Economy and Infrastructure

11.06.19

Time to build a truly northern powerhouse

Source: PSE June/July 2019

Jack Hunter, a research fellow at think tank IPPR North, discusses how to use the Northern Powerhouse to encourage greater social purpose among businesses in the region – including proposals for a new Northern Powerhouse Community Fund.

In case you haven’t noticed, business as usual is no longer an option. The latest sign our economic model is broken came recently when the UN Human Rights Council’s special rapporteur produced a final report which pulled no punches in its depiction of spiralling levels of poverty and deprivation.

We already know poverty levels are growing fastest in already poor areas, including many parts of the north of England. We already know that the number of people experiencing in-work poverty outstrips those who are poor and unemployed. We already know this story, but it’s shocking nonetheless.

First and foremost, we urgently need the government to recognise the severity of the issues at hand. We need higher minimum standards, including a real living wage for all, alongside much tougher regulation of the worst excesses of the private sector.

We need an immediate reversal of austerity cuts which have disproportionately affected the north. And we need real powers over tax and spending devolved to local areas to ensure that councils and combined authorities can invest in their communities and provide a safety net for all.

But we also need others to step up. As economist Mariana Mazzucato argues, to build healthier local economies we need organisations of all stripes to invest resources, share their assets and work much more collaboratively. This includes private sector firms.

This idea is not new. There are already countless examples of firms across the north that play a civic role in their local community. Hundreds of firms already pay a living wage. Others invest considerable resource into the skills of their employees, and those of the future workforce. Many donate to community causes, including through charitable foundations.

This is nowhere near enough. We need a step-change in the purpose of businesses in their local area, underpinned by a recognition that it is in their long-term best interests to invest in the health and wellbeing of their local area, their supply chain and their workforce. This should be a core part of the next phase of the Northern Powerhouse agenda, which has so far focused on driving higher economic growth through boosting output among the north’s high-productivity sectors.

The Northern Powerhouse was created in Whitehall, but is increasingly something owned and championed by the north’s leaders. Because of this, there is also the opportunity to leverage the strength of the north’s history and culture, to develop a more civic role for businesses.

In a recent report, IPPR North set out how to make this happen. One idea we have put forward is the creation of a Northern Powerhouse Community Fund. We suggested that a pan-northern charitable fund should be set up, funded through a voluntary contribution of 1% of profits from northern businesses in order to help to fund voluntary and community activity in the region. Decisions about investment would be made by a panel of northern citizens, chosen by sortition.

Such a fund would give firms across the north a new opportunity to put their money where their mouth is. At the same time, it could be an opportunity to give people in the north a greater say in where money in their region goes.

On its own, a Northern Powerhouse Community Fund is clearly no substitute for urgent and radical change from government. But we can’t wait for Westminster to act. This would be a small but important gesture from the large firms that benefit from the Northern Powerhouse agenda.

The north of England has a long and proud history of civic-minded business. We need to build on this, to embed social purpose across the Northern Powerhouse. In doing so, the north can set an example to the rest of the country, and the world.

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