2017 preview: The Northern Powerhouse

Steve Gillingham, Mace's Director for the North and board member of the Northern Powerhouse Partnership writes for Construction News about the Northern Powerhouse and what to expect for the region in 2017.

If you want a guide as to where the public sector’s focus will be over the coming year, you could do worse than look at the intersection of the recent Autumn Statement and the stated priority areas of the Northern Powerhouse.

The most obvious area for growth, with £28bn over 10 years announced by the chancellor, is in the infrastructure and transport sectors. Regionally, Transport for the North has set out its stall in its Northern Powerhouse Independent Economic Review.

TfGM frameworks are up and running and the Sheffield City Region Infrastructure Investment Report has just been released. As well as highly publicised improvements to east-west rail connectivity, there is a plethora of other rail and road investments detailed. One can expect expansion of the logistics business along the routes, continued investment in the ports run by Peel and ABP, and ongoing investment in airports at Liverpool, Leeds, Manchester and Doncaster.

Another key area of infrastructure investment will be the energy sector, with ongoing onshore and offshore developments in the Humber and Mersey estuaries relating to wind power, plus preparation for the next two planned nuclear power stations at Wylfa (Horizon) and Moorside (Nugen).

Skills pressure

The main challenge facing these projects has to be the availability of skilled engineering designers and operatives to deliver the schemes. With HS2, Crossrail 2 and other major transport investments, there is bound to be immense pressure on available skills in this sector.

In the Sheffield City Region, the local enterprise partnership, local authorities and universities are all working effectively together. This should drive funding for innovation and continued investment around advanced manufacturing, including businesses taking advantage of the start-up loans announced by the chancellor. Such efforts should also encourage further expansion of digital enterprise businesses including telephony, media and banking, which are all making their home in the North.

Housing in the spotlight

We cannot ignore the continued gap in affordable housing or the response of the developer market in delivering a private rental sector for those who do not expect to be able to buy for a decade. All of the major hubs within the Northern Powerhouse have planning applications live for PRS developments and/or student residential schemes.

These projects need to go high to achieve the required rate of return on the land, so having high-rise expertise is bound to be an advantage. On the affordable side, perhaps this is the year when we will see DfMA start to close the supply gap for housing, especially if the L&G Homes model proves a success.

Clearly there is still uncertainty in the market. Investors don’t like unpredictability and businesses don’t yet know how Brexit will affect the economy. Economic forecasting appears all guesswork for the time being, but for international investors there is no doubt that the depressed value of the pound means their currency is burning a hole in their pockets when it comes to potential UK investments.

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This opinion piece features in our Northern Powerhouse section.

Portriat of Steve Gillingham