Building a Northern Powerhouse
In 2014 when George Osborne first set out the ambition behind the Northern Powerhouse, it was the most important speech on the balance of economic competences in our country for at least 30 years.
During my time in the City, I had concluded that the most successful nations all have strong, interconnected urban areas beyond the capital. This was re-affirmed in my time as chair of the City Growth Commission where our final report made the case for cities taking on a new role to build more inclusive economic growth in the UK.
It was abundantly clear to me that the ambition behind the Northern Powerhouse was finally something that could make this happen in Britain, after decades of failed efforts.
When it comes to the North South divide, I am convinced of two things.
One — this is not a challenge that can be solved overnight.
And two — neither is it a challenge that can be solved simply through financial transfers from the South to the North, or moving public sector jobs around.
This approach has been tried before by successive governments without success.
Clearly the government needs to invest in major transport projects, in the science strengths of the North and in the culture and quality of life there, which the Chancellor is now doing.
But public spending on its own is not enough.
It’s about more than spending
Tackling deep-rooted and complex problems requires much more profound change. It means creating new structures to help bring the North together, like Transport for the North. It means devolving power from Whitehall to new city-wide Mayors. And it means a focus on growing the private sector so we can have sustainable growth in the north.
The Chancellor’s vision of a Northern Powerhouse is why I joined government and why I firmly believe we now have a long term strategy that is capable of working.
Everyone I meet in the North acknowledges that there are long term reasons why we have seen London powering ahead of the rest of the country, and the business and local government leaders I meet recognise that this needs a long term solution not a quick fix.
Rebalancing the economy should not involve dragging London down, but building up the North.
Recent GVA figures showed strong growth across all English regions which is what we want to see, and at the same time there are more people in work in the North than ever before, there are nearly 160,000 more businesses in the North: that’s over 85 more businesses every day and though it is frequently assumed that manufacturing in western economies will never be a job creator again, actually the number of manufacturing jobs in the North has increased by 44,000 over the last five years.
However, we are the first to say that more must be done because we are tackling long term, entrenched problems.
And significant progress is being made.
2017 — the year of the Metro Mayor
In 2017 there will be at least five new Northern Mayors, covering over half the population of the North and backed by over £4 billion of new funding from central government.
And we are making profound reforms to the way this country is run, allowing local government to keep all of the business rates they raise, meaning that when local leaders take decisions to get growth growing in their area they see the benefits in increased tax revenues.
This devolution revolution has all happened in just over a year
As well as empowering each city, we are helping the great cities and towns of the North to work together so its economy can benefit from the same economies of scale enjoyed by places like London or the Ruhr, and function more like a single economy.
That’s why we have created Transport for the North (TfN) and backed it with £200m and it is telling that this exciting new agenda is attracting leading business people to take it forward with John Cridland taking on the role of Chair of this ambitious organisation.
We recently announced new rail franchises for the North and this was was another giant step forward with a £1.2 billion boost to rail services — it’s the end of second class travel for the North.
Going even further
But the Northern Powerhouse will go beyond governance and transport.
We must address wider issues where the north lags behind the south and I view bridging the gap in skills as key. That is why we are giving local areas control over skills budgets.
As well as connecting up the North, we have to connect it to the fast growing parts of the world economy. That’s why we want to maximise the region’s engagement with international markets. There is already significant momentum following Northern Powerhouse trade missions overseas and President Xi’s visit to Manchester.
Turning the rhetoric of the Northern Powerhouse into reality is a central mission of this government. We are determined to succeed and 2016 is a big year in taking the next steps.