Northern powerhouse ‘back on Theresa May’s agenda’

Northern powerhouse ‘back on Theresa May’s agenda’

1st October 2017

Former commercial secretary to the Treasury says northern productivity being encouraged since PM’s closest advisers quit after election

Theresa May is “allowing and even almost lightly encouraging” more focus on the northern powerhouse since her two closest advisers quit after the election, one of the plan’s architects has said.

Jim O’Neill, the former commercial secretary to the Treasury, said the plan to rebalance the UK’s economy appeared to be back on the government’s agenda following the resignation of Nick Timothy and Fiona Hill in June.

“It may be complete coincidence, but I’m sure it’s not, that since they’ve gone there is more interest in stuff to do with the northern powerhouse, as evidenced by [Philip] Hammond’s visit [to northern leaders this month],” he said.

Lord O’Neill, who resigned from the government last September, spoke as a report published by former chancellor George Osborne’s northern powerhouse thinktank said 850,000 jobs could be created by 2050 with investment from the government and business.

The Northern Powerhouse Partnership (NPP) report, written by business leaders including the Siemens UK chief executive, Juergen Maier, said the government had a “vital role” and urged Hammond, the current chancellor, to use his upcoming budget to commit billions of pounds to close the productivity gap between the north and London.

O’Neill, the former Goldman Sachs chief economist who sits on the NPP board, said the projects needed government investment of about £5bn. It was a “big ask”, he said, but one the government could afford and that fit within its industrial strategy.

The report, Powerhouse 2050: the North’s Routemap for Productivity, says the north of England could be £100bn more productive and be world-leading in four fields – including energy and digital – with the right backing.

It also calls for £60m for the north to become the UK’s first region commit to industrial digitisation, and £100m to reinforce the UK as a leader in health data.

O’Neill said investment in those four areas would be “game-changing for the north and of a sufficient magnitude that it would boost the rate of growth of the country as a whole”.

In a foreword to the report, Osborne called for the north to bring together its areas of expertise that were currently “in pockets across the region, separated by traditional geographic boundaries with proud local identities”.

The former chancellor added: “National government has an important role too, especially in providing the infrastructure needed – like northern powerhouse rail, the transformational scheme to connect the great cities of the north.

“There are other investments in science and research and training the government needs to fund, which we cost in this report and which government can clearly afford over the coming years as part of the money it has set aside for its industrial strategy.

“Bring what the north has committed to deliver and what the government can provide, and you have an economic plan that would raise productivity across the northern economy and could deliver an additional 850,000 jobs.”

Last month Osborne suggested May could “relaunch her premiership” at the Conservative party conference this weekend by making a bold commitment to improving transport infrastructure in the north.

Chris Grayling, the transport secretary, has infuriated mayors, civic and business leaders by scrapping the planned electrification of railway lines in the Midlands and the north.

O’Neill described rail electrification as a “red herring” and said it may not be the most cost-effective way forward. The former minister said he had met Grayling last week and was confident the government was committed to improving the north’s transport links.

“The idea that Whitehall isn’t focused on what the north needs for transport, I don’t think it’s actually very well founded,” he said. “The key for what’s needed for the north on transport is the straightness of the lines and the number of points. How it’s powered is of much less importance, and that I’m pretty confident about. I know the geeks get all caught up in this stuff but it’s sort of a red herring.”

He said he would be “amazed if there isn’t some kind of signal intent on transport” in the budget on 22 November, and Hammond’s visit to northern leaders this month was significant. “I’m also hopeful that now [Hill and Timothy] have disappeared the PM seems to be allowing and even almost lightly encouraging more focus on the northern powerhouse,” O’Neill added.

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