Central to delivering growth will be bridging the North-South divide - Henri Murison

In the summer, the British people elected a new government. As part of its so-called mission-led approach, it has a stated ambition for economic growth. But this is a broad mission - particularly when one makes the commitment, as has been made, for it to be right across this country, including here in God’s Own County.

In her first Budget, however, the Chancellor did something bold that has the potential to really deliver growth - she has rewritten the fiscal rules. She has separated day-to-day spending from investment, enabling a significant expansion in the UK's expenditure, particularly on infrastructure. If the promised ‘guardrails’ are fully delivered, this will mean spending coming forward for schemes like a new tram for West Yorkshire, which will indeed help improve productivity and, through this, reduce pressure on public spending, ultimately lowering long-term debt-to-GDP projections for the coming decades.

The most notable aspect of this decision is the acknowledgment that the long-term affordability of the welfare state and the broader settlement between the British people and the government must take precedence over short-term political considerations. The logical conclusion of this argument is that regional inequalities within the UK, which are not financially sustainable for government and are also a recipe for dangerous forms of populism, cannot be left to stand in perpetuity.

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There are four key challenges that hold the North back, which could be addressed by fixing the wiring of how spending works: putting up investment, but also reprioritising revenue spending.

Chancellor of the Exchequer Rachel Reeves (centre) with Transport Secretary Louise Haigh and the Mayor of Greater Manchester Andy Burnham. PIC: Danny Lawson/PA WireChancellor of the Exchequer Rachel Reeves (centre) with Transport Secretary Louise Haigh and the Mayor of Greater Manchester Andy Burnham. PIC: Danny Lawson/PA Wire
Chancellor of the Exchequer Rachel Reeves (centre) with Transport Secretary Louise Haigh and the Mayor of Greater Manchester Andy Burnham. PIC: Danny Lawson/PA Wire

Firstly, the disadvantage gap in the early years through to secondary education leads to worse outcomes in education for the long-term disadvantaged, from benefit dependency to prison.

Secondly, far too many people are unhealthy and therefore unable to participate in the workforce, which is why it is so welcome that Mayor Oliver Coppard in South Yorkshire has made this central to his priorities. Health and productivity are closely related, each influencing the other, and improving both can only be done in coordination.

Thirdly, the lack of efficient transport between cities - including Hull, Bradford, and Sheffield across to Manchester and Liverpool - remains a significant issue. Remedying this has been a longstanding priority of the National Infrastructure Commission, with Northern Powerhouse Rail now having been in development for well over a decade. This will now be appraised by the government’s new National Infrastructure and Service Transformation Authority (NISTA), which, at the Northern Powerhouse Partnership, we have suggested should be in Leeds, co-located with the National Wealth Fund.

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Fourthly, we have yet to fully tap into the job potential of the transition to Net Zero, including Clean Power by 2030, building on the success of the huge £1bn order for the Siemens blade factory just this week. We need to conclude next year the government’s decision-making on Small Modular Reactors, which will support factories and supply chain jobs in South Yorkshire and across the North. Similarly, our industrial base on the Humber, like Phillips 66 and Drax, is at huge risk until we have a Carbon Capture and Storage network available. The blast furnaces at Scunthorpe are on borrowed time because the last government failed to secure their future with access to a way to capture their emissions in time.

The Office for Budget Responsibility isn’t yet clear the government has sealed the deal on growth, but I believe they can and must be convinced of the seriousness of this government if the Chancellor and her Cabinet colleagues actually do what is needed to close the North–South divide by driving up productivity, along with wages and tax revenues, while at the same time reducing costs associated with higher numbers of poorer families.

Looking over just the coming five years will never show any of the real benefits of infrastructure, where the impact is over decades. However, if the government, in the upcoming Spending Review, puts real effort into supporting the most disadvantaged children and gets more serious about dealing with the factors that lead to people being unable to work - such as obesity - then the growth expectations, particularly long-term, will shift.

My challenge to our Metro Mayors, who were all created with the mission to drive economic growth as their principal purpose, is that they remain relentless in securing the prize of successful cities connected to their neighbouring places to maximise living standards across their whole areas. The Budget also confirmed they will receive their single settlements from government in West and South Yorkshire, respectively. My advice is to prioritise their places’ long-term interests. Put those policies that will have genuinely game-changing economic and social payback at the top of the pile. Resist the temptation of short-term initiatives that don’t address the real problems in your places. The Chancellor, in her Spending Review, must set aside short-term political payback for long-term economic and social progress. That is the right path.

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To govern is to choose. Devolution is, first and foremost, about choices—and this country in the past has made bad ones from Whitehall all too often.

Henri Murison is the chief executive of the Northern Powerhouse Partnership.

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