Levelling Up – The North Is Already Several Steps Ahead

11th January 2022

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Levelling Up – The North Is Already Several Steps Ahead

On 15 September 2021 Prime Minister Boris Johnson reshuffled his ministerial pack and pulled out Michael Gove MP as the new Secretary of State for Housing Communities and Local Government who then promptly renamed his brief the Department for Levelling Up, Housing and Communities (DLUHC). Gove therefore becomes the ultimate arbiter of all things housing, planning and levelling up.

But what on earth is levelling up, you ask? And does it affect me as a businessperson?

I’ll come back to that shortly but let me start with the answer to a more important question… from a property sector perspective, what are the implications of Michael Gove taking this role?

Well, Gove is a beast. He’s a two-time Conservative Party leadership contender and was a founding member of the ‘Brexit club’ alongside Boris Johnson and became a prominent figure in the successful campaign to extricate Britain from the EU, against the odds some would say.

He is an exceptional orator, one of the most impressive of all parliamentarians in that respect. His sharp intellect is well known and was honed as an Oxford alumnus and in his former life as a journalist for The Telegraph, The Times, the BBC and Channel 4 in the 1990s.

Important to the context of this article though are these two things:

First, in the 2016 Conservative Party leadership race he swore that he would not run. And then did, moving to withdraw his support for his friend Boris Johnson as the very last minute and placing his own name in the ring. This damaged Johnson to such an extent that Johnson was forced to step aside unexpectedly.

The second thing is Gove’s record at the Department for Education. Gove was Secretary of State for Education between 2010 and 2014. His tenure was one of controversy and change whereby he introduced academies, cut the school building programme, restructured the school curriculum, reintroduced Dickens, Byron and Keats as staples of education and attempted to ensure that children ‘with bad spelling and grammar will now be penalised in exams’.

So, what has all of this got to do with the property sector and businesses connected to such?

The answer is that Michael Gove is a moderniser, a radical even. And he is bold as brass and unflinching in doing what he thinks best no matter what the consequences. Therefore, you can expect him to announce a significant new approach to policies affecting housebuilding, planning and regional infrastructure and investment.

In his first few days behind his new ‘DLUHC’ desk at Marsham Street, Gove has already put the brakes on his predecessor’s intended planning rules reforms which sought to remove local objection from various areas of the UK that were to be zoned as fit for redevelopment without recourse to the local council process. This was fought by even Tory MPs as being undemocratic and that it would lead to inappropriate and unbalanced housing development.

But the other announcement that he has made that may have passed you by is this one, and it’s significant.

‘Housebuilding and investment will focus on the North’.

This is the levelling up bit and forms the central government agenda, hence the mighty Michael is in charge of it.

Levelling up is the equalisation of investment, infrastructure, housing and jobs across the country. Since forever, Britain’s economy has focussed upon London and the South East and this slice of the country has enjoyed a hugely disproportionate economy represented by about 40% of all GDP.

And it’s ‘unfair’ says Government. Of course, it is in the Government’s best interests to promote growth in the north and in the Midlands given that the Conservatives took ‘Red Wall’ seats there in the 2019 election and rather wants to keep them in the next one.

With Gove at the helm, his determination to reform and rebalance will be relentless. His bias toward northern cities and towns will become apparent with copious announcements that will now place funding, subsidy and special treatment everywhere north of Milton Keynes.

Sites for transport hubs, rail stations, airports, housing sites, shopping and industrial parks and business centres will have Gove’s magic dust sprinkled all over them to entice them to come alive – if their latitude is above 52 degrees north on the map.

This begs the question, what of the poor southerners left behind? Well, and I say this as a proud Geordie with business interests in both the West Midlands and the North East

“It’s our turn to prosper now, thank you very much”.

Yes, I’m biased because it’s about time the rest of the country had the leg-up that London has enjoyed for centuries. After all, it’s the North and the West Midlands that have been the engine of Britain historically. In fact, we’ve literally ‘made’ the country by way of our manufacturing past.

Interestingly though, for all my support for Gove’s newfound fondness for cold, dark nights and cooling towers, he is not the catalyst for northern investment. Although he will no doubt take the credit for the next few years’ progress.

Because the overseas money already flowing into the regions is significant even now and accentuated by the recent £305m purchase of my beloved Newcastle United Football Club by Saudi Arabia’s Public Investment Fund (PIF), alongside PCP Capital Partners and RB Sports & Media.

This news alone will provide positive sentiment for the region with alleged figures of £400 million worth of further investment, regeneration and increased demand and mark my words, you will see Newcastle transform in the next decade and which is why I have just executed upon all of my land options here, bringing my purchase decisions forward so that I can start work on building more housing in the city right now.

This is not just about winning the Premier League (although we will, of course) but is about breathing new life into the North East as a whole and its economy.

The topical Newcastle United deal notwithstanding, investors from Hong Kong to Saudi Arabia have actually been ploughing cash into Newcastle, Manchester and Leeds for a while with the likes Abdulaziz Albassam, Chief Executive of AIMS Investments, telling the Financial Times,

“When we first wanted to invest in the UK we looked at London. Then we saw there were far more opportunities elsewhere. It was a real eye opener.”

AIMS has purchased a major stake in a northern headquartered property development company to carry out its northern strategy.

And Sabic, the Saudi petrochemical company is said to be close to agreeing a £250m energy facility deal at Wilton, in the Tees Valley, which will support thousands of local jobs.

Manchester Council too has partnered with the Abu Dhabi owners of Manchester City football club to build 1,500 rental homes in the city as well as working with a listed Hong Kong conglomerate to build a further 15,000 homes over the next 15 years up here.

It’s clear to me that with house prices in the regions outstripping London prices consistently and reaching heady double-digit heights in the last 18 months, these are all extremely canny moves.

Michael Gove’s levelling up is already in full swing and the North of England will ultimately return to its status as the country’s powerhouse. All the clever money, including mine, is betting on it.

James Forrester is Managing Director of StripeHomes.

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