September 15, 2017

Osborne’s northern brainchild withers

Osborne’s northern brainchild withers

A neglect of smaller towns and communities – the councils of which are forecasted by 2020 to face an average funding black hole of £5.8 billion – means a true northern powerhouse can never be realised, says Elizabeth Cronin.

It has been more than three years since the then-Chancellor George Osborne announced to the world the need for a ‘northern powerhouse’. The promises of connecting the ‘great’ northern cities like never before through enhanced rail links and investing significant amounts of public money into its science and technology industries now feel as distant as that leading light of the Coalition government who made them. Likewise, though absent from the forefront of government machinations, they still circulate in its backbenches and backchannels of influence, particularly in the Evening Standard Osborne now contentiously edits.

A month ago, Transport Minister Chris Grayling put the brakes on plans for both the electrification of the train line between Manchester and Leeds, and the upgrading of outmoded platforms of Manchester Piccadilly, and scrapped altogether the electrification of the lines between Nottingham and Sheffield and Cardiff and Swansea. Although Grayling argues total electrification – cheaper and greener – is no longer necessary because of his intention to introduce ‘bi-mode’ trains that run on both diesel and electricity, his announcement of the policy shift on the last day Parliament met before its recess certainly gives the impression of ducking debate. After just earlier this year gravely encouraging consumers to have a “long, hard think” about whether to buy diesel or low-emission cars, it is now uncertain whether he intends to take his own advice.

The dedication of the current administration to the northern powerhouse envisaged by Osborne is – perhaps predictably – lacklustre. Though, the devolution of powers to the regions was a critical cornerstone in its inception and Theresa May did oversee the election of the Mayors of Greater Manchester, Liverpool and Tees Valley this year. Though a welcome and solid gesture, without proper fiscal support from central government it can only amount to a shifting of accountability for the inevitable shortcomings of the cash-strapped local authorities that have struggled under austerity for nearly ten years.

In fact, Osborne’s brainchild is focused only on the North’s biggest cities. A neglect of smaller towns and communities – the councils of which are forecasted by 2020 to face an average funding black hole of £5.8 billion – means a true powerhouse can never be realised. Hoping that improving the biggest areas will allow the surrounding areas to take advantage in any meaningful way is unlikely in an era of cutbacks, especially as many of these communities still reel from the economic impact of the decimation of the mining industry. Even if the devolution and proper funding of Osborne’s ideal were realised, the concept still does not go nearly far enough in empowering every part of the region to enjoy something close to London’s booming growth: the thinktank IPPR North found government spending per head is £1,943 in London but just £427 across the North.

Investing in London and the main cities of the north is incredibly important, especially as the UK’s exit from the EU throws up a period of increased uncertainty and potential competition with other European cities for international business. At the same time, the side-lining of smaller northern towns threatens the realisation of a fair and balanced society. The northerly reality of affordable homes ruled out a relative lack of job prospects sees a brain drain of young talent pouring out of quiet areas, only bolstering the overcrowding and crime of Britain’s major cities’ housing crises. IPPR North has therefore concluded that increasing the industrial output of the smaller cities that make up 33% of the North’s economy is even more important than transport connectivity in making a viable northern powerhouse: cash injections into Manchester only solve surface problems.

As Osborne holds May’s feet to the fire on this, most recently asking her to commit to a northern HS3, it is unlikely even his lofty ambitions go far enough. The jarring absence of Lancaster, Preston, Wigan and Durham from the smorgasbord of political promises means progress can only falter; the jobs wrought from investment in all areas of the North, most especially in those even still yet to recover from the mining decline, would go a very long way towards the Premier’s vision of a country that works for everyone.

3.33 avg. rating (71% score) - 3 votes
  • Grammar Grub

    The Great Northern Powerhouse is yet another attempt by the EU to regionaiise a country called Europa.

  • gunnerbear

    Actually not as it happens…that’s why I put the links in…

  • obbo12

    Oh look its chippy northerner blaming everyone else .

  • gunnerbear

    “By ending collective national bargaining you cant take into account the variation in cost of living.” Surely you mean “..can take into account…”

  • gunnerbear

    Bristol – University town….and the port is (from memory) the UKs best linked port in terms of road and rail connections for freight. Plus of course, Bristol wasn’t written off in the ’80s by HMG. Then of course over time, even the car makers left, attracted by better sweetners offered by other nations as HMG* stood by and didn’t give a damn. * – HMG all colours…..even from the ’60s… “It is on the question of the impression given as to current development and plans for future development that the language of the Rochdale Report appears to many of us to be so discouraging, for it has the very limiting phrase for the time being effort at both Liverpool and Manchester should generally be concentrated on making the most of existing facilities”. I have already indicated that that has disappointed Merseyside when compared with the way in which Southampton, 1298 Tilbury and Glasgow, for example, have been treated.

    I hope that, if he is able, the Parliamentary Secretary will give an assurance that this lack of emphasis on the importance of new port development on the Mersey does not reflect the Government’s view of the relative importance of development of Merseyside compared with development elsewhere.” http://hansard.millbanksystems.com/commons/1963/jul/10/ports-rochdale-committees-report-1 Exporters like the car firms also chose Bristol as a key ‘exit point’ for their vehicles. All the investment that the public cash created for Bristol was never replicated in Liverpool. Once that public cash flowed to Bristol, private cash followed… http://www.swcouncils.gov.uk/media/SWRA/RSS%20Documents/Technical%20Documents/02.08_Bristol_Port_Economic_Assessment_Full.pdf Slowly, Liverpool is turning round (and again I’m sure you’ll note the key references to large amounts of public cash being used to attract private firms)… https://www.ft.com/content/83245b96-e459-11e5-bc31-138df2ae9ee6

  • gunnerbear

    “Just go full on unilateral free trade and watch us reap the wealth…” Well played….your plan (or Miford’s if you prefer) has just ended manufacturing in the UK.. “Minford admits his model predicts that the policy would cause the ‘elimination’ of UK manufacturing….” http://blogs.lse.ac.uk/politicsandpolicy/the-britain-alone-scenario-how-economists-for-brexit-defy-the-laws-of-gravity/ http://www.chroniclelive.co.uk/news/north-east-news/mps-react-after-vote-leave-11269819 …so why do you want thousands of UK workers to lose their jobs? Why do you hate UK workers employed In the UK manufacturing sector?

  • obbo12

    Again, both Bristol and Liverpool were both industrial port cities. Why is Bristol’s economy doing well and Liverpool isn’t. Why the difference?

  • gunnerbear

    I agree but again you’re describing a symptom not the cause…. 🙂 A tiny amount of housebuilding… …plus mass deindustralisation so there are no decent jobs in an area……plus the sell off social housing and not replacing the RTB units sold… …plus mass immigration…. …has wrecked the UK housing market… 🙂 Governements of all colours have f**ked up royally.

  • obbo12

    Err lenders won’t give you mortgage at 10 times salary.

  • gunnerbear

    That explains the current situation, not the why bit….

  • chrisjones2

    Post Brexit we can support developing the North through policies like Regional Aid that will make a real difference in building critical mass in some industries but there is no evidence that investing in trains helped this post about 1918

  • obbo12

    Because the house prices are too high. I live in the south west and local house prices have gone up by 17% over the last two years. All the local hospital non doctors have to commute 20 miles to work to find somewhere they can afford to buy. A one bed flat costs 220K . Things get even worse the closer you are to London. The average house price in London is £600,000, how you going to buy a house on a top whack of 32k a year.

  • gunnerbear

    Yep….or if public cash is used, not a single person in a firm in that zone to be on a ZHC, not a single NMW job, no sub contracting. If the firm wants to be able to use ‘public goods’ paid for by the taxpayers, then the firms can pay it’s workers decent cash in return for goodies like very low CT and the like.

  • gunnerbear

    Okay then snowflake, if ‘scum’ is bit too rough for you, where do you stand…….with the workforce or the greedy c**ts in the boardrooms of major firms awarding themselves ever greater rates of pay whilst expecting taxpayers to top up low wages? Are you with the workforce or the likes of Sir Fred Goodwin?

  • gunnerbear

    Explain to me why a paramedic can’t afford a house in the South….

  • MrVeryAngry

    Not really. Most infrastructure spending ends up as windfall gains for landowners. Your illustrations of the M62 and the cross Pennine rail in your comment below are exactly my point. Economic growth has happened. Both of those links need upgrading. And the economies at each would happily pay for it as they know they are being strangled from ‘further growth’ by the absence of the improvement. But as you will know from Ricardo ‘all profits return to rents’ so the people to pay are the landowners at each end and along the route (as is the case with Crossrail which has a modest – about 1/6th – component of its financing from a business rates levy – it should be levied on ALL landowners of course, including private houses – but it’s better than nothing). Imagine getting central government out of this and having a locally funded LA combining with local entrepreneurs and businessmen to develop their areas?

  • Nockian

    They can’t understand it because their model is of a centrally planned mixed economy. Hence, to take away their boondoggles is to deprive them, first of the power to tax for the common good, second to act as the prime mover of all infrastructure projects and a force of the common good, third of a procurer of contracts in the private sector which result in political support from that sector and its investors (cronyism), finally as a prime mover in job creation through those projects.

    The state, bankers, businesses and the voting public are wedded to the Keynsian belief of the ‘the multiplier effect’ in which ever pound of Government spending results in nine pounds of economic growth. No one ever challenges those assumptions because those getting the contracts, providing the finance, the materials and getting the jobs, will always be the key supporters. It’s why it’s termed ‘investment’ instead of spending and it is why every interview in the media begins ‘we need more Government investment’.

  • obbo12

    No I do not want wage cuts. The biggest item on peoples bill is housing costs. There is a dramatic difference between house price inflation in the south compared to the North. Therefore the public sector workers in the south need higher increases than those in the North. A dual income family would be hard pushed to buy a house in London on nurses salary but could by a reasonable house in the North. By ending collective national bargaining you cant take into account the variation in cost of living. HM forces get base housing so do not have to pay the single biggest cost. Whats wrong with pay varying due to cost of living? Explain to me why its fair that an Ambulance driver in the North can afford buy a house and one in the south can’t.

  • ColdWater Economics

    “Infrastructure spending does not generally drive economic growth. It is in general the reverse.”

    I think there’s a lot of evidence that your ‘generally’ doesn’t apply. Infrastructure can drive economic growth. Growth can drive infrastructure development. Your dogmatism invites negligence.

  • ColdWater Economics

    Frankly, I stand against anyone calling anyone else ‘scum’. One cannot build a business, let alone a society, if your starting position is one of abusive hostility. Each and every business that ever survived more than a moment is necessarily a cooperative effort from all involved.

  • ColdWater Economics

    Just do it, and watch it become the fastest-growing region in Europe.

    What does one have to do to get a British government that can understand this? What’s the matter with them?

  • Nockian

    Absolutely. However, let the port put in the transport links, make it private and let the developers properly compensate property owners with private negotiated settlements which might include cash, shares, or other compensations. Once the state gets involved it will turn into an over priced, over time limit mess and the cost to maintain/police it will eventually make it unviable, at which point the state will close down the free ports.

  • gunnerbear

    “Whilst I’m almost wholly in agreement with this – can you imagine what a ‘free port’ special enterprise zone would do for Hull/Grimsby/Scunthorpe!” So long as national labour & H&S rules apply why not. No ‘easy hire and fire’ in those zones….no ZHC, every job way above NMW (including those on sub-contracts so even the cleaners and security guards benefit)…,….if the firms get the privilege of not paying taxes and getting infrastructure put in, the cash goes to the workforce…not the scum in the boardrooms awarding themselves ever greater rates of pay whilst expecting taxpayers to top up low wages..

  • MrVeryAngry

    Stuff ‘free ports’. Just go full on unilateral free trade and watch us reap the wealth…But in general to you comments, yes, except that infrastructure spending does not generally drive economic growth. It is in general the reverse.

  • MrVeryAngry

    Well, ‘their’ fishing industry was destroyed by an unholy alliance between the EU – sharing out ‘our’ fishing grounds as it was unfair to other EU nations – and Heath’s the next Labour government and then Thatcher’s government.

  • gunnerbear

    “Getting from Manchester to Leeds 5 minutes quicker will not change that calculation. I doubt that the current or last government had the strength for the fight with the public sector unions to end national bargaining.” So you want wages cut for workers…..c’mon then, how much should a nurse in Scunthorpe or Immingham earn? Do tell all? What happens to those in HM Forces & the Emergency services who are forced to move around the UK…does their pay go up and down as well?

  • ColdWater Economics

    I expect that’s a big part of the reason the North voted Brexit, actually.

  • ColdWater Economics

    Whilst I’m almost wholly in agreement with this – can you imagine what a ‘free port’ special enterprise zone would do for Hull/Grimsby/Scunthorpe! – and whilst I also have experience of the mind-numbing horrors of govt-led ‘regional development councils’, there are some bits of infrastructure which could really help. The most obvious, crying out for investment, is cross-country transport links, ie, M62 (death-trap though it is) and, spectacularly, a proper cross-Pennine set of rail-links. This is why the rapid post-election abandonment of the electrification was so so damning – it’s the one thing we could really do with, and yet was probably the quickest-dropped election promise in history. Instead, the money seems all to be going on the wretched HS2 project. Who could possibly make such a judgement call?

  • Nockian

    It’s interesting that many of us know exactly what is required and how to structure it. Those that know don’t want hand outs and ‘investment’. In a word we want and need freedom.

  • Nockian

    We don’t need ‘investment’ Done that, been there, got the T shirt.

    What the North needs, is what many smaller economies realise is the route to growth. A low tax, low regulation economic system with freedom from the kind of town planning that prohibits entrepreneurs and investment.

    Draw a line across the country at Gateshead and at York, let that be a giant development zone with local authorities managing all the taxes and spending in a competetive manner. No green taxes on energy, fracking allowed where feasible.

    We already tried the Government style investment through quango like ONE through Labour. It created massive waste of tax payers money without sustainable entrepreneurial growth. Government investment will never produce growth in the North except in short term fits as with Fujitsu, Siemens, LG, Samsung and now the latest white elephant bolting Japanese trains together. If we lift the burden on businesses to establish themselves in the North – be that engineering, services or finance-then there will be organic growth from within which is far more robust long term even if it looks a bit messy and haphazard from a central planning bureaucratic perspective.

    I’ve sat in many NE development meetings where grand new things and schemes were planned to use funding pots. No matter what was tried, the reality was a box ticking exercise that swelled egos of local big wigs political cronies but created virtually nothing except for a spending of the money in a much more careless way than it would have been spent had the poor tax payer not simply spent it themselves. We watched big companies come to the North with short term sweeteners that meant they didn’t really invest in much at all, so then, when times got hard, they felt no need to diversify/innovate, they just packed up and left.

    We took survey after survey to learn that the workless/ low skilled wanted jobs with a mile of where they lived, because transport costs and sparse public transport prevented them from making it feasible. That’s not a cry for more public transport, but a recognition that businesses have to be more diverse, employment flexible and local to centres where labour can be employed.

  • obbo12

    No, Shell and Ineos have sought licenses to drill. Those licenses are about potential profit in the future, not drilling now. If you have the rights to extract now, that means if the price gets back to $100 that you can extract quickly . Oil and gas extraction is a long term business and just because a company has spent money now on licenses and test wells does not mean that they intend to enter large scale production at the current price. Shallower shales around the world are going into production now.

  • Bemused

    But those are not the grounds on which the applications are being contested, but rather nimbyism and red/green political tribalism. Some huge and successful operators like shell and ineos believe it is economic and are putting their money where their mouth is. If it is uneconomic let them try and if it doesn’t work out a few holes can be filled in and nothing lost.

  • obbo12

    Fracking in this counrty is not economic with the current prices. The shale formations are deeper here than any other formation in use. The risk and cost of going deeper means, unless the price doubles, fracking will not happen.

  • Bemused

    Gas fracking is part of the solution to nearly all of the issues raised in this piece, why are the people with the “financial black holes” opposing it so vociferously? Just get on with it!

  • MrVeryAngry

    Hopefully the ‘funding black hole’ will lead to the HS2 boondoggle being scrapped as well.

    Turing to The North, it does not need any more government spending and there is no ‘black hole’. What it needs – the whole UK needs – is wholesale tax reform and reductions, and the scrapping of common national wage rates for tax consuming government employees which distort local labour markets. It is a myth, on average, that building ‘infrastructure’ (whatever that is) funded by transfer payments drives growth. It is generally the other way about, growth drives the need for infrastructure. Most infrastructer spending/subsidy ends up as rents anyway.

  • obbo12

    Few points need clearing up

    1 The line from London to Swansea is being electrified.
    2. First Great Western have purchased bi powered trains because of the Government’s decision to not electrify the stretch from Box to Bristol on the Bristol Temple Meads line.

    No amount of infrastructure spending is going to counter act the of effect of the public sector. Its the smart move in the North to go a for public sector job. The rates of pay, pension and job security versus cost of living means that taking a risk and starting your own business just does not make sense. Getting from Manchester to Leeds 5 minutes quicker will not change that calculation. I doubt that the current or last government had the strength for the fight with the public sector unions to end national bargaining.

    Both Bristol and Liverpool were port cities relying on heavy industry yet the last 60 years have seen the two cities economic fates diverge. Bristol is the largest city in the counrty without a mass transit system and yet the city is economically buoyant. Infrasturce will not create growth its a way politicians to point at something and say look we are doing something.

  • ColdWater Economics

    Whilst it may not seem so in London, this is a really important issue, both for the British economy and for its political health. The abrupt abandonment of the cross-Pennine railway electrification scheme so soon after the election leaves even those basically non-hostile to the government with a very bad taste in the mouth. And it is made much, much worse now that we all know the quite staggering shortfall in govt infrastructure spending in the North relative to London. Really, one can only go on so long with such planned and pursued inequalities before one rejects the party and the system which delivers results which seem to express such contempt.

    And it is ironic, is it not, that this is happening at exactly the time when Brexit finally opens up the possibility of economic policies which might revivify the region. Think what a system of ‘free ports’ along the coast of Eastern England could do! But it would require imagination, bravery and . . . some sign that people outside the M25 and Southeast actually matter. At the moment, we simply don’t have the evidence that this is the case. Written in sorry and perplexity.

  • Michael McDermott

    Grayling should spend an hour on the M/c Victoria Station over-bridge – the diesel fumes are over-powering.
    Northern Rail do not care a ‘expletive’.

  • SonofBoudica

    The headline should, given recent comments, be “Osborne’s Brain Withers”

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