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2 March 2017updated 12 Jun 2018 4:14pm

George Osborne: The cities of the North can rival London

The architect of the "Northern powerhouse" on why we should start thinking about the TransPennine Express like the London Underground. 

By Will Dunn

One of the chairs in George Osborne’s office has money on it. Not a lot of money – it looks to be about £2.30 – but the sight of it stops us before we sit down. “Must have fallen out of someone’s pocket,” says Osborne before, ever the taxman, he scoops up the coins and transfers them to a nearby table. It is very difficult to watch the man who was until June in charge of the world’s fourth-largest economy fiddling with two quid in coins without observing that the former Chancellor has been forced, just lately, to deal with a spectacular amount of change.

“When I left Downing Street in July,” he says, “I had a choice about what I wanted to do with my political energy. Of all the initiatives that I did in government, I don’t think anything has caught on and developed a life of its own as much as the Northern Powerhouse.”

Osborne is a northern MP, of course, albeit for a constituency in which former members of the Bullingdon Club are likely to feel at home. A Barclays survey in 2003 found that Tatton was the wealthiest area in England in terms of disposable income. The constituency’s largest town, Wilmslow, has the UK’s busiest Aston Martin dealership and more millionaires per capita than anywhere in the UK outside of Mayfair. Alderley Edge has an average house price of £589,000. On the other side of the Peak District is Barnsley, where the average house price is £126,000.

“It’s a very comfortable part of the world,” Osborne concedes, “because people are in work, and the area is on the up, and there is a beautiful natural environment around it. It’s an interesting community, because there’s also a constant pressure on things like housing, making sure people can afford to live in the area they grew up in. There are serious pockets of deprivation in the constituency. In many ways, I think it’s very representative of Middle Britain.”

But does Tatton represent the North? “The North is not one homogenous community. You can go from the wildest, remotest countryside, the Yorkshire Dales and the North Yorkshire Moors, to deprived inner-city communities in Liverpool, to some of the most successful manufacturing centres and financial centres in Britain, whether it’s hedge funds in Leeds or aerospace factories in Lancashire. The North is not different from any other part of the country, except that it does have a shared feeling that it is the north of England, a shared geographic identity, and a shared connection to an industrial past. And I think, a shared sense that sometimes it has been neglected, and London dominates – that feeling, by the way, you would get in other parts of Britain as well, but it’s one of the things I’m trying to address.”

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Are there not more important divisions in British society than north and south? The gap between rich and poor increased dramatically under both Labour and Conservative governments, with incomes rising by 64 per cent for the top fifth of earners while the bottom fifth lost 57 per cent. The intergenerational gap, too, is becoming a chasm; now, for the first time in British history, a pension pays more than a job.

Osborne says it is “a trap… to say that there are no really serious geographic differences in Britain, [that] it’s all between deprived communities and better-off communities. I think then, you miss a broader point, which is, in the modern global economy, very big cities are becoming absolutely dominant. That’s not necessarily what you would have expected. You might have thought that the internet and the ability to work from home, cities would become less important. That’s not the evidence – all around the world, growth is clustering around big cities. People want to be together, spark off each other, create innovation together. And Britain only has one global city – London. It is probably the most successful of all the global cities, and I think it’s of enormous benefit to the whole country that, located on these islands is this great global city, but it does create quite an imbalance in the economy, which obviously has been growing over the decades.”

“I just think that in the north of England there is a particular opportunity, because you have a series of quite small, similar-sized cities, all within a few dozen miles of each other, broadly speaking. Better connect them together, and you could create something like the cluster effect you get in London. That would lift all communities. That would help the poorest, as well as the richest, and bring jobs and investment and prosperity to the area. So, it’s not that there’s a unique disadvantage in the North. But there is a unique opportunity.”

The opportunity Osborne describes can be summed up as “agglomeration”, or the sticking-together of small cities with good links – transport links, but also connections in trade, culture, education and more – to create a unified area. Some policymakers point to the Randstad in the Netherlands, a megalopolis that agglomerates Amsterdam, Rottterdam, Utrecht and the Hague, as an example of how this might work. Osborne says the opportunity exists “because you’ve got these cities, like Liverpool, Manchester, Leeds and Sheffield, which are quite close to each other. To take an example I use, the Central Line in London is longer than the gap between Manchester and Leeds.”

Actually, this isn’t true. An end-to-end Central Line journey covers 54.9km; Manchester and Leeds are 57km apart as the crow flies, or 69km by road. A fast direct TransPennine Express train between the two cities takes 49mins, while the Central Line journey takes 1hr 23mins.

“Millions of people use the Central Line every day, to make journeys across this capital. People think nothing of commuting in from Reading or Guildford,” states Osborne, although it is unclear if he has asked the commuters that use London’s packed and creaking rush-hour trains if they really do think nothing of their long, uncomfortable and expensive journeys. “You just don’t get that kind of movement of people between the cities of the North. They’re all quite insular, or they have been.”

This commitment to better transport is exemplified in the megaproject that Osborne, as Chancellor, signed off: HS2. But HS2 – or at least its first phase – connects the North to London, not to itself. Would all those tens of billions (the current projected cost is £56bn) not be better spent on the east-west connections between northern cities?

Osborne describes this as “a nonsense argument. Obviously, you can’t grow and be successful by deliberately isolating yourself from the rest of the country. So I am all for the fastest possible links with Birmingham, London and beyond, and I think HS2 is going to be an enormous investment in the north of England. The biggest, in fact, since the Victorian age. But it is incomplete without the link across the Pennines, without the east-west connection. I don’t see them as in any way in contradiction, they complement each other.”

With a north-south link, says Osborne, “A big international business might think ‘we don’t have to have to have our headquarters in London, we can have our headquarters in Manchester. There’s a great pool of talent there, the property is cheaper, the standard of living can be higher for the same salary, and if we base there we’re not cut off from anywhere, we can travel quickly around the country.’ At the moment, there’s been a great success in east London with tech startups, but it’s expensive, this city. As a result, some tech businesses that can’t afford the rents in east London are saying they will set up in Berlin, or Lisbon. I’m all for Europe doing well, but we want them to be thinking of setting up in Manchester and Leeds. And now, there is a nascent tech community in both cities, but I think that is helped by having faster connections with the South and the Midlands, not hindered.”

“And, by the way, if you cancelled HS2, it’s not like you could start building HS3 tomorrow. It takes many years to get planning permission, judicial review, and for everyone to have their chance of express a view in consultation.”

Is the money still there for these grand projects? Can their budgets be guaranteed, in the uncertain years ahead?

“The big infrastructure projects – of course they are expensive, but in the scheme of the Treasury’s overall budget, they are not that expensive. Even HS2, a very big project with a very large price tag – that is money to be spent over 30 years. In any one year, the budget for HS2 is just a tiny fraction of the government’s overall budget. As Chancellor of the Exchequer, I never found that the problem of the big infrastructure projects was a lack of money. It was a lack of projects. I gave the go-ahead to Crossrail and I gave the go-ahead to HS2. But in the case of Crossrail, that had been announced at the Conservative Party conference in 1988.”

Osborne says transport is just one of the “three ingredients” that were identified as necessary to building a Northern Powerhouse. ”Second was to invest in the excellence that’s there – the science, the research and the creative industries there. We’ve put money into the graphene centre in Manchester and the life sciences centre in Newcastle.”

He is particularly optimistic in this area, having observed the North’s ingenuity and resilience at close quarters. “There was a big science facility in my constituency at a place called Alderley Park, where AstraZeneca employed 5,500 research chemists. In many ways, an example of the kind of very big company sites that used to exist, not just in pharmaceuticals but in other industries. I remember the day when they called up and said that they were closing it. It was a massive blow. It felt like one of the great jewels in the crown of northern science, and people travelled from a long way to go wand work there. But now, only three of four years later, there are dozens of life sciences businesses – it was turned into a science park, and there are lots of little startup businesses, and there are going to be more people employed on that site than when there was one single big-pharma company. So you don’t have to look backwards, you can look forwards.”

The third ingredient in Osborne’s plan, and perhaps the factor able to make the most immediate difference, “was civic power. None of these cities had elected mayors for the whole city area. Liverpool had just chosen to have an elected mayor, but unlike London, Paris and New York, they didn’t have elected mayors. And I thought without that, you would lack the power in the powerhouse.”

It’s easy to imagine Osborne’s plan to hand devolved power to the cities of the North causing concern in his party; Liverpool, Manchester, Sheffield and others may well elect Labour mayors. He says a bipartisan effort is exactly what is needed. “This is not about the advantage or disadvantage of the Conservative or Labour parties. This is a genuine collaborative effort.”

“The great thing about these mayoral contests,” he adds “is …we’ll see. In London, we’ve had a Labour Mayor, a Conservative mayor and an independent mayor. All in a city that I was told, at every election, was a Labour city, that would only ever elect a Labour mayor. I would not take any of these contests for granted.”

He reaffirms, however, that this is not a Conservative project, a Labour project, nor even a George Osborne project. “If it’s solely dependent on one person’s career, or one government, or whoever happens to be in Downing Street, the Northern Powerhouse is not going to thrive and survive. Whereas if it’s owned by the North itself, as a vision of what we can achieve in the North, then it will be a great success.”

This article originally appeared in the New Statesman’s policy report Spotlight.