Can the north beat London at its own game?

MT EXPERT: Decentralisation is inevitable, so other UK cities need to club together to instead of competing, argues PwC's head of regions Stephanie Hyde.

by Stephanie Hyde
Last Updated: 24 Aug 2015

It’s 2030 and London’s population is 12 million and rising. Travelling around the capital means double-decker tubes, walking to the office through eerily quiet streets (as there are buildings instead of cars and roads), and high-rise residential blocks dominating the once iconic skyline.

Clearly, this is an extreme view of the future, but the reality is we’re swiftly getting to a situation in London where there’s just no more room. Everyone from the Centre for Economics and Business Research to the Office for National Statistics and Transport for London has said the capital’s issues of capacity and rising costs are very real. And plenty of businesses have already started to think about the challenges and the extent to which they relocate operations to other parts of the UK.

London is a global city of opportunity, and its success is a major asset to the national economy, so this isn’t about diminishing it. Decentralisation is about making the country stronger overall by giving other cities the opportunity to grow while London goes through its own extensive infrastructure updates and revamps. The RSA City Growth Commission report released on Wednesday, which stated that more city independence on tax and spending decisions could boost economic growth by £79bn a year by 2030, reinforces this.

Having a role where I travel around the country constantly, it strikes me that the vibrancy, energy and ownership you see for developing great business locally is not always understood or appreciated in London. Of course, whatever city you live in it’s easy to think everything revolves around it. It’s a natural bias. When you actually go out and see different cities in their own environments in their own right, where London’s activities play a minor part in their day-to-day lives, you see it’s a really different mind-set.

And there are many great ideas and lots of energy in the regions. But at the moment, London is currently the UK’s mega hub and we lack others around the country.  Ultimately, it’s about creating a more successful and resilient UK economy.

Strengthening other cities

Private sector businesses are the backbone of the UK economy, 80% of which are outside London. Identifying the unique plusses of other UK cities and strengthening the connections between regions and countries will give these businesses the best chance to develop ideas, create jobs and thrive.

Manchester and Liverpool is a good example of cities working together. But it makes me wonder, does it have to be piecemeal?  I don’t think the old rule of divide and conquer, where cities compete against each other, should apply.

At the moment, we have a system that encourages natural competition between cities and a narrow, ‘what’s in it for me?’ attitude, rather than encouraging them to join forces. If the whole of the north works together, for example, the opportunities could be huge. I’m not sure Jim O'Neill's ‘ManSheffLeedsPool’ will catch on like his BRICS did, but the principle behind it of cities working together is sound.  

The north must start thinking more collectively if they are to become a ‘northern powerhouse’ and stand a chance of taking on the world, as the chancellor has suggested. Tht means coming together as ‘one north’ and not competing as separate regions or cities. Improving transport links will support this. The fact it currently takes three and a quarter hours to travel about 130 miles by train between the two freight ports of Liverpool and Hull is clearly not good enough.

Tackling the north’s transport system will enable the region to fulfil its economic potential. But it is essential the region develops its own economic model, rather than just copying London.

All the UK regions have an important role to play in driving growth for the whole country, and getting the right investment in our railways, roads and airports would better connect people and jobs, which is crucial if we want to rebalance the national economy.

Cities are reinventing and redefining themselves. The Humber Bondholder Scheme, an annual business subscription scheme to promote the region, is a good example. It not only defined the area as the UK’s Energy Estuary, but shows that international investors see the value of our regions, which I don’t think we’ve necessarily seen ourselves.

It’s not just political

So what does decentralisation mean for business?  This isn’t just about political devolution, but also about giving responsibility to businesses, local enterprise partnerships and the wider business community to invest in what would make a difference to their marketplace and put them on the map.

This is a highly politicised issue, as the Scottish independence referendum showed. But to make decentralisation happen, ultimately businesses and the Government have to work together to avoid missing the commercial realities and opportunities out their in our regions.

Stephanie Hyde, is PwC’s UK head of regions and an executive board member.

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