People love London. It’s position as a capital and global city attracts people from far and wide. There’s so much going on and so many opportunities - both professionally and personally.
However, since there are more people it means that there’s ultimately more competition for resources, housing and talent - raising up prices. This results in most items bearing substantially higher price tags than across the rest of the country.
It’s not just consumers that’re facing the squeeze, as businesses often face higher operating costs in the South. The two biggest overheads for any business are property and people (i.e. salaries). As London becomes even more highly sort after, prime real estate costs spiral and even if you can find a suitable office space, rents are averaging £50 per square foot. Compare that to the growing metropolis that is Manchester and you could be paying just £30 per square foot. No wonder Amazon have spent a lot of time recently looking for a new Manchester HQ!
People costs are also less up North. A quick search on TotalJobs found that an average qualified accountant in Manchester is paid £47,500 but their counterpart in London would take home £62,500. Of course the London accountants are paying higher property rates and living expenses too, so they are often not reaping the benefits of an extra £15k in their pockets.
So, in a world of pending Brexit and general economic uncertainty, countless businesses are making the decision to move functions up North. For the British economy overall this must be a good thing, as an alternative to ‘off-shoring’ where everyone misses out. Through north-shoring, businesses are creating pockets of opportunity throughout the UK for workers whilst providing a less risky investment for themselves.
Not only is it cheaper, there is also an opportunity to tap into a less saturated pool of talent. HSBC moved its retail arm from London to Birmingham at the start of 2018, with 88% of their 2,000 jobs filled, three months before the move. For other companies, shared service functions are the part of the business that moves outside of London, enabling businesses to tap into the finance, marketing and HR experts of the rest of the country. Law firms are also realising the benefits of offering training contracts and junior legal work in northern cities with the first Magic Circle law firm Freshfields adopting a 40,000 square foot space in Manchester in 2015. Within a few months they had decided to double the space occupied with a spokesperson talking about the move as a reflection of ‘the evolving needs of the business.’
North shoring has also created hotbeds of expertise for other industries, including the media centre that has become Manchester following the move of BBC and ITV Granada to Media City in Salford. Now, creatives and media-ites are flocking to the region in the way they used to flock to London. And it’s not hard to see why.
The reality is that people are choosing the space and better quality of life associated with northern part of England. A recent article highlighted the difference in the property market across the UK with £500,000 buying you a two bed flat in Clapham, or a Grade II listed three bed house with landscaped gardens in suburban Manchester. And as northern cities like Manchester, Birmingham and Liverpool continue to be invested in, the facilities including restaurants, bars and leisure facilities are rivalling those of London, often for a fraction of the price.
London will remain our national capital and centre of commerce and for many businesses there is no alternative for the opportunities that a capital city office can yield. But for some businesses, having the opportunity to choose an alternative or additional location for their business can be a win-win for staff and businesses alike.