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This week, we announced an initial investment of £162m in the regeneration of Thorpe Park, in East Leeds. Working with our partners, Scarborough Group, to develop this 200 acre, mixed-use site, we should be able to create 13,000 local jobs, as well as up to 7,000 homes.
We have worked on several urban regeneration projects with inspired local leaders like Ian Stewart, Mayor of Salford and Tim Wheadon, Chief Executive of Bracknell Forest Council - but this is the first project that originated through our £1.5bn programme with the government’s Regeneration Investment Organisation, RIO.
Jobs for the North
It’s a key step towards delivering the Chancellor’s vision of a Northern Powerhouse – a vision that depends on investors like Legal & General shifting the City’s focus from the little “i” of interest rates towards the big “I” of Investment.
The 13,000 new jobs in Leeds will be hugely welcome, but they are only part of the Northern Powerhouse story. What we need in the North is not just jobs, but high-quality jobs.
Collectively, the city regions from Liverpool in the West, through Manchester, Leeds, Sheffield and Hull, to Newcastle and Gateshead in the North-East are home to 10.7 million people. That’s about 17% of the UK’s population – rather more than London, and the same cities and their surrounding regions account for around 4.5 million, or 16%, of the UK’s jobs.
But jobs in the Northern Powerhouse area pay less than those in London – according to Treasury estimates, as many as 750,000 workers in the North stand to benefit from the introduction of the new national Living Wage between now and 2020. That suggests widespread low pay at present.
Jobs in the North are also less productive than those in the South-East: the Gross Value Added (GVA), or additional contribution to the economy per job in the North is just under £45,000 – 13% below the UK average, and 29% below the London average.
We can’t recreate the London economy across the North of England, and perhaps we wouldn’t want to. But it is worth remembering that less than a generation ago, London was in decline, with shabby infrastructure and a population that shrank as the quality of life deteriorated. But progress is possible, and we can make huge progress towards a balanced, mixed economy with different skills and centres of excellence, in both manufacturing and services – a Northern Powerhouse, plus a Midlands engine and high-tech clusters around universities like Cambridge, Cardiff Bristol, Southampton and Newcastle.
Part of the recipe for the Northern Powerhouse is investment in physical and digital infrastructure: every £1 spent on physical infrastructure delivers almost £3 in economic value-add, while for digital infrastructure the equivalent figure is estimated at well above £10. The other key ingredient is upskilling to create more advanced businesses and raise productivity. This is needed right across the economy – it’s depressing that [a quarter] of all UK jobs require only the educational attainment of an 11 year-old. Improving this is rightly a key part of the productivity agenda being driven forward by Sir Charlie Mayfield, Chairman of John Lewis Partnership and a Skills Commissioner.
Make the most of our universities
We can also make much better use of the research output of our universities, to create high-tech, high-productivity growth and jobs. We are good at this in some parts of the country – biotech round Cambridge, for example, and increasingly digital media in Salford, but there are huge gaps and opportunities.
Again in the Northern Powerhouse regions, only 20% of businesses are defined as Knowledge Intensive Business Services ("KIBs") by the government’s official statistics. This compares with 30% for the country as a whole. So we need to make more of the 23 universities across the Northern Powerhouse – 6 of which are ranked in the top 20 nationally for research.
A good start would be to build on the excellent work on health and ageing being done in Newcastle – part of an ambitious programme under the leadership of Vice-Chancellor Professor Chris Brink. With ageing populations across most of the world, this is an area where business opportunities will open up, and the UK can take a lead.
Politicians and academics need to grasp these opportunities and drive them forward. Devolution and local decision-making should be empowering, but we need more vision – like we have experienced in Manchester, Bracknell, Salford and now Leeds.
As our Leeds transaction shows, the money is there to make long-term investments. The Northern Powerhouse is affordable, we have to be the “we” to make it happen.