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31 January 2016

The Conservatives are so committed to the Northern Powerhouse they’ve moved it to London

The "Northern Powerhouse" always comes second to the City of London in the Conservatives' order of priorities.

By Louise Haigh

On Thursday morning at 09.30am staff were beginning their day at the Sheffield office of the Northern Powerhouse department when the Permanent Secretary arrived to tell them that the decision has been made – without any consultation whatsoever – to close the office down and move their jobs to a consolidated HQ and policy centre in London as part of a ‘cost-cutting strategy’.

Civil servants who were part of the successful but limited policy to spread expertise to broaden BIS’ insight on investment across the UK were told – out of the clear blue sky – that their services will no longer be required. For those of us who desperately want investment to flow to a real Northern Powerhouse and desperately want a government which serves the entire United Kingdom – not a small sect based around Whitehall – this was a sobering announcement, and one which has been met with understandable fury in Sheffield.
The fact that the government three times refused Labour requests in the House of Commons to publish the business case for their decision – produced by multi-national management consultants McKinsey & Company for a whopping £200,000 – suggests that even on their own crude cost-cutting rationale, the case may not be as clear as ministers made out.  
Instead, we have consultants from the City of London working for Conservative ministers in Whitehall in order to further centralise government, taking power and investment away from the cities and regions outside of London. It says a great deal about the Tories’ contempt for the North that they think a consolidated “combined central HQ and policy centre” has to be by rights in Westminster, rather than basing more in Sheffield and the rest of the country, where the operating costs would be cheaper and the perspective on UK Investment much broader.
And internal documents I have seen seem to confirm this. They suggest that for the BIS Board the intangible benefits of “London water-cooler conversations” outweigh the more clear-cut costs in increased accommodation and staffing – missing the obvious problem that it is Westminster groupthink itself which has seen business spend increasingly invested in London’s Zone 1, at the expense of the rest of the UK.
The statistics support this. Under the Tories the proportion of civil servants based in London has steadily risen, despite a stated policy to spread the civil service across the country. We’re not talking about the dedicated civil service clerks and job centre staff in London and the rest of the country who do a fantastic job but whose jobs are at risk – it is that policy making power is once again being concentrated at the centre, in Whitehall as much as Westminster. And we know the damage that does.
We know because we have an economy where nearly half of the UK’s cities suffer from low wages and even lower investment (almost all of them in the North and Midlands) and these are areas senior policy makers rarely tread.
And we know because we saw it over Christmas with the devastating floods which reaped havoc across many of our communities. Flood defences in Leeds which were cancelled in 2011 and which could have helped stop the damage were considered “too expensive”. If these floods had happened in Leeds on a weekday, the cost to the local economy would have been £400m. It is unacceptable that major cities of the UK, like Leeds, could be so vulnerable and suffer this chronic lack of investment – but the same is happening in Sheffield where £20m of government funding needed to protect the city is not forthcoming.
Indeed, the same is happening across the country.
The delays in the Midland Mainline – now projected to take up to four years longer to reach Yorkshire than originally planned, which will cost the region millions in lost investment, while Crossrail runs full steam ahead. The well documented transport spend per head which is 12 times larger in the capital than in other areas of the country, demonstrates the warped thinking and the flawed investment flow.
But surely there was no greater demonstration of the Tories’ SW1A groupthink than the decision to cast aside our great manufacturing sites while watching the London financial services industry reach boiling point. Sheffield Forgemasters which could have built the next generation of UK nuclear power stations denied a loan in 2011 for a giant forge which would have meant Hinckley Point C would have been proudly ‘Made in Britain’; our steel industry and the livelihoods communities across the country rely on cast aside as “unprofitable” and the odds weighted against them.
Continuing decline in manufacturing as a share of GDP as Conservative ministers’ continue to concentrate their economic policy on the whim of the City of London; booting out the acting head of the FCA, Martin Wheatly and kyboshing an inquiry into the behaviour of bankers because the City wouldn’t tolerate it. No matter the consequences for the rest of the economy of a square mile back to business as usual without even a shred of the regulation necessary to stop another crash.
While the UK needs an industrial strategy and an economy that is balanced between regions and sectors, the Conservatives blinded by Whitehall group-think are making strategic decisions which do nothing for the near-half of UK cities with low-wages and even lower-investement. The question is being asked by communities from Sheffield to Redcar and across the UK – why is this government not speaking up for me?

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