State of the Region 2013: Leaders tackle north-south divide

TACKLING  the north-south divide and Local Enterprise Partnerships’ ability to drive economic growth were the hot topics debated by the expert panel at TheBusinessDesk.com’s 2013 State of the Region event.

The event saw panellists Robert Hough, chairman of Liverpool LEP; Steve Mogford, chief executive of United Utilities; Juergen Maier, chairman of the North West Business Leadership Team and managing director of Siemens Industry UK and Ireland; and John Ashcroft, chief executive of pro.manchester debate the key business, financial and economic issues set out in the benchmark report in front of an invited audience of 80 senior business leaders.

Although not asked explicitly about the gap between the economic prospects and performance of the North and South,  a number of respondents to the survey still voiced concerns over it.

The State of the Region report is sponsored by DLA Piper, Yorkshire Bank and the CBI. Click here to download it.

Many said that although the North West economy is strong, London and the South East are more vibrant, offering greater opportunities. Some opined that this was a result of southern bias from government and in turn investors, with the south also enjoying the benefits of increased investment in transport infrastructure.

Juergen Maier highlighted this perfectly with the fact that investment in transport is £2,731 per head South East and London versus £134 in the North West.

Meanwhile, Steve Mogford, chief executive of United Utilities, said: “We recognise that we work in a region that has more than 50% of the country’s poorest areas.

“We have seen over the last 12 months declining consumption. Some of this is efficiency, and you usually see a 1% or 2% drop each year as people look to save money and water, but the primary reason for reduced consumption now is the number of empty properties.

“In the North West we have seen a 20% increase in the number of empty commercial properties compared to 14% or 15% in the south.

John Ashcroft added: “We really do have a two tier economy with dramatic growth in the South East. The problem is that’s the atmosphere politicians are surrounded by. We had all the talk of rebalancing the economy from the Coalition and then they abolished the RDAs [regional development agencies].”

Mr Maier added: “Things are beginning to change, with the Northern Hub and things like MediaCity coming to the region. But it is down to businesses like us to get down there and lobby for what is right. That’s the only way – we have got to get down there. NWBLT is doing that and other lobbying bodies are too.”

The region’s hotspots – nuclear, creative & digital, renewable energy and manufacturing – offer the greatest opportunities for growth.

Robert Hough said: “Clarity on nuclear is critical. Over half of the employees in the nuclear sector are based in Cumbria,” before adding that although the manufacturing sector is reducing employment levels as a result of efficiencies and automation, it gives greater penetration globally.

Mr Maier said: “According to the New Economy the biggest growth sector will be professional services in the next 10 years. But that will only happen if there is growth in other areas like manufacturing and creative. One has to create the pull on the other.”

Mr Mogford suggested that with changes to the weather as a result of global warming, our higher levels of rain fall could potentially result in economic benefits.

He said: “We are looking at water trading with London – we are water rich here in the north. We don’t play on our natural resources but there will come a time where people hunt for such places where resource is in better supply.”

When it comes to driving greater economic growth in the region, most agreed that the regional development agencies had been too hastily abolished and that although they were not perfect, they were a united voice for the region.

LEPs were announced in June 2010 to rebalance the economies away from a dependence on financial services and the public sector and to bring forward other sectors.

They have had a mixed reception since launch, with many taking the view that although a public/private partnership approach should be applauded, the  lack of funding means LEPs have no real clout – something reflected by many of our survey respondents, where 50% saying they do not know whether the LEPs have a positive impact on the region.

Mr Hough said: “You can have all the strategic bodies on earth but they are always a means to an end – all bodies are only relevant by how they drive economic activity.

“The reality has been that those areas that have them [an LEP] like Manchester, don’t really need them and those that do need them don’t have the funding to support them.”

Mr Ashcroft: added: “We are now in the third year for LEPs, which were hastily and badly conceived and designed.”

Commenting on the debate and the findings of the survey, Kate Creer, planning partner at DLA Piper in the North West, said: “This year’s survey shows a moderate increase in confidence in the North West as a business hub. 70% stated that the region is a good place to do business , compared with 64% in 2012. However, views are more divided on LEPs and Enterprise Zones.

“Last year only around a fifth of businesses surveyed stated that the LEPs were actively good for regional growth and there has been little improvement on this opinion in 2013.

“The LEPs clearly have some way to go to prove themselves with 50% of respondents still undecided on their value and a quarter stating that they have not had the positive economic impact expected to date.

“Only a quarter of respondents are confident that enterprise zones are good for regional growth, a substantial drop from 70% in 2012. More than half remain uncertain of their value, however with the potential to create significant opportunities for emerging businesses and sectors in the North West , it will be interesting to see how these zones shape up and act as a tool to focus resources strategically and attract investment during the course of 2013.”

Click here to see a gallery of images from the event.