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Northern Powerhouse needs more fiscal powers to succeed

  • Wednesday, April 27, 2016
  • School

The Northern Powerhouse project needs more fiscal devolution and powers if it is to have any real chance of bringing lasting benefits to the region, says Karel Williams, Professor of Accounting and Political Economy.
Speaking during a debate in Manchester on the progress of the initiative, Karel said Greater Manchester had not got adequate powers as part of the devolution deal. “It needs control of its balance sheet, it needs borrowing powers. At the moment it has responsibility without power.”
Karel was critical of the theory behind the Northern Powerhouse. “It is broadly based on the agglomeration theory that by better connecting cities and regions and creating more density, you will somehow drive economic growth. But it ignores the weight of historical research about how cities grow, namely by their relationship with the broader hinterland and by their trade with the rest of the UK and globally. That is precisely how Manchester became great during the industrial revolution.”
The debate put forward the motion that the Powerhouse was simply a continuation of a ‘poorhouse’ rather than the birth of a ‘powerhouse’. Arguing for the motion, Karel said a vote for the motion was a vote for realism.
His view was shared on the platform by Ivan Lewis, MP for Bury South and a candidate to become Greater Manchester’s first elected mayor next year. He added: “The Northern Powerhouse is an elite project and the public feels locked out. Devolution has to benefit all parts of Greater Manchester.”
Arguing against the motion, Clive Memmott, Chief Executive of Greater Manchester Chamber of Commerce, said the Powerhouse should be the start of a more balanced approach to economic development in a country that is “hopelessly over centralised”, pointing to particular opportunities around transport. “Why can’t our connectivity be as good as London’s?” But he warned that the Powerhouse must not become a “panacea” for every problem in the north.
Also arguing against the motion, Sean Anstee, leader of Trafford Council, believed there was “an insatiable appetite” to see the Northern Powerhouse succeed. “We should get behind this concept. If the appetite dwindled that would be a disaster and a missed opportunity. We are trying to overcome centuries of centralisation, and to make the Powerhouse happen we need confidence, ambition and connectivity.”
Before the event, attended by business and political leaders from across the city region, 38% of the audience were in favour of the motion, 20% against and the rest undecided. By the end of the debate a resounding 76% were in favour of the motion, pointing to widespread scepticism about the Northern Powerhouse project.

*Prof Williams’ arguments about cities are developed in a new working paper from CRESC (Centre for Research on Socio-Cultural Change) entitled How Cities Work