Northern powerhouse: The talent perspective

As George Osborne’s Northern Powerhouse initiative gathers steam, Mark E.Johnson looks at its implications for the business community and the mobility sector.

Salford media centre, Manchester
What does devolution and improved transport infrastructure mean for the North in general and the movement of talent in particular?"The old model of trying to run everything in our country from the centre of London is broken. It has led to an unbalanced economy," said UK Chancellor of the Exchequer George Osborne in October 2015, as he announced devolution packages for the Tees Valley and the North East as part of his Northern Powerhouse initiative.The Chancellor's comment captured the spirit of the Northern Powerhouse plans. The government intends the initiative to rebalance Britain's economy, enabling the North to challenge London and the South East's economic dominance. It hopes that the large cities of the North will increase their levels of collaboration, connecting their economies and taking greater control over regional government policy.The two key prongs of the scheme are devolution and transport infrastructure. On the devolution front, Mr Osborne has offered city regions increased budgetary powers in areas such as local transport, employment support and skills provision, as well as funding packages ranging from £15 million to £30 million per year for 30 years to boost local economies, with the proviso that the regions take on an elected mayor. City regions that have signed up for a devolution deal so far include Manchester, Sheffield, Liverpool, the North East, Tees Valley, and, from the Midlands, Birmingham.The transport element of the initiative includes a raft of spending on infrastructure, but the biggest impact will come from rail. The High Speed 2 project will improve rail links from Leeds, Manchester, Sheffield and Birmingham to London, while the delayed electrification of rail routes across the North and Midlands will improve the connectivity of key regional cities.

Benefits

"What makes the North different from the rest of the country," says John Mothersole, chief executive of Sheffield City Council, "is that you've got five big cities and their city regions, all of which, certainly in international terms, are in relatively close proximity. So what it's about is getting those economies working to a higher rate, super-connecting them so that they can grow faster through a single labour market, through collaboration."Evidence shows that, if you connect economies, you drive collaboration, innovation, and jobs and wages growth, because they operate as one economy."For Tracy Bush, managing director of Relocate2Sheffield, rebalancing economic activity across the north/south divide is a necessity. "In the UK, there are companies that may have come from overseas and thought 'yes, we want to set up in London', but then they physically can't grow. The rates and the cost make it very difficult to expand."So often, when you're talking to businesses who are looking to relocate here, it does seem to make sense. Operating costs can be a lot less here, and, if they're looking to take on new staff anyway, why not start somewhere else?"Ms Bush says that, with increased political focus and improved infrastructure in the North, the trend will accelerate.James Sykes, director at Hays in Manchester, says that the Northern Powerhouse is already paying dividends in this respect. "The philosophy and aims of the Northern Powerhouse, and its profile within the media, are boosting the existing trend for north-shoring. In the last six to 12 months, we have seen more companies than ever considering moving or expanding their UK operations into the North West."The initiative is definitely giving businesses confidence to consider their options. A number of our clients are looking to create stronger regional bases across the North to work alongside strong London operations."

Challenges

The Northern Powerhouse has faced its share of challenges, however. Critics have claimed that the initiative is hype over substance, and voices from the Labour Party have said that it doesn't go far enough One move that seemed to embody such concerns was the recent decision to close the Department for Business, Innovation and Skills' Sheffield office, its largest outside London, moving to the capital the work done by 247 staff."At the very least, it's an odd message to send out," says John Mothersole. "And the question asked most vociferously in Sheffield, by both the public and the private sector, is 'what does this mean for the Northern Powerhouse?'"For James Sykes, however, the crucial challenge for the plan comes back to talent. "The North has 23 universities, six of which rank in the top 20 nationally for research excellence. The historic challenge has been relevant local job creation across the North West to keep this talent in the region, as the feedback is that they would like to stay."For the initiative to be a long-term success, it needs to be sustainable, with a joined-up approach to establish the region as a place of career opportunity for employees, and provide the skills the region needs to thrive."

Talent

Hilary Wilkinson, director of Manchester-based Gallica Relocation, anticipates that Manchester's involvement in the Northern Powerhouse will result in an uptick in relocations to the area, particularly as the city seems to be being suggested as the 'capital' of the Northern Powerhouse."I do think that Manchester is already an attractive destination for businesses and talent. It has many residents who have moved north for an improved quality of life," she says, "but the new focus on the area will attract further movement to the city."Movement into the city is predominately to the south. It remains to be seen whether this will continue."James Sykes also emphasises the importance of quality of life as a driving force for talent moving north. "The relocation of UK and global organisations to the North is already making the region more appealing to candidates. The challenge and opportunity will be to persuade more people earlier in their careers to make the move."There are currently some big-name employers here, and, for talent looking to make a commitment to the region earlier in their career, they want to see a range of longer-term career opportunities across a choice of employers, which the initiative can bring."Transport improvements are an important aspect of improving the Northern Powerhouse's talent outlook.Says Mr Sykes, "From a regional perspective, investment in local infrastructure is more important to open up and access wider candidate talent pools. To help prevent the brain drain of candidates to London, improving transport links to provide easier access to other big cities in the North from outlying areas will be vital."For John Mothersole, improved transport plays into the notion of'super-connectivity', as far as talent is concerned. "We all know, whether it's Leeds, Manchester, Sheffield or Liverpool, that there's a point at which we lose our talent because of their perceived need to further their career elsewhere in the country."I've rounded the numbers slightly here, but if you take the populations of Greater Manchester, Sheffield City Region and Leeds City Region, you've got a population of just over 80 per cent of Greater London, and yet you've got 40 per cent of the productivity."So there's something about the labour not being able to move around easily and people believing that they're going to have to live out their career in one labour market. It's a bit binary – live here or leave – and what we want to get is that circulatory nature, so that Leeds, Manchester and Sheffield can operate as one labour market."All the evidence nationally is that, when you do that, it drives opportunity and wage growth up. It will make it easier for talented people to commute in, and that's great."

Key sectors

Getting down to the nitty-gritty of particular Sheffield business sectors he expects to benefit from the Northern Powerhouse, John Mothersole names advanced manufacturing."There is a world-class cluster of research assets in this region. We're impressed by the growth we've seen in the last ten years, but now we want to see that level achieved in the next five years. It will be Europe's largest knowledge-led engineering district."The second sector is modern logistics built around the motorway network and the land around the Robin Hood Doncaster/ Sheffield airport. The third is health and healthcare. The final one is the creative and digital sector, which is very much focused in our cities and town centres."Of Manchester, Hilary Wilkinson says, "The financial sector – and hence those with such skillsets – are perhaps the obvious beneficiaries. I would hope that devolving finance to the combined authorities could improve local facilities and attract more manufacturing to the area."James Sykes seconds the importance of the finance sector, including the reshoring of contact centres. He adds, "Distribution and logistics is currently one of the fastest- growing areas in the North West. For these employers, the initiatives around national transport connections will be key."A number of other large companies within FMCG, pharmaceuticals and chemicals have also opened centres of excellence or head office operations covering the UK, Europe and Africa from the North West."Mr Sykes notes that the Media City hub, which houses the BBC, among others, is creating a number of digital and media roles. He adds, "Alongside the growing need for professional and technical skillsets, there is a growing demand for entry-level staff, so it's important for the initiative to be integrated with the education system, to ensure that school and university leavers have the skills needed by these new employers."As a result of the deal, the region should continue to attract a wider range of employers and the associated career choices, which are vital to retain these employees long term within the North West."While the Northern Powerhouse will mean different things for each of the different city regions it affects, its most important ramification may be in the less tangible sense of cohesion it creates.As Tracy Bush put it, "You're not just promoting Sheffield – you're promoting your entire region, or the whole of the UK." Relocate Global Spring Issue 2016

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