As the dust begins to settle after a frenetic general election campaign, what do we need to see in the next five years from the incoming government?
Much was made before the election of the need to rebalance the national economy, with a strong North complementing London and the South East. A Treasury analysis published in 2014 suggested that if the projected growth rate in the North could be increased to match the projected national average between now and 2030 it would add £56bn to the Northern economy.
It is acknowledged that our great cities, with Manchester in the vanguard, must be the engines of this growth.
Investment in connectivity is fundamental if we are to realise this potential.
The previous government made the right noises about supporting HS2 and One North. But Britain has a woeful record of delivering large infrastructure projects. There is no reason to doubt the government’s commitment but now is the time to start delivering.
Greater Manchester has also been in the forefront of moves towards increased devolution to our great cities and it is essential that there is no let-up.
We would urge the government not to let other issues crowd out English devolution. In Greater Manchester, we have made enormous progress in gaining freedoms and powers over transport, strategic planning, housing, skills and elements that will allow us to invest in the conditions for growth.
But we have been clear that this needs to go hand-in-hand with service reform, which helps Greater Manchester people to become more independent and enables services to become more integrated. This will reduce their cost to the public purse sustainably over time as well as making people’s lives better. The most dramatic example of this is the health and social care deal between Greater Manchester and NHS England, which will see the combined budget – around £6bn a year – fully devolved by 2016-17 and enable services to be better integrated. Removing artificial barriers between hospital and neighbourhood care, for example, and placing the emphasis on the latter will reduce the pressure on overstretched wards.
More control over skills provision will enable us to make sure that our residents are equipped with skills which better reflect employers’ needs.
Developing successful integrated policies tailored to the needs and priorities of places such as Greater Manchester ultimately requires place-based budgets similar to the health and social care model. Greater Manchester’s ultimate ambition is to have control or influence over all public spending here. If we are to become less reliant on government funding, we would also like to see a route map to increased fiscal devolution for locally generated resources – starting with the full suite of property taxes: business rates, council tax and stamp duty.
But if cities are to play their full part in rebalancing the economy, the government also needs to look at some of the finance factors that are hampering us – sometimes even penalising us – for growth.
Places such as Manchester, which due to a predominance of lower-valued properties have a smaller council tax base as well as experiencing higher levels of deprivation, have been disproportionately hit by cuts to local government funding. Previously there had been an established equalisation principle which meant that councils thus affected were given extra funding. This has been stripped away.
Councils with higher numbers of students, exempt from council tax, used to be similarly compensated. This principle too is being eroded.
Paradoxically, we are being penalised for a thriving higher education sector.
Then there is the new homes bonus. The perverse way this is calculated means it has actually cost us more than £15m over the past five years – despite Manchester delivering housing growth of 15% above the national average.
Cities need to be freed to maximise their contribution to growth – and share in the rewards, not just the risks.
Sir Howard Bernstein is chief executive of Manchester city council
