AS 2014: Statement of intent
Yesterday's Autumn Statement saw the Chancellor put the Northern Powerhouse at the heart of the Conservative Party's plans for re-election next year and marked the beginning of the 2015 General Election campaign, writes Kevin Whitmore, associate director at Lexington Communications.
Ever the consummate political operator, George Osborne used one of the last pieces of Parliamentary theatre to deliver a range of pre-election goodies aimed squarely at winning the marginal seats in the North West needed for him to get another five years in the Treasury.
The Chancellor will be hoping that the big ticket items for Manchester – a new £235m Sir Henry Royce Institute and a new theatre on the old Granada site, plus the rubber stamping of the DevoManc devolution package – will win votes from commuters in Bolton West, Bury North and Cheadle.
The continued support for the Atlantic Gateway project, plans to improve access to the Port of Liverpool and a £47m investment in flood defences at Rossall in Lancashire, is intended to shore-up Tory majorities in Lancaster & Fleetwood, Wirral West and Warrington South.
A new Sovereign Wealth Fund to capture the receipts of shale gas exploration for the benefit of the North is similarly intended to keep voters on-side in the Conservative-held Lancashire constituencies with large shale gas deposits.
The core message was simple. The economy is recovering but is in too fragile a state to be entrusted to Labour. With a growing economy, falling unemployment, low inflation and interest rates, the Chancellor was able to paint a rosy picture. Lurking in the detail however was an admission that the deficit is estimated to be £93.1bn and borrowing will be £12.5bn more than forecast.
But the Chancellor's commitment to a Northern Powerhouse is more than electoral calculation. It is borne out of George Osborne's nostalgic attachment to Victorian-era industrialism and a firm belief in the power of devolution. Combined, these influences make him the country's most powerful advocate for rebalancing the economy away from London and the South East.
Surprisingly, there was no announcement on devolved powers for other Northern cities, although Osborne did say his "door was open" to other cities who wanted to follow Manchester's lead. There was no 'One North' transport announcement either but, as outlined in yesterday's Infrastructure Plan, a full strategy will be published next March.
Yesterday's announcement was more a political statement of intent from the Chancellor than a review of the nation's finances. It marks the start of the long run-in to next year's general election and signals the Conservative Party's intent to campaign on its economic credibility in the North West as well the South East.
Nonetheless the political picture remains complicated. Despite some good economic news the deficit is still a problem. For whoever wins the next election, reducing the gap between income and expenditure remains predicated on substantial further cuts and a reliance on benign bond markets delivering interest rate savings on Government debt.
Crucially, polls show that much of the public is yet to feel any sense of financial improvement and despite generally leading on measures of economic competence, the Conservatives continue to trail Labour, while the Lib Dems languish in single figures. The election is still wide open.
