The latest government industrial strategy was launched this week. Let’s hope it lasts. History tells us it won’t. Business is certainly sceptical having made investment decisions in the past based on Whitehall plans which ministers lose interest in after the first sound bites have gone away or a new set of young advisers have come up with a new plan for a new minister.

The other reason past initiatives to boost productivity, wages and the Northern economy have disappeared is because of changes in government. The use of state control during the war led to the Attlee government’s confidence in a nationalisation programme. The Thatcher government reversed this and until 2008 it was generally accepted that capitalism and the private sector would guarantee economic success. All that changed after the crash and ten years on we are reaping the whirlwind of people’s distrust in markets, experts and globalisation.

This Industrial Strategy shows that the Conservatives are now committed to the state having a real role in intervening in the economy. To a considerable extent this has been driven by the success the Labour leader Jeremy Corbyn has had in identifying people’s distaste for rampant capitalism.

That brings me back to the question businesses are asking, will it last? Possibly if Greg Clarke, one of the abler members of the Cabinet stays in post and if Jeremy Corbyn doesn’t get into Downing Street. His industrial strategy based on nostalgia for the Attlee days would look very different.


The industrial strategy is targeted at the construction industry, life sciences, driverless cars and artificial intelligence. So, there is an emphasis on high tech jobs. The question is will this help with our chronic lack of productivity. Most companies in the North operating at the cutting edge of research are productive but 60% of jobs are in retail and manufacturing which is where the productivity problem really lies. There are 40% more jobs in retail than pharmaceutical. The industrial strategy is too narrow to address this widespread problem.

It is also in danger of being southern focused. Currently only 10% of research spending is in the North. The investment by healthcare giant MSD in Manchester is to be welcomed but confidence in the Northern Powerhouse is shaky at the moment. There is a growing sense outside the Manchester and Liverpool conurbations that the whole project is city based. Of course, one answer to that is for counties like Lancashire and Yorkshire to stop squabbling and get their act together. But the piecemeal approach of governments since 2010 to devolution has not helped. Transport for the North (TfN) is a big step forward but in outlining its new powers recently, the government document contained weasel words about “formally considering” TfN’s statutory transport strategy and TfN’s right to be “consulted” on rail franchises. It does not have the same powers as transport for London.

Finally, there has been a bitter reaction from local government. Whilst mayoral areas will have full control over their local industrial strategies, other councils feel they have been excluded from playing a role at the expense of the Local Economic Partnerships (LEPs). This despite the fact that ministers are calling on LEPs to address problems relating to their leadership, governance and accountability.

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Since the late seventies there have been forty different schemes to boost economic activity in the North to help close the gap with the booming South East. Local Enterprise Partnerships (LEPs) are the latest initiative and their performance has come under the eagle eye of the National Audit Office (NAO).

Their findings matter because by 2021 £12bn of our money will be channelled through LEPs under the Local Growth Fund. However the NAO has just published a report saying many of them lack capacity, expertise, transparency and that they spend money on short term projects because of Whitehall funding conditions.

There are LEPs all across the North with Leeds awarded the largest Growth Deal so far, £627m. Greater Manchester tops the national table for money given to transport projects. Liverpool City Region has been well staffed from the outset having taken on the staff of the Mersey Partnership. Warrington and Cheshire LEP is boosted by Warrington’s ability to take advantage of its excellent connectivity. With regard to Lancashire, Downtown recently hosted a top level conference at Brockholes where the ambition of the county to be part of the Northern Powerhouse was clear.

For all that there are major challenges facing our LEPs. For instance what exactly is their role in the Northern Powerhouse world of City Regions and elected mayors? The government wants LEPs centrally involved in the devolution deals they have recently signed. But LEPs have told the NAO they are uncertain of their role particularly when their boundaries are not aligned with city regions. The relationship between the business led LEPs and city region mayors, to be elected next year, remain unclear.

The idea behind LEPs was that senior business leaders would play prominent roles, but getting these busy people involved has proved difficult. The impression is sometimes given that the business representation on LEPs lacks heft and drive. The NAO calls for business to make a greater effort to be involved after years of complaints that such bodies were dominated by politicians.

Although LEPs are business led, they rely heavily on local councils for expertise. 69% of LEPs told the NAO they did not have enough staff of their own and 28% said they were not skilled enough. However local councils are under enormous pressure to empty bins and care for the elderly. There has been a 68% cut in Town Hall spending on economic development, the core function of LEPs.

LEPs have been around for a few years now, so how are they doing? Are they providing value for money? The NAO is critical about Whitehall’s methods for answering that question. LEPs have admitted that pressure to spend money in a single financial year has sometimes led them to invest in “spade ready” schemes rather than ones that would be of longer term benefit.

LEPs also need to raise their profile with the public with greater media coverage and seek ways to be more democratically accountable. The danger of not putting down roots in the community was seen when the Coalition government was able to sweep away the Regional Development Agencies with little public reaction.





George Osborne is in danger of being caught in an ambush of his own making when he presents his budget next week.

He needs to keep voters sweet ahead of the EU referendum but recently announced that the optimistic note he struck at the time of the autumn statement has now gone flat. There was always a danger that mid term unpopularity might lead people to vote against the government for reasons unrelated to Europe. At the moment the Conservatives hold a healthy lead over Labour, but an unpopular budget with new cuts and tax rises could change that before June.

The Chancellor was too bullish in the autumn and now that the economic headwinds are beginning to blow, he is thrashing around for answers to keep his pledge of a budget surplus by 2020 intact. The suggestion of a major reform of pensions was a spectacular example of this. The idea was floated to remove tax relief on pension contributions rather than taxing withdrawals later in life. This would have been a complete reversal of the current position but would have given Mr Osborne more tax revenue now. The plan met severe criticism, not least because a future Chancellor might be tempted to tax withdrawals as well.

That pledge of a budget balance by 2020 is crucial if George Osborne is going to make a bid for the premiership, but it certainly restricts his room for manoeuvre as uncertainty persists on the international front. With growth forecasts cut and average earnings rising more slowly, tax revenues are not what he expected as recently as November.

Reaching for more cuts in public services is going to prove very difficult. The well reported difficulties faced by councils like Lancashire clearly show there is no low hanging fruit on the public spending tree. Indeed the Chancellor will need a long neck to munch much more. So let’s nickname any more economies in this area, the giraffe cuts!

It is always difficult to predict what Chancellors will do, but I would be surprised if petrol duty remains frozen as it has been since 2011. With the drop in forecourt prices to around a pound a litre, this would be a relatively pain free area to raise tax. He ought to do something about taxing the amount of sugar we consume but there seems to be a reluctance to do so.

With virtually zero interest rates the climate remains favourable for investment and consumer growth remains strong. However the latter familiar development in the UK economy may be storing up trouble in the future. If only the manufacturing figures were as healthy.

Osborne will be entitled to say that his campaign to make multinationals pay their UK taxes is beginning to work. This is an essential development as people grow weary of the austerity agenda.

Wednesday’s budget will be both a temporary distraction from debate on the EU referendum, whilst also potentially affecting its outcome. Osborne has been in post nearly six years now. He will need all his political skills to get through this Budget.





This week the deadline passed for northern councils to submit their bids for devolved power. Will this herald the real start for a coherent, democratically run, Northern Powerhouse or a mishmash of devolved functions confusing to business and voters alike?

Government policy faces two ways on this issue. On the one hand they want requests for devolution to come from our city and county regions, allowing for a varied pattern to suit the area concerned. This is in the belief that one size doesn’t fit all. On the other hand ministers are very firm in their belief that elected mayors are a condition for real “Manchester” style devolution.

As deadline day approached there were frantic moves across the North to get bids in. In some areas it mirrored football’s transfer deadline day. But before surveying the complicated picture from Merseyside to Leeds, let’s remind ourselves what this is all about and whether it matters to business.

Conservatives in the previous Coalition government were determined to dismantle the structure of regional power put in place by Labour. They believed that city regions provided the real engines for growth working alongside business driven Local Enterprise Partnerships. Many Labour city leaders agreed with them, particularly Sir Richard Leese, the leader of Manchester Council. He formed a powerful alliance with the Chancellor George Osborne in launching the concept of the Northern Powerhouse to link major cities like Leeds, Manchester and Liverpool together.

Greater Manchester struck a deal before the election to get widespread economic, housing and health powers. In return they reluctantly accepted an elected mayor. Former MP Tony Lloyd is filling that role on an interim basis.

Other cities in the North were much more reluctant to accept an elected mayor and perhaps hung back awaiting the outcome of the General Election. Now with a fully Conservative administration and a new Local Government Secretary, the choice has been simplified It’s Greg Clarke’s way or the highway.

The sort of powers that might be devolved are important for business. The skills gap, poor transport links, planning, and access to finance are some of the issues firms are concerned about and being able to influence policy locally rather than traipsing down to Whitehall must be good.

So as the deadline passes, what is the picture in the North? In Greater Manchester the deal is done whilst on Merseyside things remain complex. The bid, which is also a response to the general Spending Review, has been described as “a work in progress” by officials. Veteran Liverpool Lib Dem councillor Richard Kemp prefers “last minute” which he regards as the wrong approach when control of £4.5bn of expenditure is involved. The problem on Merseyside has been the difficult relationship between the leader of the City Region, Cllr Phil Davies of Wirral and the elected mayor of Liverpool Joe Anderson. The latter believes in an elected mayor for the sub region whereas other councils in the sub region see it as a recipe for a Liverpool takeover.

To the south Warrington and Cheshire Local Enterprise Partnership is putting in its own bid for devolved powers, not wishing to be overshadowed by the city based Northern Powerhouse.

Similar sentiments prevailed in Lancashire last week at a Downtown sponsored event. The county’s leader Jennifer Mein pointed out they had the third largest economy in the North. Business wants a united bid for power but once again there are local sensitivities as Lancashire has to deal with Blackburn and Blackpool unitary authorities as well as 12 district councils.

In Yorkshire there has been a lively debate around three proposals. Some argue that the Yorkshire brand is known around the world and so the devolution deal should be county wide. Geoff Boycott for elected mayor anyone? Leeds remains convinced that a city region based solution is best involving some of the surrounding towns. Meanwhile a third group would like to contain Leeds and go for a North and East Yorkshire sub region.

This process across the North has lacked real input from the people and it will be down to Communities Secretary Greg Clarke to hand down decisions from the centre once again.

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