'Northern Powerhouse' really help Northern businesses?

Thought Leader

Newsroom: Will creating a 'Northern Powerhouse' really help Northern businesses?


The phrase Northern Powerhouse has been heard a lot in the past few weeks. It is the name of an initiative created by Chancellor George Osborne to improve economic and transport links between cities in the North of England, which he hopes will boost prosperity in the region and so rebalance the UK economy away from London and the south east.

For many years the North of England economy has been growing at a slower rate than the UK as a whole. However according to analysis by HM Treasury, if it was able to grow at the same rate as the UK, this would generate an additional £44 billion for the Northern region between now and 2030.

A key element of the Northern Powerhouse initiative is investment in roads and high speed railways, both to link the major cities in the area, and to improve journey times between the south and the north. The Chancellor’s latest announcement included the creation of a £60 million high speed rail link between Manchester and Leeds, the expansion of the M62 and a proposed £75 million trans-Pennine tunnel from Manchester to Sheffield.

There have also been moves by the government towards giving cities in the north more governance over their own affairs, and several cities and regions now have their own directly elected mayor, including Manchester, the North East and Sheffield. According to the Chancellor more than half the population of the Northern Powerhouse will be able to elect a mayor accountable to them in 2017. In Manchester devolution has gone a step further, with the city’s £6.2 billion health and social care budget handed over to a body of local health chiefs and leaders.

Some business owners in the north are however sceptical about whether the Northern Powerhouse will really make much of a difference to their venture. A recent survey of 1000 small firms by online invoice finance firm MarketInvoice found that 70% of them didn’t actually believe the government would ultimately create a Northern Powerhouse, while more than half of them did not feel the government was genuinely committed to increasing investment in the north. Just 4% felt that the Chancellor George Osborne had done enough for small and medium sized businesses based in the north.

The big challenge for the government is to ensure that Northern businesses feel they are benefiting in some way from the initiative. For small firms based in Manchester, which is seen being at the heart of the Northern Powerhouse, the benefits are obvious, as it brings new focus and energy to the city as well better transport links. Small business owners based in other parts of the north away from the big cities, however, are less convinced they will see any upside.


Virgin Media Pioneers Tom Grattan and Daniel Wallace are the founders of Factored, a design studio based in Lancaster, which they established earlier this year.

Tom says: “I think any investment in transport is good but I can’t see it making a huge difference to us in Lancaster. Our view is that all the plans stop at Manchester. Manchester is the cut-off point and will get a lot of investment. As a business owner I can see why they are doing that, because it is the city that is easiest to invest in and put the infrastructure in. It is also the city that has got the best mind set for investment. But really the Northern Powerhouse initiative needs to go that bit further to include Lancashire and Liverpool as well.  If they can get that triangle working then that would be absolutely great. It needs to be a more unified approach.”