Manchester should not use tax incentives to lure firms away from London, warned those at EG’s Manchester Question Time. Chris Berkin reports. Photography by James White
Industry leaders at EG’s Manchester Question Time panned the idea of tax breaks for companies moving north, and warned that the northern powerhouse concept was becoming too Manchester-centric.
The notion of providing tax breaks for “northshoring” businesses was comprehensively rejected by the panel of industry heavyweights, who claimed such moves would be unsustainable.
Speaking to an audience of 200 industry professionals, surrounded by sweeping views of Manchester from the 10th floor of Argent’s One St Peter’s Square, they agreed infrastructure investment would be a far more favourable proposition.
Greater Manchester interim mayor Tony Lloyd told delegates that a subsidy would have “very limited value” if it meant companies “that don’t have the capacity to be freestanding here in Greater Manchester” relocated functions away from London.
“We want investment that’s sustainable in the long term,” he said. “The kind of movement we want is investment in underlying infrastructure that allows people to come to Manchester because it’s the place to be.”
Mills & Reeve real estate partner Caroline Hanratty agreed. She said that she did not see the need to “intervene with the market with tax incentives while there’s already momentum”.
“The incentives I’d like to come to the North West would be housing, transport, a quality workforce, education and healthcare provision. So if there’s money to be spent on drawing people away from the South East I’d like to see it spent on those areas.”
Glenn Howells Architects director Glenn Howells further shunned the argument for tax breaks, claiming the focus should turn more towards organic growth of regional start-up businesses rather than on striving to lure firms and government departments away from London.
Howells said: “The ambition was to try to draw out large government departments and have them in your city – the new conversation is about noticing there’s an outward migration of young people who live and work in London, and it’s about how you create an economy around that.”
London’s economic success has led many to speculate that it would begin to price out major corporate occupiers as rents and house prices outstrip earnings – a prediction reinforced by the recent moves of back-office functions out of the capital by law firm Freshfields Bruckhaus Deringer and HSBC.
However for Howells, growth outside the capital was not just about established companies moving to the regions, but about new firms establishing themselves there. He said: “For the sustainable long-term ideal, we’ll be growing our own headquarters which are located outside of London, because companies are starting in Manchester and in Birmingham. The old idea of drawing out old companies has got mileage but I don’t think it answers all the questions.”
For Apache Capital Partners managing director Richard Jackson, the northern powerhouse has made Manchester’s investment fundamentals “compelling” to his Middle Eastern investor base, and more effective than the “granular incentives of a council”.
The success and expansion of the London mayoralty and the subsequent devolution of mayoral roles to regional cities including Manchester had inspired overseas investors’ confidence in the UK regions, he said.
“When the devolution plans for Manchester were approved, that was seen as a really big thing – they like the fact you have someone in control who can manage the inevitable complexities and conflicts within your councils and the boroughs around that. One size doesn’t fit all – London can’t be right about everything and you can guarantee they won’t be right about many things in the regions.”
However, Savills director Jeremy Hinds argued that Manchester’s marketing acumen risked damaging the wider northern powerhouse concept.
“I’m not a fan of the phrase ‘northern powerhouse’. The phrase has become too synonymous with investing in Manchester. It has to be pan-northern – if we’re going to keep the idea behind it we need to build the brand more quickly.”
Lloyd agreed that the image of the region needed to incorporate “other powerful conurbations” such as Yorkshire and Merseyside, arguing that the prime minister’s recent trade mission to woo investors in Singapore and Malaysia had shown overseas firms that “the North was worth looking at”.
“The backing of the prime minister was helpful… and perhaps for parts of the world where London was synonymous with the United Kingdom, those days are over,” he added.
Time to shift housing focus to families
On housing there was disagreement among the panellists over the kind of housing stock the council should be focusing on. Apache’s Richard Jackson argued that the supply and demand imbalance, combined with changing demographics and shrinking affordability, meant the market was ripe for more private rented sector development to provide for young professionals looking for a full lifestyle.
However, Lord Matthew Taylor, chairman of the National Housing Federation and former government planning adviser, argued that the UK housing industry was “massively underdelivering” on a different kind of housing stock for family occupation.
“[Families] want a garden, a house, a community, good schools, a crèche and shops. It’s that group we are under-delivering on, on the premise that there’s not enough land in this country to build all those homes – and yet in England only 9% of land is developed and half of that is parks and gardens. Multi-occupation private rented is squeezing out families.”
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