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North East says better connectivity is key to improving productivity

Business and regional bodies say improved connectivity can drive productivity growth across much of the UK and contribute to closing the gap between the best and worst performing regions, according to a new study published today by HS2 Ltd.

Drawing on evidence from over 100 employers, local authorities and universities across the UK, HS2: Getting the best out of Britain, highlights the regional strengths of highly skilled manufacturing clusters, universities and research centres, and cutting edge technology entrepreneurs, but warns that more needs to be done to draw them together and realise their full potential. In the North East, the report shows how HS2 will help close the productivity gap by:

  • Making it easier for businesses across the North East 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;
  • Encouraging collaboration in the knowledge based industries in the region, in particular the software technology, gaming and creative businesses based in Newcastle and the growing number of software companies in Sunderland and DigitalCity on Teeside;
  • Better connect the region’s exporters by cutting journey times from Newcastle to Heathrow Airport by 1 hour and 20 minutes.

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.

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 prepare to exit the European Union.

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

Chris Grayling MP, Secretary of State for Transport said:

“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 for passengers – 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.”

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.

The report, to be launched at an event in Nottingham later today, demonstrates 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 the Midlands to gain better access to new markets, investments, and become more globally attractive.

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.”

In addition, the study finds that by bringing major cities closer together, HS2 would further support the distribution of the £17bn professional services market around the whole country. With office costs up to 80% cheaper in the North compare to London, and salaries up to 40% lower, huge efficiency savings can be made. Prime office rents in Newcastle are for example, one fifth of rents in the West End of London.

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

HS2 will serve around 30m people and directly serve 25 stations, joining up the dots between where we are now, and where we could get to as a country – a combination of more capacity and better connectivity will improve accessibility, and, therefore, productivity in the Midlands and the North – at the same time as easing the pressure on London.


HS2: Getting the best out of Britain here.

Download the North East regional briefing here.


Case studies:

Centre for Process Innovation – Redcar


The Centre for Process Innovation (CPI) is a UK based technology innovation centre and the process arm of the High Value Manufacturing Catapult. Established to support the UK process manufacturing industry, CPI collaborates with universities, SMEs and large corporates to help overcome innovation challenges and develop next generation products and processes. Operating across a broad range of technologies, we support our partners at every step of the way; from concept to market; business support to technology development; from scale up to supply chain intervention.

Leaf FM – Newcastle


Leaf, a mobile application, uses their online community to enable its users to discover, connect, and support music artists. It was founded in Newcastle in 2014.


Notes to Editors

HS2 Ltd media team contact details:

  • Monday to Friday (9am to 5pm) 020 7944 6149
  • Out of hours & weekends 020 7944 0550

Background information

The Government gave the go ahead for a UK high speed rail network, called High Speed Two (HS2), on 10 January 2012.

HS2 will be a Y-shaped rail network providing direct, high capacity, high speed rail links between London and Birmingham and on to Leeds and Manchester. HS2 will improve capacity across the rail network, shorten journey times between Britain’s major cities, boost the UK economy and create tens of thousands of jobs.

In 2012, HS2 Ltd submitted proposals to the Secretary of State for Phase Two of the project from the West Midlands to Leeds and Manchester. The Government announced its initial preferred route for Phase Two on 28 January 2013 and the public consultation on these proposals ran from 17 July 2013 to 31 January 2014.

The HS2 hybrid Bill for Phase One of the new railway between London and the West Midlands (effectively the ‘in-principle’ planning application for the scheme) was deposited in Parliament on 25 November 2013.

MPs debated and approved second reading of the High Speed Rail (hybrid) Bill for construction and operation of the line between London and the West Midlands in the House of Commons on 28 April 2014. MPs voted 452 to 41 to agree the second reading of the Bill.  Royal Assent, which grants powers for construction of the Phase One route, was awarded on 23 February 2017.

In November 2015 the Government confirmed the section of the Phase Two route between Fradley, at the northern end of Phase 1, and Crewe. Known as Phase 2a it will open in 2027 and deliver the benefits of high speed rail to Crewe; Manchester; north west England; north Wales and Scotland six years earlier than planned.

The Government made an announcement on the rest of the Phase Two route serving Manchester on the western leg, and the East Midlands, South Yorkshire and Leeds on the eastern leg on 15 November 2016.

HS2 Ltd is a company wholly owned by the Department for Transport (DfT). It is responsible for design, engineering and construction of HS2.