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Making sure the Northern Powerhouse and Midlands Engine don’t end up on the scrap heap

At the end of July debate raged between Chris Grayling, the Transport Secretary and Andy Burnham, the mayor for Manchester over the future of the Northern Powerhouse. This followed the Government’s renewed backing of the £30bn Crossrail 2 in London. Here we saw the Government give to the South with one hand and take away from the North with the other, as it announced that the electrification of the rail link between Manchester and Newcastle may no longer go ahead.

 
The announcement re-invigorated the argument over where the Government invests in key infrastructure projects in the UK, with the long held view that the North and Midlands are all too often overlooked.

 
This is also the view of the UK’s Construction SMEs as our latest SME Confidence Tracker revealed.

 
Despite the Government setting up a £400m Northern Powerhouse Investment Fund in February this year, half (50%) of construction SMEs have not heard of the Northern Powerhouse. Additionally over a third (37%) feel that the plans for the Northern Powerhouse are too focussed on Manchester and that plans should look at more cities in the region.

 
Moving further south and along the M1 or M6 and we arrive in the so called Midlands Engine. Here the views of SMEs in the construction sector are even bleaker. Almost three quarters (72%) have not heard of the Midlands Engine and almost a third (31%) believes the plans are too Birmingham focussed.

 
It is clear that SMEs and contractors in the construction industry have a lack of faith in the grand visions of the Government’s plans for transforming the two regions. But more importantly, awareness and participation in delivering these key infrastructure projects appears to be low.

 
This debate points to the growing concern surrounding the current Government’s commitment to its predecessor’s policies for the Northern Powerhouse and the Midlands Engine. With newly elected Mayors in both regions to champion their cause, it is vital that SMEs and sub-contractors are able to tap into the opportunities available and ensure that the projects deliver work for all and create jobs across the sector.
Earlier this year we saw the Government also release its Industrial Strategy Green Paper with the aim of making the UK become a more productive, prosperous and fairer economy. When asking construction SMEs what the biggest challenges were to making this happen, almost two thirds (64%) said there was too much investment in London. Meanwhile around half said that the cost of doing business in the UK is too high (51%) and that uncertainty around Brexit was damaging the economy (48%).

 
Before we truly see the North become a Powerhouse and before we hear the hum of the Engine in the Midlands, tarmac needs to be laid, concrete poured and houses built. After so much promise it is vital that the Government continues to deliver on its promises for the Northern Powerhouse and the Midlands Engine. Both strategies are vital to rebalancing the UK economy as we look towards March 2019 and life outside of the EU. While investment in the South and London is still needed, it is important that the vision for the rest of the UK is not lost and does not end up on the scrap heap. While clearly there is a disconnect between policy makers and the business world, it is important that tangible progress begins to show, otherwise scepticism will become a reoccurring theme. SMEs and sub-contractors can have a vital role to play in the delivery of these projects whilst deliver wider benefits such as job creation and skills development.

 
Helen Wheeler, Managing Director, Construction Finance
Bibby Financial Services

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