Why Osborne has opted to look North

GEORGE OSBORNE and Communities and Local Government Secretary Greg Clark have been busy announcing their enthusiasm to offer city deals to cities other than Manchester, which secured such an arrangement in 2014.

Manchester City Council has long been in the vanguard of working with governments of both political persuasions. Under Tony Blair’s New Labour government, it received generous funding to revive the area of east Manchester which had been in precipitate economic and social decline since the later 1970s.

The coalition Government in the years immediately after the general election of 2010 had been so besotted with the idea of free markets that it initially withdrew financial support for urban regeneration and left it to the market to determine which cities and parts of cities flourished.

As it became clear that the policy would ultimately lead to a greening over of the North of England and the removal of the entire Northern population to congregate in the South East and was increasing the trend towards the Conservatives becoming electorally toxic in the North, there was a sharp policy change in 2014.

This new policy involved a city deal for the Manchester city region which transferred powers and resources from Westminster and Whitehall to the Greater Manchester Combined Authority (GMCA). Yet it was on the condition that there was to be an elected mayor for the city region who, modelled on Boris Johnson in London, would wield power rather than the elected local authorities.

Now this offer is to be extended to the other great cities of England and Wales. Why? There are creditable and more cynical motives on the part of the new Conservative government. On the positive side, Britain is a heavily centralised state and it is time to share power with the regions to create a more effective political structure for the country as a whole.

Local people and politicians often understand better the needs of their localities than do remote policy makers in London. Greater energy being invested at the level of city regions is likely to galvanise more economic growth and to rebalance the national economy away from an undue stress on London.

There is, however, a more cynical interpretation of Osborne’s motives.

First, the policy is his baby and will promote his chances of inheriting the party leadership and defeating Boris Johnson, particularly if it promotes economic growth.

Second, combining smaller local authorities into a much bigger unit to provide services will cut costs and fit with the objective of eliminating the deficit. While appearing to be a generous policy, therefore, it may fit well into the Conservative ideology of diminishing the size of the state and of public spending.

Third, the language of transferring power to the North may help to rebuild the electoral fortunes of the Conservative Party in Northern towns and cities where they have hit rock bottom in recent years, with Ukip emerging as the main rival to Labour.

Fourth, it passes responsibility to local government for unpopular decisions such as the closure of hospitals.

Fifth, generating more economic growth in Northern cities and their hinterlands will enable the Government to cut subsidies to the North and require that it becomes a self-financing region. For example, the Manchester city region consumes more resources than it produces.

Osborne is insisting on the adoption of the model of the elected mayor against the wishes of most city political leaders and contrary to the outcome of referendums.

Why is this aspect of the policy so vital for him? He may genuinely believe that a dynamic mayoral figure will make the devolution of powers work more effectively. Yet there is a lingering suspicion that a single leader is easier for the Government to control than a local authority. He may also hope that the elected mayors will be drawn from Conservative-leaning business men or women, or non-party political celebrities, and so reduce the control by the big Labour local authorities in Manchester, Sheffield, Leeds, Liverpool and Newcastle.

There were those who said that the shift to devolve powers to cities was a pre-election gimmick which would be dropped if the Conservatives were reelected. On the contrary it has become a top priority in the immediate postelection period.