A Bank of the North

This post was written 3 years ago and therefore may not be as accurate as more recent posts.

The north south divide is getting bigger. No matter how fast Manchester pedals to keep the momentum, London just keeps growing.

I heard at the University of Manchester this week that most graduate jobs are within a 3 square mile area in the centre of our capital.

Those kind of jobs just don’t exist in Manchester in any kind of volume. Our business base is made up of small and medium sized businesses and a smattering of larger firms in the financial and professional services sector. Their recruitment processes don’t require detailed psychometrics and numeracy tests. So preparing graduates for graduate jobs inevitably accelerates this drift to London. Depressing. It makes us ever more determined to keep the pressure up on what needs to be done to create real business growth, wealth and fulfils the ambitions of our young.

If the challenge of re-balancing the economy is to help businesses, then the biggest issue that needs addressing is investment.

Since 2011 investment by banks into small and medium sized businesses has dropped by 14 per cent. That amounts to a drop of £20.7billion. Private equity isn’t bridging the gap, crowdfunding is a drop in the ocean, invoice discounting is a short term fix to get you access to your own money. Jonathan Diggines of Enterprise Ventures (EV), one of the region’s foremost venture capital investors, says business has never had it so tough: “I cannot recall it ever being as difficult for them to raise money as it is now.”

Even when you pause to applaud the £100million investment over the last three years by the European backed North West Fund, which EV partly manages, at zero cost to local government or the Treasury – it barely touches the sides.

What it has proved is a good social return and tangible economic returns. A new government needs to embrace this and go further and deeper with the ambition to draw on funds to invest in our next generation of businesses.

A really radical investment plan needs to strengthen political and economic institutions at a city region or pan-Northern level. Frankly, it doesn’t matter which.

What we need is a Northern investment bank, rooted here, not beholden to London or Edinburgh. Not a brand name, but something authentically of the North. It would be a far better investment than the billions currently being frittered away on business support by what passes for the Regional Growth Fund.

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