Northern Powerhouse

It’s one of those intractable problems that every government claims to want to solve, yet somehow, the can gets booted further down the road every time. The North of England – once a powerhouse of industry, now a byword for economic neglect – continues to languish in the economic doldrums while London hoovers up the cash, the investment, and, crucially, the talent. And yet, when you strip away the sentimentality, there’s a hard economic truth at play: investment goes where it makes the best return, and for decades, that simply hasn’t been the North.

Labour, of course, has a particular headache here. Its new power base is precisely where the country’s economic rot has set in deepest. The former industrial heartlands, once thriving on coal, steel, and textiles, are now struggling to define their future in a world where those industries are either dead or drastically diminished. The Tories, for all their bluster about ‘levelling up’, never truly cared about reviving the North – if anything, they’ve spent the last 14 years watching it decay while funnelling cash into the City of London and the South East. But now, Starmer and his crew actually have to deliver something tangible, or the political consequences will be severe.

The problem? Economic logic doesn’t always align with political necessity. If your goal is to maximise growth, you invest where there’s already momentum – high-tech clusters in Cambridge, financial services in London, advanced engineering in the Midlands. But if you abandon the North, you fuel resentment, deepen inequality, and create a gaping wound in the country’s social fabric. It’s a delicate balancing act, and so far, Labour seems paralysed by it. They know they need to act, but they also know that pouring money into places with little private sector appetite is risky. The failure of HS2’s northern leg is proof of that – half-measures and dithering accomplish nothing except annoying everyone equally.

The way forward isn’t complicated, but it does require courage. If the government is serious about regenerating the North, it has to do more than throw subsidies at failing industries. Instead, it should create the conditions for new, high-value sectors to flourish. That means tax breaks for tech firms willing to set up shop in Manchester, Leeds, or Newcastle. It means proper infrastructure investment – not just half-hearted rail improvements but a genuine, long-term strategy to make the North competitive. It means leveraging the region’s universities to create R&D clusters akin to Silicon Fen in Cambridge. And, crucially, it means decentralising government agencies and contracts, so the gravitational pull of the South begins to weaken.

But will they do it? That’s the real question. Starmer’s Labour seems more intent on proving itself ‘fiscally responsible’ than actually taking bold steps. There’s a deep-seated fear of being seen as reckless spenders, especially after the Tories have bled the country dry while somehow convincing people that it’s Labour who can’t be trusted with the purse strings. So we end up with timid, uninspiring measures instead of the radical action that’s actually needed.

The truth is, if Labour wants to hold onto its new northern heartlands, it has no choice but to act. The North isn’t asking for handouts – it’s asking for the tools to thrive again. And if Starmer’s government doesn’t deliver, they’ll find out soon enough that political loyalty, like economic investment, goes where the returns are best.

However, there's a problem with powerhouses in areas of high unemployment. In the late 1950s and early 1960s, the Conservative government was actively encouraging car manufacturers to establish factories in areas of high unemployment, particularly in Scotland and Wales. This was part of a broader industrial dispersal policy aimed at reducing economic dependence on traditional industries like shipbuilding and coal mining, which were in decline. Rootes had wanted to expand production at their existing sites in Coventry, but the government refused financial support unless they built the factory in Linwood, near Glasgow. The decision turned out to be disastrous for Rootes, as the remote location led to supply chain issues, high costs, and a workforce that was less experienced in car manufacturing. These problems contributed to the Imp's notoriously poor early reliability and, ultimately, the downfall of Rootes itself, which was later taken over by Chrysler in the 1970s. So, while Macmillan’s Conservative government didn't outright "force" Rootes to manufacture the Imp in Scotland, they made it a condition for financial support, effectively giving the company little choice.