Mike Hughes talks to Northern Powerhouse Partnership's Henri Murison

Cities are ‘the most powerful engines of growth almost everywhere’, he said, but they needed ‘more decision-making power to put their best ideas into effect’.

When he left office in 2016, business and civic leaders were determined not to let the idea leave with him, and the Northern Powerhouse Partnership was established with founding members including Drax, HSBC and Siemens. The group needed a leader to work alongside Lord Jim O’Neill as Chair and George Osborne as President, so they brought in former Newcastle City Councillor Henri Murison as director and made him Chief Executive just over two years ago.

Times have changed since the Osborne speech, so what does Henri think of the role of the NPP now that devolution has given so much new power to regions across the UK and a new Government is in Downing Street?

In the BUSINESSiQ boardroom in Darlington a few, he tells me: ‘I think the key purposes still stand and obviously the context now is to what extent have you got a government who’s willing to work with you?

• Only £5 for FIVE months of unrivalled business and news coverage. Just click HERE to sign up

‘The aim of trying to rebalance the northern economy – not by holding London back, but by actually closing that gap through us doing well here in this part of the country – hasn’t changed, but I think the responsiveness of government has absolutely changed.

‘One of the challenges of the tail-end of the last Conservative government was that their level of commitment to this agenda had waned considerably, and one of the intellectual problems with Levelling Up is that it was based on trying to correct for the consequences of the fact that our economy here is underperforming compared to the rest of the country rather than dealing with the root causes.

‘The only way to create better paid jobs and with it higher living standards is to bring private sector jobs to this part of the country and I think we have a government now with a growth mission who has every intention of seeking to pursue that agenda with real vigour. So now the key opportunity is to what extent can our mayors and the business community work in partnership with government to make that happen.

‘If you look at some of the economic performance in the North East, there are some real green shoots in terms of productivity. But the underperformance particularly of the region once you get south of Newcastle and before you hit Teesside has been a significant challenge economically, so we’re focused very heavily on what we can do to drive up regional productivity which requires long term public and private investment.

‘The mayoral combined authorities have the opportunity to take some of those longer term decisions, understanding all the different levers you have to pull. The point is that you don’t just build the Leamside Line and generate economic growth off the back of that. There is a benefit to doing that, but there’s a benefit if you do lots of things.

Henri Murison (Image: Sarah Caldecott)

‘If you sort out the skills system, if you better connect people to better paid jobs, if you do all those things at the same time, you have a disproportionate impact and I think the challenge of central government is that dropping a few quid here or there and not doing that in a joined-up way means you don’t get the full benefit.’ As he talks, I can see why Henri is in a good position to assess the region. He is independent, ready to work with anyone who has the best interest of the region at heart, and pretty much immovable in his belief that the North deserves better and can pay back belief and investment many times over.

He isn’t one to panic but rather to very swiftly assess and react, using commonsense against anyone who wants to move at a slower pace or in a different direction.

He tells me: ‘There is only a limited amount of money that can be invested by the public sector to be able to help generate jobs and opportunities in this part of the country. So you need to spend every penny effectively and that does mean challenging questions about making sure we get value for money and that every opportunity the public sector has is fully maximised.

‘The problem comes if you make decisions that might in the short term have some electoral benefit, but not the long term economic benefit. It’s up to the politicians in office to actually take those decisions and I think it’s a question for the public to judge if the mayors do what they’re supposed to do, which is to focus on the 20 or 30 year time horizon.

‘So taking that long-term view, we’re very lucky that working with some of the leading businesses here in the North of England, we are able to think through what role business can play to enable growth in this part of the country. What is the opportunity that business can unlock in something like net zero where we’ve recently published some evidence?

‘What we’re trying to do is to inform policymakers – whether that be our elected mayors or central government – about what the scale of the opportunities might be or some of the policy options they might have, but also importantly what the degree of private sector leverage would be. Across the north of England, you will get four to one investment in those areas – £4 of private investment for every £1 of public money.

‘But this isn’t saying that central government has to do all of this because the current financial position means there is no option for central government just to pay for everything. The opportunity is to what extent can the private sector come in and help deliver what we need. The extent to which we can unlock that is a huge opportunity.

‘There is a bigger prize than just the Tees Valley or just the North East, let alone the two of them together. Because remember, there is clearly shared economic geography not just between the Tees Valley and here, but the wider North East just to the north of where we’re sitting today, but there are also obviously shared economic challenges and opportunities that might stretch beyond the boundaries of one combined authority – so carbon capture and storage is not just about what the benefits will be to Teesside, it’s what the benefits will be to the whole of the North and to what extent can we use the lessons learned from these projects.

‘If you want freeports and you want combined authorities to be successful, they need to be genuinely delivering additionality – something that wouldn’t have happened anywhere else in the UK, if it hadn’t been for intervention. But this can’t just be about simply redistributing jobs within the UK from one relatively disadvantaged region to another, because that isn’t an effective model for what the public sector should be doing.”

His focus on public and private sector collaborations means that trust is vital, because when there is doubt it only takes a fraction of a second for decisions to be put on hold. The claims surrounding Teesworks were an obvious example – no corruption, but just the idea of an investigation and a list of changes to be made can be enough.

Henri Murison (Image: Sarah Caldecott)

He measures his comments carefully: ‘The very simple thing to say clearly is that the outgoing government did a review. There were actions that have been given to the combined authority that they have to deliver against and I think they’ll need to demonstrate to the new government that they’ve done those actions – because the key point here is that this is public money.

‘Obviously a number of private sector business people, including those who worked previously with the mayor and those like Steve Gibson have given their opinion that the terms of which this deal is now working is not in the best interests of the public in this part of the country, and that is a legitimate matter of public discussion. It’s not for me and you to take sides, but I do think it’s a positive thing that we have a proper debate.

‘Our mayors need to be open to scrutiny and challenge and I think a key point is that the public and taxpayers have a legitimate interest in making sure that money has been spent properly and as a believer in local democracy I want local people to be able to elect politicians who can make decisions for their areas.

‘I’m also a big supporter of there being appropriate safeguards and checks and balances, because if the whole point of this is we want to spend a lot more public money that isn’t through Whitehall then we need to have checks and balances for our mayors that are equivalent to the ones that exist in Whitehall.

‘The process has been gone through and will play out. But I do think that the fact there was a public debate about the rights and wrongs of these decisions – that people who were involved have given their opinion on decisions taken – is an important part of how the functioning democracy should work.

‘As an advocate for combined authorities and the role of mayors, you also have to be an advocate for those checks because whether a mayor or a combined authority has made the right or the wrong decision should go through the right process and we should be open to scrutiny and challenge. And that means as much as possible, the decision should be made in public, apart from where there are necessities to keep things private.

‘This is public money that doesn’t belong to anyone else, and you, as journalists in this building and your colleagues at other newspapers and publications, not only here in the region but nationally, have a right to be able to challenge and to report those affairs with a degree of transparency.’ One of the challenges for every business-focussed organisation in the North East is to balance growth priorities with the poverty that still has a stranglehold on so many families in the region. The misconception can be that millions are being pumped into major projects while families a few hundred yards away can’t afford decent food.

So is there a balance that can be struck between the two?

‘Child poverty is a big focus, but that isn’t at the expense of a focus on economic growth,’ says Henri.

Henri Murison (Image: Sarah Caldecott)

‘As an institution we are as equally focused on the challenges in education because so many of the children here in the North East of England – 10 per cent who are persistently disadvantaged – will underachieve at GCSE and have worse outcomes in the labour market.

‘We are as equally concerned about that as we are about the other barriers to raising productivity in the North East because poor transport links is on a par with educational standards and skills. They’re not divisible, but you can’t say one is more important than the other and while transport is what we would call a binding constraint – if you don’t improve transport, nothing else will work – fundamentally here in North East and in the Tees Valley there are significant challenges for employers because the people coming into the labour market do not have the requisite skills to be able to work.

‘So I don’t draw the division between those two issues in quite the same way, because if you want to address educational performance then you need to deal with the consequences and causes of poverty, particularly amongst our children in the region. You could create all the jobs you want but if local people don’t have the skills to take those jobs, then all we’ll do is import people from the parts of the country to do them, and that’s not the outcome the mayors are seeking to achieve.

‘It should be possible in an advanced economy to educate people effectively and support them to be able to do their best and achieve their potential regardless of their socioeconomic background, and be able to attract international investment. I don’t think those two things are contradictory at all.

‘One key point is that if you do both those things at the same time and you bring more innovation investment to the parts of the country like this one, both public and private, and use that innovation in order to make firms here more productive, then it is perfectly possible to achieve fairer growth.

‘Of course, there are things that would address child poverty that are very important, that would address wider inequalities in our society. But those things, as important as they are, are not the same as the things you need to do to address the fact that people’s outcomes into the labour market are worse.

‘If you look at our nation’s deficit, look at the fact that never mind 100 per cent GDP within two to three decades, we could be at 200 per cent debt to GDP ratio, we need to be able to have people paying more tax and paying more money and being less dependent on the welfare state system, particularly in work benefits, and that is only possible if you raise incomes and it’s only possible to raise incomes if you have more productive businesses that can afford higher wages.

‘We give equal status to our work on education and work on transport. We don’t draw a hierarchy of what’s more or less important, because if you want to address the productivity challenge in the North of England, you have to do all of it.’ Henri is in a serious business, with the biggest issues to be tackled and major government changes at regional and national level. But as with any job, there is fulfilment, satisfaction, even joy, at progress that can be made and the feeling that this is a better place because of what he has done.

He seems to find it difficult to accept congratulations or to pat himself on the back, perhaps because his mind is always set on the next meeting to be had until – if ever – his job is completed. But with a little manoeuvring, he admits to being proud of progress.

In our boardroom, with suitcase by his side for that next meeting, he says: ‘Having spent my early career in local government, one of the things that I’m really proud to see is that when I was thinking about how we could use transport as a way to unlock growth in Tyne and Wear and in Newcastle in particular, the tools to do that we’re not open to us.

‘I was a proponent of franchising the bus network in the North East over a decade ago, but the powers to do that were not ones that we had available to us. So I think my reflection having been involved in the Council when the leader, Nick Forbes, did his growth deal for Newcastle was that it was the early building blocks of the devolution scene we see today.

‘But then despite the fact Newcastle had an early and a very good deal with government, it’s then taken a long time to get to the point where the whole of the region is able to benefit from a similar arrangement.

‘Without doubt it’s a real privilege to have the opportunity to make any contribution to addressing some of these long-term issues and because it is in the business community’s interest for the environment that they operate in to be a more auspicious one, there are many successful businesses here in the North East who’ve achieved amazing things.

"That could be coming out of Tees Components, looking at casting and forging for BA and Rolls Royce or in Hitachi’s factory where there are huge examples of success. But in many cases, this is despite some of the things that could and should have been done to make this a more prosperous place, and the fact that central government has not taken those decisions is the reason why we now need to take more of them for ourselves.

‘I have every confidence that those now in those positions of political leadership like the one I used to have hold better tools to fix some of their own problems – so my ask of the Labour government is not for them to fix the North East or to fix the Tees Valley on their own, because I actually don’t believe that’s the right answer.

‘Instead, I believe that in a mature grown-up country the central government’s role should be to back all of those places and that’s why I’m so positive about the broader plans that our mayors are currently being asked to write.

‘We’re trying to create the opportunities and the preconditions for existing businesses here in the North East to do better and to enable startups – particularly from our universities which is something that I have been so lucky to see many examples of over the last few years – and finally to attract more investment into the region.

‘Because we must never forget that businesses can choose to be here and they can choose not to be here, and we have to create the right ecosystem and the right environment for them to choose this place.’ It’s easy to imagine his line of argument coming from a senior politician, standing in the Commons to debate investment. He has that tone and presence, but not the inclination.

‘I’m very lucky – and very grateful – that I’m an ex-politician at an age of life where I’ve been able to have a second career,” he says.

‘I think we’ve got some talented politicians here in the region and much more talented than I ever was and I have every confidence that the region has strong and effective leadership politically. But I do think it falls to not only ourselves but important organisations we collaborate with, like John McCabe and the North East Chamber of Commerce, to help to support those who may be in politics and want to help the business community.

‘I am really positive about the opportunity to change the environment for businesses in this region. The public sector’s job has to be to enable growth. That is the opportunity that they can take and I believe they have many of the levers now they need to do that and with a supportive central government, I think we can genuinely change the drivers of productivity in the North East and the Tees Valley.

‘Many of the decisions that need to be taken are for long term gain rather than short term, but the failure to take them for many decades is why we’re in the mess we’re now in as a country, and the only way you can deal with this country’s long term economic challenges is by raising productivity and you don’t do that overnight.’

• This interview was carried in the Autumn issue of BUSINESSiQ magazine. To order a regular free copy, go to Subscribe | BUSINESSiQ