Tory 'Northern Powerhouse' Claim Questioned After North/South Divide Report

North south divide
The Angel The Angel of the North statue is seen in Newcastle, northern England. Nigel Roddis/Files/NEWCASTLE/REUTERS

The director of the Institute for Fiscal Studies has poured cold water on the Conservative’s campaign to create a ‘Northern powerhouse’ as a new report highlighted a worsening divide between the affluent South of England and the rest of the UK.

Paul Johnson of the IFS said he did not believe that such a turnaround was possible in one parliament, while Northern Labour figures accused the Conservatives of failing to understand the needs of the North.

A report by UK-based thinktank Centre for Cities, published today, found that the gap between the between the best and worst performing cities in the UK has dramatically increased in the last 10 years, with Northern cities losing out. It found that between 2004 and 2013, for every 12 new new jobs created in cities in the South, just one was created in the rest of the UK.

The report comes just 10 days after UK prime minister David Cameron and chancellor George Osborne kicked off their tour of the north-west of England, reiterating the Conservative Party’s plans to create a ‘Northern powerhouse’ if they win the May election - promising investment, tax credits for research and development and improved transport links.

But Johnson said that they were overestimating what could be done in the short run. “Realistically a northern powerhouse would be a 10- or 20-year project and is not something that can happen without consistent policies on it throughout this time,” he said. “You would need a consensus.”

According to Johnson, who has previously worked at the Treasury, the Department for Education and the Financial Services Authority, many of the key economic measures have little to do with the short-term economic policies that make headlines. “We hear all these things about inflation or unemployment being reduced in the last year or so but the effect of economic policies take a lot longer to see and happen than that. That’s why sometimes it’s as much about changing the institution as it is about economic policies.”

David Cameron launched his northern tour by giving a speech in Manchester in which he declared that he wanted a UK where “economic might [is] not just held in one city but spread right across our country”. He continued: “We need a strong London, but we need a northern powerhouse too… When you get that critical mass of people it amplifies jobs and ideas and businesses. The cities and towns of the north of England can have that critical mass.”

The north-west is home to many marginal seats, so it’s perhaps unsurprising that Conservative election co-ordinator George Osborne was keen to show his party’s solidarity with the northern regions of the UK, insisting that £7 billion would be spent on investment there.

Today the chancellor continued the offensive, when he officially opened a new science park at the University of Chester, saying: “Science is a key part of the government’s long term economic plan and lies at the heart of our plan to build a northern powerhouse”. Last week Osborne issued another statement in which he said: “Rebalancing our national economy, ensuring that the economic future of the north is as bright, if not brighter, than other parts of the UK, is the ambition we should set ourselves.”

Richard Leese, the leader of the Manchester City Council said that previous Conservative rhetoric had not changed into a reality, but was more optimistic for the future adding: ”I would say that the support the chancellor is now putting in for investment into infrastructure is right and what we’ve been arguing for for years.”

Leese, a proponent of creating greater transport links to create a “a virtual northern super city”,  is clear that whoever wins the next election he wants to see “investment in infrastructure, in research and in skills… across the north.”

He is also keen to push further devolution of his city in the wake of the new tax and spend powers being handed to the Scottish parliament. “We’ve made our first steps of devolution and these are big steps we’re talking about. In the future I want a greater ability to do what I call place-space budgeting where regional services are organised around where people live, not divided into departmental silos. And I want more responsibility for raising and spending money which means decided taxes - a proportion, not a totality though of course,” he said.

However, many remain unconvinced by the Tory’s promises. A spokesperson for Simon Danczuk, the MP for Rochdale lambasted the idea saying: “This northern powerhouse thing is meaningless - so far they’ve just given a few powers to local councils. I do think that the Tories look at the UK in terms of winners and losers, that’s the harsh reality of it.”

He also said that the Tories did not understand the needs of northern Britain: “When the Tories came into power they introduced enterprise zones in the north, but they put them in all the wrong places - they put them in places that were already doing OK. It’s because a lot of Tory MPs aren’t from these area, so they don’t represent these areas. There’s a long tradition of the Tories not particularly liking the North.”

Leeds councillor James Lewis who is chair of the Transport Committee has a more outlook on the Tory’s plans but is clear that there is still a long way to go. When discussing the imbalance in spending on transport between the north and south he said: “I think we’ve heard the right words but now we need  a long term commitment to funding these things. In terms of HS2 for example the government need to put the money in to match their commitment.”

Lewis, like Johnson, was also clear that it would take more than one government to establish equality across the UK: “Realistically it’s going to take the length of more than one parliament to fill the infrastructure deficit in terms of transport. We’re talking 20 years ahead, so it will take three or four governments to deliver this. There needs to be a cross party commitment, for both the current and future governments, to make sure the the funding imbalance between north and south is equal in terms of transport.”

Newsweek contacted the Treasury but they did not immediately respond to a request for comment.