NORTHERN POWERHOUSE –A GOER OR A GONER?

Few projects south of the border should have sparked more apprehension at Holyrood than the grand ambitions of the Northern Powerhouse.

The idea was to boost economic growth by “urban agglomeration”. This would be achieved by devolving more powers to the region, enhancing investment in science and innovation and boosting transport infrastructure to improve links between Manchester, Liverpool, Leeds, Sheffield and Newcastle.

Renaissance here would pose a big challenge for Scotland as it would be a keen rival for inward investment projects and a preferred location for greater London based companies to relocate rather than Scotland.

Efforts to boost Scotland’s economic heartland by greater collaboration between Glasgow and Edinburgh have foundered. Edinburgh city pressed ahead with its hugely expensive tram project while the SNP administration has long favoured dualling the A9 as its transport project of choice.

And the renewed calls post Brexit from the SNP administration for a second independence referendum are likely to have caused potential investors to hold fire until there is greater clarity on Scotland’s constitutional future. Companies would be leery of making a big investment in a country saddled with debt and which on independence would see a new currency introduced together with border controls.

But from the start the grandiose Northern Powerhouse plan with its talk of transport spending stretching to £15 billion found itself battling with sceptics.

Many outside the government considered it little more than a political ploy to strengthen Conservative support in a traditionally Labour dominated region. Others said the project would founder on inter-regional rivalries, there being little love lost between greater Manchester, Liverpool and Newcastle in the north-east. This is not the cultural or economically homogenous area that Cumbria-born Melvyn Bragg’s broadcasts about “the north” might suggest.

Now the Northern Powerhouse dream has been hit by a series of fresh setbacks.

First, it was widely thought that with the change in premiership the government’s focus on the North was to be downgraded into a nationwide agenda for boosting productivity outside the south-east.

Second, the project had been strongly promoted by George Osborne, chancellor until this summer when he was dismissed by new Prime Minister Theresa May.

Osborne’s credibility suffered a major knock with his alarmist warnings about what would happen to the UK economy after the Brexit vote. So far, however, the economy has defied the grim forebodings of the former chancellor.

Several weeks ago May’s communities secretary, Sajid Javid, pulled the plug on devolution in the region after council leaders failed to agree on whether to move forward with the plans.

There was also speculation that Newcastle could break away from its north-east neighbours and seek a “city region” devolution deal, similar to the model being pursued in Liverpool.

Then last week, Lord O’Neill, one of the main architects of the project, resigned from the government and quit the Conservative benches in the House of Lords.

The former Goldman Sachs economist who was brought in by David Cameron and George Osborne, led the development of the Northern Powerhouse plans and the two politicians were close allies.  A think tank report by the RSA which he chaired found that raising the economic growth rate of the 15 biggest cities in the UK to the national average would increase the economy by 5 per cent by 2030, or £79 billion a year.

Theresa May has since sought to limit the damage, insisting that the “whole machinery of government” is behind the northern powerhouse in an attempt to end weeks of speculation over her commitment to the north of England, though the wording of her commitment left the door open for doubt.  

“I don’t want to see our country dependent on one city any more”, she declared. “I want to get all of our great cities firing on all cylinders to rebalance our economy.” This would suggest a more diffuse approach.

For his part, Osborne remains committed. He has launched a think tank to promote the project with the backing of the American billionaire Michael Bloomberg. He said the powerhouse will be his “major focus” with Manchester at the core.

The city does not seem unduly short of money, considering that the recent local football derby between Manchester United and City saw £700 million of player investment on the pitch.

So is the  powerhouse project a goer or a goner? Supporters will be looking to new chancellor Philip Hammond’s Autumn Statement on November 23 for the firm tangible commitment it now needs to secure momentum from here. If such support is signalled, Scotland will have to raise its game mightily to meet the challenge.

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