We need to end Whitehall’s grip on the North

27.11.20

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

In last week’s Spending Review, the Chancellor announced a £4 billion levelling up fund, intended to be the light at the end of the tunnel after fifteen minutes of dismal economic forecasts.

It was a little underwhelming. Managed jointly by the Treasury, the Department for Transport and the Ministry of Housing, Communities and Local Government, the fund will require local areas to compete for money, rather than handing powers and funding to the directly elected Metro Mayors.

 For those of us hoping for a bigger say for these local areas, which have both the capacity and democratic mandate to lead the recovery, it was a setback. However, it is those areas yet to sign devolution deals that are of even greater concern. Places such as Cumbria – without a Mayor to deliver a coherent plan to government – risk wasting money on economically irrelevant projects, which will fail to address the UK’s fundamental spatial inequalities.

Levelling up can only be achieved by tackling the productivity gap at the heart of the North-South divide and – without transformational infrastructure – this simply won’t happen.   Developments such as the proposed £125m Eden North in Morecambe – an innovation-led project with the potential to simultaneously spearhead a green revolution here in the North and revive tourism in the local area – will be passed over in favour of cheaper, minor schemes.

Since its inception, the driving theory behind the Northern Powerhouse has been devolution. Working in the Treasury alongside then-Chancellor George Osborne, we advanced the case for the intrinsic value of empowered local leaders, directly answerable to their electorate.

In 2017, the first of the devolution deals were signed and we now have Metro Mayors in Greater Manchester, Liverpool City Region, South Yorkshire and the Tees Valley, with an election this May in West Yorkshire.  

While we’ve started to see some promising in-roads in areas such as in the Tees Valley and in city regions like Greater Manchester, the Mayors’ powers have been limited due to governments failing to recognise their potential and devolving further. It wasn’t until the introduction of local restrictions in August – and the ensuing well-publicised battle between Mayors and Whitehall – that people sat up and began to take notice.

Until local areas aren’t forced to go with a begging bowl to Whitehall whenever they need funding, this tension will continue to sow conflict – each time growing a little more fractious. Far easier and more effective would be a system that trusted Mayors to do the job they were elected to do.

And we’ve seen time and again that it works. Bradford Council have implemented a hugely successful track and trace system themselves months before overly centralised health bureaucracies understood the role local authorities could play.

I still believe that the Chancellor, a longstanding supporter of Northern Powerhouse Rail across the Pennines long before he arrived at the Treasury, is committed to the North. Most important of everything announced on the Spending Review was his promise to rewrite the Green Book – the Treasury’s ‘Bible’ when it comes to signing off infrastructure spending. Its purpose is to determine a particular project’s value for money but, in its current form, it has led to a cycle of decline where rich areas get richer and poor areas get poorer.

The next step is devolution – real devolution that cedes real power. This should be the moment Whitehall realises it becomes stronger by sharing power with the North – not by tightening its grip.