AN “East/West divide” has opened up when it comes to business start-ups and firm growth in the Northern Powerhouse area, new research has found – with the North-East lagging behind its powerful neighbours.

The Enterprise Research Centre’s (ERC) Northern Powerhouse Local Growth Dashboard has found that in the most recent available figures (2018), Greater Manchester’s start-up rate was among the highest in the entire UK (58 per 10,000 population).

But while other parts of the North-West including Liverpool and Cheshire also displayed healthy start-ups rates, many areas east of the Pennines lagged far behind – with the North-East region having the lowest rate of just 19 per 10,000 people.

According to the Government’s definition, the Northern Powerhouse area stretches northwards from a line running between the Mersey estuary in the west to the Humber estuary in the east. It takes in 11 Local Enterprise Partnership areas (LEPs), which roughly correspond to local authorities.

Greater Manchester also had the highest proportion of start-ups that manage to reach the £1m turnover milestone within three years (2.2 per cent). East of the Pennines, start-up growth was generally slower, with the exception of Sheffield City Region (2.1 per cent).

But for firms scaling from £1m-£2m turnover to more than £3m, Cheshire and Warrington led the pack, with 9.1 per cent of firms there achieving this over the 2015-2018 period. On this metric, Cumbria (8.6 per cent), Sheffield (7.9 per cent) and Greater Manchester (7.7 per cent) also performed above the UK average (7.4 per cent).

Cheshire and Warrington also contain the highest proportion of so-called “high-growth firms” – those growing their headcount by an average of ten per cent or more over a three-year period. Areas in the east tended to show less dynamism, with the Tees Valley having the lowest proportion of firms falling into this category.

The ERC has presented its findings in a meeting convened by the Greater Manchester Growth Company – the organisation charged with boosting economic growth and skills development in the city-region – involving all 11 LEPS in the Northern Powerhouse region.

Mark Hart, ERC deputy director and professor of small business and entrepreneurship at Aston Business School, said: “While the current political rhetoric talks of ‘levelling up’, What we’re seeing in business dynamism terms is a clear ‘east-west divide’ emerging across the Northern Powerhouse region.

“Manchester and some other parts of the North-West seem to be forging ahead when it comes to creating a good environment for start-ups and early-stage firm growth. But to the east of the Pennines we’re seeing fewer entrepreneurs and slower growth.

“These findings may strengthen the case for investment in better east-west transport infrastructure. But policymakers also need to study carefully what some Local Enterprise Partnerships are doing to foster an enterprise culture locally and spread best practice.

“If the Northern Powerhouse is going to be a meaningful economic unit, we have to address the inequalities that appear to be leaving its eastern half decidedly under-powered.”

Tees Valley Mayor Ben Houchen said: “Ever since I was elected, I have championed the entrepreneurs, the innovators and the risk takers who are investing, growing and creating jobs for local people. Those who run our small and medium-sized businesses should be given all the help they can get to thrive in our region and, with the £35million business support fund that I launched we can make sure they are.

“Businesses and organisations in Teesside, Darlington and Hartlepool are leading the way in developing the industries and technologies of the future. We will be the home of the world’s first industrial-scale carbon capture and storage facility with Net Zero Teesside – something that can only be built in Teesside.

"The National Horizons Centre is a nationally significant centre for excellence whose researchers are conducting pioneering research for the biosciences industry. And with our proud heritage in the chemical industry we are home to start-ups doing ground-breaking work on turning waste plastic back into high quality oil and developing green jet fuel.

“All of this is part of a wider plan for the Tees Valley economy, which includes all of the money we are spending on skills and training, our revitalised airport , and the major transport infrastructure improvements.

“It is important for the Government to prove to the people of Teesside, Darlington and Hartlepool that the Northern Powerhouse means more than just Manchester and Leeds.

“It is fantastic that Boris has appointed Rishi Sunak as Chancellor so we have someone in the Treasury who will always fight for our region and put our interests first.

“This is just the start. We have the building blocks in place and we’re making great progress. We’re securing the investment that is creating the jobs now and for the future. But we cannot go back to square one, we cannot go back to a time when our region was not taken seriously.

“This just shows that our plan must work and that there’s more to do to create the businesses and the jobs that our area needs and deserves”