Budget devolution key to Osborne’s ‘Northern Powerhouse’

23 Jun 14

Chancellor George Osborne today said he wanted to ‘start a conversation’ about a new model of city government that would see greater devolution of budgets to local level.

George Osborne at Science and Industry Museum, Manchester


Delivering a speech in Manchester, the chancellor set out his vision for a ‘Northern Powerhouse’, backed by stronger local powers.

‘A true powerhouse requires true power,’ Osborne said.

‘So today I am putting on the table and starting the conversation about serious devolution of powers and budgets for any city that wants to move to a new model of city government – and have an elected mayor. A mayor for Greater Manchester, a mayor for Leeds, with powers similar to the mayor of London.’

Strong local leaders could speak for entire areas and tackle issues such as public transport, economic development and crime, he argued.

Elsewhere in the speech, the chancellor identified the poor connectivity between northern cities as a brake on regional economic development.

‘I want us to start thinking about whether to build a new high-speed rail connection east-west from Manchester to Leeds. Based on the existing rail route, but speeded up with new tunnels and infrastructure. A third high-speed railway for Britain.’

Osborne asked for this proposal to be feed into Sir David Higgins’ review of the second phase of HS2.

Two other ingredients for northern success were greater co-operation between the region’s universities and industry and development of its arts and cultural centres, he said.

‘What I’ve set out today is a vision of a Northern Powerhouse – not to rival the south, but to be its brother in arms as we fight for Britain’s share of the global economy.

‘Let’s bring out northern cities together, so they’re bigger and better than anyone can be alone. It won’t happen overnight – it’s a long-term plan for a country serious about its long-term economic future,’ said the chancellor.

‘And I promise you this – I will work with anyone in any political party in any of these great cities to make this northern powerhouse a reality. For this plan is bigger than any one of us – and it’s worth it for us all.’

Cities Commission chair Jim O’Neill welcomed Osborne’s ‘boldness’, saying: ‘This is a really important speech by the chancellor, opening up the path to genuine devolution of power and ideas to our northern cities.’

Earlier this year, O'Neill told Public Finance that greater fiscal freedom was necessary to boost growth in the UK.

Lord Heseltine, who chaired the government’s commission on local growth, said: ‘Nowhere is better placed to lead the rebalancing of the UK than the North. The combined might of great cities like Manchester, Liverpool and Leeds and the combined talents of the people who live there must have the chance to lead this vital part of our country as earlier generations so proudly did in earlier times of British excellence.’

Osborne also said that the first allocation from the £2bn Single Local Growth Fund, recommended by Heseltine, would be announced in two weeks.



  • Vivienne Russell
    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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