Speech

Chancellor on the pathway to a Northern Powerhouse

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Responding to the 'One North' report, the Chancellor sets out the pathway to a Northern economic powerhouse.

The Rt Hon George Osborne

Thank you for inviting me to join you here today for the launch of what I see as a very important moment, not just for the north of England – but for Britain as a whole.

For all my life there’s been a fierce debate about what we can do to improve the economic performance of the North – and a growing understanding across the whole country that unless we do, our whole country will not only fail to reach its potential, but will become increasingly unbalanced and unhealthily dependent on the success of that undisputed global city, London.

But it’s been difficult to get agreement on a single plan to enhance the northern economy.

At different times, different cities have pursued their own agenda.

National governments of all political persuasions have shown an interest in the issue, and then that interest has faded.

And what has been the result?

We’ve seen a remarkable revival of our city centres here over the last couple of decades, and some of the civic leaders responsible for that are here today.

But the harsh truth is that if you take, say, the last 18 years of GDP growth, the northern economy has been below the average of the whole nation.

Britain cannot afford that state of affairs anymore. And we don’t have to accept it.

Modern economists have spoken about the economic benefits when a critical mass of people, businesses and infrastructure are brought together in a large city.

The whole is then greater than the sum of its parts.

Our great northern cities represented here individually are quite small on the global stage - but combined they rival in size London or New York or Tokyo.

It was this opportunity to create a Northern Powerhouse that I identified earlier this year.

I said that if we can bring our northern cities closer together – not physically, or in some artificial political construct – but by providing modern transport connections, supporting great science and our universities here, giving more power and control to civic government; then we can create a northern powerhouse with the size, the population, the political and economic clout, to be as strong as any global city.

The response to my challenge has been far more positive and encouraging than I dared hope.

It chimed with the thinking you were already doing.

What I find exciting, very exciting, about this moment is that there is the prospect of a real consensus that this is the way forward.

Not total agreement on every detail - that would be absurd. But general agreement on the plan ahead.

It is the plan put forward by Jim O’Neill and his Cities Commission.

It is the plan of Michael Heseltine and the work he has done here locally at the Atlantic Gateway, and nationally in his report.

It is the plan I set out in my speech on the Northern Powerhouse at the Museum of Science and Industry.

It is the plan the Deputy Prime Minister has spoken of in Sheffield.

And it is the plan that resounds loud and clear from this excellent report on transport connections, whose very title – One North – captures the approach we seek.

Of course, the proof of whether this is more than just another report and another event is what happens next.

So let me be clear.

Today I give you this personal commitment.

Work with me over the coming months and together we will make a reality of the plan I’ve set out for the Northern Powerhouse.

I’m ready to commit new money, new infrastructure, new transport and new science. And real new civic power too.

Today I’m setting out the Pathway to this Northern Powerhouse, so we deliver a real improvement in the long term economic performance of the north of England.

This will be a centrepiece of my Autumn Statement - and part of our long term economic plan for the country.

Here is the pathway to the powerhouse.

First we’ll take today’s report and work on delivering its component parts:

Extra motorway capacity; better rolling stock; more efficient freight routes from our ports; local metro and tram improvements; and faster and better rail connections across the north.

This is August.

In September, the government’s Chief Scientist, Mark Walport, will report back to me on the plan I set out here for major new science in the North that is truly global in its ambition.

I’ve spoken to Mark recently; I know he’s speaking to you and the leading universities across the North.

There are some very promising ideas in the pipeline.

Next month I’ll have a firm recommendation from Mark.

That’s September.

In October, David Higgins – who’s here today – will publish the report government asked him to produce on the northern phase of HS2.

He’s taken on board my request to look at a new high speed route across the Pennines. An HS3.

Your work today is, in part of course, a contribution to David’s ongoing work – with your ideas for high speed cross-Pennine rail and bringing the benefits of the existing HS2 proposal to the north more quickly.

I’ve spoken to David recently. I know he is ambitious in his thinking. I know he is working on the new cross-Pennine possibilities.

Let us leave him to complete his task – but I am looking forward to his thoughts on ambitious plans that will bring our northern cities closer not just to the rest of the country, but to each other.

That is October.

In November, I propose to set out ideas for a major transfer of powers and budgets to cities in the north, who want to move to a new model of city government.

I know it’s controversial with some, and the local politics isn’t always easy – but almost every major global city has a single mayor, and it’s the view of many different people who’ve looked at our cities here and say it’s time we did the same.

Before deciding in advance how to respond, wait to see what I am offering in return.

And wait to see how we will build on the work our Cities and Universities minister, Greg Clark, now sitting around the Cabinet table, has done with all of you on city deals and growth deals.

We will not disappoint.

A better quality of life is what makes global cities such attractive places to live.

So there’s more work to be done as well on skills, schooling and housing, on improving the local environment and promoting the great culture here – Howard has shown me the plan for the new Lyric Theatre in Manchester, and it could represent an incredible opportunity to enhance the quality of life here.

Let’s hear some more ideas like this.

So we have your report now in August.

Science in September. High speed rail in October. Civic power in November.

All brought together in the long term economic plan for this Northern Powerhouse I will set out in the Autumn Statement – a plan to build it, with a plan to pay for it.

For, of course, none of these things are possible without a growing, secure economy and your public finances under control.

I said at the beginning that our northern economy had, over the last 18 years, not grown as fast as our national economy.

An average nominal growth of 3.9% a year, when the whole UK was averaging over 4.4%.

We in this room, working together, can change that.

Over the next couple of decades, to 2030, the horizon of your report today, I believe we can raise the GDP growth of the north to the projected level of GDP growth of the whole nation.

If we do that, new Treasury analysis today shows that we would add £56 billion in nominal terms to the northern economy, £44 billion in real terms.

Let me spell it out.

There is a prize that awaits the north of England.

If we work together, bring our cities together, invest in future transport and skills and science, we can build a Northern Powerhouse.

The prize is worth fighting for: adding over £56 billion to the economy of the North – in real terms, over £1,600 for each person living here.

I have today set out the pathway to that northern powerhouse. Let us walk it together.

We’ll bring our country together by doing so.

I’m prepared to roll up my sleeves and get it done; you are too. So let’s get it done.

Published 5 August 2014