News story

Long term economic plan for the north-west set out by Prime Minister and Chancellor

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

More jobs, better transport connections, science investment and a better quality of life are at the heart of the long term economic plan for the north-west.

The Prime Minister and Chancellor today (8 January 2015) set out their six-point long-term economic plan for the north-west, highlighting what has been delivered, what is underway and the next steps in building a northern powerhouse that enables the region to reach its potential as a driving force in the UK economy.

At a speech at Old Granada Studios, the site of what will become the new theatre called The “Factory Manchester” the pair set out the detailed plan at the start of a two day tour of the north-west. This is the first in a series of regional tours that the Chancellor and Prime Minister will be undertaking throughout the country in the coming weeks and months, to highlight what the government is doing to ensure a truly national recovery.

In their speech, the Prime Minister and Chancellor showed how the north-west has seen the joint fastest growth in output per head in the UK in 2013, the most recent year for which data is available. There are more people in work in the region than at any time on record, with an average of 200 more people in employment per day over the past year.

But more needs to be done to build on this strong performance to ensure that the region fulfils its potential. So the Prime Minster and Chancellor also set out their six-point long-term economic plan for the north-west:

  1. to increase the long term growth rate of the north-west to at least the forecast growth rate of the whole UK, by building a northern powerhouse, which could generate an £18 billion real terms increase in the size of the north-west economy by 2030. In real terms this is equivalent to over £2,000 per person in the north-west, or a 50% increase, compared to if the North West continued to grow at its long run average
  2. to raise the employment rate in the north-west to that of the UK average. That will ensure over 100,000 more people in employment in the north-west during the next Parliament by supporting the private sector, backing business investment and new start-ups in our drive for full employment in the north
  3. to deliver the largest ever and most sustained investment in the long-term transport infrastructure of the north-west. With £4.5bn committed to electrification of existing rail lines, new trains, new urban transport, and a major upgrade to the roads across the whole region. This is on top of the committed £42.6bn investment in new high speed connections from the North of England to the South and the potential for investment in high speed connections east to west across the north of England
  4. to make the north-west a global centre of outstanding scientific innovation, with a particular focus on material science, biomedicine, supercomputing and energy with major investments in the excellent universities and NHS teaching hospitals of the region, and making sure the energy resources are used to the benefit of local people
  5. to raise the quality of life in the north-west by supporting its great cultural and sporting strengths, building up to 25,000 new homes, nurturing the rural environment and improving education outcomes in the region’s schools so over 75,000 more pupils attend outstanding schools
  6. to give greater power and voice to the great cities and counties of the north-west, delivering a new directly-elected Mayor for Greater Manchester, and supporting other areas with appropriate plans to give people greater control over their local economy and local government

The size of the prize if the northern powerhouse can be created in the north-west is clear:

  • an £18bn real terms increase in the size of the north-west economy by 2030, if we raise the long-term growth rate of the north-west to at least as high as the forecast overall UK growth rate.
  • this is equivalent to over £2,000 per person in the north-west in real terms
  • over 100,000 more people in employment during the next Parliament, if the working age employment rate gap between the north-west and the UK average was closed today
  • up to 25,000 new homes for families in the north-west, if we continue our substantial level of investment in housing in the region
  • over 75,000 more children attending outstanding schools, if school performance in the north-west matches that in the highest performing region

There are no quick fixes to achieving these important goals, so the Prime Minister and Chancellor are also setting out a specific timetable to deliver the key concepts of this plan over the five years of the next parliament, and the following decade (see details in notes to editors). As important next steps in the plan for the north-west, the pair announced three new measures to improve transport links, invest in science, and boost house-building:

  • connecting up the north – Colin Matthews, the new Chairman of the Highways Agency, will oversee the development of a plan for a major improvement in trans Pennine roads, as part of the strategy to connect up the north into a powerhouse. Initial figures released by the government today show that a tunnel could cut journey times across the Pennines by up to 30 minutes
  • “Health North” – The Prime Minister and Chancellor today convened leading health scientists to discuss proposals for a new investment in health research in the north of England. The Chancellor has asked Professor Ian Greer, Provost of Health and Life Sciences at the University of Liverpool to develop “Health North” - a programme to unlock future medical innovations. The move follows major science investments in the North West at the Autumn Statement, including the new quarter-billion pound Henry Royce Institute for advanced materials research and innovation
  • making the north-west an attractive and affordable place to live – A key part of the northern powerhouse strategy is ensuring a high quality of life, in order to attract innovators and creative people. The PM and Chancellor today announced the short list for Housing Zones - areas which are in line to receive government loans to regenerate run-down brownfield areas into new housing. Three shortlisted schemes in the north-west have put forward proposals to create up to 5,500 homes

After the speech, the Prime Minister and Chancellor will be visiting a variety of businesses across the north-west to hear how the government’s long-term economic plan is delivering for them and what more can be done to build the northern powerhouse. Today they will hold a roundtable with key health experts to discuss how to build on the north-west’s position as a health science centre. They will then visit two prominent local businesses that have benefitted from the region’s recovery under the government’s long-term economic plan. On Friday, they will hold a business roundtable and visit other local businesses to hear what more the government can do to support local businesses to expand and go on creating jobs. The Secretary of State for Transport, Patrick McLoughlin is visiting Cumbria on Thursday to see how new improvements to the local rail network will help connect the region.

The Chancellor of the Exchequer said:

The economy of the north-west is growing, creating jobs, and doing so more quickly than other parts of the country. That has not, frankly, been the case over much of the last thirty or forty years, as our economy has become more unbalanced, and the gap between the economic performances of the north of England lagged behind that of London and the south.

Our message today is that is not inevitable, it is not something we should accept; it is instead something we have in our power to overcome.

Rebalancing our national economy, ensuring that the economic future of the north is as bright, if not brighter, than other parts of the UK, is the ambition we should set ourselves. We achieve that not by pulling down our capital city, or diminishing its success. Having one of the greatest global cities on earth, located two hundred miles to our south, should be an asset, not a weakness.

No, we achieve this rebalancing of our economy by pursuing a clear and consistent and sustained plan to hold up the whole of the north of England, including the north-west. Creating a northern powerhouse of jobs, investment, prosperity and bright futures, that is the objective of our long term economic plan for the north-west that we set today.

The Prime Minister said:

When it comes to the next generation – to Britain’s long-term future – few things are more important than rebalancing our economy. We can only have a strong British economy if no part of the country is left behind. In the USA they’ve got major centres of industry not just in New York but in Los Angeles, Chicago, Houston, and Atlanta. That is what we should aspire to in the UK, economic might not just held in one city but spread right across our country.

So we need a strong London, but we need a northern powerhouse too. In the modern world growth is being powered by big cities. The top 600 cities in the world contain just 20 per cent of global population but create 60 per cent of global GDP. When you get that critical mass of people – it amplifies jobs and ideas and businesses. The cities and towns of the north of England can have that critical mass. If we join them together as a team and let them pool their strengths, if we back their scientists and innovators, if we back their thriving cultural life, make them great places to live and give them powerful elected voices, then we can create a northern powerhouse.

Further information

Timetable for Action - Implementation in the north-west 2015 – 2025

2015:

Connecting up the north

  • essential pre-construction works procurement for High Speed 2 (HS2) will be carried out to ensure spades will be ready to hit the ground once the Phase 1 hybrid bill receives Royal Assent. HS2 will be the first new railway built north of London for 120 years, link 8 out of 10 of Britain’s great cities, directly serve 1 in 5 of the UK’s population, and transform journey times
  • decisions on taking forward Phase 2 of HS2 are due to be made. Sir David Higgins has concluded that building both the Eastern and Western legs of HS2 is the only way to deliver the strategic reductions in journey times and extra capacity that is needed
  • decisions on the section of Phase 2 south of Crewe opening by 2027 (6 years earlier than currently scheduled) are due to be made. The government has asked HS2 Ltd to prioritise work to analyse accelerating construction of the route to Crewe and a hub station at Crewe to see if the benefits of HS2 can be brought to the north sooner
  • interim report of the comprehensive transport strategy for the north will be produced by March 2015. The strategy will cover the potential options, costs and delivery timescales for High Speed 3 (HS3), a high speed rail link connecting the great cities of the north. Sir David Higgins has stated that, with a new high speed rail link, the journey time between Leeds and Manchester could be cut from around 50 minutes to between 26 and 34 minutes
  • specification of the next Northern and Trans-Pennine Express rail franchises will be released. The next franchises will deliver additional capacity, new trains and investment in stations
  • electrification of the railway between Manchester and Liverpool will be complete
  • new deep water container terminal at the Port of Liverpool will open. The £300 million project is central to the strategy for further development in Atlantic Gateway, to maximise private investment in the area and support the delivery of critical infrastructure
  • commenced work on the three strategic studies in the north - the Trans Pennine Tunnel, the A66/A69 and the M60 West of Manchester

Science, innovation and energy

  • board for the new Sir Henry Royce Institute for advanced materials research and innovation will have been established and its Director appointed. The Institute will be based in Manchester and will have satellites in other cities, including Leeds, Liverpool and Sheffield
  • National Graphene Institute, based at the University of Manchester, will open in March 2015. This £60 million facility will create the UK’s home of research into the world’s thinnest, strongest and most conductive material, which was first isolated in Manchester
  • The University Enterprise Zone in Liverpool is designed to develop stronger partnerships between universities and small high tech businesses. Construction will being this year on a £15 million facility, funded partly by the government, which will house and support new businesses focused on ‘sensor technologies’

Quality of life

  • government intends to announced the second round of schemes under the Build to Rent fund, including up to £100 million investment in the north-west to deliver up to 1,500 new homes
  • detailed terms of the £300 million Housing Investment Fund for Greater Manchester will have been agreed
  • 2,000 new homes will have been constructed, supported by £97 million investment through the Get Britain Building programme, in 34 schemes in the north-west
  • Over 20,000 additional affordable homes will have been delivered in the north-west by March 2015

A voice for the north

  • north-west will begin to benefit from the significant investment in the region through the Local Growth Fund, which will mean that:
    • Cheshire and Warrington will benefit from £142.7 million for projects including infrastructure improvements in Chester and a Life Science Investment Fund to support new science start-up businesses in the life science business cluster in Cheshire and Greater Manchester
    • Cumbria will benefit from £26.8 million for projects including a new Advanced Manufacturing Technology Centre at Furness College and a package of sustainable transport measures within Cumbria
    • Lancashire will benefit from £233.9 million for projects including infrastructure improvements in Blackburn and the creation of a transport gateway in the heart of Preston connecting the railway station and bus station to the city centre
    • Liverpool will benefit from £232.3 million for projects including a comprehensive package of improvements to the facilities of six colleges in the area and the reopening of the Halton Curve railway line
    • Greater Manchester will benefit from £476.7 million for projects including the purchase of 12 additional light rail vehicles for the Metrolink network and an investment programme for local further education colleges and providers
    • government will also announce the allocations of a further £1 billion of the £12 billion Local Growth Fund in early 2015, from which Cheshire and Warrington, Cumbria, Lancashire, Liverpool and Greater Manchester Local Enterprise Partnerships are well placed to secure funding to support local projects as part of their ambitious plans for growth
    • government will take steps to ensure the full implementation of the devolution deal with Greater Manchester, to deliver a directly elected Mayor for the metro area. As an agreed transitional step towards this, the government will aim to publish secondary legislation by the end of March to introduce an appointed Mayor for Greater Manchester
    • as an important step towards the new directly elected Mayor, the Greater Manchester Combined Authority (GMCA) will receive new responsibilities for skills, business support, employment and health and social care

2016:

Connecting up the north

  • construction work should have begun on the £350 million Metrolink extension to Trafford Park, which was enabled by the government’s devolution deal for a directly elected Mayor for Greater Manchester
  • new Northern and TransPennine Express rail franchises will commence
  • construction work will have begun on the £1.8 billion of investment in the national road network in the north-west. This was announced in the government’s Roads Investment Strategy, published in December 2014, and will fund the biggest increase in capacity into the north-west since 1971. Schemes that will benefit from the investment include:
    • a four-lane Smart Motorway link on the M62, all the way from Manchester to Leeds
    • improvements to the road links to the port of Liverpool and Ellesmere Port, backed with £300 million of investment
    • a £170 million investment on the A57, A628 and A628 Trans-Pennine Route, including a bypass for the village of Mottram
    • further investment on the southern access to Manchester, joining up previously announced schemes to provide better access to the city and Manchester airport.

Science, innovation and energy

  • design for the Sir Henry Royce Institute will be complete, and construction will begin
  • development of the Cognitive Computing Research Centre, based at the Hartree Centre in Daresbury, Cheshire will begin. This £113 million investment will set up a partnership with IBM which will enable non-computer scientists to gain useful insights from big data in order to enhance and design products, services and manufacturing processes
  • government is supporting the global effort to build Square Kilometre Array, which will be the world’s most powerful radio telescope, and is headquartered at Jodrell Bank. In 2016, the computing and software design will begin, which will potentially transform our understanding of the universe

Quality of life

  • Great Exhibition in the north in 2016
  • work ongoing on key flooding and coastal defence schemes in the north-west, with an anticipated investment of over £35 million in the region in the financial year 2016/17

A voice for the north

  • primary legislation will be introduced to enable Greater Manchester to introduce a directly elected Mayor. Changes to legislation are also planned to ensure that the new Mayor can take on the responsibilities of the Police and Crime Commissioner

2017:

Connecting up the north

  • construction work will have begun on the £21.4 billion investment in Phase 1 of HS2, subject to Royal Assent for the hybrid bill
  • work on the £210 million road investment from Junction 8 on the M60 to Junction 20 on the M62 will be completed. This will be in addition to the £140 million road investment for Junctions 25 to 30 on the M62, where work was carried out between 2011 and 2013
  • work on the £191 million road investment in the A556 in Cheshire will be completed. This will bring the A-road that serves as the main southern access to Manchester to Expressway standard through online and offline widening, grade separated junctions, and a bypass around Mere
  • work on the Mersey Gateway Bridge, where construction will have been completed on a new six-lane toll bridge, linking Runcorn and Widnes. The private sector is investing around £600 million and will construct, finance, and operate the new bridge on behalf of Halton Borough Council. The government has already committed support to the project, including £86 million for land and development costs, £126 million towards operating costs, and a £257 million debt guarantee
  • 95% of premises in the north-west will have access to superfast broadband, enabling them to maximise digital connectivity

Science, innovation and energy

  • Graphene Engineering and Innovation Centre, based in Manchester, will open. This £60m facility will complement the National Graphene Institute, as a world leading test-bed for graphene process engineering and scale up, focussing on application of research
  • development of the Energy Sub Surface test centres, in which government is investing £31m, will begin. The first of these will be at the former Shell site at Thornton Science Park, part of the University of Chester. The facility will provide world-leading research on a range of energy technologies including shale gas and carbon capture and storage
  • development will begin in extending the capabilities of the National Nuclear Users Facility (NNUF), in which government is investing £60m. This will include consideration of the facilities at the Central Laboratory of the National Nuclear Laboratory (NNL) in Cumbria, the Dalton Cumbrian Facility and the Universities of Lancaster and Liverpool
  • The University Enterprise Zone in Liverpool is designed to develop stronger partnerships between universities and small high tech businesses. Construction will finish early in 2017 on the £15m facility, funded partly by the government, which will house and support new businesses focused on ‘sensor technologies’

Quality of life

  • investments under the Builders Finance Fund, which enables SME developers to unlock housing developments, will be complete. Up to 33 schemes in the north-west have been shortlisted to deliver over 2,500 new homes
  • 35 free schools will have opened in the north-west, with capacity for almost 15,000 children, as well as 9 University Technical Colleges and 6 Studio Schools- introducing new approaches that are increasingly helping all schools to raise standards
  • through the Priority School Building Programme, 40 schools in the north-west will have been rebuilt, with capacity for over 21,000 children

A voice for the north

  • first election for a new Mayor of Greater Manchester will have taken place, subject to the necessary legislation, and the new directly elected Mayor will be in post with significant new responsibilities, including control of a £300 million Housing Investment Fund, powers over strategic planning, responsibility for a devolved and consolidated transport budget, control of a £900 million earn back arrangement over 30 years, and the roles and responsibilities of the PCC, subject to the necessary legislation

2018:

Connecting up the north

  • Work on the £600 million investment in the Northern Hub will be completed in the winter of 2018. The Northern Hub is a co-ordinated programme of rail enhancements schemes including extra track, new platforms, and a new rail link (the Ordsall Chord) between Manchester Victoria and Manchester Piccadilly. The new link will provide new direct services through Manchester city centre to Manchester airport. The Northern Hub will allow for shorter journey times across the north of England, improving the connections between Manchester, Liverpool, Chester, Sheffield, Leeds and Newcastle
  • main construction works on HS2 Phase 1 tunnels and stations are expected to commence

Science, innovation and energy

  • construction will complete on the new Sir Henry Royce Institute for advanced materials research and innovation, which will be based in Manchester and have satellites in other cities, including Liverpool

Quality of life

  • work ongoing on key flooding and coastal defence schemes in the north-west, with an anticipated investment of over £13 million in the region in the financial year 2018/19

2019:

Connecting up the north

  • Work on the £350 million Metrolink extension to Trafford Park should be completed

Science, innovation and energy

  • The new Sir Henry Royce Institute for advanced materials research and innovation will be open and fully operational
  • Development will be complete on the Cognitive Computing Research Centre, based at the Hartree Centre in Daresbury, Cheshire
  • Development will be complete on the Energy Sub Surface test centres, in which government is investing £31 million

Quality of life

  • The new theatre and exhibition space in Manchester called ‘The Factory Manchester’ will open in 2018-19. The government committed £78 million of capital funding to this in autumn statement 2014. It will provide a valuable new cultural resource for the community, combining a theatre similar in capacity to the London Coliseum and a flexible space like the Tate Modern’s Turbine Hall. It will provide space to accommodate opera, ballet, theatre and visual arts

2020:

Connecting up the north

  • fifteen new major road schemes under construction or open to traffic, including the A585 link to Fleetwood, and the Smart Motorway spine down to Birmingham

A voice for the north

  • first independent assessment of Greater Manchester’s earn back investment will be carried out. This will evaluate the benefits to economic performance of the investment and, dependent on success, will unlock the next tranche of investment

Science, innovation and energy

  • development will be complete in extending the capabilities of the National Nuclear Users Facility (NNUF), in which government is investing £60 million
  • proposals for a long term investment fund from tax revenues from shale will have been brought forward for the north and other areas hosting shale gas developments. This will ensure that revenues from shale in the north-west are reinvested in the long-term economic health of the north-west to create jobs and investment

Implementation in the north-west: beyond 2020

2025:

  • majority of work on the £1.8 billion of investment in the national road network in the north-west, which will begin in 2017, will be complete by the end of 2022
  • work ongoing on key flooding and coastal defence schemes in the north-west, with an anticipated investment of over £13 million in the region in the financial year 2020/21
  • schemes earmarked for the second road investment strategy period ready to go ahead, such as the major improvements to the M60 / M62 / M66 interchange at Simister Island

2030:

  • phase 1 of HS2 will be open by 2026, subject to the necessary legislation. Liverpool, amongst other places, will immediately benefit from reduced journey times to and from London
  • construction work will begin in the mid-2020s on the £21.2 billion investment in Phase 2 of HS2, from Birmingham to Manchester and Leeds, subject to the necessary legislation. Phase 2 alone will create at least 60,000 jobs in the midlands and the north. The government has asked HS2 Ltd to develop a plan for accelerating the opening of Phase 2 to 2030, bringing forward its significant benefits to the north
  • the section of Phase 2 of HS2 south of Crewe could be open by 2027, 6 years earlier than previously scheduled, subject to a decision on an accelerated timetable

Analysis of the benefits to the north-west’s economy

To calculate the boost in the north-west’s economic output if it were to grow at the same rate as the UK as a whole between now and 2030, we used data from the Office of National Statistics (regional gross value added (GVA) and national population data) along with the Office of Budget Responsibility’s economic GDP forecasts.

Regional economic output is measured annually by the ONS. The published data estimate the GVA in each region in nominal prices with data available from 1997 to 2013. Therefore this data captures both changes in price and volume over time.

Between 1997 and 2013 the north-west grew more slowly than the UK as a whole. The average annual growth rate of the North West’s GVA was 3.8 per cent which was below the UK’s average annual growth rate of 4.2 per cent over the same period.

The OBR’s forecast period is up to 2019 after which we assume that the North West grows in line with UK trend nominal GDP growth of 4.6 per cent per annum. If between 2013 and 2030, the north-west were to grow in line with the OBR’s forecast for the UK average growth in nominal GDP, its GVA would be £153,140m higher in 2030 than in 2013.

If over the same period, the north-west were to continue to grow at its average rate of growth seen between 1997 and 2013, its nominal GVA would only be £127,008m. The difference between the two – equating to the potential benefit of growing in line with the rest of the UK – is £26,132m.

To calculate the real, inflation adjusted figures, we undertook the same calculation, but also applied the national GDP deflator across the regions (regional GVA deflators are not published) to give constant prices at 2013 levels.

If by 2030 the north-west were to continue to grow at the same rate as between 1997-2013, the north-west’s GVA would grow by £68,519m. If instead it is able to grow at the same rate as the UK as a whole, it would grow by £49,889m. The difference between these two is £18,630m.

We then applied the ONS’ forecast for UK population growth to their estimates of the regional population to estimate the per capita measures. This showed that growing at the same pace as the rest of the UK would be equivalent to an additional £3,370 per person in nominal terms or £2,402 in real terms.