How many times can you say “Northern Powerhouse”? That appeared to be the competition between prime minister Theresa May and former chancellor George Osborne last week.
Last Friday, Osborne launched his business-backed Northern Powerhouse partnership to lobby for the infrastructure investment and devolution agreements he supported as chancellor.
Days later, May wrote an editorial in the Manchester Evening News which used the phrase “Northern Powerhouse” five times. Her message is clear: she is pro-Northern Powerhouse and is committed to continued infrastructure investment, devolution and support for science and innovation.
The Northern Powerhouse brand has been critical for encouraging Asian investment into the region.
Lyslee Li, business adviser at Manchester-based advisory firm Gibbs Investment, said Chinese investors understood the concept, because in China businesses that follow government policy tend to profit, so commitment to infrastructure projects such as HS2 has driven regeneration and development.
While devolution has given confidence to some businesses to locate in the North, Bruntwood chief executive Chris Oglesby said he had seen a marked increase in interest from international health research occupiers at his science parks following the health devolution deal for Greater Manchester.
Despite May’s words, there has been a step change in policy, with the Northern Powerhouse subsumed into May’s “industrial strategy”, which promises to drive growth more evenly around the country.
Hours after Osborne’s think-tank launch, chancellor Philip Hammond tweeted: “Lord O’Neill [minister responsible for the Northern Powerhouse in the Treasury] and Andrew Percy [Northern Powerhouse minister] will spearhead government’s Northern Powerhouse work but we will focus on all areas of UK to support economic growth.”
Industrial strategy has been defined as “government intervention to support and develop some industries to enhance economic growth”. Through devolution agreements, May could try to be more aggressive in aligning particular industries with specific regions, such as health and creative industries in Manchester and manufacturing in Sheffield.
Devolving infrastructure
One senior council executive member in a regional city suggested May could devolve more infrastructure planning and funding to local authorities. So where national government funded the HS2 station in Birmingham, the proposed HS2 station in Manchester might have to be funded through devolved local taxes and public-private partnerships.
Plans to make the National Infrastructure Commission a statutory body were dropped from the Neighbourhood Planning Bill this month, indicating a shift away from the big national infrastructure projects of recent years. It could put some big infrastructure projects under threat.
“Take the top 10 national infrastructure projects, I reckon only the top three will happen,” the council executive said.
Transport for North, which is due to become a statutory body next year, could be given more powers to drive forward its own infrastructure projects.
Devolution of decision-making is likely to be key for maintaining the support of Northern leaders. Jim McMahon, MP for Oldham West and Royton, said: “The idea that civil servants know what is right for Greater Manchester is a nonsense. It is far better that we take that power, snatch it from the hands of civil servants, and give it to people in Greater Manchester.”
May is expected to add greater detail to her industrial strategy at the Conservative Party Conference in October and in November’s Autumn Statement.
May pledges “proper industrial strategy”
Theresa May has pledged to create a “proper industrial strategy” for the UK.
The phrase is associated with the late 1970s period of inflation, strikes and state ownership of struggling industries and was wiped out by Margaret Thatcher with her agenda for free-market economic liberalism.
However, calls for its return have been rumbling.
Lord Heseltine, in his 2012 report No Stone Unturned in Pursuit of Growth, said the controversial strategy “deserves serious consideration”. He praised the Dutch government, which in 2011 identified innovation hotspots in nine key industrial sectors, to be stimulated by greater investment or research and development tax reductions.
Heseltine’s report was picked up by Ed Miliband’s Labour government in 2014. Lord Adonis published a full industrial strategy named the Adonis Growth Review, which identified high-growth companies and sectors, infrastructure and regional delivery and leadership.
In the July Cabinet reshuffle, Greg Clark was made secretary of state for business, energy and industrial strategy, instead of his predecessor’s title of business, innovation and skills. Last month, May chaired the first meeting of the new economy and industrial strategy committee, which will look at stimulating productivity growth, innovation and focusing on the industries and technologies which could give the UK a competitive edge.
Sir Richard Leese, leader of Manchester City Council, said: “A politician has made a promise to us; let’s make sure she keeps it.”
Listen to Leese’s thoughts on the strategy at http://estatesgazette.podbean.com
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