The UK can’t keep relying on the south to secure its economic future, argues Clive Lewis, head of enterprise at the ICAEW
Why are some cities and regions better at creating businesses than others? According to the City Growth Commission, if the UK’s top 15 cities were to realise their potential, it’s estimated they would create an additional £79bn of growth.
A recent report from Enterprise Nation outlined the factors that contribute to the creation of new businesses in enterprising regions across the UK. In addition to a solid infrastructure and access to business support services, the report revealed that the presence of a sector-leading company is crucial to creation of new businesses in a certain area, as well as positive media coverage of the region, lower living costs and a forward-thinking local government.
The analysis was accompanied by a survey of members of Enterprise Nation, who were asked about the factors that contributed to an enterprise 'buzz'. Unsurprisingly, they listed some of the same things that are mentioned above.
However, the report also reminded us of the north-south divide. It revealed that 11% of businesses relocated after setting up, with 27% heading to the south east, 27% to the south west and 20% to London. Despite the higher costs generally associated with these regions, businesses said the main reason for their move was to be close to an existing customer, although lifestyle choice also played a part.
Five cities outside London were compared against the above factors. How did they compare?
Manchester comes out on top. The city has created an infrastructure that could host startup and established businesses and which has already facilitated the creation of a media cluster in the city. Moving the BBC to Salford has been aided by collaboration between the public and private sector and academia.
Brighton is hampered by its inability to attract large companies and its higher living costs. However, it has a positive media image and an entrepreneurial culture, as well as the highest density of digital companies in the UK.
Bristol ticks all of the boxes but lifestyle. It has eight separate funds to help businesses access finance as well as a good range of transportation links to the rest of the UK.
Sunderland only falls short on media coverage and lifestyle. It has 11 funds to help businesses access finance and there are plenty of large companies in the area including Nissan and Sage.
Northampton ticks the fewest boxes but highlights include synergy between public investment programmes for the region as well as the input of academia.
The report undoubtedly suggests that there are ways of rebalancing the English economy away from London and the south east. However, as Manchester has successfully demonstrated, it very much depends on a forward-looking local government that prioritises attracting investment to that specific region.