Member Article

North East Northern Powerhouse insight: Dr. Stan Higgins

In an ongoing series, Jamie Hardesty is talking to North East business leaders in an attempt to understand the region’s feelings towards the government’s Northern Powerhouse initiative.

First up is Dr. Stan Higgins, CEO of cluster organisation NEPIC, which supports the growth of the North East’s chemical-using industries.

Come May, two years will have passed since George Osborne first spoke of the need for ‘building a Northern Powerhouse’.

Whilst awareness of the phrase has of course increased during this time, growing consciousness has not necessarily produced greater understanding of what the Northern Powerhouse actually is.

This investigation, surveying regional business opinion, hopes to add coherence to the concept.

Hi Stan. What does the Northern Powerhouse mean to you?

The Northern Powerhouse (NP) has already had an impact on NEPIC’s work in that it has allocated UKTI funding to support our trade and investment mission to India 12 – 19 of March. The terms and conditions of our contract with NP/UKTI now states that we must encourage companies from across the North of England to participate. We are pleased that a couple non-NE companies are indeed joining us.

Organisations like NEPIC are already feeling an impact but my personal hopes are that the complete imbalance in infrastructure spending between our region and the Southeast will be addressed. Furthermore I hope that a better understanding of the importance of manufacturing and the foundation industries like chemicals and steel will arise. Not only because of their economic importance but there is a growing realisation that manufacturing jobs can also contribute to social and psychological well-being of communities and individuals.

Are there signs of the Northern Powerhouse starting to bear fruit in the region?

The NP initiative should bring more focus on the needs of the Northern regions but some of my worst fears have been have already been compounded. The NP initiative has started like all new initiatives with the usual table top analysis of business & industry. The consultants used have again used ONS SIC code data in this table top analysis and this will always downplay the economic importance of the NE region, in particular our manufacturing output. This is because so many of our operational units report their production and performance to head offices out of our region. The “Branch Office Effect”, which is worst in our regions of all UK regions, has yet again reared its ugly head in the data and subsequent report which is being used to formulate the NP programmes and processes.

I can say with certainty that the importance of the chemistry using industries to the Northern Powerhouse, that is chemicals, pharmaceuticals, plastics & polymers, metals, etc is under played because most of the big players have their reporting offices outside of this region and outside of the North of England. The last industry analysis I saw published by the McKinsey Centre for Cities using this data also suggested that no cars were made here!

Has the government done enough to convince you of its commitment to Osborne’s vision?

Not yet. There appears to be a huge focus on the political issues of establishing City region mayors. The physical needs of our region are not yet being addressed and it seems to me that via the LEPs and Mayors there will be even greater centralised control of what we do than ever before. I have seen that localism seems to mean; you tell us what you need then we will decide what you can have.

Localism to me should work the other way round. Many of the big (good?) ideas for our region that the LEPs have put forward have been red-lined in London. Localism to me means we get a budget, we decide what we need and we are then held to account on the delivery. Perhaps this is most likely to happen if the region were to achieve some sort of devolution; but we missed out on that some time ago.

Transport improvement is intrinsic to the Northern Powerhouse. Do you believe that spending billions of infrastructure will improve Northern productivity?

Yes I do. There are restrictions on our roads and railways that are restricting industrial growth and efficiency. Furthermore, when I look around the world most of the major industrial growth areas are focused around ports. I do not think we have promoted our regions port facilities.

The NE’s main European competitor locations are Rotterdam and Antwerp, both of which have huge resources allocated to them to promote their service and industrial infrastructure. Our region has lost foreign direct investment time and time again to these locations.

This is not just because these competing locations are on the continent; because our region in fact has many advantages over them in terms of raw materials supply, access to baltic seaways, and deep water port facilities. Companies tell NEPIC time and time again that they simply treated better and given more support when they go there. We simply do not match their research, advertising and investment follow-up services. This is stuff we can fix and would cost very little to do so.

Are there any other areas which you believe money should be spent on, ahead of transport?

As I stated, focused bodies are needed to attract large-scale international mobile investments to the Tees, Tyne and Wear. We also need a better understanding amongst our political and industry leaders of the mineral assets of our region, particularly its coal and gas fields and the modern technologies that can be used to access them.

Geological studies show that the Durham Coal Field still has huge coal reserves deep underground. Modern technologies can access these reserves giving our country access to over 10,000 years-worth of energy. Extraction does not need men/women to go underground, indeed the technology can be operated off-shore.

Furthermore this raw materials and energy opportunity could be very low carbon indeed when coupled to industrial carbon capture and storage & usage technologies. We clearly have the off-shore capability in our region. We also have a chemical industry desirous to access the gas produced, and as a country we could achieve better control of energy pricing and security. However commissioning such a new industry will require several £ billion of investment. In my opinion this is the big step change stuff that the Northern Powerhouse should be initiating.

Does the North East need a mayor? If so, who should it be?

I am not sure that a Mayor is needed but the factional nature of our local council structures do need to be sorted out. We have too many to deal with. Furthermore I do think we need visionary leaders from business. The likes of Sir John Hall in his heyday. WE need leaders that are less political and more focused on a big idea, with a plan with clear objectives and a real passion to deliver.

Will the Northern Powerhouse be realised in the North East?

The NE’s Chemicals, pharmaceutical, automobile industries already contribute much to the NP and with better and more focused support they could do so much more. I fear though that we will continue to tinker at the edges again and the really important step changes we need will remain on the horizon out of our reach.

I really hope that I am proved wrong. NEPIC and its members will continue to seek out investments for our region. We get no public sector support for this work but our local communities should be thankful that local industry still support these efforts in the face of huge international competition.

Thanks Stan.

Don’t miss our latest Northern Powerhouse coverage here. To nominate a North East business leader to be part of our new series, contact Jamie at jamie.hardesty@bdaily.co.uk.