Productivity key to Northern Powerhouse success

1 Jun 16

Northern Powerhouse devolution plans should focus on boosting productivity, particularly improvements to skills and transport within cities, according to the Centre for Cities.

In a report published today, the think-tank looked at economic lessons from the northern cities in the Rhine-Ruhr and Randstad regions of Germany and the Netherlands, which have been cited by ministers as models for the Northern Powerhouse.

Today’s Building the Northern Powerhouse report found that efforts to boost productivity in cities were most important to growth.

The review found the success of these regions is not the result of extensive connections between cities, as is often assumed. In fact, the inter-city commuting links in the Rhine-Ruhr and Randstad areas are little better than in the North of England.

Instead, the economic vibrancy of these regions is driven by the strong performance of their individual cities, which are 40% more productive than counterparts in the Northern Powerhouse.

Therefore, it is vital to address skills gaps, as only three urban centres (York, Warrington and Leeds) are in the UK top 20 in terms of the number of residents educated to degree level.

In addition, strengthening transport networks within northern cities is a bigger priority than inter-city links. While improving train connections between cities such as Manchester and Leeds will help economic development, the research suggests that boosting transport links within cities will have a bigger impact on productivity, by enabling people to access jobs more easily.

A series of government devolution deals have agreed to localise powers over services including transport, planning and skills to areas including Greater Manchester, Sheffield, Birmingham and Liverpool, and the North East and Tees Valley.

Today’s review, supported by law firm DAC Beachcroft, said devolution to city regions must continue in order to ensure policies match local needs. The north of England is comprised of many economies, which operate over a city-region scale and have distinctive challenges when it comes to skills, local transport and planning. Important policy decisions on these issues should therefore be at the city-region level.

Where decisions are taken on pan-northern issues – such as by Transport for the North – they should be made in a way that best supports these city regions to prosper.

Centre for Cities chief executive Alexandra Jones said the government must maintain its focus on the major northern cities such as Manchester, Leeds and Newcastle.

“These big urban areas have the most potential for growth in the region, but are currently underperforming, especially in comparison to cities in more successful areas such as the Rhine-Ruhr and Randstad areas,” she stated.

“Instead of spreading limited monies and political focus equally across the whole region, national and local policy-makers should concentrate most resources on addressing the economic challenges that big northern cities and their city regions face, as these have greatest potential to deliver benefits for the North as a whole.”

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