According to the Institute for Public Policy Research (IPPR), the Government’s new £3 billion Apprenticeship Levy is likely to benefit businesses in London and the South East the most, once again raising concerns over a widening north-south divide.
The scheme came into force on April 6 with the aim of creating 3 million new placements by 2020, but the IPPR fears it will raise less money and have a smaller impact in areas outside of the capital and its surroundings.
The criticism followed former chancellor George Osborne’s call for parliamentary action to stem the flow of graduates from the north moving to London.
It paints a gloomy picture for the future of northern business, but should location still be an issue in today’s digitally-driven economy?
The Northern business boom
Despite the continuing appeal of the South, some of the biggest companies in media, tech and digital sectors have been moving in the opposite direction.
Lower business costs have played their part in the shift, most notably inspiring the BBC’s move from London to MediaCityUK in Salford in 2011. The landmark decision became a clear indication the North could now rival the South when it came to attracting major organisations.
Even uncertainty posed by the EU referendum might be playing a role in the resurgence of the North.
Research by audit, tax and consulting services provider RSM showed an increase in software publishing and development companies based in the North West, with the number of businesses more than tripling from 175 to 449 since the vote to leave the European Union last June. The North can now justifiably be considered as one of the UK’s leading technology hubs too; according to a report by the Tech North Investment Index, investment in the sector totalled a 10-year high £327m last year.
As a digital agency based in the North West, we have worked closely with clients based in London, including Haringey and Westminster Councils, without location or any concept of the North-South divide posing an issues. So why does location still continue to cause friction?
Given that the economic divide in certain sectors, such as digital, appears to be closing, what else can be done to accelerate a change in attitudes? Both government and independent initiatives have an important role to play in this. As a digital agency competing against major systems integrators, the introduction of the government backed G-Cloud and Digital Outcomes and Specialists platforms (collectively known as the Digital Marketplace), which has enabled companies of all sizes to fairly compete for public sector contracts, has played a big part in breaking the stranglehold of big multinational corporations.
Similarly, when it comes to changing attitudes toward the north-south divide, the importance of groups such as the Northern Powerhouse Partnership, an independent body set up to support the region’s businesses, cannot be overestimated. The Government’s pledge to invest £556 million in the partnership can only big a good thing when it comes to further improving infrastructure, skills, innovation and opportunities in the region.
While the South East might remain the UK’s top destination for business, it is clear the North is closing the gap. Northern businesses are no longer in the shadow of their southern counterparts and should now be able to compete on a level playing field.
And with the Government investing heavily in regional bodies such as the Northern Powerhouse Partnership and the continuing expansion of the North’s business and tech sectors, the fabled north-south divide could soon become a thing of the past.