Chancellor on building a Northern Powerhouse
"This is a revolution in the way we govern England", says the Chancellor of the Exchequer, George Osborne.
This is my first speech since the election and it is no coincidence that I’ve chosen to come to the north of England, to the great city of Manchester, to talk to you about building a Northern Powerhouse.
Closing the decades-old economic gap between north and south was in our manifesto, featured in the speech David Cameron made on the steps of Downing Street last Friday and is one of the main reasons I wanted to return to the Treasury to finish the job.
It will take time and I’m realistic that we will not always see overnight results. But we should not passively accept that, compared to the rest of our country, the relative economic decline of the north of England is inevitable.
We can reverse it – and create a balanced, more healthy economy for working people across our United Kingdom.
If you want a metaphor for what we can achieve, just look at our surroundings.
This building has a proud heritage. It was part of this city’s industrial history. Built when Manchester was the workshop of the world. Then it went into decline and spent a number of years derelict. Now it has been renovated and has become an important cultural and event space in the city.
The story of this building, its evolution and its success, is echoed in towns and cities across the north of England.
And I can see it in the official data too.
Yesterday we learnt that employment in the North is up by 151,000 in just one year.
Unemployment here has fallen by over 20%
A new job is being created here in the North every three and a half minutes.
And the North is growing faster per person than London.
Frankly this has not been the case for much of the last thirty or forty years.
Over a long period, under governments of all political colours, our economy has become unbalanced and our capital city has come to dominate more and more.
The answer to that is not to pull London down – it’s to all our benefit that we have one of the great global cities in these Isles.
What we need to do is build up the rest of our country.
In the last couple of years that has started to happen. But to really close that long term growth gap, we need to take further radical action. That’s why I’m here today.
Just under a year ago I came to the Power Hall in the Museum of Science and Industry here and set out a vision for a Northern Powerhouse.
I proposed a new approach to rebalancing the economy.
Not just moving public sector jobs around from one part of the country to another, but growing the private sector so we can have real, sustained growth that supports great public services.
Not imposing remote and artificial regional bureaucracies, but building on real local economies and the cities and towns that people actually feel they belong to.
Above all it was a vision based on the solid economic theory that while the individual cities and towns of the north are strong, if we enable them to pool their strengths, they could be stronger than the sum of their parts.
That’s because one of the paradoxes of the modern, knowledge based economy is that technology has not pushed people apart, it has drawn them together.
People want to cluster together in communities and feed off each other’s ideas.
City size matters more than ever before. Firms need access to increasingly deep pools of human capital.
People of talent and ambition want to live in places with great schools, good jobs, fast transport connections, sport and culture. That’s why cities that were once hollowed out are now filling up.
Economic evidence shows there is a powerful correlation between city size and the productivity of its inhabitants. The top 600 cities in the world contain just 20% of the global population, but contribute 60% to global GDP.
That was the powerful thinking behind the City Growth Commission that Jim O’Neill led with such imagination. It is the thinking behind the collaboration from the local authorities like those led by Richard, Sean and Peter here that produced the One North report.
It’s what my great colleague, Lord Heseltine, grasped the need for decades ago. It’s what my new Cabinet colleague Greg Clark, has long understood too.
Within 40 miles of Manchester, you have Leeds, Sheffield and Liverpool, Lancashire, Cheshire and Yorkshire – a belt of cities and towns that contains ten million people – more than Tokyo, New York or London.
Bring those cities together, connect Liverpool to Hull, the North West to Yorkshire and the North East – and the whole will be greater than the parts.
When I gave my speech here in this city a year ago on the Northern Powerhouse I will confess this: I wanted it to be the start of something special, but I am a realist and I knew the odds were against me.
There was a huge cynicism in many quarters about what I could realistically achieve.
That was just 11 months ago.
But since then we have made more progress than I dared hope possible.
We’ve created with your help Transport for the North and started to develop detailed plans for high-speed rail east-west across the north.
We are making record investment in transport which will see the key roads upgraded, and the north’s railways improved with new trains and electrification.
We’ve worked with the great universities of the north to make major scientific investments, like the quarter of a billion pound Sir Henry Royce Institute in this city, with links to Leeds, Sheffield and Liverpool. An idea that barely even existed a year ago. Or the new investment in the centre for ageing in Newcastle.
And by having everyone from the Prime Minister down fighting hard for it, we’ve just made Manchester University’s Jodrell Bank the global headquarters for the new Square Kilometre Array – the largest experiment in the history of science.
We’ve worked with the NHS teaching hospitals and funded the ground-breaking Health North.
We’re committed to exciting new cultural investments too, from the new Factory Manchester, a great new arts venue here in this city, right through to promoting Yorkshire as a home of world cycling.
And then, last autumn, across the political divide, we reached an absolutely ground-breaking devolution agreement with the elected leaders of Greater Manchester.
When I proposed the idea a year ago, it seemed a distant prospect. Now it is becoming a reality.
Now we’re devolving power over policing, skills, housing.
We’re giving the City control over transport, including buses.
We’re devolving power over a £6bn health and social care budget.
And we’re bringing it all together with the accountability and leadership that an elected city-wide mayor will provide.
I want to thank the civic leaders of Greater Manchester for the courage and imagination to work across parties with me to make this happen.
We’ve put the Power into Northern Powerhouse.
And we’ve caught the imagination of a nation looking for new answers. That’s what we’ve achieved in 11 months – now imagine what we can achieve over the next five years.
Some people have said to me: it’s all about Manchester. What about the rest of the north? What about the rest of the country?
I’ve just spent 6 weeks travelling the country being asked: why can’t we have a powerhouse here – in the Midlands? In the West Country? I was even asked by one reporter, when are we going to have a Southern Powerhouse to rival the north?
Let me be candid. I think if I had tried to deliver, simultaneously, new devolution settlements in every major city, at the same time, and tried to get every city authority to accept new elected mayors, it simply would not have happened.
Getting Manchester through the Whitehall machinery and overcoming the political divide was difficult enough.
But I always thought this: if I could work with you to achieve this new model of civic leadership and local power here in greater Manchester, I could hold it up to the rest of the country as the example of what was possible.
If we here could step through this door to a better future, then others would follow. Not by force – as national government have so often tried to change local government – but by example and choice.
For we all know that the old model of trying to run everything in our country from the centre of London is broken.
It’s led to an unbalanced economy.
It’s made people feel remote from the decisions that affect their lives
It’s not good for our prosperity or for our democracy
As I said when we first set out plans for a Northern Powerhouse, we need fundamental change - and this is the once in a lifetime opportunity to deliver it.
And that is precisely what we intend to do, not just in the north of England but across the nation.
We will deliver the devolution to Scotland and Wales we promised.
But today I can tell you we will go much further and deliver radical devolution to the great cities of England.
I say to these cities: it is time for you to take control of your own affairs.
So a central part of our Queen’s speech will be a bill to enable a radical new model of city government.
Here’s the deal:
We will hand power from the centre to cities to give you greater control over your local transport, housing, skills and healthcare. And we’ll give the levers you need to grow your local economy and make sure local people keep the rewards.
But it’s right people have a single point of accountability: someone they elect, who takes the decisions and carries the can.
So with these new powers for cities must come new city-wide elected mayors who work with local councils.
I will not impose this model on anyone. But nor will I settle for less.
London has a mayor.
Greater Manchester has agreed to have a mayor as part of our Northern Powerhouse - and this new law will make that happen.
My door now is open to any other major city who wants to take this bold step into the future.
This is a revolution in the way we govern England.
It’s power to the working people of our country.
And it means a stronger democracy and greater prosperity for all.
Let me go into more detail, and confront head on those who say: “why do we need to have an elected mayor to have the radical devolution of power? Can’t we just give it to a committee of local leaders or officials?”
We do need local leaders to work together, and the Manchester model of devolution is not like London. We haven’t created a new Assembly here. We’ve built on the excellent cooperation you’ve established with your combined authority, as you asked me to do.
Other cities can find the mayoral model that works for them. But it has to involve a city-wide elected executive mayor.
So let me say it again and be crystal clear today. We’re not imposing a mayor on anyone.
It’s up to local people and their elected representatives on councils to decide whether they are interested in their communities taking part in this new revolution in city government.
But equally, I’m not interested in any more half-way house deals. We will transfer major powers only to those cities who choose to have a directly elected metro-wide mayor.
For there’s a reason why almost every major world city has an elected mayor. It’s a proven model that works around the globe.
It’s a powerful point of accountability. A person vested with the authority of direct election.
It makes the devolution of multi-billion pound budgets, and powers from policing to housing possible.
Having a powerful elected mayor will give Greater Manchester – and other cities too I hope – a powerful new voice in our national life.
That’s what we need if we want to prevent our great capital city dominating more and more. It’s what we need to attract global investors here.
Manchester is a powerful brand, known all over the globe. It will have a new, electedchampion to represent it and promote it to the rest of the world.
I want other cities with other champions.
We’ve already passed secondary legislation so that Manchester can appoint an interim mayor and hold the election for a fully elected mayor from 2017.
And now we’re going further.
On 27 May, the Queen’s Speech will be read. It will include a new City Devolution Bill.
This law will pave the way for Greater Manchester – and, importantly, other cities as well, to take greater control and responsibility over all the key things that make a city work, from transport and housing to skills, and key public services like health and social care.
It means by the end of this year the legal framework will be set so that any city can proceed to implement a Mayoral devolution deal.
This week, the Prime Minister appointed my colleague James Wharton to the government. An MP from the north- east, now the Minister for the Northern Powerhouse in the Department for Communities and Local Government.
He will take the legislation through Parliament.
And to help drive forward these changes, I have another announcement to make.
I’ve already mentioned Jim O’Neill’s name today – he was the Chair of the City Growth Commission, whose work has inspired the thinking behind the Northern Powerhouse
He’s one of the world’s top economists. And he’s the man who invented the term ‘the BRICs’ and changed the way everyone viewed emerging economies.
Today Jim gets a new role.
I’m very pleased to announce that the Prime Minister has appointed him to my department as the Commercial Secretary to the Treasury – right in the heart of government, in the department that historically fought tooth and nail to stop giving up power, we have a brilliant new Minister to help make devolution and the Northern Powerhouse happen.
And he’ll work to deliver the big infrastructure investments and links to emerging economies our country needs.
Here I hope we can go further and faster in devolving power in this trailblazing city of Greater Manchester.
We’re already piloting the retention of business rates here, and in the neighbouring local authority of Cheshire East. Now it’s time to think whether we could go further down the road of fiscal devolution.
So that you take control of raising more of the money you spend – and, from my way of looking at things, see the rewards from the taxes you cut.
We are piloting the devolution of some aspects of employment support, and I want to see if we can go further there too.
But we can’t build a northern powerhouse with just the big cities of the north. Half the economy of the north of England is outside its big cities.
So we’ll empower the towns and great counties of the north too, by extending a form of the City Deals programme we ran in the last parliament to cover counties and towns too.
There are great economic strengths to build on outside the biggest cities - whether it’s the nuclear cluster in Warrington or chemicals on Teesside. I want councils and Local Enterprise Partnerships here to come forward with plans to build on their strengths.
There are great universities here. They’re a key economic asset for the north, and I want to see their strengths recognised through the creation of prestigious new Regius Professorships.
And to turn great ideas into great products and jobs, there are more clusters of industries in the north that could benefit from the creation of further Enterprise Zones too. So we will be inviting bids to create more Enterprise Zones.
I want all these new opportunities available across England – in the Midlands, East Anglia and the South West too.
I said we would do start all these things within the first 100 days of a Conservative government and we will – starting in the Queen’s Speech.
When I stood up in Manchester a year ago, I said I wanted a Northern Powerhouse not to rival the South, but to be its brother in arms as we fight for Britain’s share of the global economy.
For let’s remember this:
Working people here have exactly the same aspirations as everywhere else in the country.
To be able to get a good job. To buy their first home. To make sure their children get a good education, and their family great healthcare.
I’m determined they should have the same chance to achieve those aspirations.
I don’t want any child growing up in any part of Britain, to feel like the big opportunities are all happening somewhere else, happening for someone else.
I don’t want the ideas, the ambition, the energy and the creativity of any part of our nation to go to waste.
We are one nation.
And there’s no way to build a strong economy, and a strong United Kingdom, unless we spread opportunity to every part of this land. And our plan to do that starts now.