The Northern Powerhouse and Why More Businesses Are Moving

Since the introduction of the Northern Powerhouse, both national and international companies have begun to migrate or expand their businesses into the north to benefit from what these cities can offer.

Join the Esme team as we look at how the Northern Powerhouse first started and identify some of the companies that have taken the plunge. We’ll also look at some of the reasons cities like Leeds and Manchester are attracting large companies over London.

The Northern Powerhouse was first introduced by George Osbourne in 2004 with the aim of increasing the northern economy by investing in skills, transport, culture and innovation. Mayors of these northern cities were provided with significant powers and budgets to ensure the decisions were made and executed appropriately, with the city and their resident’s best interests at heart.

Since the introduction of the Northern Powerhouse, the UK government has provided £3.4 billion to the north through growth deals, £70 million to improving schools, and a huge £13 billion towards transport and access. This investment has seen Manchester become the fastest growing city outside of London, yet still having up to 40% lower operations costs than London. Leeds has also seen a significant change in its economy – according to Leeds City Council, the city has seen a 34% increase to its economy over the last decade, and it’s predicted to grow another 21% over the next 10 years. These economic changes have made northern cities a cost saving and opportunity hot spot for companies looking to move or expand out of ‘the big smoke’.

Many businesses have already migrated to Northern cities in an urge to cut costs. In 2017 Burberry announced its plan to relocate 300 jobs from London to Leeds. The company estimated it would save a huge £100 million by doing this. Channel 4 has also chosen to migrate to Leeds by opening an additional headquarters in the northern capital, as well as moving 200 of its 800 London employees to the city.

There are a number of reasons companies are choosing to move or expand to northern cities, with the biggest being the financial benefits these cities can offer to the business itself and its staff.

According to Instant office space, flexible office space in London costs between £650 and £2500 per month. Yet cities like Manchester, Leeds and Liverpool offer space for a fraction of the price with Liverpool office space ranging between £250 and £300 per month. This means that businesses which decide to move or expand up North, could save up to 400% on their office rent each month.

Hiring new talent can also prove a significant saving for businesses who migrate to the north. According to Payscale, wages in northern cities are typically lower than in London – the average salary in London is £35,298, yet in Manchester it is £26,674 and in Leeds its £26,077 per year. This is mainly due to the fact that the cost of living is dramatically lower outside of the capital, with cities like Manchester being approximately 35% cheaper to live in than London. This can also help to attract and retain new talent as housing, leisure and food is typically more affordable.

Not only is relocating or expanding to a northern city cheaper, but it also gives businesses an opportunity to tap into a less saturated talent pool. The University of Manchester and Leeds are regarded as some of the best in the world, and according to Simon Brereton from Leeds City Council “three-quarters of graduates from Leeds Beckett stay in Leeds… [and] typically a third of Leeds University graduates get a job and stay locally”. The high retention of graduates in northern cities gives businesses a wide breadth of skilled graduates to choose from when hiring.