Reflections in the Northern Powerhouse

This week I spend two days at the Northern powerhouse Conference in Manchester trying to understand what it actually is, and how the kinds of hard technology (also called deep technology or really anything that requires more than IT to develop) would fit in.

After attending every session and listening to the panel discussions I came away with a slight sense of deja vu and a few positive impressions, and a few niggles that might need to be addressed.

The Northern Powerhouse Is A Thing – Especially In China

While still a nebulous concept without much in the way of leadership, planning, budget or strategy, the Northern Powerhouse has stimulated a great deal of thought about how to make the North of England a more productive place. Various statistics were quoted, but the overall impression was that the Northern Powerhouse region was around half as productive as the South East of the country. The solution to this productivity conundrum is believed to lie in providing better transport infrastructure and faster broadband across the region.

I’ll admit to being sceptical that the solution to anything is simply chucking money at it, and we need more joined up thinking when it comes to productivity. A question was asked whether there was a direct relationship between broadband speed and productivity to which the answer was a resounding yes from the participants on the digital infrastructure panel. I’m less convinced that a leap from 30Mb/s to 300Mb/s would have a significant impact on most businesses outside the digital sector.

I spent some of the conference with representatives of large Chinese banks who liked the Northern Powerhouse idea far better than most of the inhabitants of the Northern Powerhouse seem to. Perhaps this because regional projects are more common in China and have delivered demonstrable results. Accessing and harnessing this know how would be a positive step.

The outcome of my discussions was that if there is a credible investment case to be made then money is available.

 

Meeting Today’s Challenges, In 2020

This is a serious worry. Despite the Northern Powerhouse plan to exploit regional expertise in healthcare technologies and advanced materials these were hardly mentioned at the conference. In fact, there seemed little vision beyond the next two years, or any materials other than concrete and steel which I believe is a huge mistake.

Whether you prefer it to be called the 4th Industrial revolution, the rise of the robots, the marriage of physical and cybernetic systems, machine learning or artificial intelligence, a major change is already underway. Ignoring this means that by the time all of the infrastructure has been built it may be unnecessary.

There is a concern that huge investments will be made in widening motorways and laying fibre optic cables, projects that will be completed just as autonomous vehicles and 5G or even 6G will render them obsolete.

Often large projects like this take 20 years, and 20 years is a huge amount of time. 20 years ago there was no iPhone, Facebook, Twitter, Uber, Airbnb and twenty years before that the only computers were mainframes.

 

Remember When Leeds Used To Have Lawyers?

Leeds is one of the great Northern cities that successfully reinvented itself as a legal and financial centre. It made the transition from textiles to engineering to services in a way that was the envy of many other cities.

But legal services are already under threat from AI. Starting with paralegals and rapidly moving through most routine work from due diligence to conveyancing, artificial intelligence is beginning to replace while collar jobs. In 20 years will AI do to Leeds what Margaret Thatcher did to the coal industry?

As the impact of AI begins to be felt there will be changes to our cities and local economies just as significant as the rose and fall of manufacturing. The next to go will be white collar jobs in previously safe professions. I don’t hear anyone in the Northern Powerhouse community considering this.

The Northern Powerhouse in 2035 will be very different from today, both socially and economically.  Unless we try to understand the economy of the future we risk investing huge amounts to develop unwanted infrastructure while doing nothing to address the economic and social problems that technology will create.

 

The Northern Powerhouse Is Like A World Economic Forum Meeting A Decade Ago

When I first got involved with the World Economic Forum a decade ago meetings were dominated by important people wrestling with major current crises. No one had any time at all for technology as the assorted economists, bankers and management consultants at the meetings neither knew or cared about it.

A decade later WEF sees technology as a major influence on global economics (as it has always been). Whether that is the use of AI in high frequency trading or clean water using graphene a glance at the WEF web site will reveal as much interest in science as in macroeconomics.

The Northern Powerhouse was very similar in its  focus on building things and fixing things and a narrow vision that required little other than government money. Will it change and realise that the real drivers of economic growth are the 8, 20 or 27 great universities in the region as was variously mentioned by different speakers? Perhaps when there is agreement on the numbers it might.

 

Squeezing More Out Of Tired Infrastructure and Unskilled People

I wasn’t the only one raising an eyebrow or two when the head of Network Rail excitedly announced that they were beginning a program of digital signalling on the network. Are we to understand that cables, pulleys and men in flat caps are still running the network a couple of decades after the rest of the world went digital?

This seemed to be symptomatic of a lack of investment in infrastructure across the region – something only too apparent if you have the misfortune to experience the bizarrely named Trans Pennine Express rail link between Leeds and Manchester. Existing infrastructure is being made to work harder, with minor productivity gains though digitisation being offset by a lack of training in how to use the tools.

Skills, or the lack of skills was a common complaint, and this was countered by the revelation that the UK invests less in training than many other areas. This means that tools which should enhance productivity are not well enough understood to be effective.

The logical conclusion is that before we invest in infrastructure we should invest in people.

 

Widening Inequality and Social Unrest

The consequence of not investing in people will be widening inequality. Already some 20% of people do not have the digital skills needed to take advantage of the digital revolution. One speaker claimed that 65% of primary school, children will end up doing jobs that don’t exist today, which intuitively sounds right.

The idea of jobs, and even careers for life is already seeming rather quaint although this is not yet reflected in the education system. Investment in technology goes hand in hand with investment in training and retraining an agile and flexible workforce. It’s something we need to address now, not in twenty years time.

 

The Timid Northern PowerMouse

Finally, the ambition of the Northern Powerhouse seemed very limited, or perhaps non-existent. Building the kind of high speed rail links that France, Germany and Spain have had for decades was about as ambitious as it ever got.  I can’t see how playing catch up with the 1990’s is going to catapult the North into the big league of global economic powerhouses.

China, Singapore, Dubai all provide us with post Brexit models of how ambition, determination and money can come together to create word class infrastructure. Much of this involves a significant investment in science and engineering which has the potential to translate into sustainable jobs.  Building Japanese designed high speed trains for HS2 in the North East is a long way from sustainable – it doesn’t develop any re exportable skills or know how. Building a Hyperloop, maglev or fleets of autonomous vehicles on the other hand would require the development of skills and manufacturing facilities which would provide jobs for half a century.

For the Northern Powerhouse to be taken seriously it needs to have bolder objectives than a few railways. Something that the region can be excited about and feel proud of delivering.  If timidity and fear of failure are allowed to be the dominant characteristics of the project  then it needs to be put to sleep, and quickly.

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