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Northern Powerhouse should be the last place George Osborne looks for cuts in his Budget

That nine in 10 of Britain’s most-deprived cities lie in the North of England should come as little surprise

Monday 29 February 2016 01:02 GMT
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Britain's Chancellor of the Exchequer George Osborne arrives at Downing Street in London
Britain's Chancellor of the Exchequer George Osborne arrives at Downing Street in London (Getty)

The Northern Powerhouse was always a project that was going to face massive economic, rather than political, challenges, and the latest report from the Joseph Rowntree Foundation, which has its roots in chocolate production in York, underlines them. It also, however, lends weight to the argument that, if anything, the Powerhouse project should be strengthened, broadened and extended rather than scaled back.

That nine in 10 of Britain’s most-deprived cities lie in the North of England should come as little surprise, though the extent of economic failure, especially in the generation of private-sector jobs, never ceases to depress.

As any resident or visitor can discern from the grandeur of their neo-Gothic town halls, the heft of their mills and factories that still stand, and the elegance of the Victorian and Edwardian villas and terraces that constitute their inner suburbs, such a pitiful position did not always hold true. Indeed, for most of the past 1,000 years, a varied background of wool, iron, steam, coal, textiles and manufacturing generally gave the phrase “North-South divide” the opposite meaning to the one today.

It is difficult to accept that, despite industrial decline and economic change, there is something inevitable about the depopulation and disintegration of large areas of the North of England. Traditional regional policy that subsidised jobs and investment in the North had, at best, a mixed record during most of the period after the Second World War. The Thatcher experiment had a baleful effect on many communities, not just the famously destroyed mining towns and villages, and many are worse off than they were three decades ago.

Yet there are success stories, such as in parts of Manchester and Liverpool, where free enterprise, local-authority initiatives and judicious investment by central government have brought about regeneration. In many cities, though it is unfashionable to mention it, immigration has also played its part in creating new businesses and keeping factories and agricultural firms going. The Northern Powerhouse, even with the trimming it has suffered under a hard-pressed Treasury, will create at least one of the conditions for a regenerated North – far better transport infrastructure and connections that will cut the costs of running a business and end the relative isolation of many centres.

The problem, of course, is that while the Powerhouse will help the more populous, vocal and politically significant centres, primarily in and around the marginal constituencies of Manchester and Lancashire, other centres will see much less benefit, such as Newcastle, Hull and Grimsby in the North-east, or what we used to know as the Potteries around Stoke. To which the answer must be an equally ambitious programme in those regions that will open the way to raising the regional economic growth rate, boost jobs and restore civic pride.

But still more is needed: more freedom for local authorities and more enterprise zones offering tax breaks and looser planning rules to deal with the most desperate situations, as was done 40 years ago in east London’s once derelict but now booming Docklands.

As a Tory strategist and Cheshire MP, George Osborne can clearly see the political dividend from such a reversal of fortunes. As Chancellor, he must also sense the tantalisingly dramatic turnaround in the national finances that a revived North with a powerful private sector can bring. Whatever else, the Powerhouse should be the last place he goes looking for cuts in his Budget.

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