The Spending Review will widen the north-south divide

Squeezing disproportionate amounts of public spending out of the regions will leave the country fiscally unbalanced and with regional disparities on the scale of most developing nations.

At Budget time we are now familiar with tables setting out the impact of announcements – particularly tax and benefit changes – on different household types. The Treasury Green Book now publishes a familiar bar chart showing the net effect of each Budget on different household deciles in order that we can judge how progressive its measures have been.

But what is less common is any analysis of how big fiscal decisions affect different areas of the country. At the last Budget, the Financial Times created an ‘Austerity Map’ of Britain showing how benefit changes were affecting different local authority areas but it is possible to go further than this and to map how changes across nearly all aspects of government spending affect different regions.

As part of a wider piece of work on government spending, IPPR North has carried out an analysis of yesterday's Spending Round announcements. Assuming that broad spending patterns in 2015/16 are similar to those today, in aggregate, departmental cuts will reduce public expenditure in the North East by £57 per person and in the North West and Yorkshire and Humber by £50 per person, compared with £43 per person in London and £39 per person in the South East.

Perhaps most significantly, though, when we look at the impact of departmental cuts as a proportion of the size of the regional economy (as measured by gross value added) the Northern regions are – once again - hardest hit with the North East suffering three times as much as London. 

Consider this alongside announcements concerning capital spending and the picture is compounded further with spending in London more than ten times that of the North East. As a nation we are already spending more than 500 times as much on transport infrastructure in London than we are in the North East, 25 times more than in the North West, but with the announcement of a government commitment to a further £9bn for Crossrail 2, it is likely that the capital city will swallow up more than 90% of all regional transport infrastructure investment in the coming decade.

Government will argue that its commitment to local growth comes in the form of the Single Local Growth Fund – the pot of unringfenced funding which will be bid for by business-led Local Enterprise Partnerships (LEPs). But given that Michael Heseltine proposed a £49bn fund over four years, the announcement is less than one-fifth of what LEPs might have hoped for, only going to prove once again how hard Whitehall finds putting the rhetoric of decentralisation into practice.

If government is serious about rebalanced growth then it must recognise that national prosperity depends upon regional prosperity. Squeezing disproportionate amounts of public spending out of the regions may well have a political and ideological logic to it, but it will leave the country fiscally unbalanced and with regional disparities on the scale of most developing nations. Mercifully, this is only a single year Spending Round, but it is beholden upon any incoming government to reverse this shocking pattern of public expenditure and ensure that northern prosperity is national prosperity once again.

Ed Cox is Director of IPPR North

@edcox_ippr

The Angel of the North sculpture overlooks the match between Gateshead and Esh Winning on May 2, 2013 in Gateshead. Photograph: Getty Images.

Ed Cox is Director at IPPR North. He tweets @edcox_ippr.

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Who is the EU's chief Brexit negotiator Michel Barnier?

The former French foreign minister has shown signs that he will play hardball in negotiations.

The European Commission’s chief Brexit negotiator today set an October 2018 deadline for the terms of Britain’s divorce from the European Union to be agreed. Michel Barnier gave his first press conference since being appointed to head up what will be tough talks between the EU and UK.

Speaking in Brussels, he warned that UK-EU relations had entered “uncharted waters”. He used the conference to effectively shorten the time period for negotiations under Article 50 of the Lisbon Treaty, the legal process to take Britain out of the EU. The article sets out a two year period for a country to leave the bloc.

But Barnier, 65, warned that the period of actual negotiations would be shorter than two years and there would be less than 18 months to agree Brexit.  If the terms were set in October 2018, there would be five months for the European Parliament, European Council and UK Parliament to approve the deal before a March 2019 Brexit.

But who is the urbane Frenchman who was handpicked by Commission President Jean-Claude Juncker to steer the talks?

A centre-right career politician, Barnier is a member of the pan-EU European People’s Party, like Juncker and German Chancellor Angela Merkel.

A committed European and architect of closer eurozone banking integration, Barnier rose to prominence after being elected aged just 27 to the French National Assembly.  He is notorious in Brussels for his repeated references to the 1992 Winter Olympics he organised in Albertville with triple Olympic ski champion Jean-Claude Killy.

He first joined the French cabinet in 1993 as minister of the environment. In 1995, Jacques Chirac made him Secretary of State for European Affairs, teeing up a long and close relationship with Brussels.

Barnier has twice served as France’s European Commissioner, under the administrations of Romano Prodi and José Manuel BarrosoMost recently he was serving as an unpaid special advisor on European Defence Policy to Juncker until the former prime minister of Luxembourg made him Brexit boss.“I wanted an experienced politician for this difficult job,” Juncker said at the time of Barnier, who has supported moves towards an EU army.

 

Barnier and the Brits

Barnier’s appointment was controversial. Under Barroso, he was Internal Market commissioner. Responsible for financial services legislation at the height of the crisis, he clashed with the City of London.

During this period he was memorably described as a man who, in a hall of mirrors, would stop and check his reflection in every one.

Although his battles with London’s bankers were often exaggerated, the choice of Barnier was described as an “act of war” by some British journalists and was greeted with undisguised glee by Brussels europhiles.

Barnier moved to calm those fears today. At the press conference, he said, “I was 20 years old, a very long time ago, when I voted for the first time and it was in the French referendum on the accession of the UK to the EU.

“That time I campaigned for a yes vote. And I still think today that I made right choice.”

But Barnier, seen by some as aloof and arrogant, also showed a mischievous side.  It was reported during Theresa May’s first visit to Brussels as prime minister that he was demanding that all the Brexit talks be conducted in French.

While Barnier does speak English, he is far more comfortable talking in his native French. But the story, since denied, was seen as a snub to the notoriously monolingual Brits.

The long lens photo of a British Brexit strategy note that warned the EU team was “very French” may also have been on his mind as he took the podium in Brussels today.

Barnier asked, “In French or in English?” to laughter from the press.

He switched between English and French in his opening remarks but only answered questions in French, using translation to ensure he understood the questions.

Since his appointment Barnier has posted a series of tweets which could be seen as poking fun at Brexit. On a tour of Croatia to discuss the negotiations, he posed outside Zagreb’s Museum of Broken Relationships asking, “Guess where we are today?”

 

 

He also tweeted a picture of himself drinking prosecco after Boris Johnson sparked ridicule by telling an Italian economics minister his country would have to offer the UK tariff-free trade to sell the drink in Britain.

But Barnier can also be tough. He forced through laws to regulate every financial sector, 40 pieces of legislation in four years, when he was internal market commissioner, in the face of sustained opposition from industry and some governments.

He warned today, "Being a member of the EU comes with rights and benefits. Third countries [the UK] can never have the same rights and benefits since they are not subject to same obligations.”

On the possibility of Britain curbing free movement of EU citizens and keeping access to the single market, he was unequivocal.

“The single market and four freedoms are indivisible. Cherry-picking is not an option,” he said.

He stressed that his priority in the Brexit negotiations would be the interests of the remaining 27 member states of the European Union, not Britain.

“Unity is the strength of the EU and President Juncker and I are determined to preserve the unity and interest of the EU-27 in the Brexit negotiations.”

In a thinly veiled swipe at the British, again greeted with laughter in the press room, he told reporters, “It is much better to show solidarity than stand alone. I repeat, it is much better to show solidarity than stand alone”.

Referring to the iconic British poster that urged Brits to "Keep Calm and Carry On” during World War Two, he today told reporters, “We are ready. Keep calm and negotiate.”

But Barnier’s calm in the face of the unprecedented challenge to the EU posed by Brexit masks a cold determination to defend the European project at any cost.

James Crisp is the news editor at EurActiv, an online EU news service.