The Northern Powerhouse is a regional grouping, of the North East, the North West, Yorkshire and the Humber and North Wales. First coined by the coalition government of 2010-2015 to drive investment in skills, innovation, transport and culture in northern regions of Great Britain.
Has the Northern Powerhouse initiative boosted construction activity in the region?
Five years on from George Osborne’s speech, the project is fully underway. However, figures from 2018 show the total value of construction contracts awarded in this region totalled £13.2 billion in 2018. This a decrease of 24.0% from the previous year. As an overall figure, how does this breakdown by sector?
Together with the Construction Products Association, we have created a ‘Hotspots’ map, which provides a regional analysis of construction contracts awarded in 2018. Accounting for local trends and particularities that aren’t always reflected at a national level. In detail, we looked at the residential, infrastructure and commercial sectors and identify ‘hotspots’ and ‘coldspots’ of activity in 2018.
Infrastructure construction activity in the Northern Powerhouse – 5 Years On
When the initiative was set out, just over 5 years ago, an emphasis was placed on the investment in transport. However, infrastructure contract awards totalled £2.1 billion in 2018, a 59.3% decrease from 2017.
In 2018, hotpots were in Liverpool, Calderdale & Kirklees, Conwy & Denbighshire, and North & North East Lincolnshire, which includes two of the top ten largest infrastructure contracts in the country. The £350 million Keadby 2 combined cycle power plant near Scunthorpe. And the £165 million main quay works for the Able Marine Energy Park at the Port of Humber.
Commercial construction activity in the Northern Powerhouse – 5 Years On
Commercial contract awards were valued at £1.3 billion in 2018, a decrease of 19.5% compared to 2017. Northern Powerhouse hot spots were Durham, South Teesside, Cheshire East, Cheshire West & Chester. And also included, Greater Manchester South West, Manchester, and Mid Lancashire. The largest contract was for the first phase of the Rochdale Riverside regeneration comprising a £70 million retail and leisure complex.
Residential construction activity in the Northern Powerhouse – 5 Years On
Focusing on residential contract awards, these totalled £5.8 billion in 2018, falling 13.1% from the previous year. Gwynedd was the sole hot spot. Liverpool featured in the top ten contract awards with two residential towers in 2018. The £65 million Lexington PRS tower and the £60 million Infinity Tower 1, part of a planned triple-tower development in the city centre. The largest contract award was in Preston, Mid Lancashire, for £160 million, which was the Preston Road development of 256 houses, alongside a neighbourhood centre and retail units.
Tom Hall, Chief Economist at Barbour ABI, commented. “The Northern Powerhouse scheme was set out to build the economy, but these figures do not reflect the ambitions of the strategy. All three sectors have seen a decline in 2018, infrastructure contract awards have seen the most substantial decrease at 59.3%. However, there are several hotspots in the regions, particularly in the commercial sector. The majority of this growth was due to the warehousing subsector, which saw a large increase in new contracts. Leading us to believe that consumer activity continues to move away from the high street to online.”