Andrew Vine: Hammond should act to close North-South divide

WHATEVER picture the Chancellor paints of the economy in his Spring Statement today, he will effectively be addressing two separate nations.

Theresa May and Philip Hammond visited Leeds College of Building after last November's Budget, but will the Spring Statement contain any good news for the North?
Theresa May and Philip Hammond visited Leeds College of Building after last November's Budget, but will the Spring Statement contain any good news for the North?

One is the South, where funding is plentiful and the economy buoyant. The other is the North, that seemingly foreign country to a Government which is long on warm words and short on hard cash.

This gulf between the two nations that co-exist within our country never seems to make much of an impression on the Government.

Nor do those senior members of it, from the Prime Minister downwards, who define themselves as one-nation Tories ever appear to see any irony in doing so whilst consistently ignoring not only the needs of the North, but its entirely justified case for a better deal.

Chancellor Philip Hammond was interviewed by the BBC's Andrew Marr ahead of the Spring Statement.

It’s possible to take an educated guess at the broad outlines of what Philip Hammond will say when he comes to the Dispatch Box at lunchtime.

The economy doing reasonably well, though growth falling short of forecasts, with employment up and a steady whittling away of the deficit.

And we can expect the usual sprinkling of stardust, the stuff about the Conservatives being the responsible custodians of the economy and the NHS, while finding extra money to boost business. So far, so routine.

But it takes no account of one of the greatest structural weaknesses in Britain – the North-South divide. That divide yawns as widely as it ever did, and by doing nothing to close it, the Government does a disservice not only to the North, but to the entire country.

Chancellor Philip Hammond was interviewed by the BBC's Andrew Marr ahead of the Spring Statement.

Giving the North the resources it deserves would undoubtedly boost Britain’s whole economy, so why not just do it? It really is a no-brainer.

There is simply no good reason for our region, and the rest of the North, to be starved of money when the already affluent South East enjoys a much better financial deal.

Transport funding is the most glaring of the problems. Whilst commuters into London see billions poured into new lines and rolling stock, those of the North are crammed into old trains where they often have to endure tortuously slow journeys.

In particular, the trans-Pennine route amounts to a national joke. Except it isn’t any laughing matter for the passengers.

And the insistence of the Transport Secretary, Chris Grayling, that he is providing adequate funding to improve matters doesn’t bear a second’s scrutiny.

Further evidence of the Government’s disregard for the North is provided by its sluggishness on responding to the clearly-expressed desire of Yorkshire for a devolution deal, which is depriving our region of a much-needed financial boost.

So too, the Northern Powerhouse, that coalition of the willing longing to work together for the greater good of all, but still failing to receive proper support from the Government.

It is quite possible that none of this was in the Chancellor’s mind as he prepared for today’s statement, which is a dispiriting thought.

Yet it should be at the forefront of his thoughts, especially against the backdrop of Brexit, which colours virtually everything the Government does.

To deny the North the means to fulfil its potential is not just neglectful as Brexit looms. It is irresponsible.

The Government’s own research has concluded that in the event of a post-Brexit economic shock, it will be the North that suffers most, ironically enough some of the areas that voted most enthusiastically to leave the EU.

Whilst the predictions have been rubbished by the most ardent Brexiteers, to dismiss them out of hand is foolish.

Even if they prove to be excessively gloomy, it is more likely that they indicate a probable direction of travel rather than being completely wrong. It is the Government’s duty to make contingency plans to safeguard the North against damage.

An iniquitous Brexit deal that leaves the South largely unaffected, but hits the industrial heartlands of the North, would only serve to widen the divide.

We have bitter experience in Yorkshire of the consequences of economic collapse. The mass unemployment and dereliction left behind by the decline of coal, steel and engineering during the 1980s and 1990s scarred this region, and such a catastrophe cannot be allowed to happen again.

All of which adds up to a compelling case for the Chancellor to move beyond paying lip service to the North, and start taking practical steps to close the divide with the South.

The benefits of doing so are clear. It would be a win-win, both for the North and for Britain. There simply is no downside to rebalancing the way public funding is shared out, especially given the uncertainties of life after Brexit, when the economy needs to be firing on all cylinders to minimise any possible problems.

The Chancellor should recognise this, and make clear today that it is in nobody’s interest to have a two-speed economy. But he should go further, and show tangible signs of doing something about it.