Tom Lees is Head of Corporate Affairs at Mace, which is a founding member of the Northern Powerhouse Partnership.
Theresa May has set out a political platform designed unashamedly to try and woo working class Labour voters into the Conservative fold. However, she faces a challenge that has bested at least two of her party’s previous leaders: how to make the Tories more appealing outside their South East heartlands. The North remains her toughest nut to crack, but our new research shows that a focus on regional infrastructure in next month’s Autumn Statement could hold the key.
First, the challenge. While the opinion polls currently give the Conservatives a substantial lead, they show the North to be an enduring problem for them. Despite Labour’s internal strife, they can still outpoll the Tories by double digits in the region, with the North East remaining especially suspicious.
Fiddling with the Conservative brand to try to ‘detoxify’ it to swing voters has been tried several times since 1997, but frankly hasn’t worked. What George Osborne recognised, with his Northern Powerhouse agenda, was that it is the language of hard cash that will convince northern sceptics that the Tories give a damn about their region. He spoke a great deal about investing in infrastructure, such as road and rail, but perhaps time ran out for him before any real political gains could be realised.
But a more constraining shackle was that, even though infrastructure spending is fairly unique in terms of its ability to provide a very direct and concrete payback, Osborne’s fiscal rules prevented him from splashing any serious cash required in the North. The new Chancellor, unencumbered by those rules, already appears open to borrowing for carefully selected investments that will realise a productive return such as infrastructure and housing. I hope he will use November’s Autumn Statement to invest in construction and infrastructure projects in order to create a jobs and regional growth stimulus.
Infrastructure investment has been shown to be fantastic for regional development because it is what is called ‘sticky’, creating benefits that remain in the local area – jobs, a better investment climate and a pull for businesses to locate. Not all regions are the same, however, and it is crucial to focus on where the returns – both financial and political – will be high. From our analysis, this is undoubtedly the North of England.
The first reason is simply because connections between northern cities are currently so poor that very modest measures can have huge benefits. A recent report we published, for example, with modelling by a former Treasury economist, shows that minor measures such as road widening or rail signalling enhancements which, if they shaved just 60 seconds off average travel times across the north, would produce productivity benefits that would add a whopping £1.6 billion a year to the regional economy.
Rail station upgrades are an example of projects that can transform a local area and bring in real benefits in terms of jobs and business investment. One of the projects a number of my colleagues have worked on, Birmingham New Street, is a fantastic example of this, and many readers will have seen it first-hand at this year’s Conservative Party conference.
New opinion research done for us by YouGov shows huge support for the idea that investing in new infrastructure is public money well spent, with 62 per cent of people supporting this idea, against only four per cent who disagree. This approval is especially high among voters in the North East at 70 per cent, indicating that a focused investment programme could have real electoral appeal and real benefits for the economy.
The big problem in all this has always been securing local approval for projects built near to people’s homes: the infamous ‘nimby’ factor. Even on this front, however, our research shows the north presents a comparative advantage over other locations.
We asked a national sample of respondents to imagine that a major infrastructure project such as a new motorway, rail route or power station was being developed near to where they lived. Unsurprisingly, many people were sceptical of the idea and average acceptance rates across a range of different types of projects were only around 20 per cent. Even so, people in the north tend to be the least likely to object to the idea of nearby projects and their acceptance rates are quite a bit higher, at around 25 per cent.
Suggest a fairly modest payment to local residents of £5,000, and average acceptance rates across a range of projects jumps 15 per cent, from 20 per cent to 35 per cent. People in the North of England are again the most ready to accept projects in this scenario, with 42 per cent acceptance. In fact, across the country this is the area most likely to be swayed by cash payments.
Given these results, we believe that there needs to be a properly-funded focus on northern infrastructure and within it, that a transport programme should be the priority. This would better-connect northern cities and produce immediate economic returns that would, crucially, stay in the region, whilst boosting opportunity for local people.
For government, this would be public borrowing of the better kind: spending that gives a clear and direct positive financial return. What is more, the projects needed to deliver this growth would be comparatively simpler to agree locally. Ultimately, this focus on northern infrastructure could just be the catnip that produces the electoral dividend in the north that has eluded the Tories for so many years.