George Osborne interview: smaller government is not enough

The Chancellor on elected mayors, northern cities and the need for ‘a bit of the Michael Heseltine’

7 March 2015

9:00 AM

7 March 2015

9:00 AM

Puccini’s doesn’t seem like George Osborne’s sort of restaurant. It is a pizza-and-pasta place in the safely Labour constituency of Salford and Eccles, Greater Manchester, most notable for the fact that Sir Alex Ferguson once took his whole squad there. (‘Penne alla Giggs’ is still on offer to prove it.) In recent years, however, the Chancellor has become something of a regular — he has even taken the Prime Minister along — and is made welcome to the point that when we met there last Thursday diners queued to be photographed with him.

The Chancellor used to look awkward in such situations. But this time he looked relaxed, chatting away with whoever passed. It is all part of a carefully cultivated relationship. Greater Manchester is to blaze a trail for his idea of better, stronger local government, with more powers in exchange for more accountability in the form of a directly elected mayor. Osborne talks about a ‘northern powerhouse’ to drive the economy alongside London; other than the recovery, he says, it’s ‘the thing that I’m most passionate about and spending most energy on’.

If you could bring together Manchester, Leeds, Liverpool and Hull, he says, you would have ‘a critical mass of ten million people, equal in size and in economic potential to London’. ‘If you take the Central Line in London and you laid it across the Pennines it would be longer than the gap between Manchester and Leeds,’ he explains, his arm chopping the air in excitement. ‘But there are nothing like as many journeys between Manchester and Leeds as there are on the Central Line every day. These places — Liverpool, Manchester, Leeds, Hull — are not particularly far apart. But their transport links are pretty terrible.’

A northern conurbation bound together by better transport links would address what Osborne calls one of ‘the big weaknesses in the UK: too much of our success and strength in London and the south-east. We need strength and success elsewhere in our country, not by pulling London down but by building the rest of the country up.’

Stronger local government would help, too. ‘Far too much happens at the national level’ in England, the Chancellor declares. But running the Treasury, a famously centralising department, he isn’t going to devolve power willy-nilly. City councils will have to agree to create a combined authority and have an elected mayor to benefit. ‘If we are going to devolve really big budgets and big city-wide responsibilities of things like transport and policing and economic development and health and social care, then you need the accountability of an elected mayor.’

Do voters actually want that? Three years ago, ten cities held referendums on whether to begin electing mayors, including Manchester, Leeds and Wakefield — but only one, Bristol, said yes. Osborne is adamant that what he is offering now is not what the punters turned down. ‘We made a mistake in basically agreeing to a load of conditions imposed on us by our coalition partners,’ he says — that the mayors ‘had to be only in individual boroughs of cities rather than across the city area, that there weren’t going to be new powers. So it was not surprising that, with the exception of Bristol, we lost.’

Osborne is now negotiating directly with council leaders. He was in Manchester last week to sign an agreement devolving the £6 billion health and social care budget to the city’s councils. Mayors, he says, provide not just democratic accountability but are also ambassadors for cities. ‘I would love this to happen in other parts of the country like Leeds and Birmingham,’ he says. He’s also not bothered by the risk of the odd disastrous candidate being elected: ‘You get great mayors, you get lousy mayors. But that’s not a reason not to have mayors.’

Osborne is also keen on devolving powers over business rates, calling the current uniform system ‘a reaction to the problems of the 1980s’. ‘There were militant councils, most famously in places like Liverpool, and the national government at the time felt it could not just abandon cities like Liverpool and see every business in the city driven out. So, they stepped in. But I think we’ve moved on a lot.’

Devolution of taxes and the like ‘is not going to happen overnight’, he says, but he would like cities to have more responsibility for how they fund their services ‘in time’. Intriguingly, he cites the Scottish economy as evidence for the benefits of this. ‘On unemployment rates and the like it has performed really well. Only the south-east, eastern England and London have performed more strongly.’ But he is quick to add that ‘nationalism and long-term economic development don’t go hand in hand’.

There are several surprising aspects to what Osborne is trying to do. The first is the Treasury — a department known for hoarding power, with a low opinion of local government — backing devolution. I ask whether this is a product of austerity: does he just want someone else to do the cutting? Osborne vehemently denies this, saying that he’s devolving rising budgets for transport and health. But it is a striking coincidence that the Treasury’s conversion to localism has come in an era of retrenchment.

The second is that a Conservative chancellor is working with largely Labour-run councils. ‘The Conservative party absolutely must not allow itself to be shut out of parts of the north of England,’ Osborne says. He concedes that the Tories have ‘shied away, in the past, from talking about the gap between the north and south. We didn’t really want to engage with that question.’ That has to change, because ‘the Labour party talked about this north/south gap but made the gap a lot wider’, and because ‘you have to have an offer to all parts of the country, if you want to be a party of all parts of the country’.

Osborne doesn’t see anything unconservative about government trying to mastermind the revival of a city or a region. ‘The Conservative party is at its strongest when it’s not the party that says there is no role for government and the state should just get out of the way,’ he says. ‘That is not a strand of Conservative thinking that, by itself, is enough. You need to have a bit of the Michael Heseltine: “I’m going to take the Docklands and build a financial centre here and build an airport here.” Or, “I’m going to take the Albert Docks in Liverpool and put the Tate Gallery here.” That’s an important part of the Conservative argument.’

Osborne is, though, keen to stress that this isn’t all just a clever wheeze to menace Labour in its northern heartlands. ‘I’ve always thought that good politics follows from good economics and good policies. I didn’t start by saying I’d revive the Conservative party’s fortunes in the middle of central Manchester.’

So, if city mayors are such a good idea, surely Osborne must welcome the boost that would be given to the concept by one of their number returning to the Commons as prime minister? Osborne smiles and replies, ‘Who do you have in mind? Boris? Well, Boris is coming back, he’s going to be the MP for Uxbridge. But there is no vacancy for prime minister.’ If Osborne succeeds, the next ambitious and successful mayor to arrive on the national stage will speak with flatter vowels.

Budget Briefing 2015


On the day of the Budget announcement (18 March), join The Spectator’s Andrew Neil, Fraser Nelson and James Forsyth for a discussion on George Osborne’s last Budget before the general election. This event has been organised by The Spectator in association with Aberdeen Asset Management. For tickets and further information click here.

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Show comments
  • Cim Thayne

    Seems rather well thought-out actually.

    • Molly NooNar

      Do the Northern cities want what he’s offering? The first time round he asked the people- and they said no. Now, he’s trying to bypass the people.

      • tjamesjones

        not really molly. technically he’s proposing something different. and morally, it’s pretty hard to argue that he’s imposing on the people by offering an elected mayor. at what point did we vote for the current system of councils, boroughs etc?

        • Molly NooNar

          Nanny state Tories know best it seems. The same with their useless police and crime commissioners. We could have told them that was a load of rubbish too, but we don’t get consulted. When we are consulted on things like fracking, even though 99% of the public said “no”, the Tories still try to press ahead with it full speed in the face of public opposition.

          • EUROJESUS

            Full speed – you subscribe to an interesting concept of time.

          • tjamesjones

            wow hit the rewind moll. when did 99% of the public say no to fracking? I missed that one. Was it the same time we said we prefer high energy prices and ongoing reliance on petrostates?

            and now for the take the cake moment of this week: “nanny state tories”. So there I was going to vote for the tories, realised I don’t want a nanny state, so I thought, what the hey, Ed Miliband doesn’t want to meddle in the economy, I’ll vote for that.

            Maybe just stick with “the nasty party”, nothing else seems to be working M

          • Molly NooNar

            The Tories have done plenty of meddling, printing public money and giving it to the banks £350Bn worth, nevermind its sweetheart deals with developers, frackers and tax avoiding big businesses.

            Even the Torygraph reported the results of the consultation:

          • tjamesjones

            not sure you’ve represented the facts too well here: the article you posted from the Telegraph says that 99% of responses to a consultation (which is not the same thing as 99% of the public), were against a proposed law change.
            And that much of these responses were from campaigns from our progressive friends at Greenpeace. That is not democracy, that is the voice of an interest group.

          • Molly NooNar

            And excluding those responses (when there is no reason why their views or views that they support should be excluded), there was still 92% rejection of fracking!

          • tjamesjones

            why would anybody respond to say they supported the law change? of course it’s nimbys who have bothered. or should that be numbys

          • Molly NooNar

            Wow, anyone who has a different opinion than the fracking firms can be dismissed as Nimby. This truly is the golden age of democracy.

          • tjamesjones

            Molly you and I both may have opinions about fracking, but we do not have any evidence about what the opinion is of the nation. The fact that you quote responses to a consultation as facts about the public opinion doesn’t say much for your interest in what the actual public opinion is.

          • Molly NooNar

            What then is the point of a national consultation if you don’t want the public’s opinion? This idea that you can dismiss these responses just because you don’t agree, as the Tories have, is outrageous.

          • tjamesjones

            I think your outrage is misplaced, if it isn’t tactical. Nobody would present the consultation exercise as you do – politics is about managing trade-offs. If we surveyed the country asking “do you want cheaper fuel”, or “do you want to reduce our depence on Russia and Iran”, what do you think the answer would be? I wouldn’t mind if you addressed that, if you’re engaged on the subjecxt of Fracking. And in the end, if you don’t like the people in office managing those trade-offs, vote for the other side.

            Every single building project in this country has an opportunity for feedback – the vast majority of responses will be negative (who writes to the council to say they approve of their neighbour’s plan to build an extension). What mattesr is not the direction of the responses but the substance of the objections. In many cases, the substance will not be enough reason to refuse the planning application. So too here.

          • Molly NooNar

            Nobody would present the results of a consultation exercise by considering the dominant and clear response that has been overwhelmingly given? Seriously?

            To the questions you ask there are a host of alternatives to try and achieve them which would probably have public support without resorting to fracking: renewable energy, reducing waste by insulating homes better, nuclear energy etc. Why can’t you accept that it was a clear rejection of fracking by the public? It’s why there have been demonstrations at fracking sites, why Tory shires are in open revolt about it.

            This has nothing to do with tradeoffs. It’s about a Tory “born to rule” mentality. We know best.

          • tjamesjones

            sigh. the consultation exercise is conducted to give the public a chance to air views. It isn’t a mini-referendum. This point is not a matter of debate.

            Nor is it under debate that some people object to fracking.

            People also object to nuclear fuel, wind turbines, high energy prices, wars in Iraq, etc.

            Thank you for engaging with the trade-off question. I would say (a) renewable energy is one part of the mix but is not a replacement for fossil fuels. That’s why we still use fossil fuels for the majority of our energy needs (b) insulation is not an alternative, it’s an additional thing that we can do. We still need power (c) nuclear is still part of our mix, though you might recall quite a lot of public resistance to it as well – and Germany and Japan have recently canned it.

            You invoke a tory “born to rule” mentality, but the basis seems to be solely that you donj’t like the decision they have taken. Why not just engage on that basis, rather than waste more energy on that futile English obsession with class. Your real issue here is fracking, not ‘born to rule’.

          • edithgrove

            It will be 100% against by the time the British see the devastating effects fracking is having in the Netherlands. Less reliance on petrostates but your house falls down. Wow yourself.

          • Tom M

            “…. the devastating effects fracking is having in the Netherlands.” I’m interested, tell me more.
            “…but your house falls down….” That interests me too but for a different reason. I lived in a mining area in the 60s. If you tried to get a mortgage there was a lot of teeth sucking and foot shuffling. Always resulting in a surveyor’s report listing cracks “possibly caused by mining activity” in the property. Suffice it to say that the tunnels created by the NCB are still there and no-one is much interested in possible subsidence anymore. That isn’t to say that there were never any problems, there were, but never on the scale they thought possible.
            Bearing in mind that fracking happens much much further down than coal mining ever did I am somewhat dubious of the claims of doom from anti-frackers.

          • edithgrove

            google fracking and Groningen, and look at the images

            Here’s one: http://www.monumentaal.com/heemschut-bezwaar-tegen-gasbesluit-groningenveld/

          • Tom M

            Thank you for that link but my Google translator doesn’t make much sense out of the text. I see references to earthquakes and one of gas but I can’t get the gist of the article.
            However given that it is caused by fracking let me try this. If it could be demonstrated that we in the UK would all benefit from a considerable reduction in energy prices by fracking how many houses suffering from subsidence would we be prepared to sacrifice for the common good? Would you permit fracking if it were one house or ten or one hundred? Clearly there is a debate to be had. We wouldn’t deny lower energy prices to all if it was a case of buying out say 50 properties would we?

          • edithgrove

            Its more like 100,000 properties so far and regular earthquakes. You don’t meed to translate this article, as I said you can google fracking and Groningen and it will bring up many articles in English. I think the debate in Groningen has been had, and a decision made. But within the post democratic corporate society we live in no doubt fracking will continue.

          • Tom M

            Thank you edith, done as you suggested. That is certainly serious damage which has been caused by gas extraction (someone commented that it wasn’t exactly fracking but some other method. Small point I suppose). Apparently the government has or will pay out some 1.2 billion euros in compensation for damaged property.
            So far I am in agreement with your sentiments. Now I wish to part company.
            As I said before and the articles I have read tacitly agree there is a plus side to this inasmuch as the revenues from the gas. That cannot be ignored. The Dutch Government is happy to pay compensation (allbeit tardily) because the revenues are vast.
            The problem I think that should be adressed is the lag between damage and compensation. I certainly would not like to be living in a house shored up with acrow props whilst the lawyers work there way thorough the paperwork. The houses I seen on the web should have been evacuated a long time ago and the people rehoused in new accomodation very quickly after the first cracks appeared. Should this be a Government policy then it might be people look upon fracking more favourably.

    • wycombewanderer

      Machievellian even!

      all these are labour councils, give ’em enough rope eh!


      “He was in Manchester last week to sign an agreement devolving the £6
      billion health and social care budget to the city’s councils.”

      Come on now, how does that change anything?

    • Blindsideflanker

      Only if it is a scheme to fracture and dismember England.

  • Kinks N Slinks

    If you ordered Penne alla Giggs in the restaurant George was interviewed in, do you end up getting served something his brother wanted?


    “These places — Liverpool, Manchester, Leeds, Hull — are not particularly
    far apart. But their transport links are pretty terrible.”

    15 years on and still nothing but big words.
    Incidentally, neither the Northern Hub nor the wider concept behind it was not Osborne’s idea.

  • rtj1211

    The most important feature of a mayoral system is that joke candidates can be supported by powerful media moguls and then their business friends know that the bribery process is streamlined and simplified: bung the Mayor once and you have them in your pocket forever……..

  • edithgrove

    Am I alone in remembering we were promised a debate in England about devolution to cities or an English Parliament?

    • Blindsideflanker

      Indeed, it is a Government that foists stuff on us which we don’t want, but fails to honour the promises it made to us.

      When there is stuff they want it happens in a flash, when there are policies we want, we get nothing but obfuscation.

      On English devolution they worry their little heads about if there would be, or not, different classes of MPs in Westminster if English people were given equality, but they don’t care a toss if they turn English people into constitutional second , third, forth or fifth class citizens.

  • Blindsideflanker

    Osborne is pushing ahead with city fiefdoms to pre-empt any constitutional settlement for England.

    Labour is using the London assembly as an argument why there shouldn’t be
    devolution for England, for they argue there are already different powers in different areas. Of course this wasn’t the declared aim when they set up the London Mayor assembly, for if it was we should have all had our say in London
    getting an assembly . It will be many times worse if we get Osborne’s Mayoral fiefdoms across English cities.

    Just as Labour triedto get piecemeal regional assemblies to fracture England
    through local votes, Osborne is doing the same, via the back door, to England with his Mayoral fiefdoms. But Osborne can’t even get us to vote for Mayors, he is financially foisting them on us. Whatever Government we get, we always get them pushing for the balkanisation of England, why is that? Is there some hidden department of the British state whose sole purpose is to destroy England,
    a bit like the Scottish office, but in reverse?

    When the Cameron Conservatives achieve their aim to fracture England
    into a dogs breakfast of competing mayoral fiefdoms, what happens to all of us
    who don’t live in a city fiefdom , but live in a hinter land of nowhere? Where
    do we get our representation? Do we get annexed by a city fiefdom? Will we be
    asked if we want this?

    The Conservatives rely on English votes, but they seem to have nothing but contempt for English people and culture. A culture of civic representation through our Parishes, Councils, Counties and MPs, none of which they care very
    much about, Hampshire was established in 755AD older than most of the countries of the world , yet I understand Osborne is planning a city fiefdom in Southampton and Portsmouth, have we been asked if we want this ancient County abolished? No.

    People say they care about the Union ending, I do as well, for me it can’t end soon enough (and I was someone who was ambivalent about my British /English nationality) . The worst thing that ever happened to England was the Scots NOT voting for independence. At the moment there is a race on as which
    happens first, the British establishment destroys England, or the dis-United Kingdom ends.

  • tomleatherbarrow

    I’m not a natural Tory supporter (that doesn’t mean I’m Labour either) but I think this is one of the most far-sighted, thought-through and intelligent policy proposals brought forward by any party in a long time. George Osborne deserves enormous credit for at least trying to redress the regional imbalance, re-energise local councils and make decisions local again. Believe me, Birmingham where I now work, is worried!

    The extent of local power dilution and centrism was brought home to me a few years ago when I met the Director of Public Health for Birmingham. She told me that at the height of the swine flu epidemic she was unable to close down a local school to stop the spread of the outbreak and couldn’t even send out a press release without it being approved by the Department of Health. The situation is ridiculous and the proposals for Manchester are, I hope, the start of returning power to the regions. If they screw it up, voters can get rid of them – it’s called democracy.

    I did however despair at the recent Spectator podcast which touched on this issue when Fraser Nelson appeared to pour scorn on this proposal suggesting that all the Tories needed to do was talk about the improving economy, education etc to win back Northern votes.

    It’s going to take a lot more than that! More of this kind of thing please – George you are onto something keep going!

  • mikewaller

    Before Osborne gets every political hanger-on north of Watford salivating into his or her latte, he must be made to cap the costs of government administration in the UK. At present it swallows 2% of all income tax – make sure it is held at that. If there is to be more government administration in Scotland and Manchester, there must be matching reductions elsewhere. Please sign my e-petition to this effect at:http://epetitions.direct.gov.uk/petitions/74584

  • global city

    Who do Tories think that local public sector generate jobs and wealth?

  • tartan pimpernel

    Good idea George, just a bit late. We could have told you years ago that the north felt neglected, that’s why we have SNP in Scotland.

  • Linda Hudson

    The people of the North East of England voted against a Regional Assembly.

    The government will now impose a Mayor which comes with all the extra expense of another layer of government and supporting staff, red tape, bureaucracy, and more diktat, and all this is being implemented by 2017.
    The powers that be will have their Regional Assembly come what may.
    Regional Assemblies are An E.U. plan for nine E.U. regions, and Common Purpose officials are already placed within society for the running of the up and coming E.U. Federalist superstate.
    Pity our political masters are not as clever creating jobs for the people and for U.K. manufacturing base building, as they are for creating themselves super paid and titled none jobs!
    The people do not want a mayor, and they are not even being given a vote on it and that is what is called Democracy U.K. style!
    Pity the poor beleaguered U.K. and European taxpayers working men and women, who are here to sustain the powers that be, and their army of bureaucrats, their life style in which they have became accustomed to!