The problematic Northern Powerhouse

The main problem with the ‘Northern Powerhouse’ is the dichotomy between the picture it is trying to paint and the present-day reality – it is a piece of rhetoric wheeled out by politicians trying to divert attention from the London-centric political and economic bubble. It plays upon Thatcherite tropes of London-centred financial service development over industry and the ‘North-South’ divide, without appreciating that it is a ‘London and home counties versus everywhere else’ divide. It betrays the complex sociology, anthropology and economics that go into centuries (if not millennia) of city-building, and the simple fact that London owes some of its success to its external networks, but largely that it has the internal industries, culture and administrative bodies to make it a draw for the entire world.

Understanding a city

After studying Plato’s Republic and Marcel Henaff’s The City in the Making, I have adopted a more nuanced stance on the complicated and co-dependent networks and developments upon which a city is built, and London does not have to be a standalone case.

From its birth, London has been burned down and rebuilt, swollen and expanded. It is in the city’s very nature to grow, change and be in a constant state of flux – and this has brought about three characteristics which at present, make London unique within the UK.

First, it is uniquely diverse. Not in the hold hands Kum Ba Yah sense of the word, but rather a violent and constant state of layering – especially since the industrial revolution – where new cultures and ideas come to the city in search of a new way of life. What this does, according to the likes of Henaff, is boost the odds of innovation. New and constantly competing ideas and perspectives are not only faced off against one-another, but they are taught that only the best survive, and so the reciprocal relationship between economic and political entrepreneurship is allowed to blossom. While diversity is visible in any metropolitan trading hub, London has arguably developed a reciprocal relationship between diversity and innovation. Not only does diversity spark innovation, but London’s readiness to change and revolutionise in order to prosper has cemented its status as the first port of call for those coming from overseas seeking to work hard to secure a better quality of life.

Second, its ability to fall and adapt and grow. If anyone has ever had the ill fortune to come across a proud Londoner, we might tell you that London has an ethos that sets it apart from other places – or a worse cliché like, ‘it’s the people that make it what it is’, without much sense of community or fellowship existing. What some may mean is that – failing to adequately articulate the sentiment – there is a realisation that they are part of something bigger than themselves. London is not a series of buildings, nor an orthodox city, but an urban sprawl, capable of harbouring its most profitable industries and cultural beacons at its core but with a seemingly bottomless capacity to expand, not just regarding social and architectural hardware, but also software. It is its ability to not just grow organically, but revolt and change seismically in an instant, that makes London a global city, and currently the only one of its kind in the UK.

Third and arguably most obvious – and important – it almost embodies the simple formula that makes a city successful; a strong relationship between administrative and productive forces. In less cryptic terms, The City and Westminster are just down the road from one-another. Financial services are our primary export and Westminster is the home of the UK’s primary political institutions – the explicit link between the two arguably being stronger than ever with professionals more-often-than-not occupying most positions of political office, and many politicians going on to work in The City. While the link I’m drawing is frustratingly opaque, what I’m pointing to is not a quid quo pro between the City and Westminster, just that London has the balance between an entrenched administrative body and economic output, which makes it a uniquely productive node in the UK. Going beyond this and owing to its capacity for innovation, London is the home of financial services built upon knowledge economics, not just in the UK but the world-over. Rather than adequately remodel other cities in the image of the London, a sort of half-hearted set of initiatives has been under way to encourage other cities to emulate London’s success. Without major restructuring, London’s financial services will remain the stalwart of the UK economy (the inflated living costs and house price bubble of course owing to this success and the fact that it has yet to be challenged by other UK cities).

What has been done wrong?

For those committed enough to reach this point, or to those who have come to this point immediately, I will keep the faults of incumbent policymakers brief.

The bottom line is that ‘The Northern Powerhouse’ refers to six cities (Liverpool, Manchester, Newcastle, Hull, Sheffield and Leeds). This leaves us with two options, realise that ‘The North’ is a culturally and industrially disparate area and approach cities individually, or tackle a third of the English landmass as a single entity and improve infrastructure between cities, before they contain the internal expertise or infrastructure necessary to incite substantive change.

I hate to sound like an old record, but the fact that MPs have so far found the second option more favourable appears to show a lack of understanding for how to encourage the growth of a prospering city. The fact that I bitterly allude to HS2 isn’t because it’s a bad idea, but because it appears to be the only meaningful show of intent to bolster development of Northern cities.

What is sorely needed, primarily, are structural changes to cities outside of the capital. Meaningful structural change; devolution of administrative capacities along with economic plans to develop the comparative advantage of a city. Ultimately, a strong, specialised administrative body and productive potential, not an assorted flinging of graduate schemes and weak incentives in the hope that one of them sticks. The moving of BBC operations to Manchester is a start, but wholesale adjustment is needed.

While a diverse and mixed economy is healthy, the UK economy has for the last three to four decades focused primarily on the comparative advantage of financial services. While Manchester has increased its stake in this industry, it is meagre in comparison to the monopoly held by London. Quite rightly we should lament the shrinking of industry and the outsourcing of not only labour but also the supply of goods that we consume, but we should accept that as a country now largely profiting off of international flows of capital, our cities need to modernise to fulfil their maximum productive potential. This is not to say that a monoculture should be created, but that there is something to be said about maximising the profit-making capabilities of our urban spaces which are home to the largest concentrations of qualified individuals and technological capabilities – London should not be our only global city.

What could be done for Northern cities?

A forewarning, the remainder of this article will be both dogmatic and didactic, but its core message is simple; Brexit should be an excuse for the UK to build for the future, not grit its teeth and hope small businesses hold fast while London relies on the mercy of markets.

Well, if we are truly worried about what Brexit will do to our industry, make our cities an opportunity that other countries won’t want to miss. UK policymakers should now work to justify the billions of pounds spent on infrastructure in the North and encourage this trend to continue. Beyond the traditional schemes for graduates and small government endorsements, entice employers to these cities. Make Northern cities an alternative to the temptation of moving their operations and headquarters to Ireland; create corporate tax bubbles and agree tax breaks for large corporations willing to set up shop and employ a quota of local graduates, as well as offering graduates incentives not to move down South or abroad. Employ ambitious city planners such as ARUP (who have had a hand in HS2 and The Shard) and British construction and engineering firms to build new infrastructure and housing and prioritise the awarding of contracts to companies willing to provide opportunities and apprenticeships to young and unemployed tradesmen.

Ultimately, spend some money in the short term to make our cities appear ready for business on the international stage and make them ready to realistically compete with London and other cities around the world. Make our cities an enticing prospect so that they attract investment and provide opportunities to the next generation of the young and learned who are likely already training their sights on London.

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.