Northern Powerhouse will roll out to Sheffield as city grabs transport powers

Sheffield City Hall, October 2012 by Ed Webster

Sheffield is to join Manchester as the second northern English town to grab a host of powers from Whitehall as chancellor George Osborne seeks to devolve significant oversight of transport to the region.

Under the plans the Steel City will vote for an elected mayor in 2017 to preside over a region spanning South Yorkshire, Nottinghamshire and Derbyshire.

However the Sheffield mayor appears to risk being labelled a glorified transport commissioner, much like the current mayor of London, as the highlighted policies from a government press release concern little else:

  • Responsibility over the region’s transport budget, with a multi-year settlement to be agreed at the Spending Review
  • Responsibility for franchised bus services, which will support the Combined Authority’s delivery of smart and integrated ticketing across its councils
  • Responsibility for an identified Key Route Network of local authority roads that will be collaboratively managed and maintained at the city region level by the Combined Authority on behalf of the Mayor
  • Powers over strategic planning

City devolution has been a pet project for Osbo for a number of years, and the “Northern Powerhouse” slogan regularly featured in the Tories’ general election campaign.

Victorian Britain boasted a number of powerful city governments, as evinced by the grand city halls still used by many of the local councils, but by the end of the Second World War much had been centralised in Whitehall.

Whilst Osborne continues to flaunt his devolution credentials he has come under fire for not putting enough public money into regions outside of London, a position justified by Conservative claims that too much public investment discourages the private sector from investing.

Under the new plans for Sheffield the central government will invest £30m a year over the next 30 years, in what the government claims will allow the Steel City to “boost local growth and invest in local manufacturing and innovation” – a policy seemingly inconsistent with the “crowding out” thesis.

For the deal to go ahead all local councils must agree to it, with the regions affected detailed in this map below from the Big Investment Project:

Sheffield City Region Map by Big Investment Project

Image Credit – Sheffield City Hall, October 2012 by Ed Webster

Massive public investment in London exposes Northern Powerhouse fraud

Tyne Bridge, January 2012 by Neil Turner

London is due to swallow masses of public investment despite government promises to rebalance the economy away from the capital, raising questions over Conservative commitment to both austerity and the so-called “Northern Powerhouse”.

Tory opposition to public infrastructure investment has in the past been justified by the “crowding out” thesis, which argues that public investment can discourage private investment, meaning that reducing public investment in a given region should boost economic growth.

Speaking in his 2010 budget statement, chancellor George Osborne said: “Our policy is to raise from the ruins of an economy built on debt a new, balanced economy where we save, invest and export. An economy where the state does not take almost half of all our national income, crowding out private endeavour.”

Yet in March of this year Osbo pledged £13bn for transport investment in North England, which in combination with the £50bn HS2 rail project was spun as a bid to make “the Northern Powerhouse a reality”.

Since then analysis from the Sheffield Political Economy Research Institute (Speri) shows that despite London having more businesses per person than any other English region, particularly the northernmost three, planned public investment is disproportionately targeted towards the capital.

Business per 10,000 population in English regions, ONSPlanned public infrastructure spending per head by region, TreasurySources: Office for National Statistics, Treasury and Speri

Writing online, Speri’s policy research officer Tom Hunt and deputy director Craig Berry said:

“It is of course possible, but extremely unlikely, that the government has decided to ration infrastructure investment outside of London because it believes profoundly in the crowding out thesis, and therefore does not want public investment to inhibit a private sector-led recovery in the North.

“It is far more likely, however, that the crowding out thesis is purely part of the rhetorical justification of austerity, and forms no part of the actual decisions on where the public sector should invest in infrastructure in practice.

“Instead, the government is content to maintain the bias of investment towards London, because it seeks to support the strong business activity that already exists in the capital.”

The pair argued that short term investment in the North, such as beginning HS2 construction from Manchester and Leeds rather than London, would create jobs in the region.

Medium-term investment in transport would help workers travel to work faster and move goods faster, they added, measures which would also ease Britain’s long-held productivity problem.

Image Credit – Tyne Bridge, January 2012 by Neil Turner