Philip Barnes – Blog

WHERE has Newcastle’s Manchester envy come from?

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And we’re not talking football or music here.

I was a privileged to be asked to speak at the recent Developing Consensus conference in Newcastle alongside, amongst others, Lord Shipley, James Ramsbotham from NECC and Barry Rowland the Chief Executive of Newcastle City Council.

The day had one key objective; namely to achieve consensus between the public sector and the private sector on how to deliver new investment, development and jobs.  Various fascinating and interesting issues were raised during the day.  Perhaps the first of these was the differing levels of interest from the two sectors.

Whilst over 150 business and property people turned up only 8 local authority officers attended. No politicians were able to make it, disappointing as they are the people who have the elected mandate to make the difficult and important decisions on where and how to bring forward growth and jobs.  Various speakers outlined the numerous economic strengths of our city and region. Our friendly and hard-working workforce, our quality of life and our transport links were cited.

Less clear was how many other locations might also claim these advantages in this competitive global marketplace.  And then people started talking about Manchester, with a combination of envy, antipathy and fear.

Economists realise that economic growth is not usually driven by the right location, raw materials, ports or motorways. Rather growth is created by having inclusive pro-business political and economic institutions.  Why else is South Korea one of the richest nations on earth whilst neighbouring North Korea is one of the poorest?  Achieving a pro-growth institutional framework often depends on what economists call a ‘critical juncture’. Namely an economic or political shock to the system.

But more of that later…………….

The Newcastle City Council speaker acknowledged the vital role of supporting the business sector but stressed that the overriding objective of the council was to address inequality and improve disadvantaged communities.

Whilst it is clearly impossible to argue against either of these objectives, many in the audience felt that the current priority should be on encouraging business to create the jobs, growth and taxes which then provides a  sustainable platform for such socioeconomic improvement.

At times, the conference struggled to get to grips with what the people in the room could actually do to improve the growth prospects of the region. Talk of the Eurozone crisis and the growth of Brazil and China are interesting, but it is fruitless focusing on exogenous factors beyond our control.  There seemed a reticence to talk about the disadvantages of the region as perceived by potential investors, and what we can actually do about them. For example, housing. The region has the worst housing stock in the UK, highest levels of pre 1919 terraces, too many old flats and a woefully low proportion of modern detached family housing.

The discussion on housing was understandably muted given recent decisions to scale back the proposed level of new family housing in favour of relying on inner-city  brownfield sites of questionable attractiveness to either developers or customers.  This reticence is despite virtually every economist in the country now advising Government that an increase in house building is crucial to achieving economic  growth.

Back on to Manchester and the reality of Manchester’s success. Remember it is the third highest visited city in the UK and in 2010 was voted by British business leaders  as the second best city in the UK to locate a business.

But earlier I mentioned critical junctures, and without wishing to trivialise, the injuries inflicted on over 200 people, Manchester’s critical juncture was one of the worst  episodes in the city’s history – the IRA bomb in 1996.

The City and its neighbours immediately developed a unified growth and regeneration culture in response, which persists today. While many in the North East may cast envious eyes over to the North West perhaps the loss of One North East can be viewed as our shock to the system.  Rather than bemoaning its demise we should see it for what it is – an opportunity to choose a bottom-up path of our own creation.

And with a brand new business-led Local Economic Partnership now firmly finding its feet under the effective leadership of Paul Woolston and Ed Twiddy, we have every  reason to be optimistic especially building upon the two Enterprise Zones and the fantastic new City Deal for Newcastle Gateshead.

The final Developing Consensus speaker was the inspirational Jason Tipton of Insure the Box. An inward investor from Essex now based at Quorum in North Tyneside.  In his view the North East is the best place in the UK to locate a business.

Food for thought.

Author: philipbarnesblog

Group Land and Planning Director for Barratt Developments PLC. FRTPI, FRICS

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