I keep hearing Chancellor George Osborne talking about the creation of a ‘Northern Powerhouse‘.
For some time now I’ve been scratching my head and wondering what this really is all about. As with all things Osborne there is some electoral calculus. Perhaps he thinks the Tory party can regain its glory days in the big northern cities through this initiative.
So far my investigations have yielded the key idea behind the Northern Powerhouse is the creation of a whole new series of administrative structures which in many ways resemble the old EU plan to divide England up into a series of regions.
The Romans used to call it divide and conquer. At the epicentre of this is Manchester. When people there were asked whether they wanted a Mayor for that great city, they rejected it. In spite of this Mr. Osborne plans to power ahead.
At least John Prescott had the courtesy of putting his North East regional government before the electorate in a referendum. His proposal was crushed and he respected the result. So we are to have more highly-paid politicians, yet more layers of government and somehow Mr. Osborne seems to think this will lead to greatness. But what really interests me is the economics.
It is not difficult to sit at fashionable dinner parties in Notting Hill and elsewhere with the smart set of London and to be convinced of just how swimmingly everything is going. Indeed my fellow panellist on the BBC’s Question Time last night, Conservative MP Nadhim Zahawi, seemed to be saying – to coin an old Conservative phrase – “you’ve never had it so good”.
But when I visit the North, which I will be doing a lot of over the next few weeks with the death of Michael Meacher leading to a by-election in Oldham West, the people I meet feel far from comfortable. They’ve seen their living standards stagnate or decline over the course of the last ten years.
They know that wage compression caused by a massive over-supply in the labour market has damaged their life chances. For Mr Osborne of course, he spends his time meeting many of the big conglomerates who have benefited themselves from Britain being a low wage magnet. But I suspect that our Chancellor now spends rather less time visiting people that work in heavy manufacturing.
It is an astonishing fact that the Ineos plant outside Runcorn consumes as much electricity as the whole city of Liverpool. Indeed for heavy manufacturing, energy is very often an even greater cost than wages.
As I’ve said before the European Union’s pursuit of carbon dioxide targets is damaging the chances of all manufacturing companies across the EU. At the heart of this is a blind faith in a form of green energy that simply does not work.
The obsession with wind power may have made some rich land owners even richer but it has led to a form of power that is intermittent and expensive.
Not only does every consumer pay an excess on their bill which will a mount to 20 per cent by 2020, but the same applies to our businesses too.
Indeed, former Italian Industry commissioner Antonio Tajani said that we are witnessing an industrial massacre across the EU. And he’s right. Because as we put up ineffective wind turbines, the Chinese and Indians are building up to four coal fired power stations every week.
But in one way the rest of the EU are fortunate. Their leaders appear to be slightly more in touch with the realities of manufacturing than the posh boys who govern Britain.
Mr. Osborne, not satisfied with the European emissions trading scheme, decided to introduce a new carbon floor tax.
And unlike the Germans who recognised that over-dependence on wind was damaging, he has overseen the closure under the Large Combustion Plant directive of several of our biggest coal fired power stations. There are more closures to come.
The Germans have got around the directive with their new program of building coal fired electricity generation. Indeed I was stunned as I drove to Cologne last year to address a meeting at the sheer number of power stations all there emitting their carbon dioxide.
The Germans put their industries first. They now pay about four and a half pence per kilowatt hour. In Britain we pay nine. As I grieved to see the losses in Redcar, Scunthorpe and Lanarkshire, I also know this is but the top of the iceberg. Tens of thousands of jobs have gone with the closure of our smelters, the massive contraction of our steel industry, the cut backs in refining, smelt, glass and many others.
For the North of England, which traditionally is where much of our heavy manufacturing has taken place, the world under Mr. Osborne looks a long way from a powerhouse.
To make matters even worse, by the end of next year our electricity generation will be down to an excess capacity of about two per cent. One major closure and the lights will go out.
A powerhouse needs power Mr. Osborne and affordable power at that.
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