The mayor has unveiled a new model for economic growth with a first-of-its-kind fund to back projects in every part of the city-region
It all started in a backroom at the Lowry in Salford where Greater Manchester’s 10 council leaders, chief executives and the mayor assembled for a meeting. Like those before them, this new generation of leaders decided it was time to do things differently.
Greater Manchester’s economy has grown rapidly over the last decade – faster than anywhere else in the UK – but many have not felt it. And while attracting investment around the city centre may have become easier, other places are still struggling to finance projects.
Everyone agreed something had to be done. Exactly how and when the left-behind areas would benefit caused contention.
Backed by others, Oldham council leader Arooj Shah kicked off when the first list of projects was presented, the Manchester Evening News understands. That initial list, which focused on investments with a faster rate of return, offered nothing for her town, she argued.
Other leaders agreed, complaining that their boroughs too had waited long enough for investment. But there was more to come.
Other pots would be rolled into the £1bn GM Good Growth Fund which was announced this week, allowing for a wider spread of investment. The idea is that, through a mix of loans and grants, more lucrative schemes would help fund longer-term investments.
Reflecting on the row, Andy Burnham said leaders in the north of the city-region were ‘right to challenge us’, agreeing that they ‘can’t wait forever’. The Labour mayor has been credited for listening to those leaders and bringing back a more palatable proposal.
It comes as speculation about the Greater Manchester mayor’s political ambitions continues with some cynics suggesting this week’s announcement is part of a leadership campaign. Whether or not that’s his intention, the move sends a strong signal to Westminster.
Less than a week before the budget, Greater Manchester is showing the country how to do growth. And as Reform UK continues to lead the polls nationally, tapping into frustration felt in ‘left behind’ places, the need for ‘good growth’ is more important than ever.
“There’s a real frustration that the economy doesn’t work for people,” Praful Nargund, director of the London-based Good Growth Foundation, says. “Even in places like Greater Manchester which is the fastest growing region in the country, people don’t feel that.
“This is the kind of approach that could deliver good growth across the country,” he says of the fund which he describes as a UK-first.
The £1bn fund is a new take on the model pioneered by the late Manchester council boss Sir Howard Bernstein who, a decade ago, secured a £300m pot from the government, used to finance schemes that the private sector would not. It was a success.
The cash loaned out generated interest and was recycled when paid back, making around £1bn available to developers over a decade. But, controversially, most of the money went to one company, Renaker, which used the loans to finance luxury flats in the city centre.
It was time for a new approach. One that builds on this model but starts to close Greater Manchester’s own north-south divide.
The Housing Investment Loans Fund, which was extended by the government earlier this year, will now be rolled into a wider package of loans, some of which will be available at subsidised – rather than purely commercial – rates. The £1bn fund will also draw on Greater Manchester’s integrated settlement which was secured in the latest devolution deal, giving leaders more flexibility over how it’s spent.
The Greater Manchester Combined Authority (GMCA) will borrow up to £150m too while a further £300m will come from the Greater Manchester Pension Fund. This mix of sources means that the GMCA will be able to allocate funds through grants, loans and equity.
And crucially, it means that projects which are harder to finance can be subsidised by the proceeds of more lucrative investments. In a speech in Stockport on Thursday (November 20), Mr Burnham vowed that this ‘patient approach’ to regional investment that Greater Manchester is pioneering will ‘bring about a level of simultaneous development we have not witnessed here since Victorian times’.
How is he so confident it will work? The answer lies in Stockport, which has already started to benefit from the city’s success, he said.
Rather than seeing the city as a rival, Mr Burnham told the event hosted by the Good Growth Foundation, the town now realises its proximity to Manchester is a strength. The markets were slower to realise this and the public sector still has to step in.
Lacking private investment, leaders in Greater Manchester agreed to put public money into a residential block linked to the new Stockport Interchange. “Already that development to which the market wouldn’t lend is fully let,” Mr Burnham boasted in his speech.
So where to next? Oldham town centre, Wigan Pier and Prestwich are all set to benefit from the first round of funding next week alongside nearly £100m for three schemes around central Manchester which are expected to deliver a faster return on investment.
Papers reveal that 69 housing schemes, which together would deliver 21,961 homes, have been put forward for consideration while a further 28 employment schemes, creating 20,561 ‘direct jobs’, are also in the mix. For now though, just 31 projects have been named.
Of these priority schemes – three in each borough with an extra one in Manchester – 13 are set to have funding approved at a GMCA meeting next week with a further four to be taken forward next March. Additional projects will be announced every six months or so.
According to Mr Burnham, the £1bn fund is expected to ‘unlock’ £3bn of private investment with ‘just enough’ public money going into projects to give the markets the confidence to invest in these developments. But ‘good growth’ isn’t just about geographical spread.
The mayor also wants to link the fund to his Good Employment and Good Landlord Charter as well as his plans for technical education. Companies accredited as members of these charters, or those who join one or both, will be in a stronger position to get funding he says, while new requirements about creating T Level work placements and apprenticeships will be added to the procurement process.
Dr Sarah Longlands, chief executive of Manchester-based think tank CLES, describes the fund as ‘fiscally creative’. She says the Labour mayor is ‘making the right noises’ when it comes to building community wealth and procurement that supports the local supply chain.
“People here in Greater Manchester need to feel that their lives are changing for this investment to be considered a success,” she says, “so who builds these homes, who can afford to live in them, who new jobs will be for and whether new office space is accessible to small local businesses, will all matter.”
Not everyone is satisfied with the plan. Some fear that political priorities will be favoured over financially prudent investments while others worry that the GMCA will act like the Treasury, prioritising investment in the places with the highest and quickest returns.
But as far as Mr Burnham is concerned, the approach is both bold and prudent. “I don’t think we could seriously change the prospects of the north of Greater Manchester without an approach like this,” he told the Manchester Evening News. “This is about closing our own North-South divide.
“You’ve heard us say that before but this is a very, very serious attempt at doing that.”
For now critics may be entitled to be sceptical. The £1bn fund may mark a break from the past, but this one will be no different unless the benefits reach the places where patience is running out. For all the talk of ‘good growth’, people will want proof and soon.
