Since George Osborne launched his idea of the Northern Powerhouse last summer, it has become popular initiative for a man whose party has only a few MPs scattered across the North. At the Autumn Statement, the Chancellor unveiled a landmark agreement between Westminster and Greater Manchester, which involved devolution of power over areas such as skills and transport, in addition to the creation of a newly elected mayor. Yesterday, he seemed to go one step further.
If Manchester was the clear winner at the Autumn Statement, on first glance it may seem that Leeds came out on top at the Budget, when it was announced that the government had reached an agreement with the West Yorkshire Combined Authority for a new city deal. What he didn’t say, however, was that his dealings with the political leaders in Leeds have been more fraught than those with Manchester.
Originally, Manchester wanted a referendum before accepting an elected mayor, but eventually gave in due to the extensive powers on offer. Greater Manchester’s enthusiasm for greater autonomy has since led the government to announce further devolution over the region’s NHS budget, a first in England.
Earlier this week former Deputy Prime Minister, Lord Heseltine, warned of Leeds risks falling behind Manchester unless the West Yorkshire Combined Authority copied the Manchester model. He warned: “There are clearly no deals on the scale that Manchester achieved without a metro mayor.” Leeds may have scored an own goal by not agreeing to a new mayor.
Yesterday was also not just about the expansion of the Northern Powerhouse across the Pennines. Greater Manchester secured another win from Osborne, and will now retain 100 per cent of any additional business rate growth beyond expected forecasts. This is by no means hugely innovative, but this wasn’t a Budget with game changing announcements. In fact, the one policy he could have announced to make people in the North take notice, a funding commitment on a high-speed rail link between Manchester and Leeds, was left out completely. We now wait for an interim report on the project.
What does all this mean ahead of the election in May? Osborne has undoubtedly shown commitment to match his rhetoric about creating a Northern Powerhouse. There is a fundamental realignment about how the regions in England are governed, and as in the 19th Century, Manchester has quickly become the model for others to follow. But yesterday’s announcements on devolution are best viewed alongside what this Budget ultimately was for the Conservatives. A defensive approach aimed at curtailing Labour attack lines in the short election campaign.
The Conservative Party still has an image problem in the North. Further steps to aid the Northern Powerhouse project are designed, in part, to help counter this argument on the doorstep. That’s why Osborne mentioned ‘the North’ 12 times during his speech. He even went out of his way to point out that over the last year the North grew faster than the South.
The problem Osborne has with championing the state of the economy in the North is that it easily has the potential to seem out of touch. For example, according to the latest data from the Office of National Statistics, unemployment levels in Lancashire are still above the national average. The Conservatives need to talk about the recovery with only weeks to the election, but for many people there has been no recovery thus far.
The biggest problem that Osborne and the Conservatives face, though, is an issue that Miliband picked up on in the early part of his response to the Budget: the Conservatives may claim to be champions of the North, but they have also implemented stark cuts on public services. Sir Richard Leese, Leader of Manchester City Council, made this point just yesterday on LabourList, arguing: “The Tories have taken most money away from the communities that can least afford it.”
The debate over devolution, then, illustrates how the run up to the election is likely to proceed. The Conservatives want to talk about the economy, the creation of the Northern Powerhouse and how the recovery will lead to increasing prosperity across the country. Labour, meanwhile, will cast the Conservatives as the ‘nasty’ party, a damaging influence on the future of the North, implementing cuts on people they don’t understand.