By Ken Wilson, chairman of Ken Wilson & Associates (KWA)
The Northern Powerhouse is high on the political and economic agenda and a source of great debate among local businesses. Essentially it’s a Government initiative to make the North of England more economically productive by improving connectivity between its main cities.
Supporters of the scheme claim it’s a once-in-a-generation opportunity to drive investment and jobs into the North East. Critics, on the other hand, say it’s a pointless mix of hot air and political posturing in a bid to woo Northern voters.
The reality probably lies somewhere in between these two polar opposites. If the Northern Powerhouse works, it will almost certainly create much-needed jobs and investment, redress economic imbalances between the North and South of the country and help to reduce chronically high unemployment levels in the North East.
There is a great deal of uncertainty about how it will work in practice, though. Who will hold key decision-making powers and how will the North East ensure that it doesn’t lose out to bigger centres of influence such as Manchester and Leeds?
There’s also the petty political in-fighting which threatens to undermine the whole project. The Commons Business, Innovation and Skills Committee, which is chaired by Hartlepool Labour MP Iain Wright, has launched an inquiry to discover whether the Northern Powerhouse is, after all, a policy underpinned by pointless rhetoric and spin.
The other key element to this debate is the proposed devolution deal, which would transfer a host of decision-making powers from Westminster to the North East. However, this is in jeopardy after Gateshead Council rejected the idea and six others refused to sign up until central Government granted further concessions – meaning a final decision on devolution has been pushed back to May.
Devolution is an important part of the Northern Powerhouse because it would, in theory, give the region more influence over its social and economic fortunes. There’s significant opposition to various strings attached to the deal, however, particularly the Government’s insistence that there must be an elected mayor in place before any additional powers are granted.
It’s unclear, though, how much influence and decision-making power that person will have. Will he or she have overall responsibility for green-lighting key investment, skills and infrastructure projects, for example?
Consensus on devolution is vital because Chancellor George Osborne is unwilling to back down on his chosen mayor-led model. If it doesn’t go ahead, the North East could lose out to other regions – Manchester is already ahead of the game – that do have this structure in place.
Assuming that an agreement can be reached, it’s vital that the elected mayor has an industry background and is well attuned to the needs of local businesses. Devolution must be driven by the requirements of industry. Only then will the North East have the power to influence its own economic destiny and shape a strong Northern Powerhouse that can draw in investment from around the globe.
If this happens, companies have a much better chance of creating the jobs, skills and wealth that this region so badly needs.