Northern Powerhouse blow as key advocate quits

Lord O'Neill of Gatley.Lord O'Neill of Gatley.
Lord O'Neill of Gatley.
Serious work lies ahead to prove talk about the Northern Powerhouse project was nothing more than an 'electoral con trick', a Yorkshire MP said, as Theresa May's political opponents blamed her for Lord O'Neill's resignation.

One of the architects of the Northern economic growth policy, Lord O’Neill of Gatley, has resigned as commercial secretary to the Treasury and has taken the unusual step of quitting the Tory benches in the upper house.

In his resignation letter to the Prime Minister, the peer made reference to his belief that the devolution of economic and financial controls to Northern cities, and a close business relationship with China, were both vital to the UK’s post-Brexit success.

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He referred to the speculation that Mrs May was not keen on either policy but that the case for the Northern Powerhouse to be at the heart of government policy was now even stronger.

Northern devolution and economic ties with China were both key themes of David Cameron’s administration, with former Chancellor George Osborne having driven the Northern Powerhouse agenda.

Leeds West Labour MP Rachel Reeves described Lord O’Neill’s exit as “a crushing vote of no confidence” in Mrs May and her economic policies and it came on a day when extra pressure was heaped upon the PM by Yorkshire entrepreneur and Ukip donor Paul Sykes.

Mr Sykes said he would rejoin the Tories for the first time in nearly a quarter of a century if the UK left the single market and regained “full control of our borders and fishing rights”. He said the forthcoming Brexit negotiations gave the Government the best chance to rebuild the country since Margaret Thatcher’s era.

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Mrs May was informed by Lord O’Neill hat he had primarily joined government “for the specific purpose of helping deliver the Northern Powerhouse, and to help boost our economic ties with key growing economies around the world, especially China and India and other rapidly emerging economies”.

He wrote that despite concerns about Mrs May’s attitude to both policy areas, they did now seen to be commanding her attention.

Lord O’Neill wrote: “The case for both to be at the heart of British economic policy is even stronger following the referendum, and I am pleased that, despite speculation to the contrary, both appear to be commanding your personal attention.”

Although the peer hinted at the Prime Minister attaching growing importance to the Northern Powerhouse agenda, Leeds MP Ms Reeves said she was not convinced.

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She said: “Lord O’Neill’s resignation confirms my fears that regeneration and investment in our Northern towns and cities are a low priority for this Government.

“The Government must live up to all its talk about the Northern Powerhouse and prove it was more than an electoral con trick.

“It is time for the new Prime Minister to show her commitment to Yorkshire and the rest of the region.”

Labour’s shadow minister without portfolio, Jon Ashworth, said Mrs May only had herself to blame for Lord O’Neill’s resignation and blamed his exit from the Tory Party for the PM’s “divisive lurch to the right” in attempting to bring back grammar schools.

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Jonathan Carr-West, chief executive of the Local Government Information Unit, believes Lord O’Neill’s resignation is unlikely to dampen speculation about the PM’s Northern Powerhouse ambitions and said it would be a “tragedy” if the devolution agenda fell foul to political point scoring.

Although Lord O’Neill had been an important champion for the Northern Powerhouse it is the Northern businesses, innovators and investors “that will ultimately unlock our economic potential”, argued IPPR North think-tank director Ed Cox.