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Embrace Northern Powerhouse opportunities but beware of trouble ahead

Infrastructure consultants must get behind the Northern Powerhouse agenda but beware of forthcoming challenges as Spending Review cuts and devolution issues emerge.

As George Osborne held meetings in China last week to reveal £24bn in investment opportunities in the north of England, ACE members met in Leeds to discuss the opportunities and progress being made on the Northern Powerhouse agenda.

ACE chief executive Nelson Ogunshakin urged firms to sieze the emerging opportunities and engage with key figures who will drive the devolved investment plans. “We have a golden opportunity to create a Northern Powerhouse.

"We should be really cautious about how committed the Department for Transport is to the Northern Powerhouse agenda compared to where Osborne might be."

Ed Cox, director, IPPR North

"We must understand the game plan and provide the intellectual thinking to create deliverable plans and bankable projects,” he said.

“There is a pressure on politicians to devolve power. The government know we can’t keep everything in London. Osborne has made the north his powerhouse and he says he will make it work. We can either criticise him or get on the side of him and make things work,” he added.

But despite the clear political will for the devolution agenda and acknowledgement that northern prosperity means national prosperity, challenges remain explained Ed Cox, director at leading think tank IPPR North which has led thinking on the structural changes needed to create a Northern Powerhouse.

“There is some trouble on the horizon for the whole agenda. The government has not got the capacity to deal with the demands being made of it from the combined authorities,” said Cox,

He pointed out that 38 submissions for devolution deals had been made to government earlier this month ahead of the Cities and Local Government Devolution Bill, which will be read in the House of Commons next month. Furthermore the Spending Review would hit local authorities hard.

“This could further damage government’s ability to get some deals off the ground,” he said.

Bigger political issues too are threatening to overshadow the Northern Powerhouse agenda with political emphasis set to shift to Scotland and London in coming weeks, followed by the promise of an EU referendum “which could trump everything,” said Cox.

Financial pressures are also clear said Cox with the pausing of the electrification of the railway line between Leeds and Manchester indicative of the financial challenge facing projects.

“We need to see a more decentralised skills system if we are going to be able to make the northern economy fly,” Ed Cox, IPPR

“We should be really cautious about how committed the Department for Transport is to the Northern Powerhouse agenda compared to where Osborne might be,” he said noting that the newly created cross regional Transport for the North had so far been allocated just £30M to carry out a strategic review of Northern transport schemes ahead of a strategic plan being published in Spring.

The creation of Transport for the North itself in January is an important step for the devolution agenda, said Cox who described the organisation as a mezzanine tier of devolved authority, moving power away from London and operating across several regions. In fact the creation of the body was first proposed by IPPR in 2012 with further details outlined in its March 2015 report “Transport for the North: A blueprint for devolving and integrating transport powers in England” which outlines the institutional steps that should be taken in establishing the new body.

Other steps critical in ensuring northern prosperity include five key factors that first identified by the OECD in its lagging regions study of 2010. Most critical is supporting human growth and skills.

“ACE members have a real opportunity to influence the Northern Powerhouse agenda. We have to encourage foreign direct investment and make sure that infrastructure becomes the catalyst to make the great northern plan work.” Nelson Ogunshakin, ACE

“We need to see a more decentralised skills system if we are going to be able to make the northern economy fly,” said Cox explaining that IPPR North would be revealing its analysis on the issues next month. Supporting the business environment was considered to be the next most important factor with infrastructure coming third as a supporter for the human capital and business environments. Finance availability issues and good governance and policy were the other main factors.

Looking ahead Cox urged government to widen the planning for the Northern Powerhouse and said that a Great North Plan which included spatial planning was needed. This would give further clarity to the private sector. In February local developer Peel Holdings told Infrastructure Intelligence that this kind of strategic thinking was critical.

But despite the challenges ACE chief executive Nelson Ogunshakin said that it was an exciting time for the region and urged members to engage closely with local decision makers. “ACE members have a real opportunity to influence the Northern Powerhouse agenda. We have to encourage foreign direct investment and make sure that infrastructure becomes the catalyst to make the great northern plan work.”

Ed Cox and Nelson Ogunshakin were speaking at the ACE Northern Region event organised by regional chair Marc Davies of WYG.

If you would like to contact Bernadette Ballantyne about this, or any other story, please email bernadette.ballantyne@infrastructure-intelligence.com:2016-1.