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Balancing Britain: the ‘Northern Powerhouse’ and the search for alternatives

Despite concerns over the government’s devolution plans, there is a broad consensus that localism is a good thing. Craig Berry examines the ‘Northern Powerhouse’ narrative – and what an alternative might look like

February 24, 2016
12 min read

krauze-devo2The ‘Northern Powerhouse’ is a narrative of change or, perhaps more precisely, of reversion to some earlier state of affairs within which the north of England was more confident, more important, and more prosperous. As such, the policy around devolving powers to city-regions within the north has developed into an important dimension of the current government’s so-called ‘rebalancing’ agenda. Accordingly, however, the Northern Powerhouse has inherited many of the conservative connotations of its conceptual parent. Nevertheless, the agenda’s limitations – and even dangers – have not so far detracted from its intrinsic appeal, as the prospect of devolution is used to answer popular concerns about place and insecurity.

Rebalancing and the north

‘Rebalancing’ is designed not to legitimise radical change within UK economic policy, but rather to de-legitimise the notion that a more interventionist state is necessary, in a post-crisis environment, to restore sustainable growth. The idea that the economy can be rebalanced clearly implies that there once was balance – that is, some natural economic order that was skewed by mismanagement by politicians. The Northern Powerhouse narrative fits the same mould: at a time when the economic crisis has further disadvantaged the north relative to London and the south east, the government dusts off devolution – hitherto a largely centre-left agenda – to effectively tell the north that its prosperity is its own business.

Of course this does not mean that the government does not want the north to prosper. Rather, it indicates that it believes that the path to prosperity is composed of forces of urban ‘agglomeration’. It accepts with seemingly little reservation the ‘new urban economics’, which posits that a city-based and market-led concentration of economic activity can improve the national growth rate, even if it essentially means abandoning those areas where market forces do not work. The implication, or accusation, is that successive governments have effectively held back certain cities by seeking to manage spatial inequalities. This helps to explain the government’s determination to install directly-elected ‘metro mayors’ in each refurbished city-region – the region, and ultimately nation, as a whole will be better off if the largest cities are enabled to dominate.

Ironically, the turn to the north is in part a recognition that the UK’s premier powerhouse, London, may be close to reaching the limits of what is possible in terms of urban agglomeration, as urgently required upgrades to the south east’s rail and aviation infrastructure are confronted by opposition from residents and their representatives.

Politics and place

It is possible to identify, however, a range of more cynical motives that have influenced the emergence of the Northern Powerhouse as a key objective. Insisting that the existing political infrastructure is reformed to accommodate directly elected mayors can disrupt the formation and consolidation of alternative political agendas within local authorities. It even offers the prospect of power ‘changing hands’ in large Northern cities that have in the past acted as agents of progressive policy-making.

We must also see the recent emphasis on geographical rebalancing within England, in the form of the Northern Powerhouse, in light of the abject failure of the earlier coalition government’s agenda for sectoral rebalancing. Manufacturing resurgence may be implicit in the Northern Powerhouse agenda – because of the deliberate echo of the north’s industrial past – but this objective had been explicit in the coalition’s programme. Yet the promised ‘march of the makers’ has clearly failed to materialise, with manufacturing output still more than 6 per cent below its pre-crisis peak. This failure has been tacitly recognised by the government, even if remnants of the rhetoric remain – manufacturing was barely mentioned in the Treasury’s recent productivity plan.

Furthermore, it is impossible to assess the character of the government’s plans for devolution without appreciating its synergy with austerity, especially given how hard local government has been hit by spending cuts so far. While the notion that the chancellor is seeking to ‘pass the buck’ in terms of implementing reductions in public expenditure is too simplistic, it is nevertheless the case that transferring some public service responsibilities to local government strengthens the solvency of central government, at a time when the state’s dependence on borrowing is profound – and intensifying. Of course, he is loath to simply recreate the solvency dilemma at the local level – a recurrent feature of local politics in the United States; hence the emphasis on devolving spending powers to local authorities, but continuing, more generally, to severely restrict their fiscal autonomy.

Most fundamentally, the Northern Powerhouse enables the current government to further demonstrate its apparent understanding of popular concerns around ‘place’. Crises destroy complacency about the basic building blocks of our lifestyles, of which physical space is probably the most fundamental. Place, and associated concerns around identity and belonging, has therefore become an important dimension of numerous political and policy dilemmas. This helps in part to explain the momentous rise of the SNP in Scotland and the emergence of UKIP as a political force in England, as well as the Conservatives’ shifted stance on issues such as Europe and immigration in response.

This shift was triggered by the financial crisis, and exacerbated by the experience of austerity. The Northern Powerhouse agenda is a way of demonstrating to the electorate that the government takes seriously your concerns around a lack of control of the spaces in which you live. Yet the manner in which the agenda has proceeded reinforces rather than challenges austerity. The problems of northern city-regions are given more recognition, yet northern citizens are themselves ‘liberated’ to fix them. The government’s most important post-crisis spatial imaginary is of course England, rather than the north alone, and the crude ‘powerhouse’ branding imposed upon the north indicates the persistence of the north’s subservience to England proper in Conservative thinking.

Devo-danger

None of this is to suggest that devolution is not a good thing, other things being equal. Whitehall has demonstrated for many decades (if not centuries) a limited understanding of, or even indifference towards, the needs of local economies in the north. There are strong reasons to believe that genuine decentralisation will buttress economic resilience in Britain, both by enabling local policy-makers to adapt more effectively to adverse economic conditions, and through the diversification that will result from allowing different local economies to tread different developmental paths. Our answer to the failure of one national growth model should not simply be to find a new one, but rather to enable experimentation in how prosperity is pursued.

krauze-devo1It is, however, impossible to devolve powers that do not exist. Britain has no meaningful tradition of industrial policy, as it would be understood in a continental context. Its leadership of the industrial revolution meant it has never needed to develop tools by which to ‘catch up’. Industrial policy powers should be devolved, so that northern city-regions can support existing industries and develop new ones – but the centre will have to take the lead, in the first instance, in creating and fuelling adequately the means of doing industrial policy within the British state at all levels. As things stand, the Northern Powerhouse agenda not only fails to instil industrial policy powers within northern city-regions, it creates the dangerous impression that it is doing precisely the opposite. More generally, local authorities must cease playing ball with Osborne on devolution while local government continues to be the main victim of fiscal consolidation. The ‘can do’ positivity of some civic leaders in the North is nice to see – but cash is the only currency that matters at the moment.

An alternative approach to devolution?

A compelling alternative to the Northern Powerhouse agenda has not yet been articulated. Devolution, after all, had previously been largely the Labour Party’s domain, with the Blair government having devolved significant powers, established the regional development agencies, and attempted – before being thwarted by the 2004 referendum defeat in the north east – to establish new democratic processes at the regional level.

Policy debates on localism and devolution within the main political parties have actually been relatively rich in the past few years. The Liberal Democrats’ 2010 campaign discourse of ‘community politics’ provided fertile ground for coalition building in its links with the Conservative ‘big society’ policy. The ‘Blue Labour’ tendency that emerged from 2010 expressed a form of localism. It adopted the argument that the state crowds out community activism, and compounded it with a more direct critique of the pernicious social consequences of unfettered free markets. Concepts such as ‘Englishness’ are presented as inherently progressive in their potential to catalyse associational life, and to foster social relations that are separate from state and markets. However, this focus on culture and identity also leaves a vacuum in terms of what institutional form devolution could take. Like the ‘big society’ agenda that it was developed in response to, Blue Labour’s approach to localism could be accused of being ‘famously vague’.

The Labour Party started to prepare plans for a decentralisation of powers during the Conservative-Liberal Democrat coalition period in office. Yet, in contrast to other political parties, this was done rather quietly, and these ideas did not feature heavily in the 2015 election campaign. This arguably contributed to electoral losses in Scotland, and accentuated the devolutionary proposals of other parties.

Jeremy Corbyn has thus far offered very few thoughts on devolution, other than to dismiss the Northern Powerhouse agenda as a ‘cruel deception’ during his leadership election campaign. The issue is clearly not one of his priorities, and the gap between local Labour leaders in the north and the central party has grown into a chasm in recent months. Of course, Corbyn’s shadow cabinet is a broad church – there are some, such as Lisa Nandy, who appear to endorse, in general terms, the direction of travel of northern leaders. Others, such as shadow communites secretary Jon Trickett, recognise the transformative potential of the politics of place, yet remain sceptical of the Northern Powerhouse agenda.

Corbyn’s strategy is to confront the overall austerity agenda directly, in an attempt to convince the electorate of its macro-economic erroneousness and ethical callousness. While this may in many ways be creditable, it will probably do little to dent the ideological hegemony of the neoliberal ideas that underpin austerity. Few people welcome austerity in-itself – the government’s ingenuity lies in the co-evolution of austerity with a set of political objectives, such as greater local autonomy, that the electorate is more likely to support.

The end result of the lack of a tangible alternative to the current approach to devolution is an intensification of incoherence, at least in England.

The most immediate priority is to find a way to accommodate the localist consensus that now exists. A range of phenomena such as the rise of single-issue protest and calls for greater involvement in politics constitute a demand by individuals for greater empowerment, so that they may exercise greater political power themselves, not only through traditional political parties and their archaic structures for participation. Real change will require international collaboration, and the ability to act and organise pragmatically that such endeavours require. But it will also require that the centre relinquishes economic policy control, as much as possible, to the sub-national level.

An approach to economic change that invites people to take ownership of the transformation they want to see will be more sustainable, and better achieved, where the democratic process is within touching distance. If local communities are trusted to govern themselves to a greater extent, then they in turn will place greater trust in politicians who tell them that certain powers are best exercised at the national level. Indeed, devolution should quintessentially be seen not as fragmentation, but rather as a way to renew collectivist politics.

Powerhouse of cards

The Northern Powerhouse label might not be around that much longer; its rebilling as ‘Northern Poorhouse’, ‘Northern Powercut’ and ‘Powerhouse of Cards’ demonstrates how easy it is to satire, when the reality inevitably fails to live up to the rhetoric. However, the politics of place is here to stay, insofar as it speaks to citizens’ concerns about their economic security in the post-crisis environment. At the moment, the government is managing to draw upon these concerns while offering little by way of genuine change to the UK’s economic geography. But the Northern Powerhouse will create its own dynamic. The alignment between devolution and the current government’s interests will not pertain indefinitely, creating opportunities for the left to refashion localism on its own terms.

As budgets for local public services, and newly devolved services, continue to be cut, and market-led local growth plans unravel in the face of investment volatility, the argument must be made that devolution carries the risk of eroding the economic security of many areas. Reversing this minimally decentralising agenda, even if desirable, would simply feel all too much like taking power from the hands of local communities. Instead their genuine empowerment needs to be championed. This involves accommodating a wider range of voices and a greater willingness to allow different parts of the country to pursue their own economic policy agendas. There may be disagreements along the way, but ultimately any efforts to enhance the ability of people to shape their own communities will strengthen the foundations of a better future.

Craig Berry is deputy director of Sheffield University’s Political Economy Research Institute (SPERI). Illustrations: Andrzej Krauze

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