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Spotlight THE NORTHERN POWERHOUSE: HERE TO STAY Andy Burnham MP / John Cridland / Andrew Percy MP

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SpotlightTHE NORTHERN POWERHOUSE: HERE TO STAY

Andy Burnham MP / John Cridland / Andrew Percy MP

01 cover.indd 1 23/09/2016 16:21:02

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The Northern Powerhouse | Spotlight | 3

CONTENTS

 Expressing admiration for George Osborne is, for many people, the political equivalent of eating a McDonald’s in a service station car park, or listening to the James Blunt CD that’s kept hidden in the deeper recesses of the glovebox – it can make sense at the time, but it is very much a private act. And yet, this

autumn, Osborne has shown both a stronger sense of engagement and a more steadfast adherence to principle than his friend and former leader.

While David Cameron’s pledge “to continue serving as an MP” until “a bit later” turned out to mean “for about two months”, Osborne has shown that he is willing to fight for the survival of his flagship policy, the Northern Powerhouse. In doing so, he shows himself also to be a long-term strategist. After all, though Theresa May and her government saw an immediate need to appease the British electorate’s dissatisfaction with their predecessors following the Brexit vote (and Osborne’s sacking was the first and most demonstrative act in this campaign), no politician in his or her right mind would dismantle a policy seen as vital to the economic integrity of half the country.

That is why Osborne was able to accuse May openly of having a “wobble” over the north, and why she was forced to affirm in the Manchester Evening News her “absolute commitment” to devolved powers and investment in a more balanced economy. It is also why, in this special report, you will find senior politicians, from both main parties, expressing their support for the policies that Osborne initiated. Some have even gone so far as to suggest that Osborne could run in the upcoming election for Manchester’s new and more powerful mayor, and win. Recent evidence suggests, however, that the former chancellor is able to think further ahead than that.

2nd Floor71-73 Carter LaneLondon EC4V 5EQTel 020 7936 6400Subscription inquiries: Stephen Brashersbrasher@ newstatesman.co.uk0800 731 8496

The paper in this magazine originates from timber that is sourced from sustainable forests, responsibly managed to strict environmental, social and economic standards. The manufacturing mills have both FSC and PEFC certification and also ISO9001 and ISO14001 accreditation.

First published as a supplement to the New Statesman of 30 September – 6 October 2016. © New Statesman Ltd. All rights reserved. Registered as a newspaper in the UK and US.

This supplement and other policy reports can be downloaded from the NS website at: newstatesman.com/page/supplements

4 / Andy Burnham MP The shadow home secretary and Labour candidate for the first mayor of Greater Manchester challenges Theresa May to commit to investment in the north 6 / Andrew Percy MP The new Northern Powerhouse minister outlines his plans for revitalising the region 10 / John Cridland The chairman of Transport for the North on his ambitious plan to dig a tunnel between Manchester and Sheffield 22 / Dave Innes Don’t blindly applaud economic growth, says research by the Joseph Rowntree Foundation: unmanaged, it can in fact deepen social divisions

Supplement edited byWill DunnDesign and ProductionLeon ParksSub-EditorTracey Beresford

Commercial DirectorPeter Coombs+44 (0)20 3096 2268Account DirectorLaura Alderson+44 (0)20 3096 5778

Commitment in the face of change

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03 Contents.indd 3 23/09/2016 16:22:39

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4 | Spotlight | The Northern Powerhouse

ANDY BURNHAM

THE NEED FOR COMMITMENT

George Osborne’s fall from grace reached a new low last Friday. The former chancellor was

forced to travel to Manchester to lobby a prime minister with whom, just a couple of months ago, he sat around the cabinet table.

His complaint was that Theresa May had failed to put an end to a summer of speculation about the future of his Northern Powerhouse initiative. In Osborne’s words, she had a “wobble” over the plans.

Osborne’s intervention in the debate was not unhelpful and he knows how wrong it would be for the Tory party to abandon their promises. Before the last election, you couldn’t escape Tory MPs touring the north and promising the earth. It looks like the Northern Powerhouse could go the same way as the “big society” – a clever vote-seeking soundbite and not much else.

As chancellor, Osborne may have inflicted the biggest revenue cuts on the north but at least he recognised the unbalanced nature of our country and devolved significant powers away from

The Manchester mayoral candidate Andy Burnham calls on the government not to shelve its commitment to the Northern Powerhouse

Brexit’s lesson for Westminster: ignore the north at your peril

Westminster. He just wasn’t around long enough to back up all the fine talk and the devolved powers with real money.

In June’s EU referendum, we saw a stronger Leave vote in the north compared to the rest of the country. The result, particularly in former industrial areas, reflects not only concern about immigration but a much deeper sense of alienation from a Westminster politics that has failed to provide answers for their communities over many decades.

When people voted Leave, they told us loud and clear that they want to see change in the way our politics works. Abandoning the Northern Powerhouse and promised investment would be entirely the wrong response to Brexit.

Entering Downing Street a few weeks after the vote, May pledged to close these divides in our society and fight the “burning injustices” that exist between different parts of the country and social classes. I welcomed the words but, if they are to have any real meaning, she must back them up with real money.

The London perspective on life dominates the political debate and does

Furious George: will the

former chancellor’s plans for

the Northern Powerhouse be

quietly shelved by the new

Prime Minister?

04-05 Andy Burnham.indd 4 23/09/2016 16:23:41

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The Northern Powerhouse | Spotlight | 5

Labour must not fail to take this moment seriously

not do justice to the challenges that people here face. In post-Brexit Britain, the Northern Powerhouse should become much more, not less, important. May should fully embrace the project and make it a crucial part of the government’s response to the referendum result. If the government fails to show these areas that it has listened and understood the message they sent, then the political crisis in our country will only deepen.

With devolution to elected mayors, we have a chance to revitalise Labour in the north, too. I am determined that, as a party, we do not make the mistake of Scotland. If Labour fails to take this moment seriously then we will leave an opportunity for others.

For decades, government policies have been designed for the south and not the north – allowing the gap between the two to grow bigger. If I am elected the first mayor of Greater Manchester, I will use devolution to place new emphasis on technical education and council housing.

There has been a long-standing snobbery in England towards technical education, and our education system invites schools to devote more attention to university-bound kids than to those who want something else. If we want a more equal society, it starts with giving every young person hope that there is a decent opportunity waiting for them at the end of school. I will ask the birthplace of the Industrial Revolution to lead a revolution in technical education and set an ambition of a quality apprenticeship for every young person who gets the grades.

Westminster has for years tried to foist a housing policy designed for the affluent south on the rest of the country, promoting owner-occupation to the exclusion of investing in other forms housing. This has led to the sell-off of our council housing, an unregulated private rented sector and a failure to build the new homes that we need.

But under the devolution deal, a £300m housing fund has been created for Greater Manchester that can provide loans and guarantees to councils and housing associations to expand the

public housing stock and buy out the absent and neglectful private landlords. A new rent-to-own scheme will build the homes we need to get our young people on the housing ladder.

There is an exciting opportunity for mayors to bring health policy and housing policy together, too, and place a new emphasis on building homes with care and support in mind. In the century of the ageing society, we need to follow the lead of Sweden and start building “dementia-friendly” homes. Devolution of the NHS budget means we can build the country’s first fully integrated National Health and Care Service, working to bring social care into the public sector and the NHS.

Far from powering on, the economy of the north of England risks grinding to a halt if promised transport links are not delivered. Failure to give the north a fair share of transport funding has saddled us with a clapped-out, overstretched and overpriced rail service.

Yet, during August, government sources briefed newspapers that Theresa May is planning to impose greater cost controls on the HS2 rail link and could curtail HS3. When overcrowded trains still take hours to trundle across the Pennines, I simply cannot see how anyone could possibly conclude that Crossrail 2 is the highest strategic transport priority for our country.

In her Autumn Statement, the Prime Minister must make the first down payment on the building of the Northern Powerhouse with a commitment to the most ambitious version of an HS3 scheme, linking Liverpool with Manchester and onwards to Leeds and the other cities of the north. She must understand there is no social mobility without modern public transport.

People remember a previous Tory prime minister standing on the steps of Downing Street quoting St Francis of Assisi – and seeing a wide gap open up between her words and her deeds. To prevent history repeating itself, I urge Theresa May to act quickly to make clear her personal commitment to investing in the north and rebalancing our country.

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6 | Spotlight | The Northern Powerhouse

ANDREW PERCY

A NEW PLAN FOR THE NORTH

For too long, the United Kingdom has been much too dependent on growth in a single city. As the Prime Minister set out recently, writing in the Yorkshire Post, the Northern Powerhouse remains a crucial part of our ambition to create a country with a balanced economy that works for everyone – by helping the great cities and towns of the north to pool their strengths and take on the world.

The northern economy already hosts more than half a million businesses, and many of the world’s finest universities and research institutions. Fifteen million people call the north home – that’s more than Hong Kong, London or New York City.

In the past year alone, the number of people in work in the north increased by one person every five minutes – to 121,000 in total – and the number of businesses increased by 10 per cent.

This Conservative government realises

Devolution deals will transfer millions in investment, says Andrew Percy, minister for the Northern Powerhouse

Power will shift from Whitehall to the town halls of the north

to town halls in the north, alongside the power to make decisions that local people really care about. Through elected mayors, with elections next year, there will always be the strong, accountable governance arrangements in place to ensure local voices are heard.

Investment My appointment as Northern Powerhouse minister reaffirms the government’s 100 per cent commitment to seeing people and businesses in the north thrive.

The Northern Powerhouse is now a name recognised and admired around the world and is being backed up with massive investment in science and technology, transport and connectivity, culture and tourism, and ever greater powers for local communities.

Now we are looking to build on this momentum through an industrial strategy that focuses on improving productivity, rewarding hard-working

the huge untapped potential of our great northern towns and cities to become a powerhouse for our economy. We will achieve this with a revolutionary new style of governance through devolution, increased investment and modern transport links.

Devolution After decades of central control, the system for local government in England is experiencing its biggest change for generations. For too long, successive governments were content to hoard power in Whitehall and hope growth would trickle down from London. Those days are over.

We are determined to build a country that works for everyone, not just the privileged few; to create a country in which – wherever you are from, whatever your background – you can work hard and get on in life.

The north’s devolution deals will see billions transferred from Whitehall

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The Northern Powerhouse | Spotlight | 7

Boeing, Siemens and Rolls-Royce are moving in

people with higher wages, and creating more opportunities for young people.

We want to build on the progress made in the north of England but also to support economic growth across the country and tap the potential of all our cities. This new emphasis will be constructed on solid economic and cultural foundations.

Throughout history, the north’s wealth and prosperity have been linked to its industrial power and commercial enterprise – today’s growth is no different. That’s why we have developed 17 enterprise zones across the Northern Powerhouse, centres of excellence offering world-class infrastructure alongside financial incentives to help businesses grow.

Investing in talented individuals in high-value technical industries – many of them graduates of the north’s world-class universities – is helping to build strong support networks for businesses across the region. And companies such as Boeing, Siemens and Rolls-Royce are already moving in.

Local communities have already been backed with significant cash for investment. In the last round of Growth Deals, £2.8bn was given to decision-makers across the north to support local businesses and infrastructure, with projects such as the £5m Olympic Legacy Park in Sheffield, which will create up to 1,000 high-value jobs and is attracting investment from companies like Toshiba and Westfield Health. And with a new round of Growth Deals this year, worth up to £1.8bn, it’s clear the “Whitehall knows best” mentality is gone.

Transport Good transport infrastructure is vital to making this a reality.

Transport for the north has been established and provided with £200m to set a clear direction for investment and ensure that this money is targeted where it is needed most to transform transport for the whole area. We’ve committed to spending a record £13bn on transport in the north by 2020. We are putting the Northern Powerhouse in the fast lane for infrastructure.

We’re building new bridges such as the £486m Mersey Gateway bridge and the Wear crossing. Key road improvements include multimillion-pound upgrades to the A1 and M62. Meanwhile northern railways are being prioritised through the electrification of the TransPennine railway and HS2.

Northern Powerhouse partners Step by step, we are making the Northern Powerhouse a reality. But we know there is much more to do and that is why we ask that you judge a project of this scale in years, not months.

The next stage of this journey is to make sure local people and businesses are the real drivers of its success. That is why we’ve launched a “partner scheme” for businesses in the north to help those responsible for its economic renaissance take ownership of the powerful brand. Already this includes businesses such as Manchester Airport Group, the Peel Group and Atkins, and we want many more to sign up.

I would urge businesses to get involved because, following the Brexit vote, the north must seize the historic and positive opportunities on offer.

Over the past year, trade missions, our Northern Powerhouse “Pitchbook” and award-winning promotional videos have already highlighted to foreign investors more than £24bn of investment opportunities. And in that time, we’ve seen money coming in to numerous investment projects, including in Manchester, Stockport and Newcastle.

Time and again, businesses abroad have said the north has some of the best products and people in the world – and, as a proud Yorkshireman, of course I would agree. In fact, EY’s research revealed that the number of foreign direct investment projects in the north has increased 127 per cent in the past two years alone.

Brexit will allow Britain to forge a new place in the world, with new freedoms, new opportunities and new horizons for the north.

As we work hard to get the best deal for the UK, so must the north.

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8 | Spotlight | The Northern Powerhouse

Cynicism in the north-east about the

Northern Powerhouse project can perhaps

be attributed to the Conservatives’ legacy

in the region, says Vicki Hayward

Theresa May must convince us this is more than a PR job

IN ASSOCIATION WITH

ADVERTORIAL

historically minimal, with greater focus on Manchester and the M62 corridor. Indeed, our devolution deal relied heavily on European Union funding, and the government has admitted that the £800m earmarked for the north-east is unlikely to happen in an environment outside of the EU.

Furthermore, the North East Combined Authority has failed to provide certainty on devolution, following its rejection of the proffered deal. This demonstrable absence of detailed specifics for our region points to our continued alienation. For many in the north-east, the old adage “once bitten, twice shy” echoes ominously.

Cynicism is perhaps appropriate, and could be attributed to the Conservative Party’s legacy in the region; Margaret Thatcher’s economic restructuring certainly had a significant impact on our once-powerful industry. However, in

The EU referendum sparked a monumental shift in the British political landscape this year.

Theresa May’s swift cabinet reshuffle after her appointment as prime minister unseated George Osborne, the champion of the Northern Powerhouse, and handed his pet project to a junior minister – suggesting a demotion in the order of priorities.

Recently, however, the Northern Powerhouse has obtained May’s backing, and the project has been offered £13bn in funding for transport throughout the north. The government has also given Yorkshire a £24m cycling fund, with a promise to devolve further powers to the region in the next year.

In the rest of the north, however, objectives on devolution remain unclear. In the north-east, scepticism is evident. Our inclusion in Northern Powerhouse rhetoric has been

Will the north-east receive the same

attention as the M62 corridor in

Northern Powerhouse planning?

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The Northern Powerhouse | Spotlight | 9

2016, it would be hard to envision history repeating itself. The north-east has gone digital and is, arguably, the UK’s most burgeoning tech hub – worth £5.7bn to the region and growing. Even Google has acknowledged the north-east’s increasing influence, by hosting its Digital Garage in Newcastle this year.

At OnTrac – a subsidiary of the OnTechnology group – we have first-hand experience of what it’s like to be a successful digital company in the north-east. We were named fastest-growing northern tech company at this year’s Northern Tech Awards, and have continued to strengthen links with companies and clients alike by creating a wide range of bespoke software.

This year has also seen OnTrac take the first intrepid steps into virtual reality, an element of technology that perfectly complements our existing portfolio of products and services. We have the

ability to create software that will enable clients to visualise geospatial data in a BIM-compliant, virtual environment within the building management/services industry. Using our existing links within the rail industry, we have created a virtual network for the purpose of scenario simulation, driver route knowledge and capacity planning software. This promises to open up new areas for growth and innovation.

These are exciting times, but our role within the Northern Powerhouse remains unclear. We feel that the prime minister’s renewed focus confirms only what has long been said: that the Northern Powerhouse is nothing more than a concept, critical to the success of a clever PR campaign designed to soften northern attitudes towards the Conservative Party. In short, the government has a long way to go, if it is to convince north-east enterprise that it is committed to the inclusion of our region in a true Northern Powerhouse.

It is worth noting, however, that we do share a common interest with the architects of the Northern Powerhouse. OnTrac has an extensive list of clientele within the rail industry, and has been steadfast in its commitment to improving transport links – not just in the north – but in the UK as a whole. Our most recent product, eTrac, has been rolled out across the wider UK rail network, and aims to dramatically lower the risks for workers in the industry. It has already been used to create 26,000 kilometres of digital diagrams.

OnTracw has delivered value to its clients without a proper Northern Powerhouse foundation in place. We expect this success to continue, as Theresa May’s vision expands in the future. Our parent company, Tracsis, shares similar expectations. Its significant operations in the north were established long before the concept of the Northern Powerhouse; it is these connections that have helped drive the group’s continued success. If this renewed vision for the Northern Powerhouse doesn’t take off, Max Cawthra, chief financial officer at

Tracsis, believes that it will be “simply business as usual”.

The north is a hub of productivity, with a buzz of ingenuity throughout our business communities. Ultimately, we are a region of endurance: the north has always prevailed in times of uncertainty, and this must continue. In short, northern enterprise needs to be its own driving force for change.

OnTrac’s managing director, Martyn Cuthbert, says: “Ensuring the UK has a 21st-century digital infrastructure, with the ability to collect, analyse and share mass data, is critical to the long-term prosperity and competitiveness of our country – particularly following Britain’s exit from the EU.”

He continues: “The internet has become a global platform for communication, commerce and social interaction, and a more joined-up approach to technology will help the government become more effective, transparent and accessible to the British public. The result will be major improvement in public services, such as healthcare, education and energy. This will ultimately help improve all our lives, as well as drive the continued success of the north-east and beyond.”

The North East Combined Authority must clarify our future position in the Northern Powerhouse. Its rejection of a devolution deal implies it is paralysed by politics that are entrenched in archaic traditions. To add more complications at this stage only leaves the north-east further excluded from involvement in the prime minister’s vision, and creates divisions in the region.

The political establishment needs to change fundamentally to bring about devolution. David Cameron’s commitment to austerity did not prove the key to an economically successful country. Theresa May needs to learn from the mistakes of her predecessors. It is important to acknowledge that her plan – if one with actionable intent beyond Yorkshire – has real potential. However, it requires the government to embrace the digital revolution, and understand its importance in our future.

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10-11 Ontrack adv dps.indd 9 23/09/2016 16:30:31

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10 | Spotlight | The Northern Powerhouse

JOHN CRIDLAND

THE CASE FOR A TRANS-PENNINE TUNNEL

The economy of the north has been transformed by its transport before. The man-made landscape,

from its Victorian industrial centres to the bridges and canals of its countryside, appeared with the Industrial Revolution. John Cridland sees a parallel with the modern north.

“What is remarkable about that period,” Cridland says, “in which the north played a leading role, was the way in which entrepreneurs seized the opportunities of canal growth, and then rail investment, to do things that only a generation earlier would not have been possible.”

For Cridland, connectivity is what makes economic areas succeed.

“I like to use the example of the Randstad in the Netherlands,” he says, referring to that country’s “ring city” region, made up by Amsterdam, Rotterdam, Utrecht and The Hague. “In the Randstad you’ve got a similar population to the cities in the north of

The most ambitious project yet proposed for the Northern Powerhouse is the trans-Pennine road tunnel. John Cridland, chair of Transport for the North, tells Will Dunn why he supports the idea

A tunnel through the Peak District: can you dig it?

England, but greater economic value, and connectivity is part of that. If you’ve got somebody growing up in somewhere like Salford, the Metro has given them a chance to travel quickly and effectively on a regular basis between Salford Quays and Manchester Piccadilly.

“What TfN [Transport for the North] is now trying to do is to make it possible for someone from Salford not only to have a high-quality job in Salford or Manchester, but to have a high-quality job in Leeds or Sheffield or Liverpool. And whether it’s rail links or road links, it’s regular, predictable and high-quality travel options that give people chances.”

While those in Dutch and German cities can realistically look for work in a city within the same megalopolis, Cridland points out that people in northern England are hampered by the journey time between cities. “These are distances which, in other parts of Europe, would be perfectly commutable. The distance between Sheffield and

“It’s a Crossrail of the north”

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The Northern Powerhouse | Spotlight | 11

Manchester is not massive, but the evidence shows it has the slowest journey time per mile of any two cities in the country.”

Part of the problem is the way in which transport routes in the UK have evolved: all roads lead to London. Cridland says there are major new investments across the north, from Sheffield and Manchester city centres to the ports of Liverpool, Teesport and the Humber, which could, if connected, offer a “multiplier effect”, allowing businesses to share resources and expertise. “East-west links could liberate travel patterns for citizens to get to higher-quality jobs and for entrepreneurs to seize economic opportunities, because they’re filling a real gap. It’s the east-west links in the north of England that are poor.”

The solution, he says, is to dig deep. The proposed trans-Pennine road tunnel is still only a feasibility study, but it’s thought that it would reduce the drive between Sheffield and Manchester by

half an hour, saving more than 11,000 hours of driving per day. It would be a mega-project on a par with Crossrail, involving up to 18 miles of subterranean driving; up to 15 million cubic metres of rock would need to be excavated, enough to fill 6,000 Olympic swimming pools.

“As a grand project,” Cridland agrees, “it is of that scale. It’s a Crossrail of the north. And if you look at what Crossrail is doing to transform London, I think that’s the opportunity.”

He adds: “In talking to elected leaders and business representatives in the north, one hears regular and powerful anecdotal stories about the challenge of journey times, and the quality of provision. We’ve got the Pennines between Manchester and Sheffield, so, whichever route you go, you are likely to face congestion from winding routes, and you’re also likely to face weather challenges. Congestion in the villages at the end of the M67, heading for the Woodhead Pass, is an illustration of the challenge it provides for travellers

but also the challenge for people trying to live in those neighbourhoods, where the transport capacity simply isn’t good enough.

“So, you’ve got the challenge of all-weather routes across the Pennines, whether it’s Sheffield-Manchester on the A628 or the A6, or whether it’s Leeds to Manchester on the M62, which is the only motorway-equivalent route if you’re in Sheffield and you decide to go north and across. These are high-altitude roads, they’re susceptible to winter weather. Because the trunk routes are not of motorway standard, particularly on the Sheffield-Manchester routes, you have pinch points at both ends. In villages like Mottram, people come off the motorway and go down to an ordinary, two-way trunk road that winds its way up across the Pennines, so you get a lot of stacking.”

As with Crossrail, the case for a tunnel is made by what lies between destinations; not houses, in this case, but the rugged beauty of the Peak District, which Cridland calls “a phenomenal national asset”.

“We are considering a very long and ambitious tunnel for precisely that reason – that it would be wholly inappropriate to consider a surface dual carriageway across a national park. But tunnels also have impacts. They still need venting, for air safety. If you think back to Victorian rail tunnels, they had those little castles in fields. As a child, I used to wonder why somebody had built a castle there, until I realised that they were air tunnels for the railway that the Victorians had built underneath the hill.

“Anything you do has an environmental impact. It’s up to stakeholders to judge whether they think the feasibility study is addressing that properly, and I’m sure there will be a variety of opinions.”

Many of the environmental concerns raised in TfN’s study are associated with the proposal that the tunnel should carry a road, rather than a railway. Overall, TfN foresees a significant increase in air pollution, noise and the carbon emissions associated with more traffic. Furthermore, if people from Sheffield

The M62 currently sends

large volumes of traffic into

the villages and winding

roads of the Pennines

t

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12 | Spotlight | The Northern Powerhouse

JOHN CRIDLAND

THE CASE FOR A TRANS-PENNINE TUNNEL

are going to begin driving to work in Manchester, there will need to be a lot more parking spaces in Manchester. Without supporting infrastructure, says Cridland, a tunnel would merely move pinch points, rather than relieving them.

“It is a priority to make sure that there is good connectivity between the existing transport infrastructure at either end of a new route, and that new route. That is in part why, even in the interim report, options have been narrowed down, and certain routes – particularly the southern routes – have been ruled out. The options are narrowing down on the northern routes because the environmental impact would be much less, and because it links better with existing roads.

“A lot of the stakeholder comment has been about the consequential impact,

metropolitan area – will meet with a great deal of difficulty and opposition, from the need to battle the south of England for investment to the need to preserve the environment that makes the north an attractive place to live.

But earlier this year, TfN commissioned research that illustrates the yawning gap between London and the north, and the size of the opportunity that could be grasped: according to the Northern Powerhouse Independent Economic Review, Londoners produce on average £22,000 more gross value added (GVA, a measure of economic activity) per person than people in the north. The challenge for everyone working in the north is to see if this gap can be bridged – or perhaps, as John Cridland suggests, if it can be tunnelled.

at both ends, of the new route. We recognise that that’s an absolute priority to get right, because it would be liberating people to do travel patterns which they don’t currently do, and inevitably there will be a knock-on impact.

“TfN is a partnership of civic and business leadership on both sides of the Pennines, and the strategic routes will need to be followed through by individual local authorities taking responsibility for their own local travel solutions and making sure that there are local travel solutions at each end of a potential tunnel, so that it is an integrated package, not an isolated investment.”

There is no question that the overarching project behind Cridland’s plan – to connect the cities of the north into a single, highly commutable

t

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ADVERTORIAL

Northern Powerhouse | Spotlight | 13

With emphasis on economic development underpinning the Northern Powerhouse

agenda, the North-East has seen rapid growth in its digital economy. The region has a fast-growing reputation for software and infrastructure development, in particular the creation of interactive experiences for both commercial applications (digitisation) and entertainment (games/CGI).

Whilst the visual representation of products is widespread, the method, results and application have vastly improved to deliver technologies that are changing the way customers perceive products across different mediums. The North-East is home to companies that are harnessing and delivering such technologies on a global scale.

Commercially, the automotive industry is the perfect example of how advances in visualisation technology are benefiting customers. ZeroLight is a Newcastle-based software and innovation company, delivering visualisation solutions to global brands including Audi and Pagani. Between 2014 and 2015, the company’s employee count grew by 140 per cent; the following year it rose 90 per cent. Now at around 100 employees, with operations in other countries including the US, Germany and China, ZeroLight has relocated to high-profile offices on the Newcastle Quayside to accommodate its expanding workforce.

Its technically gifted programmers have a strong understanding of computer science and maths, along

New technology draws on the great tradition of engineering in the north-east, says Joseph Artgole of the visualisation specialist ZeroLight

Region’s industrial heritage lives on in its digital hub

with the vision to see simple solutions to complex problems. Artists push the capabilities of existing infrastructure by demanding more tools to deliver the stunning visuals seen in ZeroLight’s work. In-house innovation and R&D increases the collective expertise of staff, maintaining their position as world-leaders in their field.

The highly specialised development taking place at ZeroLight is a catalyst for opportunities in the region. The company is contributing to the North-East’s growing pool of technical expertise through education. Its graduate and internship scheme promotes and encourages uptake of computer science and other Stem subjects. Sixty per cent of ZeroLight engineers joined the company through the graduate scheme, as did 75 per cent of its technical directors, who now lead their own automotive client teams.

Engineering in the North-East has a long history and is well and truly alive in the region’s modern digital economy. Principles of invention established by its civil and mechanical engineering pioneers provide a strong foundation for today’s software engineers. Research by Tech City UK, published last year, found that 77 per cent of digital companies in the North-East are part of a cluster. More than half rely on local universities for training and recruitment, significantly higher than the national average. Support for start-ups is led by organisations such as the venture capital firm Northstar Ventures, Campus North and Sunderland Software City.

The work ZeroLight has produced for international automotive manufacturers has been recognised by publications including Top Gear, the Verge, Fortune, Evo and Automotive Management. Recent awards include an International Business Award and a Techies award for its market-leading real-time cloud technology; it made the top ten in this year’s Startups 100 and was shortlisted in the Financial Times Boldness in Business awards and the UK Business Awards.

IN ASSOCIATION WITH

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Charlie Cornish,

Chief Executive

of Manchester

Airports Group

(MAG), discusses

the future of the

North’s international

connections

Taking the North to the rest of the world

IN ASSOCIATION WITH

ADVERTORIAL

services from Manchester Airport, or to increase frequency on existing ones. In the past few years we’ve seen direct long-haul flights launch eastwards to Hong Kong and Beijing, and to Los Angeles and Boston in the west. These are on top of the seven daily flights we have to the Middle East and our strong network of short-haul services, which total more than 210 destinations. This growth will continue because airlines recognise the strength of our huge catchment area, which equates to roughly the size of the Netherlands in population.

Transport lies at the foundation of every successful economy and whilst connecting the North to the rest of the world is crucial, it is also imperative that the region is better connected within itself. If the wider North had better access to Manchester Airport, we would be able to meet a greater share of our passengers’ connectivity needs more conveniently, allowing them to fly

Manchester Airport supports the jobs of more than 42,000 people. How will you ensure that the region continues to benefit from your success?As Manchester has grown to become the UK’s third biggest airport, the number of people employed on our site has increased dramatically. Having just celebrated a record year for both passenger numbers and financial performance, we are sure we’ll see more growth as more airlines view Manchester as the gateway to the North of England – and, increasingly, the UK as a whole. This will stimulate more employment, as will the £1bn investment programme that will soon be starting at our terminals, which will create 1,500 jobs alone between now and the end of 2019.

International connectivity will also create more jobs in our Airport City project, which will bring global businesses to the logistics, manufacturing and leisure space we are developing on land next to our terminals. This is already paying off, with the decision by Amazon to open a fulfilment centre at Airport City, creating a further 1,500 roles.

What drives Manchester Airport’s growth?There are many reasons, but the most obvious is the further development of our aviation offering. A growing number of airlines are looking to start new SH

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directly from the region rather than travelling to Heathrow or using other European airport hubs.

We also have room to grow. As the UK’s third busiest airport we have 24 million passengers passing through our doors each year, but our two runways have the ability to handle around 55 million. That’s why we’re investing significantly at the moment.

How does this fit in to the Northern Powerhouse agenda?The importance of a strong Northern economy is more widely acknowledged than ever before and there is no doubt that the Northern Powerhouse vision has already shown the world that the region is both an attractive place to visit and to do business with. Manchester Airport is the international gateway for the whole of the North, and we know our growth is just as important for people and businesses in Sheffield, Liverpool and Leeds.

For example, the direct services that will soon be flying from Manchester Airport to San Francisco from next summer will deliver a significant boost to tech businesses across the north, who will be able to tap into the expertise and funding of Silicon Valley. This is the kind of global access the North needs, and which we provide.

That’s why we were pleased to see Manchester Airport was included in Transport for the North’s Northern Powerhouse Rail proposals. Reducing journey times between the North’s major cities and its primary international gateway will deliver major productivity benefits for businesses across the patch, stimulating exports at the same time. The potential is there to treble the number of people that have good access to the airport by public transport. With nearly 10 million potential passengers, an extra 20 or 30 long-haul services would be viable for the airlines.

Why wouldn’t you want to realise that potential as soon as possible?

Could government be doing more to help airports like Manchester grow?It’s well established that international connectivity is key to economic growth, so it follows that government should do everything it can to forge improved links with key global markets.

At Manchester Airport, we have seen impressive growth in long-haul connectivity in recent years, but when you compare our long haul growth to that of our European peers, their growth has been much, much faster.

One of the main reasons for this is the UK’s punitive aviation tax regime, which we believe is in need of urgent reform. Air Passenger Duty makes tickets more expensive for individuals and businesses, adding as much as £140 to the price of a long-haul ticket. Many European governments have scrapped similar levies due to the negative impact they were having on both airports and economic growth in cities and regions surrounding them.

More importantly, high levels of APD influence the decisions of airlines when

they’re choosing where to place new routes, particularly long-haul services. We believe APD could be reformed to incentivise the launch of new long-haul services, which stimulate far greater economic benefits over time than the tax take would provide.

From a northern context, there needs to be an appreciation of how investment in surface connectivity – road and rail – can not only drive down commuter times and save businesses money, it can improve our ability to attract new air services and connect us with key global marketplaces. Making it easier to get to the north’s primary international gateway should be front of mind when it comes to making any decisions around investing in transport infrastructure.

The argument over expanding London’s airport capacity has been going on since 1968. What’s your answer?We have said all along that it is beyond doubt that there needs to be more capacity in the South East. But as a competitive airport operator in a competitive industry, we are more focused on what we need to do to make the most of our airports than we are in taking sides.

With an announcement on a new runway at either Heathrow or Gatwick imminent, the government must signal its commitment to developing a long-term aviation policy that will enable proposals for further new capacity at other airports, such as London Stansted, to be brought forward at the right time. At the very least, the government should leave open the possibility of other UK airports, including Stansted, bringing forward investment in further new capacity in the future.

In the intervening period before any new runway materialises in the south-east, the government must do everything it can to make the best possible use of the spare capacity that already exists at airports such as Stansted and Manchester. These airports will have a significant role to play when it comes to connecting the UK to world in the years to come.

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ADVERTORIAL

The Northern Powerhouse has captured people’s imagination. In two years, it has gathered

momentum, and major infrastructure projects are coming into focus through the National Infrastructure Commission and Transport for the North.

Figures have shown how much the north has suffered from chronic underinvestment. Judging from the national infrastructure pipeline, the gap in transport funding per capita remains woeful, with seven times greater investment in London than in the north. Gaps in skills, education attainment, productivity and income have given the Northern Powerhouse further raison d’être.

The Brexit vote momentarily put a question mark on its future but, if anything, the referendum result should validate the need for a Northern Powerhouse. Analysts pointed out that the decision to leave the European Union reflected disenfranchised pockets of the population feeling left behind by the poor state of education, housing and employment in their communities. In other words, this disenchantment strikingly exposes the gaps in socio-economic factors that the Northern Powerhouse seeks to address.

WYG has a strong presence in the north. We recognise the potential that exists and understand how it could benefit the whole country when unlocked. Serious investment is needed as well as a clear plan weaving together hard infrastructure and socio-economic dimensions, and I urge the Chancellor to commit funds at the

After millions expressed a sense of being left behind, the Northern Powerhouse has never been so important, says Marc Davies, Head of Environment at WYG and Chair of the ACE Northern Region Group

Brexit vote shows why the north needs this boost

upcoming autumn statement. Only by doing so can rebalancing occur in any material way. Our business is to offer multidisciplinary advice, using our expertise in areas such as transport, engineering, planning, project management and the environment, to deliver a strategic vision for our clients’ assets. Importantly, we make projects come to life and ensure their delivery. This is a process that is remarkably in line with what it would take to make the Northern Powerhouse a reality.

We are already working on projects that embody its spirit. The Kirkstall Forge regeneration scheme in Leeds is a good example. A new railway station will connect the area to the city centre in five minutes. It will become a thriving quarter with 1,000 new homes, creating hundreds of new jobs and attracting £400m of private sector investment. Our recent appointment on Transport for Greater Manchester’s framework is another significant step.

The Northern Powerhouse is also about creating synergies between cities, businesses and people. Business has great potential to contribute to growth in the north, and there is a real desire across all sectors to take the lead. Earlier in the year, this led to the creation of Business North to give local business a united, coherent voice. We are proud to be a founding member of this first truly pan-northern organisation. I also Chair the Association for Consultancy & Engineering Northern Region Group, adding important lobbying power to the decision-making process.

Research and innovation also have a vital role to play. To this end, we recently supported IPPR North in launching a Blueprint for a Great North Plan.

Our connections and our ever increasing role in the north mean that we are well positioned to advise those currently considering northern investments. The need for a Northern Powerhouse has never been so relevant, which is why WYG intends to be instrumental in its realisation, with expertise, commitment and passion.

IN ASSOCIATION WITH

16 | Spotlight | Northern Powerhouse

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ADVERTORIAL

Northern Powerhouse | Spotlight | 17

The UK pharmaceutical sector continues to flourish, creating wealth and employment

opportunities as well as medicines that have the potential to transform patient’s lives. However, since most large pharmaceutical companies and almost two-thirds of R&D in the UK are concentrated in the south-east of England, it is easy to assume that the south has a monopoly on scientific talent, investment and infrastructure.

In reality, it is the north, and in particular the north-west, that increasingly threatens southern dominance, with the north of England now delivering more clinical trials than Oxford, Cambridge and London combined. Much of this is due to successful collaborations and strategic partnerships in the region between R&D centres, the NHS and academia, which have allowed expertise to be shared, economies of scale to be realised and an extensive supporting infrastructure to be developed.

The Northern Health Science Alliance (NHSA) is one example of scientific collaboration. Founded in 2013, the NHSA unites northern universities, research-intensive NHS trusts and four academic health science networks to create a single point of contact for organisations that can then access resources across eight major cities. This includes globally recognised oncology expertise in Newcastle, Leeds, Liverpool and Sheffield, and at the Manchester Cancer Research Centre and the Christie hospital.

Perhaps then it is not surprising

Collaboration in health research is helping to create a scientific Northern Powerhouse, says Jonathan Lewis of Aptus Clinical

Partnerships can turn molecules into medicines

that the north now hosts 30 per cent of all UK clinical trials, with global pharmaceutical companies attracted to the region by the ready access to a large patient population. The north is home to three out of the top five recruiting NHS trusts and has the largest share of patient recruitment in the UK, accounting for 37 per cent of all clinical trial participants.

The strategic decision by AstraZeneca to relocate to Cambridge, from its former state-of-the-art facility at Alderley Park in Cheshire, could have been viewed as a setback for innovative research in the north-west. However, after being bought by Manchester Science Partnerships in 2014, Alderley Park is re-establishing itself as an internationally recognised centre of scientific excellence. Its onsite bio-science incubator, the BioHub, has enabled new pharmaceutical, biotech and life science companies to take advantage of its facilities, scientific heritage and industry expertise.

Many of these companies have benefited from the large pool of former AstraZeneca employees who have remained in the region. Among them is Aptus Clinical, co-founded in 2014 by myself and two other former AstraZeneca colleagues, which is rapidly developing as a leading UK specialist oncology clinical research organisation. Our network of world-class scientists enables us to support life science companies by providing flexible and cost-efficient access to the core technical disciplines essential for successful clinical development.

The emergence of companies such as Aptus Clinical at Alderley Park will contribute to the development of the scientific Northern Powerhouse. Not only will they be a magnet for employment and investment in the region, but ultimately they will help transform cancer treatment and outcomes for patients globally.For more information on Aptus Clinical and its clinical development consulting and full-service clinical trial delivery services, visit aptusclinical.com

IN ASSOCIATION WITH

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SHEFFIELD COUNCIL

HOW SHEFFIELD SECURED £1BN INVESTMENT

Over the past year there has been considerable focus on Britain’s relationship with China and the

opportunities it can bring to secure much-needed foreign direct investment in our economy. In Sheffield, this is something we have been working on for a number of years. We have a well-established relationship with our sister city Chengdu, and the University of Sheffield is home to thousands of Chinese students. Chinese investors are funding the £65m New Era Square development, close to the city centre.

This summer much of this collaboration culminated in a landmark partnership with Sichuan Guodong

Sheffield City Council leader Julie Dore and her team have secured investment from a Chinese construction group that could total £1bn over the coming decades

China in your Hallam

This is one of the biggest Chinese investment deals in a UK city outside of London, and it is the first deal of its kind to be made anywhere in the country. What we have here is an investor putting its money into Sheffield and making a 60-year commitment to the city, for the benefit of future generations. The partnership confirms Sichuan Guodong’s long-term commitment to working with Sheffield. As a result, a whole range of projects become viable, because there isn’t the same pressure to make large returns in a shorter time frame.

As a city, our role in the partnership is about giving Sichuan Guodong a great offer to invest in. We are working with

Construction Group, a Chinese conglomerate with numerous interests, which is listed on the Shanghai stock market. It has been seeking opportunities to invest and expand its business interests outside of China for a number of years. Personal connections with Sheffield, the opportunities Sheffield presents, and the strategic relationships between our city and Chengdu – where Sichuan Guodong is based – have helped to secure the deal.

Under the partnership, Sichuan Guodong will commit to an initial £220m investment in Sheffield, which will fund a number of projects as part of the development and regeneration of the city centre over the next few years.

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It’s the first deal of its kind anywhere in the country

them on how the initial £220m will be spent. The focus will be around city-centre residential, office, retail and leisure projects, all of which are essential in creating a dynamic city centre.

This is an exciting opportunity to deliver on the ambitions and aspirations we have set out for our city centre. Usually the barrier we face is securing the investment to achieve our goals.

So, how did we get here? This partnership has been more than 18 months in the making, and is the result of huge personal commitment on behalf of the council’s leadership and the chairman of Sichuan Guodong, Mr Wang. The initial contact was made thanks to Sheffield’s links with Chengdu. When the potential opportunities became apparent, we invested time in building trust and working intensively with Sichuan Guodong to explore the mutually beneficial opportunities.

In October 2015 a memorandum of understanding was signed between Sheffield City Council, Sichuan Guodong and the government body UK Trade & Investment. This committed the parties to exploring the possibility of establishing a long-term, strategic relationship to fund the economic regeneration of Sheffield. Since then the council has worked intensively, culminating in the signing of the partnership agreement in July.

This partnership has the potential to be groundbreaking for Sheffield. Like many of Britain’s cities outside London, it has a number of world-class assets – including our innovation district, the Advanced Manufacturing Research Centre, and the Olympic Legacy Park – as well as being at the forefront of new industries such as digital and health-care technology. The challenge we face is gaining the commitment of investors to deliver partnerships on a scale that will be transformational.

The commitment that Sichuan Guodong has made to Sheffield is a huge vote of confidence in our city and sends out the message that we are able to compete with anyone to attract an investment of this nature. If we are to

take this to the next level to transform our economy, it is essential that we are actively supported by the government.

The appointment of Greg Clark as Secretary of State with responsibility for industrial strategy is an encouraging step in the right direction, especially considering his track record of commitment to new industries, to cities and the north of England. However, the government’s commitment cannot be purely rhetorical; it must go beyond talking about its ambitions for the north of England. On a financial level, cities need to be given the support to get partnerships up and running, get projects off the ground and inspire confidence in the north.

We require funding on a level given to regional development agencies before national investment for regional economic development was decimated in the last parliament. While some funding was secured in the devolution deals that were struck when George Osborne was chancellor, this is still only a fraction of the money that was previously available.

There was recognition from Osborne at the time that these devolution deals were not an end in themselves, but a starting point for the government’s commitment to rebalancing the economy. What we need to see now is the financial resources to build on deals such as the one secured with Sichuan Guodong, so that foreign direct investment can create the most effective public-private partnerships to support the economies of our great cities outside London.

We have demonstrated what can be achieved when a city like Sheffield can connect with an investor that sees the potential of our region and makes a commitment to it. The council wants to send out a message that Sheffield is open for business. We have also recently signed co-operation trade agreements with the city of Daqing, the leading centre for the oil and gas industry in China and location of the World Snooker International Championship, and with the city of Nanchang. The announcement of a deal with Sichuan Guodong is just the start; we now have much to deliver on.

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Just as businesses can

be supported to run

more efficiently, so

cities can be helped to

work better together,

says Cath Kenyon,

Managing Director

at bespoke software

experts, Kaleida

IT know-how will be a driving force behind the Northern Powerhouse

IN ASSOCIATION WITH

ADVERTORIAL

about the obstacles to growth these industries face, while sharing the knowledge and experience needed to overcome these. Creating opportunities to support cross-industry growth does require an investment of time and possibly resource, but it’s an investment I’ve found has given back more than it has demanded.

Collaboration is key to successThe truth is that the aspirations of the Northern Powerhouse cannot be met by government funding and input from Westminster alone. We need the entrepreneurs, innovators and investors in the north to drive the concept. If we are to see the north flourish in a time of uncertainty, there are key factors we need to take ownership of. I want to highlight just a few that are important values in the Kaleida office – efficiency, good communication and collaboration.

Each of the different regions in the Northern Powerhouse has its own leading voices, agendas and directions.

Whatever your opinion on the aspirations behind the Northern Powerhouse and the

likelihood of achieving them, the very fact that the initiative exists presents us with an incredible opportunity. It has already served as a talking point, bringing together business and council leaders at key events with a renewed sense of focus and purpose. Conferences, networking opportunities and publications such as this would not exist without it. For myself and the team at Kaleida, it has allowed us to connect with other businesses through our Construction Roundtable events, sharing knowledge and insight on how the north can work better together.

As business leaders, the Northern Powerhouse affects us all. We should all be at least interested, if not wholly invested in the discussion. I’ve always had a keen interest in seeing industries in the north flourish – in particular, the digital and construction sectors. I see the benefits in having open discussions SH

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It seems obvious to say, but if we hope to achieve anything together, we need to set clear goals and expectations that leaders and local authorities can get behind. A shared vision about what we hope to achieve – a vision that doesn’t deny the strengths and identities of the individual regions – will propel us forward. Collaboration across Greater Manchester has proved what can be achieved if we work together.

At Kaleida, we work in a way that encourages collaboration. Our job is to understand the needs of the client and develop a solution that meets those needs. We can’t do that without first establishing the objectives of the project and setting clear goals. The same is true for the Northern Powerhouse. Publications such as the Northern Powerhouse Outcomes Report have gone some way to identifying these objectives, but the exercise needs to be repeated and reviewed regularly.

Success will require someone to keep the government accountable. Until

now, it has been unclear who will be the driving force behind its proposals. This became even more uncertain with the Brexit vote and change in leadership; however, the recent appointment of the advisory board appears to be a step in the right direction.

Solutions for sharing informationThe first step towards fruitful collaboration is good communication. When working with clients, a problem we are often employed to solve involves improving communication. Our clients, who are attempting to collaborate either from multiple locations or between contractors in the supply chain, struggle to share information. This is often due to different departments or contractors using software systems that weren’t designed to talk to each other. We work to integrate these systems so that information can be shared in a way that is hassle-free but still secure.

Another obstacle can be the way information is gathered and stored. Work we recently completed for Renaker Build provides a good example. Manual data input plus wasted resource was creating a system that was slow and inaccurate. Renaker’s managers were struggling to administer complex projects across multiple sites, finding that the system for uploading, approving and paying contractors was letting them down. Our bespoke software automated large portions of the process, improving accuracy and reducing the time needed to upload, query and approve timesheets.

Andy Lofthouse, commercial director at Renaker Build, says: “We were impressed with Kaleida’s thorough approach from the start. They knew how to ask the right questions, drilling down to the real constraints we were facing. Our collaboration continued as they invested considerable time in developing an ideal solution for us. We now have a system that understands us, saving time and money, while providing visibility across projects.”

The IT industry is in a position to develop cloud-based solutions to

facilitate good lines of communication for Northern Powerhouse projects. The investment promised by the government doesn’t come around often, so we must work in a way that makes use of each and every pound.

If we want to be more productive, we need to be more efficient. Investment in transport is of course a priority, but perhaps even ahead of that, we should consider investing in communication channels and removing distance between the Northern Powerhouse cities through digital and cloud-based solutions, as well as establishing links with the south-east. Cloud-based solutions could also help bridge the gap between public authorities and private-sector partners.

Time for review and feedbackBeing efficient doesn’t always mean being the quickest. At Kaleida, we’ve found the agile methodology to be the most efficient way of managing projects. It allows us and our clients time for review and feedback, before taking the next steps. We’re able to remain responsive and flexible, while continually assessing the decisions we make with the end goal in sight. The result is a solution that fulfils the brief and also adds value.

In a time of uncertainty, the Northern Powerhouse needs to run its projects in a way that adopts the values of the agile methodology, meaning it can remain responsive to the changes in Westminster and the UK economy post-Brexit. A company that is able to establish efficient processes can go from surviving to thriving. When we have a shared vision, clear goals and effective communication, we are on the way to establishing a highly successful team of people. All individual members win. Across the Northern Powerhouse regions, we have the potential we need to flourish, but the process starts with us collaborating. I, for one, am excited about what the north can achieve.For more information and the full Renaker Build case study, visit Kaleida.co.uk. Twitter: @kaleidaltd

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22 | Spotlight | The Northern Powerhouse

JOSEPH ROWNTREE FOUNDATION

INCLUSIVE GROWTH

The Northern Powerhouse provides a powerful vision. Greater Manchester produces half the

economic output per head of population of London; the logic of creating an agglomeration of cities to kick-start the north’s economy and counterbalance London is therefore attractive. Leaders in Manchester, in particular, are taking the challenge seriously, setting the ambitious target for Greater Manchester to be a net contributor to the UK economy by 2020.

Some of the headline statistics seem to be moving in the right direction. Greater Manchester’s economy grew 2.3 per cent a year between 2011 and 2014, faster than the national average of 2.0 per cent. The employment rate in the north-west and north-east has grown faster than in any part of the UK other than London since 2008. However, this hasn’t been matched across the whole of the north; economic growth was just 0.8 per cent a year in West Yorkshire.

Research by the Joseph Rowntree Foundation shows social divisions could be deepened if city centres grow independently of struggling towns. The foundation’s policy and research manager, Dave Innes, explains

Economic growth is worth having only if it’s inclusive

Economic growth alone won’t necessarily reduce poverty – we need growth that creates more and better-quality jobs to do that. Earlier this year, the Joseph Rowntree Foundation looked at how areas of the country have performed on inclusive growth. We found that, over the past five years, Manchester, Leeds and Sheffield have performed better than average on growth – gross value added (GVA), employment and skills – but worse than average on boosting low incomes, addressing labour market exclusion and the cost of living.

A key issue is which places see the benefits of a policy focus on the Northern Powerhouse. The headlines following the vote to leave the EU talked of a divided country. But this divide exists within the north as much as it does between north and south. Most big cities in the north – Manchester, Leeds, Liverpool, Newcastle – voted to remain, but the areas of the region voting most strongly for Brexit

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The Northern Powerhouse | Spotlight | 23

map closely on to the struggling towns identified in our earlier research.

Ten of the 12 most struggling towns are in the north of England. Among them, in Burnley, Hull, Grimsby and Blackpool, more than two-thirds of voters voted to leave. Yet these towns are excluded from the original vision of the Northern Powerhouse as an agglomeration centred on Manchester and Leeds. If growth stimulated by the Northern Powerhouse reaches only the centres of the biggest cities, it will fall far short of the rebalancing required to heal the economic divides highlighted by the Brexit vote. The government needs a more ambitious vision than the Northern Powerhouse in its current form.

Our research on the role of poverty in the decision to leave the EU highlights the individual factors behind the vote: a lack of job opportunities, low pay, low skills and poverty. Where people live has a compounding effect: people with all

levels of qualifications were more likely to vote Leave in low-skill areas than in high-skill areas. This suggests a “double whammy” of a lack of qualifications and a lack of job opportunities locally leading to the dissatisfaction to which the referendum outcome has been attributed. It underlines the point that there are deeper inequalities to be addressed than between north and south.

Our new Prime Minister seems less keen on the Northern Powerhouse than her predecessor. She talks instead about a need to “drive growth up and down the country – from rural areas to our great cities” and about “governing for the whole United Kingdom”. The move to look beyond boosting growth in city centres to declining and coastal towns is welcome, as long as it is matched by the more ambitious strategy that is required. So, what should this strategy look like?

On 6 September the Joseph Rowntree Foundation launched our comprehensive

strategy We Can Solve Poverty in the UK. This lays out what national and local governments, business, service providers and citizens can do together to tackle poverty. It offers lessons for where the Northern Powerhouse should go next.

First, sustainably reducing welfare spending requires focusing support services on achieving higher employment and earnings to reduce poverty. The “work first” approach of Jobcentre Plus prioritises moving people into work quickly over improving their long-term employment prospects, resulting in too many people in jobs that don’t last or offer little opportunity to progress.

Designing and delivering services locally is important; co-locating services in a single employment and income hub would allow a more personalised approach. The devolution of the full adult skills budget gives local leaders the opportunity to make connections between training, employment

JRF’s research identified

Rochdale as the UK’s number

one “struggling town”

t

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JOSEPH ROWNTREE FOUNDATION

INCLUSIVE GROWTH

support and job creation, to support better long-term employment.

A second important lesson is that city leaders need to make poverty reduction a central part of their economic strategies. Greater Manchester in particular now has an extensive set of spending powers on transport, housing, skills, employment support and business support. All of these policy areas are relevant to tackling poverty, and it is essential that efforts to reduce reliance on welfare aren’t limited to “employment support”. Leadership at the city-region level provides an opportunity to join up these policy areas, and also to develop specific solutions to local challenges. Recent research shows how barriers to the labour market differ across areas. Many parts of Manchester and Leeds – as with other big cities around the country – remain deprived despite a large number of jobs existing locally. The problem isn’t an inability to get to jobs, but barriers such as a lack of skills, health and disability, preventing people from accessing them.

To enable them to make poverty reduction a central part of their economic strategies, local leaders need the right financial incentives. The benefits to the government of getting people into decently paid jobs, in terms of reduced welfare spending, are clear. But only 7p in every £1 of overall government savings are retained by local government for providing services. Cash-strapped local authorities have little incentive to orient their focus towards labour market participation and progression. The current financial incentives that are being put in place, notably 100 per cent business-rate retention, revolve around boosting growth and tax receipts, which, as we have seen, may do little to address poverty. Allowing local government and cities across the north to keep more of the savings from boosting employment would be an important impetus to encouraging inclusive local growth.

A bolder vision across the north must be backed by funding and finance. An immediate question is what happens to the £8.9bn of European Structural and Investment Funds committed up to 2020

for supporting growth and job creation in areas that lag behind. While these funds have been insufficient to reverse growing regional inequality, withdrawing them could speed up the relative decline.

An immediate priority should be to secure the funding allocated to local programmes through to 2020. Looking beyond then, the government should commit an equivalent level of funding to create its own rebalancing fund.

This is also an opportunity to think about how best to stimulate local growth. The Local Growth Fund, which finances the current set of growth deals, was announced on the back of Lord Heseltine’s report recommending a single funding pot to support investment in transport, education, adult skills and housing. But Heseltine’s proposal was for a pot six times bigger than the £2bn a year eventually committed. A government serious about devolution to the Northern Powerhouse should expand the Local Growth Fund to its original proposed size of £12.5bn, to give cities the clout to make an impact on local growth.

But the Local Growth Fund needs to go beyond just stimulating growth. We propose reorienting it to create an Inclusive Growth Fund. This would retain competitive allocation to ensure that funding isn’t committed to wasteful spending, but bids would be assessed according to how they contribute to job creation, pushing up wages and reducing poverty. The onus would therefore be on local leaders to prove that they would use the money to boost inclusive growth.

The next 12 months are crunch time for the Northern Powerhouse. It appears the government’s commitment to the concept is wavering, and it is unclear what will replace it. Next year brings the arrival of metro mayors in Greater Manchester, Liverpool, Sheffield and Tees Valley. Mayoral candidates should be placing genuinely inclusive growth at the heart of their manifestos. The challenge for the government is to come up with a coherent strategy to ensure that devolution to the Northern Powerhouse reduces poverty and reliance on welfare in places missing from the current vision.

Too many people move into jobs that don’t last

t

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Northern Powerhouse | Spotlight | 25

It is easy to turn to simple political fixes to tackle complex problems. Take the example of

the privatisation of our nationalised utilities, such as electricity generation. Privatisation did not bring in new investment or lower prices – instead it led to consumers becoming increasingly confused by the marketing of multiple tariffs.

Northern Powerhouse is a simple fix for the complex problem of how to grow the whole northern economy to close the output per capita gap with London and the south-east. In agglomeration theory, urban density brings benefits, and policy-makers aim to realise these gains by investing in transport infrastructure and the skills base to extend the labour market and connect up all the northern cities.

But if we take the example of Manchester as a city region, we can see the limits of this kind of thinking. The 2:1 gap in output, using the measure of gross value added (GVA) per capita, is not simply an inter-regional difference between London and the north but also a difference between central Manchester and the north-eastern boroughs of Greater Manchester, such as Rochdale, Oldham and Tameside.

The simple fix is to move workers from deprived boroughs to the city centres where jobs are being created. But policy does not recognise obstacles such as the prohibitive cost of commuting for low-wage workers. Oldham is only 30 minutes by tram from Manchester city centre but the return fare of £5.40 all but takes up the

Professor Karel Williams from Alliance Manchester Business School calls for honesty in the Northern Powerhouse debate

A simple fix won’t solve problems in deprived areas

first hour’s wages for a school leaver on a zero-hours contract.

The underlying problem is that the northern cities have not been generating enough good jobs. Outside retail and leisure, they have been adding junior white-collar, back-office jobs that do not justify London office rents. The GVA per capita in Manchester financial services of £95,000 is half the figure of London financial services.

Developers have built a new town of flats, leisure facilities, offices and retail in the centre of Manchester, with walk-to-work flats for junior white-collar workers. In the past 20 years Manchester and Salford have added at least 50,000 new office work spaces and built a similar number of (mainly one- and two-bedroomed) flats.

What we see in Manchester is not commuting but the migration of a young and mobile population from the outer boroughs, the rest of the UK and beyond, to live and work in this new town. Leave the students out of it and look at the number of 25- to 34-year-olds: between 2001 and 2014 they increased by 45,000 in Manchester and Salford and decreased in all eight other city region boroughs.

Isn’t it time to be honest about the practicalities that limit the benefits of infrastructural investment and upskilling? And then intervene to dramatically reduce fares and change the hiring strategies that mean that jobs such as hotel receptionists seldom go to young people from Oldham?

For the many who will never commute or live and work in central cities, what is the civic offer? Just what are the political classes, in the boroughs and the city region, doing to improve welfare for ordinary voters in Rochdale, Oldham and Tameside, whose interest is in social housing and adult care – not one-bedroom flats and café bars? If we take these complexities seriously, the merit of devolution is that it does provide the political framework in which these boroughs could raise awkward questions about the limits of simple fix.

IN ASSOCIATION WITH

25 Alliance Manchester Business School.indd 25 23/09/2016 16:35:31

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Since announcing the

Northern Powerhouse

initiative in 2014,

George Osborne has

fallen spectacularly

from grace, writes

Samantha Jones. But

he may yet confound

his critics

Growth in our northern cities is a high-speed train that can’t be stopped

IN ASSOCIATION WITH

ADVERTORIAL

resignation, he now resides in the unfamiliar territory of the back benches. Yet he may be able to claim the last laugh as his famous northern project takes on momentum of its own.

When May took control of the keys to Downing Street she was quick to make her mark. As Labour began to freefall through the polls, she saw her opportunity to claim the centre ground for her own. In her first speech outside Downing Street she pledged to stand up against “the privileged few” and fight “burning injustice” as well as to “build a better Britain”. She spoke about workers’ rights, the balance of power and the many rather than the few. But there was problem for those in northern England who had just voted overwhelmingly to leave the EU – May ignored her government’s flagship policy in the region. The Northern Powerhouse, many thought, would be

It wasn’t long ago that London was spending one pound in every five it generated propping up government

spending in the rest of the country. The annual report of regional growth showed that while London was +20 per cent in its output compared with government subsidies, the north-east was -22.5 per cent. In 2012, when the report was released, Brexit wasn’t even a twinkle in the eye, but the disparity between the capital and the rest of the UK was becoming a chasm.

George Osborne wasn’t a man recognised for his buccaneering radicalism in his time at the Treasury, but his legacy may well be one that he has now lost control of. The man once considered the heir apparent to David Cameron has had a pretty spectacular fall from grace, sacked by new Prime Minister, Theresa May, in the wake of the Brexit vote and Cameron’s

Manchester’s GVA has grown almost

as quickly as London’s in recent years

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an ideal strategy to deliver this bold new Britain but sadly there was radio silence.

In early August the Times reported that May wanted to “shift the focus to other rural and industrial areas”, a prospect that has created anxiety and confusion in cities in line for large investment projects. Labour’s Greater Manchester and Liverpool Metro mayoral candidates, Andy Burnham and Steve Rotheram, have reacted angrily, demanding clarity from the Prime Minister about her plans. In response, the new minister for the Northern Powerhouse, Andrew Percy, has said he is “100 per cent committed” to promoting the region’s economy.

Despite the confusion and delays created by a summer of extraordinary political events, the truth could be that, with the wheels set in motion, the Northern Powerhouse project was already picking up steam, and the

momentum created is now an unstoppable force. The eventual aim of the project was to see the region match London for GDP output, gross value added (GVA), job creation, property growth and economic output.

Looking at the headline figures, a fairly startling post-Brexit story emerges – London is stuttering. A recently published report by Samuel Tombs of Pantheon Macroeconomics showed the capital to have some of the worst economic figures across the UK. Purchasing managers’ index (PMI) data revealed that, since the referendum result, activity in the London economy has contracted more sharply than in any of the 11 other UK regions. Recruitment consultants in the capital told Pantheon the drop-off in jobs filled was the steepest in more than seven years.

In the aftermath of the 2008 financial crisis London was left, for the most part, largely unscathed thanks to the Bank of England cutting interest rates. Mortgage interest payments equalled 8.2 per cent of all households’ disposable incomes in London in 2007, compared with 6.6 per cent across the rest of the country. As London homeowners had the biggest proportion of outgoings on mortgage interest rates, they benefited disproportionately from a sharp drop in rates. Today, with the base rate now near zero, there isn’t room for homeowners to move. The investment bank Société Générale has predicted that property prices in the capital could fall by as much as 30 per cent and even 40-50 per cent in prime areas.

Of course, dire economic warnings have been commonplace since the announcement of the referendum vote but there has been light amid the gloom – the Northern Powerhouse. Could it be that one of the most unpopular politicians of his generation had seen what many before him had missed? Had the architect of the “omnishambles” Budget identified a reservoir of untapped potential?

In its State of the City Report, Manchester City Council predicted that Manchester’s top four growth sectors

this year would be science, business and financial, creative and digital, and construction. The GVA of the city has recently grown almost as quickly as London and is predicted by the Greater Manchester Forecasting Model (GMFM) to rise by 2.8 per cent every year between 2014 and 2024 – in line with the UK figure and above the north-west annual rise of 2.6 per cent. Leeds, Liverpool, Newcastle and the Yorkshire regions are performing similarly spectacularly, if not better in some areas, and sectors such as digital technology and science are being taken forward by world leaders based in the region.

Key projects taking place across the region include Manchester’s Airport City, which had £800m direct investment from China and more than £84m from European Structural and Investment Funds. Property in the region is booming, with post-Brexit Manchester offering better value for buyers off-plan than Melbourne or Miami, according to new data from Investorist. Manchester was recognised by the Economist Intelligence Unit Global Liveability Survey as the UK’s most liveable city and one of the top 50 cities globally.

House prices across the region, construction of new commercial and residential property, and job creation and business growth have risen steadily since Osborne’s announcement of the Northern Powerhouse initiative in 2014. This is before any of the HS2 or HS3 high-speed rail projects have even got under way. With high-speed rail links in place, it would be reasonable to expect Northern Powerhouse cities together to challenge London and other global financial hubs for dominance.

As London shows the first signs of hitting the skids after years of dominance, it may come to be that the lasting legacy of George Osborne – the former Chancellor associated with the pasty tax and the threatened emergency Brexit budget – is a Northern Powerhouse that eventually matches or even overtakes London. That’s quite an achievement for a backbencher.

SHU

TT

ER

STO

CK

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The earth-movers of Komatsu, the green innovation of Smith Electric Vehicles, the cutting-

edge chassis design of Gestamp Tallent, and the plastic components made by Nifco – all have found a productive home in the north of England.

But chief among these industry leaders is Nissan Motor Manufacturing UK, one of the UK’s largest inward investment successes and a company that has become synonymous with Sunderland. The Japanese automotive giant employs 6,700 people at its Sunderland plant and supports almost 21,000 more jobs in its enormous supply chain in the north-east alone.

Statistics associated with the Nissan plant are staggering: more than 40,000 UK jobs are supported in dealerships, supply chain and engineering facilities (the north-east automotive industry as a whole is linked to 141,000 UK-wide jobs). No other car plant in the history of the UK automotive industry has made more than 400,000 cars in one year, let alone 500,000. The company has trained more than 1,400 apprentices since operations began in Sunderland, with more than 100 people currently working their way through its five-year programme. Its positive influence also extends to schools; the Nissan Skills Foundation has inspired more than 12,000 pupils to engage in Stem activities.

Think of Nissan and most people think of Sunderland – the giant plant has become a symbol of the city’s success and innovation. The Japanese group motored into the city in 1986,

Nissan’s 30-year, £4bn investment in the north-east has revolutionised manufacturing across Europe, writes Paul Watson, Leader of Sunderland City Council

Maybe you can drive our car

at a time when collieries were closing down and shipyards falling silent. It not only created a new business sector in the north-east; it also revolutionised manufacturing across the whole of Europe. Its focus on kaizen (continuous improvement), job rotation and the “just-in-time” philosophy have all contributed to the evolution of the UK manufacturing industry.

This 30-year relationship between the company and its host city has been more than mutually beneficial. Nissan has invested £4bn in the plant since 1986. Its faith in Sunderland has been rewarded with repeated productivity records – the Sunderland plant is the most productive in Europe. In early 2016, the Nissan Qashqai became the most popular family car in the UK, the first crossover to achieve this. The introduction of the Infiniti Q30 premium line in December marks the first new car brand to be manufactured in the UK on a mass scale in 23 years.

Where once our engineering prowess was applied to ships and the maritime industry, we are now renowned for our automotive innovation, boasting Europe’s most productive car plant, which is also in the top ten worldwide. When we do things in Sunderland, we do them properly, successfully and with no small amount of pride and passion.

Nissan’s success has spawned an industry built on traditional skills, but grown through our innovation and hard work – our region now accounts for 26 per cent of all electric vehicle production in Europe, and we have a growing reputation for research and development investment in new and emerging technologies.

Nissan has been good for our city and our region, but we have also been good for Nissan, thanks to our skilled and loyal workforce.

There are more than 240 automotive companies in the north-east, generating more than £11bn in sales and exporting over £5.1bn annually, with a trade surplus of £2.6bn.

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28 | Spotlight | The Northern Powerhouse

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Under the former Chancellor George Osborne and Greg Clark, in his roles as minister for cities and later communities secretary, the concept of the Northern Powerhouse was a key policy area. It was a top priority for Osborne, with a focus on the HS2 rail link, elected mayors and greater control over spending for devolved regions. With the arrival of a new, post-Brexit Cabinet, it is possible that Osborne’s approach will be altered.

Devolution blueprintsOsborne was keen to give English cities powers over housing, transport and policy, and wanted Manchester to be a leading example, with the election of a mayor and greater control over its health budget. Most of the agreed devolution deals featured a new, directly elected mayor, and the government has stated that this will be required where substantial powers are to be devolved, as it ensures greater accountability.

New minister for the PowerhouseAndrew Percy is now the minister for the Northern Powerhouse. Osborne, now on the back benches, has recently announced the launch of a think-tank to promote the Northern Powerhouse. However, concerns have been raised that the Prime Minister will not maintain a commitment to the concept. Andy Burnham and Steve Rotheram, Labour’s mayoral candidates for Greater Manchester and Liverpool, have written to Theresa May seeking confirmation of her plans for

With uncertainty surrounding the May government’s post-Brexit agenda, proposals once heavily supported by George Osborne could be under threat, writes Peter Ware of Browne Jacobson

Can devolution survive in a new political era?

devolution and high-speed rail links in northern England.

The question of elected mayorsUncertainty also remains concerning the government’s position on elected mayors for devolved regions. Little has been said by May, and it could be that devolution is not at the top of the new Cabinet’s agenda. Many council leaders have suggested they are unclear how to proceed with agreements reached under the previous government. Plans for devolution may falter if local authorities do not maintain pressure on the government.

Faith in the futureIn early September, four of the seven North East Combined Authority councils voted against devolution proposals, citing concerns about post-Brexit funding. This has further threatened the devolution programme, with councils losing faith in previous promises. However, their concerns may not be justified. Philip Hammond, Osborne’s successor as Chancellor, has guaranteed EU funding for thousands of organisations, including businesses and universities.

Projects with a focus on economic development will be supported, and organisations are being encouraged to bid for EU funds while the UK is part of the EU. Among those to have been given reassurance from government are the Thames Valley Science Park and the Manufacturing Growth Programme in the Midlands, both of which receive funding from the European Regional Development Fund.

ConclusionThe precise detail of how the new Cabinet will address devolution remains to be seen. It is clear that local authorities are apprehensive about the future, which may limit their enthusiasm to engage. With a possible general election and the terms of Brexit to be negotiated, devolution is one of many issues that must now be addressed.

IN ASSOCIATION WITH

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ARTICLE TITLE

30 | Spotlight | The Northern Powerhouse

“Everybody has a book in them,” it’s said, but very few of us actually get it out

and on to paper. Joseph Beuys, the great 20th-century sculptor, performance artist, thinker and founding member of the Fluxus group, famously declared that now “everyone is an artist”, though he didn’t mean that everyone should take up a paintbrush!

It’s a common assumption that unlocking creativity and finding the way to express it is the work of the arts, design and the creative industries. That may be so, but it is also the key to the holy grail of contemporary buzzwords, innovation.

So does everybody have an invention in them? Innovus has certainly demonstrated in its first three years that there are more ideas around than usually see the light of day and that the best of those ideas if nurtured and encouraged will create jobs and stimulate further investment.

Innovus is the creative approach to technology commercialisation being taken by the University of Manchester and the National Nuclear Laboratory, two organisations that have important facilities and expertise across the Northern Powerhouse, including at its most remote corner, on and near the Sellafield nuclear licensed site in Cumbria.

A vital part of the Cumbria Local Enterprise Partnership’s strategy for growing the county’s innovation sector, other LEPs are pursuing the Innovus approach for their areas, the most advanced of these being Cheshire and Warrington.

At the time of February’s New Statesman Northern Powerhouse report, Innovus had created over 50 jobs with a further 300 forecast. Six months later, the total is nearly 80 jobs and 472 are expected to result from current investment.

Whilst the four companies highlighted then have all progressed their technologies, here we feature another three that demonstrate the impact that Innovus is having, and emphasise the exciting flow of ideas through the innovation pipeline.

A potentially world-changing technologyIt was while working in Nigeria on a waste-to-energy project that Matt Simpson, the MD of Typhon Treatment Systems of Penrith, first took up the challenge of creating the most energy-efficient water treatment possible.

He soon realised that his solution had to succeed. Water is vital to life and in

From steam trains to graphene, Britain – and particularly the north – is known for inventions that change the world. Simon Walker picks three ideas that could change the future

The smart money always bets on ideas

There are more ideas than see the light of day

ADVERTORIAL

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an increasingly global world, the supply of clean drinking water is essential.

It is expected that the replacement of existing ultra-violet (UV) water treatment technology with Typhon’s UV LED system will result in an 80 to 90 per cent decrease in energy usage.

This decreases the cost of water purification, reduces greenhouse-gas emissions, and enables the use of alternative energy sources to power the water treatment system. This effective and efficient water treatment will transform the ability of the developing world to provide sufficient supply for its people and bring substantial health benefits.

Innovus has worked with Typhon throughout to accelerate the development of the technology towards practical implementation.

Wearable technology that reduces risk in hazardous environmentsWith many years’ app development experience, Mobetrics was set up to deliver rapid and high-quality solutions – using wearable and mobile technology – to clients big and small.

Being Cumbria based, the nuclear industry was always going to be a target, and wearables are already starting to show potential to address some of the sector’s challenges.

Utilising Google Glass technology, the Second Sight software allows visual data to be captured and relayed wirelessly to remotely stationed support staff, who can then communicate information to the operator via the screen on board the glasses. A range of real time health data is collected through the use of wearable heart rate monitors and core body temperature sensors as well as radiation dose, again provided to operator and support team.

Working closely with Sellafield Ltd through its Game Changers programme, delivered by Innovus and the National Nuclear Laboratory, the technology is being developed to meet real plant requirements, where access and conditions are difficult.

A neck protection system for high-speed sportsIt was in 1941, six years after T E Lawrence died after crashing his 988cc Brough Superior motorcycle, that the first helmets for motorcyclists were made mandatory in the British army.

Within five years, the rate of fatal accidents had fallen from its peak of 200 per month to 50, though it was another quarter of a century until the wearing of helmets became mandatory for civilians in 1973. After Ayrton Senna’s death in 1994, Formula 1 made great advances in protection of drivers’ necks in the event of a crash, using the support of the car itself, but motorcyclists remain extremely vulnerable to neck injury.

The human head is a heavy part of the body and, when the distance of its

connection with the torso and the weight of a racing helmet are added, the likelihood of injury from an impact at speed is high.

Amaya Munoz, the founder of INNDE Innovation and Design Engineering, has designed a helmet restraint system to change this. The system partially absorbs the energy of the crash and disperses it away from the neck area to the scapula, reducing neck loads. The novel solution mimics the shape and function of the neck bones and muscles, providing comfort and flexibility in normal use, but additional strength in the event of a collision.

To discover more inventive ideas visit: www.innovus.org.uk

Public investment in innovative technology

Further private investment leveraged

Additional jobs forecast from current projects

£1.80m

£1.37m

Jobs created/safeguarded

79

The story so far...

393

301

Number of inventions assessed

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