IN terms of the political big picture, Chancellor George
Osborne’s autumn statement on Wednesday this week may well come to be seen as a
pivotal moment in the next general election battle.
Whether the so-called mini budget will win or lose that
contest for his party, however, is currently a difficult one to call.
On the one hand, the Chancellor was, against the
expectations of most pundits and economists, able to reveal that the deficit is
continuing to fall, and that government borrowing would therefore not need to
increase after all.
On the other, he was forced to admit that the years of
austerity would continue at least until 2018, that growth would continue to be
sluggish, and that his original target of reducing debt as a proportion of GDP
by 2015 would be delayed by at least a year.
Too much has been made of the fact that Shadow Chancellor Ed
Balls, thrown by the unexpected news on borrowing, made an uncharacteristic
hash of his set-piece reply to Mr Osborne’s Commons statement.
The truth is that only political anoraks get worked up about
that sort of thing. What will linger
more in the public’s mind is the fact that Chancellor’s harsh medicine is still
no nearer to bringing about a lasting economic recovery.
Of potentially much greater significance than Mr Balls’
incoherent ramblings is the risk that Mr Osborne’s failure to meet the debt
reduction target will mean Britain losing its AAA credit rating.
Much of what Mr Osborne has done over the past two and a
half years has been designed to stave off this very threat, and if the rating
is indeed downgraded, it will surely be time for David Cameron to find a new
Chancellor.
What, though, does it all mean for the North-East? Well – and how many times have I had to write
this line over the past 15 years? – there will be no dualling of the A1 north
of Newcastle for starters.
Other proposals which failed to win the Chancellor’s stamp
of approval included a £25m upgrade for the Tyne and Wear Metro, and a package
of support for the region’s offshore wind industry.
Furthermore the proposed welfare cutbacks, with benefit
rises for the next three years capped at a below-inflation 1pc, will also
disproportionately hit those regions with higher rates of unemployment such as
this one.
But amid all this, there are continuing signs that this
government – more so than its recent predecessors – is starting to take the
idea of regional policy seriously.
The most obvious indication of this came a few weeks when Lord
Heseltine, the arch-interventionist of Tory politics in an era where the free
marketeers held sway, published his ‘No Stone Unturned’ report.
The Chancellor has explicitly backed its call for a single
funding pot covering housing, skills, transport and job creation as well new
powers and funding for local enterprise partnerships.
Significantly, the government is to give each LEP the chance
to nominate a single major infrastructure project which will then be eligible
for a new concessionary public works loan rate, up to a value of £1.5bn.
In addition Whitehall will provide a further £350m towards
the Regional Growth Fund, to provide support for jobs and growth across the
English regions until 2015.
While the impact of those changes remains to be seen, a more
immediate boost to the region came with the announcement that - 54 years on from the opening of the Preston
by-pass - Newcastle will finally join the motorway network, with all stretches
of the A1 south of the city to be upgraded to motorway standard.
And the spectre of regional pay, which could have led to teachers
and nurses in the North being paid less than their Southern counterparts, has
also receded in what was a notable victory for both the unions and the Lib
Dems.
It was surely coincidence that, on the day the Tories were pushed
into fourth place by UKIP in the Middlesbrough by-election last week, Mr Osborne
appointed a new adviser in Neil O’Brien who has previously warned that the party risks
‘pariah status’ in the North.
If the autumn statement is anything to go by, maybe he is
already making his voice heard.
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