Could plans for new HS2 railway improve the UK's North and South divide?

New evidence from over 100 employers, local authorities and universities about the HS2 scheme, is said to demonstrate the regional strengths of the UK’s highly skilled workforces, education system and research centres.

However, it has been warned that more needs to be done to draw such areas together throughout the country and to realise their full potential in the economy.

David Higgins, chairman of HS2 ltd, said: “This report is the evidence that HS2 will boost productivity in the North and Midlands. This is a once in a generation opportunity to join up and amplify the many centres of excellence around the country, as we [exit the EU].”

“By improving the connectivity between our major population centres, HS2 will give businesses access to the skills, labour and services they need to change the economic geography of the country.”

The report shows that skills and research in the North and Midlands can match that of London and the South East. Cities and regions in the North and Midlands account for 32 per cent of the UK’s research staff working in universities with high quality research, compared to 35 per cent in London and its surrounding areas.

Despite this, it has been said that employers in the North are still held back by a lack of access to skills, with 30 per cent of businesses in Manchester citing lack of skills as a barrier to growth.

However, London continues to attract graduates from around the country with nearly half of its population at NVQ4 qualification level or above.

The report, to be launched at an event in Nottingham today (November 30), is to demonstrate that by joining up the major conurbations around the country, HS2 will enable a greater pooling of people and capital around the regions of the UK.

This connectivity will enable businesses in the North and Midlands to gain better access to new markets and investments.

Chris Grayling MP, secretary of state for transport, commented: “This study clearly shows transport investment is crucial to a strong and resilient economy. That’s why we are investing in all forms of transport including the biggest rail modernisation programme for over a century to improve services, providing faster and better trains with more seats.

“As Britain’s new railway, HS2 will deliver vital links between some of our country’s biggest cities, driving economic growth and productivity and helping to deliver the government’s Industrial Strategy.

“By bringing our major cities, regions and communities closer together we are encouraging business and innovation and building a Britain that is fit for the future with a stronger economy and fairer society.”

In addition, the study finds that by bringing such major cities closer together, HS2 would further support the distribution of the business and professional services market around the whole country, which makes up over 10 per cent of the UK economy.

Office costs are up to 80 per cent cheaper in the North compared to London, and salaries up to 40 per cent lower, so huge efficiency savings can be made.

It is estimated that relocating a 50-person-skilled legal back office from London to Liverpool could achieve annual savings of £1m.

Comparing London’s highly-efficient transport network with the connectivity that exists within and between city regions in the North and Midlands, the study argues that there is a direct link between productivity and connectivity.

Sir John Peace, chairman of Midlands Engine and Midlands Connect, added: “The Midlands economy is built on a strong advanced manufacturing base and is enhanced by a wide range of sectoral strengths, universities and research centres.

“HS2 is arguably the greatest business opportunity to hit the midlands in decades, benefitting both the East and West Midlands and collectively we need to be HS2-ready.”

HS2 will serve around 30m people and directly serve 25 stations.

A combination of more capacity and better connectivity is to improve accessibility and productivity in the North and Midlands at the same time as easing the pressure on London.

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