Is the Northern Powerhouse running out of steam?

First George Osborne, then Sir Howard Bernstein, finally Jim O’Neill. Suddenly the two joint parents of the Northern Powerhouse are out of power, joined by O’Neill, the Stockport-born Goldman Sachs economist-turned-Conservative minister, and the man who did most of the detailed thinking. That’s three worrying blows to the much-heralded Northern Powerhouse plan – and nobody knows what comes next, or whether it will survive. Unlike Osborne’s brutal defenestration or Lord O’Neill’s sudden resignation, the departure of city council chief executive Sir Howard (fondly known as SHB) came as no surprise. Aged 63, after 45 years at the town hall, and with a thousand other career paths open, he was not expected to hang around for much longer (see box, below). However, the departure came at a bad time for the Northern Powerhouse. To its critics, Theresa May’s government seems to be on a mission to wipe out all memory of Osborne, including his flagship project to rebalance the UK economy. The words “Northern Powerhouse” had yet to pass May’s lips until a late September statement saying she would “ensure the whole machinery of government gets behind it”. From the archives: Bernstein on Brexit The prime minister’s reassurance came just days after Osborne set up a partnership with council leaders to campaign for the Powerhouse plan. It looked like Osborne had forced a reluctant commitment out of her. Lord O’Neill’s resignation letter credited May only with “appearing” to support the Powerhouse initiative – deadly faint praise. Policy wobble, communication malfunction, or sign of a real rethink? It is not yet clear what the May government’s regional and industrial strategy will be. Many will judge May simply on the money she commits to HS3 and other improvements to trans-Pennine transport. In the meantime, the election of new city region mayors in May 2017 in Greater Manchester, Liverpool, Newcastle, the Tees Valley and perhaps Sheffield (see box, below) changes the political geography. The emerging city states of the North will have to learn to co-operate and this, say close observers, is where the Northern Powerhouse will succeed or fail. The truth is that despite the loud hurrahs and endless talking-up, there has always been some ambivalence about the Northern Powerhouse idea.   “Like the Big Society, the Northern Powerhouse felt like an awkward, made-up spin that wasn’t robust in delivery, with no budget or resource… born in London,” Guy Butler, Glenbrook   Guy Butler, director at investor and developer Glenbrook, says: “Like the Big Society, the Northern Powerhouse felt like an awkward, made-up spin that wasn’t robust in delivery, with no budget or resource. It was born in London, but will need to be reared in the North West – and if that is the case, it will be a success as the locals deliver on the commitments outlined. It will fail if steered from the South.” And that – in a nutshell – is the problem. The North in general both wants and does not want the government in London to take ownership of the Northern Powerhouse project. Those who want more upfront government involvement (rather than just its money) tend to be found in Yorkshire. The reason? Maybe that London would be a useful ally against an over-confident Manchester. Ian Ball, development director at Rotherham-based Harworth Estates, says: “Northern Powerhouse has been long on talk of the context, but short on deliverable outcomes. You need national leadership, not just to leave the North to get on with it, otherwise they will fight one another. Central leadership provides clarity and accelerates everything.” Edward Clarke, analyst at the Centre for Cities, says that whatever the May government does – or doesn’t do – with the Northern Powerhouse, the big story is city-region devolution. “The aim of Northern Powerhouse was not to form one single economy across the cities, and seeing it like that isn’t helpful,” says Clarke. The Pennines are a formidable barrier that won’t easily be breached, he suggests. “It’s about a better deal for all of the cities, and devolution will boost each city-region’s chances of making alliances with other cities in the UK and internationally. “Northern Powerhouse is useful for creating shared agendas and sharing a tone, but the hard policy will be made at the city-region level.” Those with a big stake in Manchester expect the Northern Powerhouse idea to evolve – and recognise that the city mayors will make a big difference. But they don’t want the branding baby thrown out with the political bathwater. “Don’t underestimate the attraction of the Northern Powerhouse brand outside the UK,” says Mike Ingall, chief executive at Allied London. “It has become recognised, people are using it – using it a lot more than I do, and it has got their attention. It’s a world brand with Manchester at its core. We have to stick with it and evolve it, because these are still early days.” See also: Who are the masters of the Northern Powerhouse? The Northern Powerhouse is being shaped by a handful of powerful figures from both sides of the Pennines, from the North and from Westminster. These are the people to watch xx xx xx Tom Sharman, head of real estate strategy at NatWest, agrees that Powerhouse branding matters, but adds: “Manchester’s branding has been key to getting investment. Leeds, Newcastle and the rest need to develop their own brands. That will be key from them. Manchester is a decade ahead and has momentum in overseas and UK markets, and other cities will benefit from that.” Sharman’s message is clear: although he wants the government to think about the big transport infrastructure projects that could join the North, and Powerhouse branding is all to the good, it is the city-regions that matter. John Ogden, managing director of CBRE’s northern offices, says the case for a rebalancing of the UK economy away from the South is as pressing as ever. Mrs May will be watched less for her words than for her deeds. “The new prime minister must back up Osborne’s promises with real money and support and actually go much further than Osborne ever did. We need to see evidence that the Surrey- and Berkshire-based prime minister and chancellor don’t focus just on Crossrail 2 and other south-eastern projects,” he says. May likes to keep her cards close to her chest: information is need-to-know. Today, what she thinks “Northern Powerhouse” really means is as opaque as what she means when she says “Brexit means Brexit.” Nobody has a clue. [caption id="attachment_863383" align="alignright" width="400"] Sir Howard Bernstein[/caption] Goodbye to SHB Remember Sir Alex Ferguson? The last time Manchester changed a long-established and well-respected leader it ended in disaster. David Moyes’ 10-month reign at Manchester United was not a happy one. Will it be the same at Manchester City Council when Sir Howard Bernstein finally hangs up his trademark scarf and bling-rings in spring 2017? The Moyes analogy is promptly kicked aside by Allied London’s Mike Ingall: “The difference is that at the council, the backroom isn’t going anywhere, and the mistake Moyes made was kicking everybody else out. Everyone else in the city is still here – we are laundering the kit and blowing up the balls as usual.” Not quite everyone has stayed in the backroom. SHB’s long period in office has seen several potential successors leave the city for jobs elsewhere. Former team members Eamonn Boylan (now chief executive at Stockport) and Charlie Parker (now chief executive at Westminster) are also tipped for the job. Those who stuck it out in the town hall are close to SHB: Pat Bartoli, the city centre chief, could become Manchester’s first female chief executive; David Roscoe, head of planning, is another key player who could be promoted. “It’s an epoch-changing moment,” says Peter Gallagher, director at Colliers International and a Bernstein collaborator for 30 years. “Howard will be totally involved in the selection of his successor, as Ferguson was. Let’s hope he doesn’t have the same problems.” South Yorkshire opts out The Sheffield City Region was never keen on having an elected city-region mayor, and rumbles of discontent over the summer have turned into a more concerted mutiny. The new government is being asked if George Osborne’s insistence that a mayor comes with each devolution deal is still in place. Final decisions will come later this month. The move comes as Chesterfield’s place in the plan is challenged (by an angry Derbyshire County Council) and others mull a Yorkshire-wide alternative. Both approaches could mean no mayoral election in May 2017, leaving Yorkshire’s city-regions lagging behind the North West and North East. • To send feedback, e-mail stacey.meadwell@estatesgazette.com or tweet @EGStaceyM or @estatesgazette