When informed of a rumour that he had died, the 19th Century American author Mark Twain famously quipped “the reports of my death are greatly exaggerated.” Following the Brexit referendum last month, stakeholders are still waiting for similar confirmation about George Osborne’s “Northern Powerhouse” strategy to boost economic growth in the North of England.
The picture is not yet clear. Just last week the auditor general of the National Audit Office, Sir Amyas Morse, described Brexit as an “emergency”, forcing government departments to decide which plans could be cancelled or suspended. The “Northern Powerhouse” would be one to “re-examine”. But in Theresa May’s frontbench reshuffle upon arriving in Downing Street, she did appoint a new Minister in charge of the “Northern Powerhouse” project, Andrew Percy. She has also recognised that much of the “Leave” vote was comprised of those in the North excluded from the benefits of globalisation.
Ultimately, promoters of major development will want to understand whether the “Northern Powerhouse” means anything for them, whatever the outcome. Earlier this month BLP attended a conference in Salford by ResPublica, a leading think tank, on realising the “Northern Powerhouse”, which gave some sense of what the answer to that question might currently be.
ResPublica was launching its “Manifesto for the North”. The event had heavyweight cross-party support nationally and locally, with all of the following speaking:
- Greg Clark for Communities and Local Government, who described the “Northern Powerhouse” as embedded in Government.
- Dan Jarvis, Labour MP for Barnsley.
- The Leaders of Manchester City Council, Sunderland City Council and Leeds City Council and the Mayor of Liverpool.
- The Chief Executive of the National Infrastructure Commission.
It ended with the then Minister for the “Northern Powerhouse”, James Wharton, setting out why he considered the “Northern Powerhouse” to be at the heart of the economic debate about the future of the UK.
The consensus from all speakers was that despite Brexit and the loss of Mr Osborne, chief champion of the concept, the question is no longer whether the “Northern Powerhouse” will continue. Instead, the debate has moved onto how quickly it will do so and what implementation will involve.
The “genie” is out of “the bottle”
Taking note of Scotland’s approach to its own regional interests, and with how the North voted in the Brexit referendum seen as a rejection of the status quo, local leaders expressed little tolerance for the agenda being abandoned or even slowed.
Like Theresa May, they regarded the Brexit vote as a signal that globalisation has not worked for too many communities in the North, whose manufacturing base has long been lost to Asia. Equally, ‘welfarism’ has also not been able to fill the gap. So a new approach is needed. The “Northern Powerhouse” is conceptually expanding into that “new approach”.
Open to ideas
Nonetheless, what that new approach means in practice for major development is still embryonic. Government speakers repeated that they were open to ideas, ideally local initiatives and see themselves predominantly as facilitators.
Devolution and the City Deals are pivotal to the Northern Powerhouse becoming a reality. There was encouragement for Sheffield and Greater Manchester taking on strategic planning powers, as enabled by the Cities and Local Government Devolution Act 2016. This was designed to introduce directly-elected mayors to combined local authorities in England and Wales and to devolve certain housing, transport and planning powers to them. Even so, ResPublica’s “Manifesto for the North” was more ambitious on planning matters.
Housing the Powerhouse
It is widely understood that the housing crisis in the North is about the wrong tenure and type of housing in the wrong places. Particularly the major cities need a thriving rented sector to attract young professionals. This is not the same issue as in the South, where there just need to be more houses. So one-size-fits-all policies need to be re-thought. ResPublica advocated the following:
- Pan-regional regeneration partnerships to lead housing development to meet local economic priorities across the entire North, and letting Northern cities keep SDLT receipts to invest in them.
- Protection from the Secretary of State calling-in planning applications for his own determination.
- Allowing redevelopment of empty housing stock to count towards affordable housing targets.
Flexibility on targets is one thing; ceding even more tax receipts and centralised powers (such as call-in) is, of course, another.
An energy “Powerhouse”
ResPublica is promoting a Northern Energy Wealth Fund, keeping receipts from, in particular, shale.
Of course, the Government has long made clear its view that shale oil (and gas) has the potential to provide the UK with greater energy security, growth and jobs. Nonetheless, the method for exploiting it, hydraulic fracturing (or just “fracking”), has attracted controversy. In recent years, torn between “Localism” and an urgent desire to “balance the books” as North Sea revenues fall, Government has made a number of policy statements and legislative changes to speed up the planning stage for fracking. The fear has been that local planning authorities progress planning applications for shale exploitation too slowly and do not accord enough weight to the national need in the face of local politics. In the wake of Brexit, will the need to find funding for tangible “Northern Powerhouse” projects see the complexion of those local politics finally swinging in favour of shale?
Great promise was also seen in NuScale’s proposals for small modular nuclear reactors in the North.
Getting about the “Powerhouse”
ResPublica sees the North-South link of HS2 as a good start but considers a high-speed “TransNorth” rail line all the way from Liverpool to Hull to be essential to unlocking regional development. Northern local leaders speaking were frustrated at the slowness of progressing these east to west connections, considering that this would not be tolerated if it were London. Ultimately, it was recognised that Crossrail had taken twenty years of lobbying, meaning that they will need to keep up political pressure, speak with one voice and provide a good proportion of funding themselves.
However it will ultimately manifest itself in planning policy and legislation, we have watched the “Northern Powerhouse” evolve over the past two years. From a Conservative intellectual concept, which some cynics say was created only to try to outmanoeuvre UKIP (and Labour) at the national political level, it has now morphed into a passionate cross-party movement at the local political level to redress economic and infrastructure inequalities with the South.
It is fair to say that UK planning contains a good helping of politics. So, with that kind of local traction, it is almost irrelevant for promoters of major development how many of ResPublica’s innovative public policy ideas make it into reality. As an emotive and live concept, the political overtones of the “Northern Powerhouse” are likely to suffuse all major schemes which capture the spirit of what its local proponents hope to achieve across the North.
An added dimension
Even in the recent past, when BLP advised on the promotion of Halite Energy Group’s underground gas storage facility in Preesall, Lancashire or National Grid’s carbon capture and storage system in East Yorkshire, the focus was on the urgent need of these nationally significant infrastructure projects. Further back, when BLP advised on the promotion of the Liverpool One shopping centre or a new football stadium for Everton FC in Kirkby, Knowsley, the emphasis was on very localised regenerative benefits. In light of recent developments, one would now expect the “Northern Powerhouse” to provide a pan-regional dimension to the case for a scheme’s planning benefits.
Even the flaws in the current concept offer an opportunity. With a dearth of funding there is an enormous appetite for promoters with independently viable schemes which can wear the mantle of the “Northern Powerhouse”. Also, promoters which can capture local political support as passionate as that behind the “Northern Powerhouse” should not underestimate its value. Our experience is that foreign investors, particularly Chinese Government-backed entities, set great store in it. Though many of them are delaying investment decisions until post-Brexit pricing becomes more certain, many are lining up long-term investment opportunities now and are interested in major Northern projects
So, not only is talk of the death of the “Northern Powerhouse” premature but it is likely to shape planning policy and decisions for some years to come, whatever its form, as the UK moves into the Brexit era.
 See our blogs on DCLG’s letter to Mineral Planning Authorities on new fracking consents, planning changes under the Infrastructure Act 2015, Amber Rudd's September 2015 Ministerial Statement, BLP's Lexis Nexus article on DCLG and DECC's earlier Shale Gas and Oil Policy Statement of August 2015 and a general analysis of what 2015's legal and political changes mean for fracking in December 2015's “Energy, Oil & Gas”