Report values Northern ‘economic potential gap’ at £34 billion

Report values Northern ‘economic potential gap’

Recent IPPR North report, Rhetoric to Reality, a business agenda for the Northern Powerhouse, found there is an ‘economic potential gap’ of at least £34 billion.

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  • Call for £50 billion government capital spend on transport in the North to help plug gap

Today’s IPPR North report, Rhetoric to Reality, a business agenda for the Northern Powerhouse, supported by KPMG, found there is an ‘economic potential gap’ of at least £34 billion.

This represents the economic boost that would be generated if the North just halved the gap between its economic output per head versus the national average.

Investment in transport infrastructure across the North of England, to the tune of £50 billion, is called for in the report, to create the connectivity necessary to achieve this step change in prosperity.

KPMG’s North region chairman, Chris Hearld, said: “Underinvestment in transport connectivity is preventing the north from behaving as a single economy and developing the strengths of similar metro-regions internationally. Separate cities and regions simply cannot achieve the economic scale and weight for competing strongly in a global economy.

“Worryingly, a long-term pattern of low investment levels relative to other parts of the UK looks set to continue. The national infrastructure pipeline shows the route for most transport spending is set to bypass the North unless spending decisions are changed.”

The report states that for the north to match London in terms of per-capita transport infrastructure spending, an extra £33 billion would have to be allocated to the north.

It illustrates that the planned national infrastructure expenditure on transport per head in real terms from 2015/16 is:

  • London £2,604
  • Yorkshire £391
  • North East £314
  • North West £397

If per-capita spending in the north had equalled the UK regions’ average over the past five years then an additional £2.5 billion would have been spent, according to the report.

Richard Threlfall, KPMG’s UK head of Infrastructure, Building & Construction, said: “The North has huge potential; it should be in the premier league of world economies but is currently condemned to mediocrity because of lack of investment.  The poor connectivity within and between our northern cities is throttling our productivity, and weak national and global links are restricting our trade. Today’s report shows, for example, that there are 40 per cent fewer commuter journeys between Leeds and Manchester than there should be, given their physical proximity. Our unemployment rate is higher than the national average, and our skills base is weaker. All these things are linked.

“We need a massive increase in public investment in the region, to trigger a virtuous cycle of increased business confidence, private investment, more jobs and a more productive workforce.

“I urge the Government, in the forthcoming Spending Review and beyond, to heed the call in this report to turn rhetoric into reality and commit to a capital investment programme of up to £50 billion, to set the north on the path to prosperity.”

Chris Hearld concludes: “The report explores why the ambition of the Northern Powerhouse is a business issue. Its conclusions are inescapable; the prize is a business-led resurgence of economic growth across the North, exploiting its geographic, natural and skills assets – from ports to production.

“In fact it’s a national matter. A prosperous North, providing a counterweight to London, drives economic benefits across the whole of the UK.”


- ENDS -


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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff.  The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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