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How will HS2 contribute to closing the North East productivity gap?

Released today, the HS2: Getting the best out of Britain report has highlighted how HS2 will boost regional productivity across Britain through improved connectivity.

The work emphasises how the new high-speed rail network will give businesses access to the skills, labour and services they need to grow at a local level as well as creating vital links between other regions.

Despite controversy and criticism over the years from business voices in the North East, the government is insisting that HS2 will be hugely beneficial for the region despite its focus revolving around linking London, the West Midlands, Leeds and Manchester.

According to the government, HS2 services will join the existing rail network near York, with trains continuing to serve Darlington, Durham and Newcastle, providing faster and more reliable journeys to the East Midlands, Birmingham and London.

Looking at the North East specifically, the report shows how HS2 will make it easier for the region’s businesses to connect, both to each other, and to the manufacturing plants, suppliers, universities and research centres in York, Nottingham, Derby and Birmingham as well as new sources of finance, particularly in London.

Moreover, the work highlights how collaboration in the knowledge-based industries will benefit from improved connectivity, particularly in the software technology, gaming and creative firms based in Newcastle and the growing number of software companies in Sunderland and DigitalCity on Teeside.

In addition, the report shows how HS2 can help to better connect the region’s exporters by cutting journey times from Newcastle to Heathrow Airport by 1 hour and 20 minutes.

The North East is home to over 2.5 million people and contributes more than £45 billion annually to the UK economy.

Yet in the Newcastle city region, productivity is 87% of national average, and in the Tees Valley, 90% of the national average. Across the North East, only manufacturing has a level of productivity close to the average for England.

In terms of talent, the report shows that world-leading skills and research in the North East can match that of London and the South East.

Cities and regions in the Midlands and North account for 32% of the UK’s research staff working in universities with high quality research, compared to 35% in London and the South East, and high quality universities produce thousands of graduates every year.

Despite this, employers in the North are still held back by a lack of access to skills, frequently citing lack of skills as a barrier to growth. At the same time London continues to attract graduates from around the country with nearly half of its population at NVQ4 qualification level or above, compared to 30% in the North East and Tees Valley.

Jonathan Walker, Head of Policy and Campaigns, North East England Chamber of Commerce said: “We were pleased to contribute to this report and welcome its findings, which make clear the substantial economic impact first-class connectivity can bring to a region.

“We have backed investment in high-speed rail in order to improve the capacity and reliability of the national rail network.

“When fully integrated alongside other planned improvements to regional rail and public transport infrastructure, HS2 has the potential to unlock significant investment in North East England”.

Helen Golightly, Executive Director at the North East LEP, said: “The impact of HS2 trains on the North East is more than simply a reduction in journey times, it will enable faster and stronger business connections between the North East economy and other centres across the North and beyond.

“The North East is a forward-thinking centre for innovation and industry and we will be working to maximise the benefits for the region of this improved connectivity.”

The report will be launched at an event in Nottingham later today.

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