AFTER PRINCE GEORGE, LET’S GET BACK TO THE ECONOMY

If only we could have an election now some Tory politicians might be thinking as they begin their summer break. A new born prince, the heatwave and cycling and cricket success have given our spirits a boost. Most important of all there is a feeling that the economy is turning even in the North which always lags behind the South East because of successive governments’ failure to have an effective regional policy.

 

House prices are edging up here and jobs are being created in the private sector to help absorb the haemorrhaging of public employment. In that connection the news from Bentley in Crewe that they are to build the company’s new sports utility vehicle enhances the North West’s successful car industry alongside Vauxhall at Ellesmere Port and Jaguar Land Rover at Halewood.

 

The key man in all this is the Chancellor George Osborne. He rivals the Prime Minister in importance when it comes to trying to stear the Tories to an outright victory in 2015. This is partly because of his power over economic decision making but also because of his central role in political strategy. For this reason Labour call him the part time Chancellor. It is a foolish charge. It makes sense to have Osborne tied closely to political decision making.

It is Osborne’s belief in concentrating on the main issue of economic recovery that has led to the ditching of “peripheral” issues like plain packet fags and a minimum price for alcohol. Lynton Crosby, the Tory party advisor has taken the hit for this regrettable U turn, but the Chancellor will have been involved.

 

I recently took the opportunity to observe George Osborne up close. He was giving a lecture in memory of that great broadcaster and champion of the North Brian Redhead. To the Chancellor’s credit, he spoke a lot about Brian and didn’t use the occasion for a bog standard political message.

 

He acknowledged the importance of having a northern constituency (Tatton). He told us his daughter had just been made Rose Queen at her school at Wildboarclough in Cheshire and that he was aware that things looked different from a northern perspective. That was certainly Brian Redhead’s view, Mr Osborne told his audience He missed out on the editorship of the Guardian because he refused to move south with the paper. For a long time he co-presented the Today programme from Manchester until being forced to join his colleagues in London. I used to join him on the train north on a Friday and he always said he was glad to be coming home.

 

Osborne concluded by observing that the North was not a monolith and should not be stereotyped. Although Redhead had worked in Manchester, he was born in the North East and lived in the Peak District. The Chancellor claimed that Cheshire had more private sector jobs than London.

 

It was an interesting and different sort of speech from a man that it is not easy to warm to. What will matter in the next two years however is not being liked but keeping the economic recovery going as interest rates begin to rise.

 

Follow me at www.jimhancock.co.uk

 

 

FIVE YEARS OF AUSTERITY AND THE CON LIB DEM COALITION

 

 

 

We’d better get used to it. A continuing economic squeeze administered by a Conservative-Lib Dem coalition. The only difference after the General Election will be that the Tories will hold most of their cards with the Lib Dems reduced to about 30 MPs.

 

The Chancellor was in confident mood on Wednesday.

He shouldn’t have been. In the rose garden days three years ago the Coalition didn’t expect to still be making cuts in 2015-16. Nevertheless George, or Geoff Osborne if you prefer, has managed to convince not only the British people but the Labour Party that there is no alternative.

 

Labour are in serious trouble. They have broadly signed up to the cuts strategy. Having lagged behind public opinion on the need for benefit reform, they are now lurching to the right to such an extent that we are not sure that basic pensions would be safe in their hands.

 

George Osborne was devastating when he used Gordon Brown’s old formula for mocking the Opposition. The Chancellor told MPs he had received representations to include pensions in the welfare cap, but had resisted them. Chris Leslie, one of Ed Balls’ Shadow Treasury sidekicks wasn’t even prepared to attack plans to make people wait seven days for benefits when the TUC were warning it could mean kids going without food.

 

Labour are in this position largely because of Ed Balls.

I’m afraid the Shadow Chancellor has to go. He is associated in the public mind with the Brown days and people still blame that administration, and not the current one, for the mess. It may be unfair three years into the Coalition, but it is a fact.

 

Alistair Darling should be the Shadow Chancellor. He is currently heading up the Better Together campaign against the Scot Nats, but he could do that part time because Scotland isn’t going to vote for independence.

Darling has a reassuring manner in contrast to the bruiser Balls. More importantly he was honest about the economic troubles ahead which nearly led to his sacking by Brown.

 

Even with Darling as Shadow Chancellor it is going to be difficult for Labour to become the largest party in 2015. Economic green shoots are appearing and house prices are rising. Public support for benefit reform and a smaller public sector has grown during the austerity years. This doesn’t mean that millions of people aren’t suffering but the majority back the Coalition and Labour is not going to be a socialist champion.

 

The Coalition shows no sign of breaking up as the election approaches. These cuts are for 2015. The Lib Dems could have made far more trouble about being committed to them for the year after the election. They didn’t and Chief Secretary Danny Alexander (a Lib Dem) received fulsome praise from George Osborne.

 

Osborne and Alexander have pulled off another trick. Amid all the cuts there is real commitment to northern infrastructure projects like rail spending in Leeds, fast track permits to frack for gas in Lancashire and the new Mersey crossing.

 

The biggest black mark for the Chancellor is the woeful failure to properly fund the Single Local Growth Fund. Lord Heseltine had urged Local Enterprise Partnerships to be allowed to bid for £49bn from the fund. It was given just £2bn a year.

 

For that you shall be called Geoffrey, Mr Chancellor!

 

 

 

BRING ON REGIONAL BANKS!

A major national bank is closing its branch in my village. No doubt they will say there wasn’t enough business. Perhaps that’s because a couple of years ago it decided to close my branch on Wednesdays and Thursdays. Traders who need to deposit cash every day took their business away and the downward spiral was achieved.

 

The people responsible for this decision have probably never heard of my village. On a wider scale, what do the big national banks know of small and medium sized businesses (SMEs) in the north asking for loans? It’s unlikely they have the knowledge about the regional economy to make good judgments. The huge central and international banks are not fit for the purpose of helping our SMEs. Net lending by banks participating in the government’s Funding for Lending Scheme, fell by £2.4bn in the last quarter of 2012.

 

So in this week when the Chancellor has grabbed the headlines with his Budget, let’s give a cheer to Ed Miliband’s proposal for regional banks. Labour would give their backing to regional banks in Yorkshire and the North West. The model would be based on the German system where local banks performed far better in the recession than the country’s large banks. The Sparkassen (regional banks) ran up less debt and avoided ruinous high risk investment. As a result, while lending by big German banks fell by 10% between 2006 and 2011, the Sparkassen increased lending by 17%.

 

The purpose of this policy proposal is to rebalance the British economy and the concept of basing it on a regional footprint is a sound one. Labour has yet to be persuaded to restore regional development agencies or a council of the North but at least this provides financial backing over a larger footprint than the Local Enterprise Partnerships that many feel cover areas that are too small to be effective.

 

The Hannah Mitchell Society which is campaigning for Northern Regional government welcomed Mr Miliband’s move calling it creative and radical.

LEEDS AND MANCHESTER STAR AT MIPIM

 

Both cities used their time well at MIPIM. The international property market held in Cannes is an important gathering for local councils whatever the Taxpayers Alliance might say.

 

Leeds told delegates about the increased co-operation with Bradford and Wakefield, learning some of the lessons of the Greater Manchester Combined Authority. The city region is reported to be worth £54bn.

 

Despite shrinking workforces and cuts in budgets, councils like Leeds are often the largest landowner, biggest capital spender and the highways and planning authority. MIPIM was told about the Trinity Leeds shopping development opening this year and work getting underway in June on the Sovereign Street office block. Bruce Springsteen is to be the first major band to play the Leeds Arena in July. Considering what the MEN Arena did for Manchester, and the ACC Arena being acknowledged as one of the major legacy benefits of Liverpool’s Capital of Culture; this should be a major boost for the West Yorkshire economy.

 

Meanwhile there was much interest at MIPIM about Manchester’s acquisition of Stansted Airport. The conference was told of ambitions to get passenger flow through the twenty million mark. Manchester Airport is approaching that now and its all still owned by the ten local authorities of Greater Manchester.

CHANCELLOR AT THE CROSSROADS

 

 THE CHANCELLOR’S NOT FOR TURNING?

 

 

Ted Heath remains a hate figure for many Tories. Two reasons for this are well known. He took us into Europe and he conducted the longest sulk in political history when he was deposed by Margaret Thatcher. The third, less publicised reason, was the economic U turn he performed midway through his government in the early seventies.

 

In 1970 Heath came to power with a right wing agenda to deregulate and make a transfer from direct to indirect taxation. Rising unemployment knocked him off course and his Chancellor Anthony Barber reflated the economy. The resulting inflation was controlled by an incomes policy which led to the miners strike, the three day week and the Conservatives lost the 1974 election.

 

When Margaret Thatcher faced a similar economic crisis early in her premiership, she was not for turning and became a heroine of her party. Such a status is never likely to be available to David Cameron and George Osborne but next week they do face a similar situation. The cries to modify the austerity and borrow our way out are deafening. Labour point out that as the economy flat lines we are borrowing more anyway.

 

I don’t expect the Chancellor to ease up. The Budget is likely to include fuel duty relief and more spending on infrastructure but I expect a broadly neutral budget as ministers cross their fingers and hope that the economic course on which they are set, works.

 

There are economic indicators which support the Chancellor’s approach, the mortgage market is easing, business start ups are growing and unemployment is down.

 

It is worth reflecting on that last point. It is one of the outstanding features of this recession. In Heath and Thatcher’s time, unemployment rocketed up as the economy slumped. Why hasn’t it happened this time. It is partly because the figures mask the fact that a lot of people are part time or under employed. Workers have been prepared to suffer wage freezes and reduced hours to keep their jobs. The trade unions, once able to bring down governments, are whispering from the sidelines. Sad but true, strikes are not really an option in the 21st century.

 

HUHNE PAYS PRYCE, NICHOLSON DOES NOT.

 

One of the many reasons why people are turned off from politics is that the great and the good generally don’t pay with their jobs when things go wrong.

 

If a brickie builds a dodgy wall and it falls down he gets sacked. If a car mechanic does a shoddy job on your vehicle; same fate.

 

But when it comes to police officers failing to pick up on complaints about Jimmy Savile or health disasters like Mid Staffs, none of the people at the top lose their jobs.

 

The glaring example is Sir David Nicholson, head of the strategic health authority which covered Mid Staffs. Now head of the whole NHS for England, he has defied repeated calls to resign.

 

Just occasionally justice is served as we saw this week with Chris Huhne and Vicky Pryce, but this does not detract from the need for people who take high salaries to walk the plank if things go wrong.