New Labour leader Jeremy Corbyn has promised a new kind of politics. He has promised to build an inclusive party that engages with those who have been turned off politics. Moreover, he represents the forefront of anti-austerity politics. Britain under Corbyn would reverse cuts and engage in a new round of public spending.
With this, Corbyn has re-drawn the electoral battleground, one which looks reminiscent of the 1970s and 1980s. At the same time, the Conservative Party has been using its own artistic licence of late to re-design the political centre ground, through the National Living Wage, tax cuts and help for aspiring home owners.
Another key strand of the Conservative Party’s artistic flair is the Northern Powerhouse. Osborne and fellow modernisers within the party may have addressed a number of electoral weaknesses, but attitudes towards Conservatives in the North are proving slow to change, as shown by all polling of the region.
Osborne’s devolution offer is the most significant attempt to address this problem since modernisers like Francis Maude called on the party to recognise the need to be a ‘One Nation’ party once more.
Corbyn, however, has already labelled the Northern Powerhouse a “cruel deception”. Corbyn’s main contention is that the Northern Powerhouse is fundamentally flawed since it does not give local authorities fiscal responsibilities. Instead, they have the job of providing public services with an ever smaller budget.
Corbyn’s point on the lack of fiscal devolution is true. So far it has been the elephant in the room as far as the Northern Powerhouse is concerned. At some point it will have to be on the table if the Conservatives are serious about re-balancing the economy.
However, although it is still early days, it is not clear what form of fiscal devolution Corbyn supports. What we do know about Corbyn’s plans for the North can be drawn from his Northern Futures publication, which calls for re-industrialisation and massive public sector investment in the region through a new National Investment Bank funded by a new round of quantitative easing.
In contrast, just last week the government announced that as part of its drive to expand on the devolution deal agreed with Greater Manchester last year, 38 cities or wider regions have applied for additional powers which the government will now consider ahead of the Autumn Statement.
The appetite shown for additional powers is striking. Despite initial scepticism from various Labour led local authorities about the Northern Powerhouse, the message seems to have been received, ‘get on board or be left behind’.
How Corbyn reacts to these Labour councillors willing to deal with Osborne will be telling. Can the two maintain productive relations while one signs deals with the chancellor and other rebukes him? The views of the leadership of Greater Manchester council and Corbyn about devolution could become fractious quickly.
The Conservative Party, though, still has one blind spot that Corbyn will look to exploit: levels of public investment.
Corbyn has called for a rebalancing of public investment, which has traditionally favoured London and the South East. The current fiscal path set by Osborne makes this somewhat of a challenge.
Osborne’s plan to generate investment in public services has been based on creating economic credibility to leverage private sector investment in infrastructure projects. According to the government’s own estimates, private sector investment will be needed for around 80% of all infrastructure investment up to 2021.
As with Corbyn’s wider agenda, the battle for Northern voters pits two contrasting visions. One based on large scale public investment and re-industrialisation; the other on devolving powers to cities in the belief private sector investment and growth will help close the North-South divide.
There may not be common agreement where the North begins but the battle lines for its future could not be clearer.
For Cicero’s latest special on the Northern Powerhouse, please click here.