Lord O'Neill, also known as "Mr Northern Powerhouse", is critical of the Government's levelling up agenda

Credit: Eddie Mulholland

When he took to the podium to deliver a rousing speech on levelling up Britain, Boris Johnson will have been hoping to win over the likes of Lord Jim O’Neill.

But the former Treasury minister and chairman of Goldman Sachs Asset management, nicknamed “Mr Northern Powerhouse”, was far from impressed.

“I thought this was going to be a really big speech,” the Mancunian says. “But when it came to what we are actually going to do about it and how we are going to measure it, it was completely lacking in any real depth.”

The address last month was supposed to set the agenda for the parts of the UK that have traditionally been left behind by Westminster.

But Lord O’Neill fears it created more questions than answers. The 64-year-old Baron of Gately has his own ideas of what might help northern towns and businesses level up.

The heavyweight economist, known for leading an attempt to prise Manchester United from the Glazer family’s control a decade ago, has joined a fund set up to help university spin-outs in the North of England.

He has joined as non-executive chairman of Northern Gritstone, which is seeking to raise £500m to back start-ups. The fund links up the universities of Leeds, Manchester and Sheffield with the aim of funding spin-outs.

“It is very much tied to the underlying focus of the Northern Powerhouse concept,” says O’Neill, an idea he helped formulate under the Cameron government.

“The UK has had anywhere between 16 to 18 of the top 100 universities in the world, around half in the north, and many in really poor productivity areas.”

Lord Jim O’Neill CV

Gritstone hopes to emulate Oxford’s achievement in spin-out companies. Oxford Sciences Innovation (OSI), launched in 2015 and notable for providing early backing to Vaccitech, was instrumental in developing the AstraZeneca coronavirus vaccine.

“We want to learn from its success,” O’Neill says, “and do some things that OSI may have been restrained from doing itself”.

It nearly didn’t happen. O’Neill says he initially turned down the opportunity to join Gritstone. “But I asked myself the question, would I be upset if someone else had the chance and not me,” he says, “so I thought I would throw my name in.”

Gritstone, he claims, is unique in that it brings together the intellectual capabilities of three universities, providing a huge pipeline of potential projects and PhD candidates that could be nurtured into future “unicorns”, or companies worth $1bn.

At a glance | What is a tech unicorn?

The project has been spearheaded by Andrew Graham, who joined as a director last year, and Russell Schofield-Bezer, a former top HSBC executive. Duncan Johnson, former head of private capital at FTSE 250 firm Caledonia Investments, has joined as chief executive, with O’Neill as chairman.

“There is a lot of rivalry between the cities in the north of the UK,” says O’Neill, “proud rivalry, so hats off to Andrew and the university’s teams for having the courage to do this.”

Gritstone expects to back around 20 companies per year. About 10pc of its funding will be allocated to spin-outs and start-ups from outside of its three founding universities.

While the Government’s own levelling up plans may remain nascent, there is interest in Downing Street in the fund. “Some of the PM’s advisers are very interested in us having some kind of lift off,” O’Neill claims.

Gritstone may have the support of No 10, but other projects appear at risk. A delay to the £39bn Northern Powerhouse Rail has led to speculation the project will be scrapped. “Politically, this would be much more important than HS2,” O’Neill says. “It is an unfortunate coincidence it was not mentioned in his [Boris’] speech and it adds to the suspicion it will be dropped.”

Boris Johnson’s plan for HS2 and Northern Powerhouse Rail

The Government has denied any plans to cancel the project.

As to other programmes that might actually be worthwhile to boost regions outside of the South East, O’Neill is a big backer of ramping up skills in cities across the North and of devolution, advocating for more power for regional mayors.

“At some stage there should be some discussion of local tax powers,” he says. “Andy Burnham [the Greater Manchester mayor] has mentioned this. There could be some kind of tourism tax. This is gaining some momentum.”

With Gritstone set to back dozens of promising UK start-ups, laced heavily with intellectual property, O’Neill says he supports the Government’s efforts to tighten up controls over foreign takeovers.

He adds that the “hostility to anything from China’’ can go too far and threaten investment in the UK, but Britain has for too long been “laissez faire” on how it deals with foreign investment.

“I wish it had happened a long time ago, that we had better principles for protecting our IP,” he says.

Having graduated from Surrey with a doctorate in Economics in 1982 and spending close to two decades at Goldman Sachs, O’Neill maintains a keen interest in economic indicators.

“I can see the reasons you would be concerned over inflation,” he says, after market jitters earlier this year, “but I don’t see evidence it is embedded yet.”

And on economic policy, he adds: “I think quantitative easing has outlived its initial usefulness. I think there is an aspect of QE that is levelling down. The scale of generosity is a sustaining factor for bond and equity markets, and obviously wealthier people have more access to those kinds of investment.”

Outside of work, O’Neill remains closely linked to Manchester United. He has renewed his opposition to current owners, the Glazers, after their attempts to break away and form a European Super League.

The collapse of the Super League was, he says, “quite possibly the most staggering own goal in international business I have ever experienced. But it is a crisis that won’t go to waste”.

With Gritstone, there is also a feeling that now is the time for the three universities to seize the moment and press on with levelling up the North faster than slow moving politicians.

“Hopefully Gritstone will achieve [in the private sector] some things that the mayors cannot do. It is unique,” he says.