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Northern Powerhouse could be derailed by Brexit, says Sir Vince

The Northern Powerhouse project risks being derailed by Brexit, according to Liberal Democrats Leader Sir Vince Cable.

Speaking at our Vital Topics lecture at the Midland Hotel in Manchester, Sir Vince said Brexit was “sucking the life” out of government and parliament, and everything was being subordinated to the project.

“The opportunity costs are staggering and all the talented civil servants are being pulled into this. Anything else, including the Northern Powerhouse and including local government and health reform, is being pushed into the background. I do worry that at a time when we really do need to be tackling these issues we are just marking time.”

Rebalancing

The theme of Sir Vince’s speech was the state of the Northern Powerhouse today and past attempts to rebalance the regional economy stretching back half a century.

He said devolution in Scotland in the 1990s was a pivotal moment. “The ‘North’ used to include Scotland which has somehow got quite detached from this. In retrospect the devolution package to Scotland has totally transformed the way we look at regional imbalances in the UK. Since devolution Scotland has become much more confident and we don’t think of Glasgow any longer as a struggling city as we do of communities in the north of England, whatever the economic realities.”

At the same time he said the restoration of London government had been crucial too. “Having a coherent force in London representing almost 10 million people with an integrated transport system and a common interest in developing sectors such as financial services is a very, very powerful political and economic force.”

Economic crash

Meanwhile the consequences for the North of the 2008 economic crash had also been profound with local government support falling by up to 40%. “The effects on Northern cities has been profound. There was also a cut in capital spending which I opposed while in the Coalition government. The cuts to local government spending and capital spending disproportionately affected the North.”

Against such a backdrop he said many towns across the North had voted for Brexit. “The perverse consequences are that Brexit will be particularly negative for many of these northern communities because the share of exports going to EU is highest from a region such as the North East than any other part of the UK.”

Vision

Sir Vince said there were three central ideas behind the original Northern Powerhouse vision. Firstly to counter enormous pull of the south, secondly to give Northern cities a voice, and thirdly to tackle the North’s poor connectivity.

He said progress on these ideas today was mixed. “There are very big divergences within the North. Manchester is now a very dynamic place and a success story in terms of economic growth and urban regeneration. But go down the road and it is a different story in Oldham or Rochdale, or somewhere like the North East outside Newcastle. To my mind the most difficult place of all is Blackpool which in many ways epitomises the worst of the problems of the North - decline, depopulation, lack of investment, lack of hope. There is a Northern Powerhouse but it is very selective.”

University hub

Sir Vince said universities were enormously important as economic drivers and hubs of particular towns and cities. “When you go back to the Blackpools of this world you realise that is part of the problem, there is no intellectual hub in those towns. The problem is that we haven’t given the status and resources to the colleges. There is no reason why Blackpool College shouldn’t have the same influence on Blackpool that the University has in Manchester.”

Meanwhile he said that it was difficult at the moment to see much progress on transport and connectivity issues across the North, while he called for more financial devolution for local authorities.

“We should be letting local authorities have a much wider tax base. Enable a bigger tax base, enable local authorities to keep the revenue, and give them the freedom to spend. The fact that councils cannot even raise their council tax and the idea that this is all decided in Whitehall is obscene. Local government has no respect from central government and that has to change.”

Emotion

Meanwhile Sir Vince added that the whole North-South debate wasn’t just about the economic indicators but ran deeper.

“I am from York and grew up with conversation around the dinner table about the North-South divide. I’ll never forget when my mother first went to London and got off the train and started apologising to the taxi driver and porters for her Yorkshire accent because she thought these people were somehow members of the aristocracy because they lived in London.

“That captured the sense of inadequacy that a lot of people felt from coming from the ‘frozen north’. That deep divide remains in a different form today. It is the psychological and emotional underpinnings which are no less important that the economic and physical geography.”