Northern Powerhouse or northern poorhouse?

The Northern Powerhouse symbolised the Government’s attempt to rebalance the British economy and revive cities that have struggled for so long. But as large swaths of those left behind – including post-industrial towns in the North – voted to leave the EU, the legacy of economic decline cast another long shadow over yet another government programme.

Discussions at our first Inclusive Growth Commission evidence hearing in Sheffield suggested that achieving inclusive growth is no simple task. It will need far greater effort in developing the tools – and providing the resources – that places need to thrive. 

In the morning, we met with City Leaders, senior university and college staff, local business owners and representation from the trade unions, to hear their evidence about what inclusive growth means for Sheffield. The rich conversation might be broadly summarised under three areas:

1. The economic model we're using at the moment is flawed, and a centralist economic model has gone as far as it can take us.
2. We need to connect more to and between what we’ve traditionally seen as isolated social policies. Our view of what public services are needs to shift (as reflected in the recent report, Changing the Narrative), and the conversation needs to change from one of ‘cost’ to ‘investment’.
3. Which also affects the relationship of the individual, locality, and the state. This has many aspects, but there are two particularly prominent ones: firstly, valuing people as assets; and secondly, shifting the language from one of consumer (“what can I get from public services?”) to one of co-producer (“what can I/we do to help our place and complement public services?”)

Sheffield is still feeling the implications of years of decline, particularly around manufacturing – in 2015, it was the 60^th most deprived local authority in England (out of 326). And on being a place that voted to leave the EU, local residents weren’t surprised: “When we talk about the referendum to the people out there, we talk about the economy collapsing – but for a lot of people the economy collapsed 10 years ago. Why would they have hope for their children under the current system?” In Doncaster, old mining communities are still in the depths of depression. There is a difference of £10bn between the national GVA (at £25bn) and Rotherham, Doncaster and Barnsley GVA (£15bn). That is a huge challenge for city-region leadership, and one where the new mayor will play an extraordinarily important role.

Adopting a needs- or asset-based approach requires a shift in the way funding works. Having a year-long training programme for those not in the job market is good, but some people who are 14 or 16 months away from work – and there aren’t resources to support that. Part of the solution is for non-profits and Councils, in particular, being aspirational and setting their terms. We talk about a failed economic system; this is ripe for places to ask what they want to be, see and achieve. And not just under the banner of devolution – but as part of a shifting economy, society and politic.

On skills, it’s easy to plot a career trajectory for somebody in the upper percentile of school performance: School, Sixth form/college, university, and job. For those not taking that route, the paths are a lot less clear – with myriad training courses, apprenticeship schemes, and qualifications. This means that those who most need a path are the ones without clear pathways. This confuses and bloats the system, too – as an example, we heard that there are more people with an NVQ Level 4 in Sheffield than Level 4 jobs.

While there are opportunities with devolution, there’s limited excited about how it actually plays out on the ground. People felt that it fell short of the Regional Development Agency, and rather than simplifying the process, it creates more bureaucracy in Mayors and combined authorities. There’s also an issue of parochialism: How does Sheffield benefit Rotherham, and how do you avoid having competition within places, as well as between places? Working together to make a transformational difference in the region is exciting – but places need to act as one government and one local authority, and that won’t necessarily be easy.

And those boundaries aren’t only geographical: it’s striking how many big institutions, because they haven’t shared their forward-thinking investment, and we haven’t had a shared approach which means we can’t leverage forward-thinking. This can be a disincentive: if you are together and are perceived to be working together across geography and cities, you have much more attraction with external investors and government in terms of looking like an investable entity.

The Commission will be publishing its findings in March 2017. Within that, there will be bold recommendations for national and local governments. As a new Prime Minister and Cabinet take shape, there are questions about the future of George Osborne’s flagship Northern Powerhouse programme. But what is clear is that a major task for government will continue to be to address the social and economic disparities that divide north and south. Cities like Sheffield may well be in a better position than in the past to seize these opportunities. Can they negotiate the tools and the resources necessary to build prosperous, inclusive local economies?

Find out more about the Inclusive Growth Commission.