The north of England has always been associated with industry, innovation, and pride in both. You can still see that pioneering spirit all over the North, whether it’s Teesside’s growing renewable energy sector, or Greater Manchester’s reputation for excellence in e-commerce and fashion.
However, that success is not as widespread as it should be. It’s been five years since then-Chancellor George Osborne called for a “Northern Powerhouse” to rival London and the South-East, yet analysis from the Office for National Statistics (ONS) suggests that gross value-added (GVA) – the value of goods produced – per head in the North still lags behind that in the South. This isn’t how you build a healthy, balanced UK-wide economy.
If we’re serious about changing this, then it’s time to talk about what simple things could set the foundations for a prosperous North. You don’t need an economics degree to understand that you’ll struggle to encourage talented employers and workers to an area if you can’t offer them the basics – things like decent homes, proper transport, and attractive areas in which to live.
That’s why Homes for the North will be joined by Kevin Hollinrake MP, Housing Secretary James Brokenshire, and Shadow Housing Secretary John Healey as we launch our new charter, Rebalancing the Economy: Building the Northern Homes We Need in Parliament this week.
We’ll be talking about the importance of devolution, transport, and the right homes in the right places for northern growth. In today’s politically turbulent times it can be hard to find something Labour and Conservatives can agree on, but we’re delighted that colleagues from both sides of the House will be coming together to celebrate something that unites them: the importance of a prosperous North.
With the right tools and right approach, the North could thrive. That’s why we’ll also be announcing an upcoming piece of research we’re working on with Transport for the North that explores how a new approach to homes and infrastructure could support the delivery of a massive £97 billion in additional GVA by 2050.
This new research, Housing Requirements to meet North of England Economic Growth Potential, builds on the findings of 2016’s Northern Powerhouse Independent Economic Review – a piece of analysis that set out how pursuing the “Northern Powerhouse Vision” could deliver a “transformational” change to the economy by 2050. This includes the creation of 1.5 million new jobs, and delivering an additional £97 billion in GVA – a massive boost that would benefit all of the UK, not just the North.
In response to this review, Transport for the North has set out how strategic transport investments in key areas could help to deliver this vision of prosperity by opening up new areas in which to live and work. Now, Homes for the North is working with Transport for the North, the Centre for Economics and Business Research and other partners to deliver the final piece of the puzzle: how building the right homes in the right places could put the North on track to achieve that “transformational” economic growth scenario.
This research will set out what, to many, just makes intuitive sense: that if you’re opening up new infrastructure links, and an area needs new homes, planning the two in tandem will result in a well-connected community where people want to live. This isn’t about ripping up the rulebook on planning – it’s about doing things smarter, and getting better results.
However, we can’t realise this vision of a rebalanced economy without a serious conversation about investment and ambition. At present, the Treasury assesses how and where to allocate investment using a methodology that relies heavily on a cost-benefit-analysis that looks at short-term economic value (ie, return on investment) rather than longer-term economic potential. This means that Treasury investment in vital infrastructure ends up disproportionately funnelled into areas like the South-East – areas that are already productive and economically strong.
This is a short-term approach that reinforces the productivity gap between the North and South. Unfortunately, we see this approach echoed in the government’s new means of assessing housing need. Objectively Assessed Need (OAN) has local authorities assess how many homes they need using data based on projections reflecting a period of sluggish economic growth – rather than accounting for future need and local ambition.
Homes for the North analysis found that this has resulted in the government underestimating how many homes are needed as a baseline in the North to the tune of 13,000 homes – which could mean a £2.37 billion loss in economic output. This is particularly troubling in light of Homes for the North research which revealed that the North needs at least 50,000 new homes a year just to keep pace with current demand.
Clearly, it’s time for the Government to take a more long-term approach to how it allocates funding for vital infrastructure such as homes and transport – looking at local economic ambition and plans, not just past trends and performance. The North certainly isn’t short on ambition and potential – last year saw Centre for Cities rank Manchester and Leeds the top two cities in the country for city centre jobs and growth.
If the Government wants to aid and assist this growth, and ensure that it is spread across the North, it’s high time that the Treasury started considering future demand and opportunity when allocating investment. We need targets, we need investment, we need the powers to deliver them in a way that works in a specifically northern context.
Our research and charter is focussed on how the North could achieve that “transformational” change to the northern economy – but it’s important that we never lose sight of the country-wide context. The lopsided nature of the economy means that many are effectively trapped in the London commuter belt, wrestling with high costs of living, housing, and commuting. A rebalanced economy would mean that people have greater choice over where in the UK they build their careers, homes, and families.
What’s more, in the first six months of 2018, the UK was one of the slowest growing economies in the G7. If the Government is to reverse this trend, it needs to start taking the North’s potential seriously. It’s time for real investment in this potential, and recognition of the fundamental importance of ‘basic’ infrastructure like homes and transport in transforming an area’s fortunes. For the sake of all of the UK, it’s high time we properly invest in the North.
Carol Matthews is chief executive of housing association Riverside and chair of Homes for the North.