The Northern Way was launched two years ago with the aim of bridging the £29bn wealth gap between the north and the south of England. But has the real gap been between rhetoric and action?
This week, the cream of the north of England's political and business elite converged on York. They were there for an update on the progress of the Northern Way.
Announced two years ago, the initiative is designed to close the £29bn wealth gap between the three northern regions and the south of England. The Northern Way action plan, published last year, aims to turn the North into a more cohesive and competitive economy.
There is no question that the job is, as Sheffield's cricketing hero, the Ashes-winning England captain Michael Vaughan might put it, a big ask. It is, after all, seeking to reverse nearly a century of economic and industrial decline.
And many fear that the initiative, like so many of deputy prime minister John Prescott's grand visions, will prove to be stronger on rhetoric than delivery. So, two years on from its launch, what has the Northern Way achieved? Is the North's economy in a better shape to take on the challenges of the global economy than it was when the initiative was announced? In this article, industry experts assess its performance against its objectives.
Increase the attractiveness of the North’s housing to encourage people to move in and stay
The good news for the architects of the Northern Way is the publication of recent figures by the Office for National Statistics showing that the long-term North-South population haemorrhage has dried up since the turn of the millennium. During the first three years of this decade, the North gained in population compared with a net loss of 31,000 people a year between 1971 and 2000. But this change was happening even before the Northern Way had been dreamt up and was probably triggered by the fact that rising property prices in the south of England have made northern living attractive, if not a necessity for some.
But a senior government adviser on urban affairs says the Northern Way has already proved to be a worthwhile exercise: "Most people thought it would be a waste of time and a lot of hot air from Prescott. But the regions are getting their act together. The west is talking to the east and the focus of the agenda is sharpening up around competitiveness. The Northern Way is at least raising the debate, it's identifying the issues and what we are going to get on and do." He says that public agencies are now thinking strategically across the North as a whole; the challenge is to get private companies doing the same thing.
Paul Spooner, English Partnerships regional director, agrees: "The Northern Way has made a big impact in terms of giving a real focus to the priorities and needs of the North."
However, the initiative has met with a frostier response from business - the very audience that it is designed to help. The Federation of Small Businesses marked the turn of the new year by launching an attack on the Northern Way, accusing it of ignoring the needs of small firms. Caroline Green, CBI North-east regional director, is equally sceptical. "The Northern Way has encouraged some creative thinking about the common problems of the northern regions and has resulted in greater communication and collaboration between the northern regional development agencies," she says. "However, it is unclear whether the strategy will have long-term political support and there is little evidence of the secured funding that would suggest the government takes the strategy seriously."
Improve the North’s transport links, both with the outside world and internally
Green puts her fingers on the two big issues that look set to make or break the Northern Way: political backing and resources. So far the cash to back the vision has proved slim - just £100m to be precise. To put this sum into context, over the same period that the Northern Way has been drawing up its strategy, the government has promised to pump billions of pounds into the South-east's growth plans. And, critics allege, the £100m is not even new money, but repackaged pots of money.
Ian Perry, chief executive of the Manchester-based Harvest Housing Group, sees the acid test of the government's commitment to the Northern Way as next year's comprehensive spending review (CSR). The Northern Way's Newcastle-based team has been told by the government to assemble the evidence to demonstrate to Whitehall policymakers why the North should get a bigger share of capital investment.
But already, Perry sees worrying omens. The CSR, until now a bi-annual event, has been pushed back a year to June 2007. As existing budgets are already set in stone, this means that the North faces an 18-month delay before it even finds out whether the initiative is going to translate into the meaningful capital investment needed to level the playing field. And the next CSR will take place against a backdrop of slowing public expenditure. "We're concerned about what happens next," says Perry.
In addition, as Green highlights, the initiative depends on high-level but fickle political backing. Many put faith in the Public Service Agreement target that the government has set of reducing the gap in growth rates between the three traditionally lagging northern regions and the rest of the economy by 2012. But last year's revision of the so-called golden rule shows that New Labour is not ashamed of breaking the targets it has set itself.
Increase brand awareness of the north of England to outside investors
There is also concern that communities minister David Miliband, the power behind Prescott's throne at the ODPM, doesn't talk much about the Northern Way. The presence of chancellor Gordon Brown's ex-Treasury right-hand man turned Labour MP Ed Balls on the Northern Way steering group means that those shaping the initiative have an ear at the top table. But in 18 months' time, if the political gossips are correct, Brown will have much more on his mind than the economy, while the Northern Way's other big champion, John Prescott, will have passed into the political rest home.
"Welcome though it is, £100m is not going to make the impact that is needed," says Chris Brown, the North-west-based director of insurer Morley's Igloo Regeneration Fund. "We can't close the gap unless the national government gets redistributive in a significant way."
Rising property prices and sustained inward migration have provided a big fillip for the housing market in the North since the 2003 launch of the communities plan, when the focus was on abandonment in the pathfinder areas. But so far development has not responded to the upswing. The latest housebuilding figures show that the level of completions has increased, but not by much, since the Northern Way strategy was launched.
So far, as in many other areas, the initiative has concentrated on strategy rather than delivery. The sums available for housing investment remain low compared with those earmarked for growth areas in the South. And the funding that is available is firmly focused on the region's seven housing market renewal pathfinders. The degree to which funds should be shifted from dealing with the consequences of market failure to fostering growth will be a key issue for the next generation of regional housing strategies.
There is little evidence of the funding that would suggest the government takes the strategy seriously
Caroline Green, CBI
But the ambitious goals laid out in the Northern Way are now starting to feed through into planning policy. New regional spatial strategies being drawn up for both the North-west and Yorkshire and Humberside propose big increases in housing provision, reflecting the growth goals set out in the Northern Way. The bulk of new dwellings are earmarked for the big "city regions", such as Liverpool and Manchester, which have been identified as the Northern Way's key growth hubs.
But last year's Northern Way action plan says it is not just the volume of housing that matters, but the quality of stock as well.
An over-supply of housing built to accommodate last century's industrial workers is off-putting for today's wealth creators, it says.
CABE's recently published Northern Housing Audit showed that the design quality of the bulk of new schemes developed in the North remains mediocre. The Housing Corporation has responded to the Northern Way by announcing a £50m competition that will encourage providers to come up with innovative housing designs. And Ian Wright, Northern Housing Consortium spokesman, says that the government should use the opportunity presented by the Northern Way to move away from one-size-fits-all policies that ignore the regional dimension. He gives as an example the Decent Homes strategy for upgrading council stock, arguing that there is a danger that arm's length management organisations could be investing money regardless of whether there's demand there for the properties. "There's a potential for money to be wasted," he says.
The Northern Way has made a big impact, giving a real focus to the priorities and needs of the North
Paul Spooner, English Partnerships
Igloo chief executive Chris Brown agrees. "If the planning gain supplement had been drafted more with the Northern Way in mind, it would have looked very different.
Two years on from the launch of the Northern Way strategy, many of the region's main transport problems look far from being resolved. The region's poor east-west rail links have seen some improvements with an increase in peak-time services between Sheffield and Leeds, for example. But for business people operating in Manchester and Newcastle, it can still make more sense timewise to schedule a meeting in London than to travel from one city to the other. Meanwhile, as long as the bulk of the UK's international air services continue to use the South-east, multinational companies have little incentive to set up in the North.
And the past year has seen a series of setbacks for the North, which indicate that the Department for Transport's copy of the Northern Way action plan must have gone missing in the post. Leeds, Liverpool and Manchester have all seen funding applications for congestion-busting tram schemes vetoed. Meanwhile the DfT has given the green light to three vast new container ports in the South-east, which undermine the commercial case for building such facilities in the Humber estuary.
But those involved in shaping the region's future see signs of hope. The region has been told by the DfT to draw up its own list of transport priorities, which will provide the basis for future investment decisions. David Walker, deputy chief executive of Sunderland Arc, says the urban regeneration company has used the Northern Way as a hook to lobby for improvements to the A65, which links the city with the main north-south links. And the A65 corridor is included in the north-east regional assembly's list of priorities, which have been submitted to the DfT.
Get agencies and authorities to unite behind regionally significant strategic projects
Walker adds that without the Northern Way, it is unlikely the region's transport planners would have identified the stretch of the A66 between the A1 and the M6, which links the region with Yorkshire, as one of its priorities. The A19 in particular will boost Newcastle's north-south connections.
Liverpool councillor Richard Kemp says the initiative has encouraged authorities such as his to link up with their neighbours to lobby for regionally important projects, such as the second Mersey crossing at Halton.
Liverpool councillor Richard Kemp is sceptical that the Northern Way is little more than a superficial exercise: "You see all sorts of publications where we are all rebranding what we are going to do, adding the Northern Way," he says. But the Northern Way's advocates argue that image matters. For prospective investors, the idea of three northern regions with their own distinctive identities is hard to grasp. Underpinning that concern is the danger that rival regions will compete with one another to attract inward investment projects. Nick Gerrard, North West Development Agency head of policy and performance says: "There's a recognition that unless we offer a product that they can respond to, we are not going to get the interest anyway."
Instead, the Northern Way seeks to create a common brand for the region that will be easier to communicate to the outside world. The North's three regional development agencies have taken this approach forward, setting up joint offices in Australia and Japan to promote the region. The Northern Way's progress report says that this campaign has generated 250 enquiries and a 70% increase in website hits.
£100m, welcome though it is, is not going to make the impact that is needed
Chris Brown, Igloo
David Walker, Sunderland Arc deputy chief executive, believes that the evidence of top-level government commitment is helpful. And he believes that developers from outside the region are showing increasing interested in the North-east - a change on the situation even five years ago, when the market was dominated by homegrown firms. "If nothing else, it shows that the government is going to do something for the North in terms of investment and development, and that's something we've been able to use in our marketing stuff," he says.
"The problem with the Northern Way is the governance arrangements," says Professor Brendan Nevin, director at consultant Ecotec. The Northern Way aims to concentrate investment on centres of economic growth, such as Manchester Airport, which is the region's dominant international gateway. But concentrating resources in some areas will mean less for others.
The three regional development agencies, which have so far taken the lead on the initiative, say that they are working more closely together. Nick Gerrard, North West Development Agency head of policy and performance, gives as an example how his own organisation is looking at the interrelationships between the region's city regions and their counterparts across the Pennines.
But as unelected bodies, they are in no position to dictate to the regions' democratically elected local authorities. The same problem applies to the regional assemblies, which will be responsible for delivering the Northern Way through their housing investment and planning strategies.
The addition of the Northern Way to the existing plethora of bodies is confusing, according to Caroline Green, CBI north-east director. "If we can get governance and delivery structures at the city regional level, that will be a really powerful step forward. Increasingly the regions are being subjected to multi-levels of governance - RDAs, Northern Way, councils, city regions and so on. Not all of these approaches give a consistent message, and business needs clarity."
Close the productivity gap between the north of England and the rest of the country
But Nevin says the absence of elected regional decision-making structures means that there will be "real difficulties" in persuading authorities to sign up to proposals that could lead to them losing out. "I can't see where the mechanisms are to take the decisions, and that is a major failing," he says.
An example of somewhere that could lose out is Doncaster. The town's mayor Martin Winter complains that the Northern Way's focus on big cities threatens to sideline smaller centres. "If you look at the Northern Way, what we see is poor-quality economic analysis based on what were the economic drivers of the past century, which will consign Doncaster to always being a second-division player."
Nevin believes that some of these tensions can be eased within the city regions, which have been identified as the hubs for growth in the Northern Way, by the creation of more effective decision-making structures. Communities minister David Miliband is on the verge of giving more strategic powers to the authorities in these city regions - if they agree to work together more closely.
Closing the £29bn output gap between the North and the rest of the country is the core objective of the Northern Way. The action plan identifies knowledge economy industries such as the media and technology as the key to tackling the North's lagging competitiveness. A study is under way to identify barriers to greater media production in the North, and the BBC's decision to relocate a large chunk of its production to Manchester has also given a fillip to the sector.
At the same time, the RDAs say that they are intensifying their efforts to build up clusters of knowledge-based businesses across the region, building on one another's strengths. Nick Muse, One North East's head of strategy, says that the Northern Way's focus on knowledge-based businesses helped the RDA justify the large bill for the acquisition of the Newcastle Brown Ale brewery site for the city's Science City project.
A more tangible sign of interregional co-operation is that being developed by the universities. Peter Roberts, Liverpool Sir John Moores University professor of regional planning, sees universities from across the North increasingly collaborating on research and teaching projects.
At the same time, the Lyons review has forced government departments to look at relocating staff outside of the South-east. Although the numbers of staff being relocated may be small so far, the initiative is encouraging investors to think more seriously about places that probably would not have appeared on their radar before.
Neil Bradbury, English Partnerships regional director, says that the agency is underpinning these efforts by using its resources to build up centres, like Sheffield, which have been identified as growth hubs in the Northern Way strategy.
But Chris Brown, Igloo chief executive, says it doesn't yet add up to a sustained shift in the economic balance of the UK. He sees little evidence of the North's major centres working as a single, integrated market. And little has been heard of the dedicated Northern Way Capitas investment fund launched two years ago.
Brown says: "There may be an increasing realisation that investing in the City and the West End is not such a good bet because those markets are more volatile than the commercial property markets of the North - but I don't see a reversal of the economic forces that are making people invest in the South-east."
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