The ‘Northern’ Powerhouse

The received wisdom is that the Government is no longer committed to the Northern Powerhouse.

The summer was beset with stories that the project is on its last legs. That there is little love lost between Theresa May and George Osborne – chief architect of the concept – is well documented, and is likely to have contributed to the abandonment of several flagship projects of the previous Conservative Government, including the Northern Powerhouse.

May’s influential former advisors – Nick Timothy and Fiona Hill – were accused by Jim O’Neill, former Goldman Sachs economist, Treasury Minister, and leading advocate of the Northern Powerhouse, of opposing the idea and even refusing to use the term.

Andrew Percy resigned from his role as Northern Powerhouse Minister after June’s election to “pursue other challenges” and return to backbenches, despite being asked by Theresa May to stay in the role. Hardly a vote of confidence in the project. The following day, the chief executive of Transport for the North – a body formed under the Northern Powerhouse banner to transform transport infrastructure across the North of England – resigned, instead opting for a role in the private sector.

And in July, Chris Grayling, Transport Secretary, announced that the Government no longer intended to electrify the entirety of the TransPennine railway between Manchester and Leeds. This seemingly broke a promise made in 2015 by former Transport Secretary Patrick McLoughlin who said that electrifying the line was “at the heart of the Northern Powerhouse.” Just a few days later, Grayling gave his backing to the £30 billion Crossrail 2 project which will run through London, from Hertfordshire to Surrey.

This led many to suggest that, to all intents and purposes, the Northern Powerhouse is dead.

With its chief architect now out of Government, some people that I spoke to relayed this concern. “The Northern Powerhouse died with Osborne, there is no one with the status and intellectual capacity to push it forward,” a Labour councillor involved in Transport for the North told me.

Osborne is attempting to breathe life back into the concept. In a recent Financial Times article, he acknowledged “there was a risk that the Northern Powerhouse would end with my own political career,” and lobbied Theresa May to make it part of her premiership relaunch at the Conservative Party Conference. To emphasise his point, Osborne is due to speak at a Conference fringe event, fittingly hosted in Manchester, in his capacity as chair of the Northern Powerhouse Partnership. With May weakened by a poor general election result, and Timothy and Hill now gone, Osborne knows that this is an opportune time to reassert his vision.

Phillip Hammond, the Chancellor, has hinted that extra funds may be made available for the Northern Powerhouse in the Autumn Statement and that it remains “a key part of the [government’s] industrial strategy.” This will be music to Osborne’s ears. May and Hammond are keen to redefine their domestic policy agenda to prove that there is more to their premiership than Brexit.

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Undoubtedly, the project will require Cabinet support and committed funds to succeed. However, while Westminster faltered, the concept has taken on a life of its own. Countless business associations, network groups, enterprise initiatives, lobbying organisations and so on, have sprung up under the guise of the Northern Powerhouse.

‘Brand Osborne’ also helped to place the initiative on an international footing with successful marketing exercises to Chinese and Middle East investors. Remember the Chinese Premier’s visit to the Etihad Stadium, the home of Manchester City Football Club (itself owned by Sheikh Mansour, deputy prime minister of the United Arab Emirates). More funds may have been forthcoming had Osborne known that the Premier supports rivals Manchester United.

The project increasingly belongs to the North as well as the government departments of the South. However, the concept is not uniformly acknowledged or understood across the North.

The Northern Powerhouse has a distinctly urban feel. It is a political concept unashamedly grounded in Osborne’s modern, metropolitan worldview. If Britain is to compete on the international stage, the argument runs, the cities of the North must come together to create sufficient scale to attract investment and talent. London’s success must be emulated; “All this requires scale. You need a big place, with lots of people. Like London.”

Osborne’s 2014 incarnation is the reframing of the challenges and solutions in a well-trodden debate about rebalancing the North and South. In 2004, John Prescott, then Labour Deputy Prime Minister, instigated the Northern Way, a collaboration between three northern regional development agencies to address the national output gap. The visions have much in common, such as the need for investment in transport links to improve connectivity and more localised decision-making powers.

A key point of divergence relates to Osborne’s focus on cities compared with Prescott’s emphasis on regions. Perhaps it is not surprising then, that in Runcorn, despite being a town steeped in industrial history and located between Liverpool and Manchester, few people had heard of the Northern Powerhouse. Of the many questions I asked during my time in the Runcorn, none consistently drew as many blank looks as “what is the Northern Powerhouse?” This idea feels at home in the cities, and remote from mid-sized towns.

However, not all cities feel equally invested.

Simon Henig, leader of Durham City Council, told me that the North East has always felt isolated. Henig pointed out that in many respects, Newcastle and Durham have as much in common with London (a 3-hour train journey) as it does Manchester (2.5-hours). Efforts to improve transport links are dominated by talk of Manchester-to-Leeds, with little regard for Newcastle and Hull. At best, the Northern Powerhouse is currently a North-Western Powerhouse.

Even in the North West, there is an overriding sense that the concept belongs to Manchester. One Liverpudlian I spoke to referred to the idea as “Manchester’s Northern Powerhouse.” Even members of Liverpool City Council suggest that the Manchester Powerhouse would be a more appropriate title. “They are a country mile ahead,” one councillor told me.

This impression is largely informed by the comparative successes of the new Metro Mayors, elected in May of this year. Devolution of powers to city regions is one prong of Osborne’s vision – “global cities have powerful city governments,” like London. Where Andy Burnham has hit the ground running as leader of Greater Manchester Combined Authority (GMCA), Steve Rotherham, chief of Liverpool City Region (LCR), has got off to a stuttering start. Liverpool is bedevilled by political wrangling between Steve Rotherham and Joe Anderson, leader of Liverpool City Council, with reports suggesting that they no longer speak. When there is a breakdown in communication within a city region, it does not bode well for communication across city regions.

GMCA is the poster child for regional devolution. Its local councils formed as a combined authority long before others around the country, which has resulted in a more integrated governance structure. As such, relatively limited powers have been afforded to LCR in the form of control of the transport budget, plus enhanced powers in adult education and housing and planning. By contrast, Burnham has taken charge of far a more wide-reaching set of powers, including the £6 billion health and social care budget.

Manchester is seen to have got its act together and been rewarded accordingly.

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That something needs to be done is beyond doubt.

The UK is the most geographically unbalanced economy in Europe. Office for National Statistics data shows that London and the South East are responsible for almost 40% of total UK output. According to IPPR think tank, “Productivity – output per person – in London is 32% above the national average; indeed, London is the only region or nation of the country with above-average productivity.”

Following a tumultuous summer, the Northern Powerhouse appears to be getting back on track. For the time being, the Northern Powerhouse belongs to Manchester. As the largest city in the North of England, it is perhaps logical that Manchester is where Osborne chose to anchor his vision.

However, a doubling-down of shared political will is required for the Powerhouse to become a truly Northern reality.