Lord Jim O’Neill – Devolution and the Northern Powerhouse post Spending Review. Are we any the wiser?

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Category: General news

Post the one year Spending Review , a more substantive major commitment to all aspects of the Northern Powerhouse ambition have still not been unleashed, not least because, as purely a one year review, we knew in advance, it could not open the door to some of the longer term big infrastructure projects.

Some may be frustrated that the government opted for just a one year Review given the ambition they have repeatedly talked about for the levelling up agenda, but, I understand their reluctance to commit to a multi year path given the ongoing massive uncertainties about the Covid-19 pandemic, its duration and the post pandemic world we will move in to. To commit to a particular path of spending and , implicitly with it, a path for taxes and revenues, would be premature. In this regard, I personally happen to believe, especially with the confirmation of the good news about vaccines, that the 2021 economic recovery might be considerably stronger than the OBR forecast, which will allow, if accurate, for a brighter interpretation of the public finances than is now perceived. Of course, alternative paths could emerge, and there is huge uncertainty and variability , so in this sense it is best to wait whatever the frustrations this may cause for those of us deeply immersed in the levelling up agenda.

Not given much attention in the media, the revamp of the so-called Green Book was good news, and even though the wording was cautious, it seems as though HMT has changed the basis for future assessments of future investment projects, essentially cutting the circular path; a virtuous one for existing high population successful areas like London for example, and a vicious one for lesser populated and especially currently underperforming areas economically. This is highly welcome, and a great deal of relief for those of us who have been pushing for such a more sensible approach for years. In my case, this goes back to the Cities Growth Commission I chaired in 2013/2014, and the Chancellor and HMT deserve congratulation for this. Let’s hope this sets a new path so that genuine productivity enhancing projects- such as Northern Powerhouse Rail- can not be so easily dismissed by the Department of Transport, which also to be fair, the current SoS seems to be a supporter of.

As for devolution, there was nothing new from the Spending Review, except for the disappointment that the new fund of £ 4bn which is replacing the investments we have received from the EU is not only applicable across all of England, it is not to be decided locally at all, and applications for funds will be assessed by three different government departments no less.

The government appears to have the notional commitment to more serious devolution in 2021, perhaps especially when it comes to relocating Whitehall departments or considerable parts of existing ones. But I would suggest this is real devolution that matters, what we really need is more powers and responsibilities to existing Mayoral authorities, as well of course, as more of them, especially now the deadlock in Yorkshire finally got resolved in 2020. We need more Mayoral authorities across other regions of the North, and considerably more powers for those that already have them. Just as vaccination will release many from the trauma of Covid-19, it should open the door to more serious government steps on devolution.

 

Lord Jim O’Neill, Vice Chair of the Northern Powerhouse Partnership 

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