A Fair Deal for the North?

IPPR North, business and industry, devolution and localism, economy, fairness, regional issues

Author(s):  Ed Cox
Published date:  20 Jul 2012
Source:  Yorkshire Post

The government likes the idea of striking a deal. It carries a whiff of free market and binds parties into a clear sense of rights and responsibilities. And deal-making might just be the way forward if the North of England is ever to throw off the shackles of its industrial past and its Whitehall-determined present.

Perhaps the greatest advance of the past 12 months has been the striking of City Deals. Leeds, Sheffield and eight other cities have established agreements with government creating significant investment funds for transport and housing projects, giving them greater control over skills and apprenticeship programmes and allowing them to keep a greater share of the tax revenues generate by new economic growth. Each deal is specific to each city’s particular needs and concerns and, although they took months to sign off, they represent a significant step forward in principle and in practice.

Already there is talk of ‘City Deals II’. Having successfully negotiated a first round of new powers, core cities are now lining up fresh ideas to test the resolve of government departments who historically have been less enthusiastic about letting go: many places would like more ability to bring together welfare-to-work, health, social care to provide more joined-up services for families and individuals. Other places are lining up their own deals: if it’s good enough for the biggest cities then why not places like Hull or York?

Government has opened the door for other deals to be struck too. In his March budget speech, the Chancellor rightfully recognised the woeful levels of investment in Northern transport infrastructure – not least in its railways – and pledged the government to funding the electrification of the Transpennine route as well as some other improvements around Manchester which will have spin-off benefits further afield. But these piecemeal announcements fall well short of a ‘deal’. If the North is to receive anything like the levels of investment seen in London and the South East then HM Treasury needs to take a longer term view of the benefits of investment and devolve both money and powers to transport authorities in the North. In return, Northern transport authorities will need to collaborate more effectively to devise a long-term strategy for reducing the fare subsidies we receive from the centre.

In theory, this year’s Localism Act provides another opportunity for the North to make demands on the Whitehall machine. The General Power of Competence gives councils a mandate to do anything that an individual may do within the wider law, including running commercial activities. Over time then, we may well see local authorities providing mortgages, building homes and even running buses again. With new Community Rights to call for services to be put out to tender or to take control of public buildings or parks, government has made it possible for deals to be struck in new ways right across the land. So how come they aren’t queuing up to do so, ministers ask?

Herein lies the rub. If a deal is to be struck, it needs to be a fair one, or at least hold out a measure of progress. Whilst government may have extended opportunities for deal-making, it has massively curtailed the means by which any deal may be beneficial to the north. Not only have spending cuts diminished the capacity of public, private and voluntary organisations to  enjoy their new found freedoms, they have staked them against one another in the competition for ever-decreasing resources and it has introduced rancour and bitterness as ‘deficit reduction’ has impacted disproportionately on northern areas.

Local Enterprise Partnerships are a good case in point. Set up on derisory budgets, they have been asked to compete with each other for the Regional Growth Funds, for Enterprise Zones and other government investments through Whitehall-run beauty contests, whilst the lion’s share of innovation funding, skills funding and inward investment support is squirrelled away by national bodies who have reaped the dividends of the closure of the Regional Development Agencies and who’s decision-making is looking increasingly skewed southwards. For example, since the demise of the RDAs, inward investment projects secured in Yorkshire and Humber have fallen by one third whilst in London and the South East they have increased by a similar proportion.

But it’s not just financial flows that are looking increasingly unfair. We lack a coherent voice in approaching the bargaining table. The Northern economy is twice the size as that of Scotland and yet the Scottish devolution debate ensures Mr Salmond a regular audience in the corridors of power. And with London in the public eye as never before, Mr Johnson also has unprecedented opportunities for deal-making at Number 10. If the North is ever to ensure its own devolution deal, it too needs to overcome local parochialism and find a more coherent voice.

With a  Spending Review now on the horizon, what would be a truly fair deal? Later this year, the Northern Economic Futures Commission will publish its final report. In that, we will set out a range of measures that aim to return the Northern economy to growth but, more fundamentally, it will make the case for a national spatial and economic plan that over a period of twenty years will stand the North of England back on its own two feet. It will require central government to change and let go, it will require Northern partners to shoulder new risks, but above all it will be a deal that breaks out of the stalemate that currently holds back Northern and national prosperity.


Our people

Ed Cox, Director, IPPR North