We need Eastern and Western Powerhouses too

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We need Eastern and Western Powerhouses too

Both the East and West of England need the Government to do more to support the spread of business confidence, highlight their achievements and inject much-needed investment into infrastructure and economic incentives, says Sebastien Kurzel.

The Northern Powerhouse, much loved by former Chancellor George Osborne, has always been the subject of jokes and scepticism around Westminister. I remember hearing that HS2 would, rather than rejuvenate the North of England, allow people from the North get to London quicker.

But despite the scepticism of many, it is starting to work. There is an industrial strategy, a visible website and a bold communications strategy, and high-profile business partners. Energy, focus, investment and government support is now returning to the North.

This is all great news. Off the back of this success, the government has created the Midlands Engine, another economic area based on the same blueprint. But isn’t it time for the government to use what they’ve learnt in the North and Midlands to create equivalent bodies in the overlooked regions of the East and West of England too?

Do the East and West need more support? 

Before George Osborne created the Northern Powerhouse concept in 2014, the North had been languishing for decades. It desperately needed government support and focus. But do the East and West of England really require the same kind of help?

The short answer is yes. The productivity figures released last week by the Office for National Statistics (ONS) painted a glowing picture of a booming West of England. But while the big cities in the West are doing well, this is far from the whole picture.

The South West contains many sub-regions with the lowest nominal labour productivity levels in the UK in 2016. Right at the very bottom of all the UK sub-regions is Cornwall and the Isles of Scilly, and, in fact, only 48 per cent of businesses in Cornwall are operating at full capacity. In terms of productivity, Devon doesn’t do much better.

Over to the East, in counties such as East Anglia and Kent, sub-regional productivity data is equally poor. Productivity in North and West Norfolk has fallen every year since 2012 and in Mid Kent it has been falling steadily year on year since 2009.

But those places are rural, they don’t need business support

For decades, economists and governments have put these poor performances down to the fact that these are rural areas. But I don’t think that washes any longer for many very good reasons.

First, according to the Government’s August 2017 Business Digest, in 2015/16 there were 537,000 businesses registered in rural areas, 24% of all registered businesses in England. These businesses employ more than 3.5 million people, not a notionally amount. There are also more businesses per head of population in rural locations than in urban areas, so the government can’t argue that there isn’t enough call for support.

Secondly, rural businesses are largely successful and could be even more so with targeted support. In a study of small businesses commissioned by the Department for Business, Energy and Industrial Strategy (BEIS), Newcastle University’s Centre for Rural Economy and Business School found that rural enterprises were more likely to have an annual turnover of more than £82,000 than urban enterprises and were more likely to report a profit.

What could we achieve with targeted government support? 

The UK is facing business and economic uncertainty on an unprecedented scale. There can be no doubt that Brexit will have an impact, even if it’s only relatively short term. We can’t escape from the fact that in times of political and economic turbulence governments drop their gaze; they focus inwards and lose sight of the bigger picture. There is now an imminent danger that the West and East of England will be forgotten, until they replace the North at the very bottom of every economic table.

But if we act positively and fast we could see results quickly. Cities like Bristol and Norwich are the economic powerhouses of their regions. According to a new study by Centre for Economics and Business Research and law firm Irwin Mitchell, economic output in Norwich this year is likely to put the city into the top 10 fastest-growing places in the UK; Ipswich already ranks at number five.

There is an enormous wealth of business confidence in the West and East of England, and it is home to some of the UK’s most successful companies. Take Bristol-based Nisbets for example, founded by Andrew Nisbet in 1983; it is now the UK’s largest catering-supplies company and exports globally. Construction firm Chartway Group founded by Ian Savage and Philip Cunningham and based in Maidstone is another fine example. The business hit the headlines in 2014 when its turnover increased a whopping 1,302.9%; or St Austell Brewery who posted a record turnover of £137.4m in 2016, the same year as they acquired rival brewer Bath Ales.

The East and West of England is alive with energetic growing businesses. But the Government must do more to support the spread of business confidence, highlight their achievements and inject much-needed investment into infrastructure and economic incentives. Creating two new Powerhouses would be a fantastic start.

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  • Sebastien Kurzel
    Sebastien Kurzel
    Sebastien Kurzel is a Masters student at LSE, and previously studied geology. He is interested in the interface between energy sources, geopolitics, and UK national security.
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