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Lord O’Neill reflects on the Northern Powerhouse

Today the Institute for Government publishes a new Ministers Reflect interview with Lord (Jim) O’Neill. Dr Jo Casebourne looks at what he has to say about his experience as ‘the guy that was driving the Northern Powerhouse’ from his time as Commercial Secretary to the Treasury in 2015-16.

Getting the job

In May 2015 Lord O’Neill received an unexpected phone call from then Chancellor George Osborne saying he’d embraced the idea of a Northern Powerhouse and asking him to use his experience as chair of the City Growth Commission to become Commercial Secretary to the Treasury.

In our interview, part of our Ministers Reflect project, Lord O’Neill admits that as well as his experience and relationships with local policy leaders in the north, there were other, more political, reasons he got the job: "… another, rather clever reason why George wanted me is because of the way I talk – I have no political opinions, but most people perceive me as being left of centre. He probably guessed that by taking me to Newcastle and Sheffield he would get a better audience than if he tried on his own."

Working across Whitehall

O’Neill describes how when he first arrived in the department "most people in the country and most people inside government thought it was a bit of a public relations game", which worked in his favour as expectations were low and meant it would be quite easy to "turn that into something more serious than that perception". He realised that "to get certain key parts of the Northern Powerhouse’s dogma into key people’s minds we needed to just reiterate the mantra to the point of it being boring" and that they had to be really focused on delivering it.

The excitement level around the policy amongst Treasury officials helped: "the very fact that Osborne had done something like this, you could tell that had raised the excitement level for officials, so there were a lot of young, smart people who were eager to get involved". Realising that Osborne was embracing the idea "helped to motivate the Treasury, who had been harder to engage when I was doing the City Growth Commission."

But that excitement did not always extend to officials from other departments, who felt that their job was to serve their own ministers: "They’d come into meetings with my officials and they would all try and defend their patch." 

Doubts from other departments centred around three key issues: "First of all, a loss of power by handing stuff over. Secondly, genuine doubt as to whether a local authority could do any better than central government which is an important point. Thirdly, lack of genuine belief that Osborne was serious." We’ve previously commented on the importance of having strong political leadership from the Treasury in driving this agenda forward across Whitehall.

The Northern Powerhouse agenda after the EU referendum

During the referendum campaign, O’Neill felt it was necessary to ingrain the future of the Northern Powerhouse and "would say to people up north: ‘You guys need to take more ownership of it yourself, so that whoever’s in Whitehall aren’t going to be able to stop the momentum.’" On the day of the results, O’Neill emailed Osborne to emphasise his thinking that if the Northern Powerhouse and devolution had been important before, they were much more important now, given the inability of the country’s leaders to connect with normal people.

Following the Conservative leadership election, with Osborne ceasing to be the Chancellor to drive this agenda overall, O’Neill remembers that "George said to me when he called us in, the morning of the PM change, he called us in to thank us all and he said to me, ‘Who would have dreamt that in one year, we would have ended up doing six mayoral deals? You should be so proud.’ Because I did negotiate them all. It was very exciting."

After Theresa May became Prime Minister, O’Neill initially stayed on to continue work on the devolution agenda. He felt that "The style of Number 10 had changed, I think initially it was more controlling. Because of the referendum and the leadership election there had already been a long time where it felt like government policy making had been frozen, which was frustrating." Yet of his time in office, Lord O’Neill felt that the Northern Powerhouse was his biggest achievement and the one that would have the most lasting success: "That would be the proudest thing. This is a serious on-going thing. It would be better if this government was more noisy about it, in my view, but it lives on."

The Northern Powerhouse agenda lives on outside government through the Northern Powerhouse Partnership set up by George Osborne. But to what extent does it live on within government?

We’ve flagged George Osborne leaving government as a risk to the agenda and the need for a clear commitment from Theresa May and Philip Hammond that English devolution remains a priority. The six mayoral elections on 4 May (in Greater Manchester, Liverpool City Region, Cambridgeshire and Peterborough, Tees Valley, West of England and West Midlands) will mean devolving real political power to many of England’s biggest cities. But as we’ve argued, it remains to be seen if this government will make new devolution deals in the rest of the Northern Powerhouse and beyond.


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