Is this Government serious about the Northern Powerhouse? If so, show us.

15.10.20

By Lord Jim O’Neill, vice-chair of the Northern Powerhouse Partnership

In 2015, I joined the Treasury under George Osborne, a year after his keynote speech calling for the creation of the ‘Northern Powerhouse’. Our aim was to rebalance the economy by reversing decades of underinvestment, in order to improve the lives and livelihoods of the millions of people who live here.

We began to invest in large infrastructure projects, most notably in transport and HS2. We identified prime capabilities in advanced manufacturing, energy, health innovation and digital, which could serve as value added businesses and drive up productivity. We started to decentralise power away from Whitehall through the first of the devolution deals.

In 2017, six Metro Mayors were elected in Greater Manchester, Liverpool City Region, the Tees Valley, the West of England, the West Midlands and Cambridgeshire and Peterborough.

Unfortunately – just as we’d started to make headway – our progress was stalled by the arrival of a new government. Under Theresa May, the Northern Powerhouse project slipped further and further down the agenda.

What she and so many others have failed to recognise is that, far from being a thorn in their side, the North is a vast economic engine with internationally competitive industries. If given the right investment, we can hope to capitalise on these assets – including hydrogen and carbon capture storage – and add billions to the economy.

Since deindustrialisation, however, successive governments have ignored our region, leaving a cycle of decline where productivity levels lag far behind the national average -and even further behind that of Europe. As a result, the North’s potential has not, as yet, been unlocked.

Despite this, I felt hopeful when a new government was elected, promising swathes of investment for Northern regions and an end to London-centric thinking.

Instead, I’ve become increasingly frustrated by politicians who seem very happy to use ‘levelling-up’ as soundbite, and less ready to put their money where their mouth is. They need to spend more time actually addressing the problems at the root of the North-South divide.

We need to transform transport connectivity, including the full, integrated delivery of HS2 and Northern Powerhouse Rail. We need to improve education attainment levels, giving Northern children the same opportunities as their peers in the South. We need to give Metro Mayors and council leaders the tools to govern the areas they were elected by.

This Government is using the pandemic as an excuse for delaying devolution. They do so at their own risk. People across the country are recognising more than ever the effects of heavy-handed, centralised system. The test and trace system is overwhelmed. Nationals newspapers are told about further restrictions before local leaders. The Prime Minister can’t remember what restrictions he himself imposes.  

Metro Mayors such as Andy Burnham, Steve Rotheram and Dan Jarvis – who have had huge successes over the past few years – are rightfully worried that the revival of cities like Manchester and Leeds could fizzle out.

Measures such as the Chancellor’s winter recovery plan will go a long way in saving thousands and jobs and businesses. However, I worry that further lockdowns will kill any green shoots of recovery, that have been seen in parts of Yorkshire and the North West, if we don’t get a plan which can stimulate the economy in both the short and long-term.

We can’t afford to get complacent. ‘Levelling-up’ may be a handy slogan for many politicians but regional inequality is a lived reality for millions of people, whose education attainment or access to jobs and infrastructure investment is simply not at a level you would expect for one of the world’s wealthiest countries.

I still believe that there is a way forward. A Covid recovery and rebalancing the economy are not mutually exclusive – they go hand in hand.