WILL INDUSTRIAL STRATEGY HELP PRODUCTIVITY ?

 

 

 

WILL IT LAST ?

The latest government industrial strategy was launched this week. Let’s hope it lasts. History tells us it won’t. Business is certainly sceptical having made investment decisions in the past based on Whitehall plans which ministers lose interest in after the first sound bites have gone away or a new set of young advisers have come up with a new plan for a new minister.

The other reason past initiatives to boost productivity, wages and the Northern economy have disappeared is because of changes in government. The use of state control during the war led to the Attlee government’s confidence in a nationalisation programme. The Thatcher government reversed this and until 2008 it was generally accepted that capitalism and the private sector would guarantee economic success. All that changed after the crash and ten years on we are reaping the whirlwind of people’s distrust in markets, experts and globalisation.

This Industrial Strategy shows that the Conservatives are now committed to the state having a real role in intervening in the economy. To a considerable extent this has been driven by the success the Labour leader Jeremy Corbyn has had in identifying people’s distaste for rampant capitalism.

That brings me back to the question businesses are asking, will it last? Possibly if Greg Clarke, one of the abler members of the Cabinet stays in post and if Jeremy Corbyn doesn’t get into Downing Street. His industrial strategy based on nostalgia for the Attlee days would look very different.

PRODUCTIVITY.

The industrial strategy is targeted at the construction industry, life sciences, driverless cars and artificial intelligence. So, there is an emphasis on high tech jobs. The question is will this help with our chronic lack of productivity. Most companies in the North operating at the cutting edge of research are productive but 60% of jobs are in retail and manufacturing which is where the productivity problem really lies. There are 40% more jobs in retail than pharmaceutical. The industrial strategy is too narrow to address this widespread problem.

It is also in danger of being southern focused. Currently only 10% of research spending is in the North. The investment by healthcare giant MSD in Manchester is to be welcomed but confidence in the Northern Powerhouse is shaky at the moment. There is a growing sense outside the Manchester and Liverpool conurbations that the whole project is city based. Of course, one answer to that is for counties like Lancashire and Yorkshire to stop squabbling and get their act together. But the piecemeal approach of governments since 2010 to devolution has not helped. Transport for the North (TfN) is a big step forward but in outlining its new powers recently, the government document contained weasel words about “formally considering” TfN’s statutory transport strategy and TfN’s right to be “consulted” on rail franchises. It does not have the same powers as transport for London.

Finally, there has been a bitter reaction from local government. Whilst mayoral areas will have full control over their local industrial strategies, other councils feel they have been excluded from playing a role at the expense of the Local Economic Partnerships (LEPs). This despite the fact that ministers are calling on LEPs to address problems relating to their leadership, governance and accountability.

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BREXIT CONSEQUENCES BEGIN TO BITE.

 

BOTH BREXITEERS SHOULD BE OUT OF THE CABINET.

A government weakened by scandal and divided over its approach to Europe continues with its ill-starred attempt to leave the European Union.

One leading Brexiteer Cabinet Minister Priti Patel has resigned, but another, Boris Johnson is still in place despite risking extending the detention of a British national in Iran.

Immigrant workers, vital to our caring services, are staying away, jobs are going at British Aerospace in Lancashire and Vauxhall in Ellesmere Port. Both industries rely on the easy movement of parts across borders. Thousands of lawyers and civil servants are being taken on to deal with the whole miserable negative exercise of Brexit. (No doubt their wages will be coming out of the £350m a week that was promised for the NHS.) The port of Dover is making plans for the huge congestion that will build up after March 2019.

So how is all this affecting the heart of the Northern Powerhouse? What is the economic outlook in Greater Manchester as the Budget approaches? I’ve been testing economic opinion which indicates that the crash that was forecast immediately after the EU referendum didn’t happen because of a credit boom and the growth of car leasing. It is felt that is now coming to an end as inflation and now the rise in interest rates kicks in. There is a fall in business confidence amidst the chronic Brexit uncertainty with a demand that the 2019-21 transitional agreement be broadly in line with the final agreement.

Northern economists believe we are looking at a growth rate of 1.5% not 2.5% that was previously hoped for. Looking further into the future we need to prepare for automation, robotics and paying more for UK workers as immigration falls.

In Greater Manchester next year jobs growth is expected to be flat. Employment in retail and financial services will be weak. Mike Blackburn, boss of the Local Enterprise Partnership, is worried that ministers don’t realise the impact Brexit will have on an area which exports 58% of its goods to the EU compared to a national average of 42%. He wants powers returned from the EU devolved to the North.

The Chancellor will be under severe pressure in the Budget to do more on housing. Steve Rumbelow, CEO of Rochdale Council, wants a major programme of council house building. He points out that permission for 50,000 houses in Greater Manchester are not being exercised.

Joanne Roney has had a quiet start since succeeding Sir Howard Bernstein as CEO of Manchester Council. She has indicated her priority is people rather than infrastructure development which characterised her predecessor’s tenure. She identified poor school starts for a large section of Manchester pupils fed into poor GCSE performance leaving colleges to teach Level 2 skills.

Eamonn Boylan is charged with looking at the picture across Greater Manchester as CEO of the Combined Authority. The spatial strategy which deals with the use of green belt and brownfield land is being rewritten after running into opposition from Mayor Burnham, is being rewritten.

Boylan points out the devolution deal is much more about powers than giving the city region money. Promises over devolving power over adult skills had still not been delivered. Local politicians and officers had many bright ideas about what could be done locally. For instance, there was an abundance of advice on how to get to university but very little on taking up vocational courses.

So that’s a sample of the thinking of people charged with putting the concept of the Northern Powerhouse into reality. But they are handicapped by the shadow of Brexit. Let’s hope for a substantial change in popular opinion that would allow Labour to oppose our leaving the EU and we could have an Exit to Brexit.

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NORTHERN RAIL: ARE THE TORIES SERIOUS ?

 

AWKWARD TIMES AT MANCHESTER CONFERENCE.

The May government is rattled by the growing perception that they are not serious about the Northern Powerhouse. So, it perhaps would have been easier for the Conservatives to be meeting in their other conference city, Birmingham. The city has been confirmed as the UK candidate for the 2022 Commonwealth Games following the election of a Tory West Midlands mayor. In Greater Manchester we elected Andy Burnham who has expressed his outrage at the decision to downgrade the electrification of the Leeds-Manchester rail line whilst giving the go ahead to Crossrail 2 in London.

We know the government is rattled because last week I was present at a meeting in Manchester where the Transport Secretary, Chris Grayling, came out fighting over his government’s transport spending. He told a startled business audience that he was going to slay some myths and rattled off a whole series of road improvements from Cumbria to Cheshire before tackling rail. His argument seems to be that electrification could be an old hat solution and bi-modal trains with state of the art technology could be the answer.

The issue is sure to come up at a conference where the Tories are reeling on many fronts. Whereas I saw Jeremy Corbyn lauded at every turn in Brighton for losing the General Election, Theresa May comes to Manchester having “won” but with the worst Conservative campaign in living memory. The Tories are past masters at preventing unrest breaking out on the conference floor but there is sure to be some raking over of the General Election coals at the fringe meetings.

Europe will also be an issue to watch at the Manchester conference. The prospect of us effectively being in the European Union until 2021 has angered the hardline Brexiteers. There will be plenty of them in Manchester Central. The Tory activists who come to conference have always been very Eurosceptic.

Besides the Northern Powerhouse, the poor election campaign and Europe, the main challenge for the Tories this weekend will be to answer the growing opposition to austerity and cuts. Labour is shamelessly promising everything to everyone, even acknowledging that if they came to power there could well be a massive run on the pound. Nevertheless, they seem to have caught a tide of opinion against pay curbs, high rents and homelessness. The Tories’ austerity programme has been in place for over seven years now and people are fed up. There are some signs that ministers are recognising this but that can spell danger. Small concessions don’t necessarily assuage the anger. They can make matters worse as workers take industrial action to push for more and the uncertain tone from ministers gives the impression that the government is running out of ideas and is past its sell by date.

Jeremy Corbyn said in Brighton that he was a Prime Minister in waiting. It was a bold, some would say fanciful claim, but if the Cabinet infighting over Europe doesn’t stop, if the cracks are on display in Manchester, there can be no certainty over what might happen this winter.

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THE UNACCOUNTABLE GOVERNMENT

 

RAIL BETRAYAL.

Since Parliament has gone into recess, hardly a day has passed without a significant policy announcement by ministers. They’ve ranged from banning petrol driven cars by 2040, to transport announcements that have the potential to drain the Northern Powerhouse (NP) of any meaning.

With MPs, away from Westminster and unable to call the government immediately to account, elected mayors and council leaders across the North have had to promise a summit in late August. Let’s hope that the current angry mood will not have turned to dull resignation.

The betrayal by Transport Secretary Chris Grayling is breath-taking. He has rowed back on plans for new platforms at Manchester Piccadilly station, said “bi-mode” trains will do on the Manchester-Leeds line rather than full electrification and downgraded rail schemes in Cumbria. At the same time the government announced their support for a £30bn Crossrail 2 project in London.

A few weeks ago, I challenged the chair of Transport for the North (TFN) John Cridland at a major conference on transport about the Treasury rules that will always mean that London schemes meet investment criteria because of the millions of commuters compared to the needs of the North. Cridland remained optimistic and TFN were urged by Manchester City Region mayor Andy Burnham to persuade the government to look at other criteria for justifying transport spending like economic return.

I said in a blog a few weeks ago that the acid test of the government’s commitment to the Northern Powerhouse would be whether Crossrail 2 or Trans Pennine investment would come first. Well now we know.

The whole Northern Powerhouse project is in serious trouble. Good connectivity between northern cities is the bedrock of the whole scheme. The new NP Minister, Rossendale MP Jake Berry is nowhere to be seen. Meanwhile Business Secretary Greg Clarke made his industrial strategy speech on investment in battery power in Birmingham this week. Ever since Theresa May came to power there has been a pivot from the North to the Midlands.

Let’s hope the summit backed by all the northern cities at the end of next month gets some answers from ministers.

EMPLOYMENT TRIBUNAL BLOW FOR BIZ.

 

It is always a shame when people abuse employment rights. But that was why the Coalition government brought in fees to deter vexatious employees and chancers who were taking employers to tribunals in droves. In 2012/13 191,541 cases were lodged before fees were levied. The latest figure is 88,000 which is high enough and by the way, fees were often reimbursed if the grievance was genuine.

Small businesses are set to be hardest hit as claims from aggrieved employees soar again. With Brexit uncertainty as well, it is not a good time to be in business.

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