George Osborne continues to surprise with his audaciousness when it comes to transport infrastructure and devolution. In his Conservative Party Conference speech this week he made the bold announcement to devolve control of £26bn of business rates to local government. This could be used to fund local infrastructure, or the rate could be cut to stimulate the high street by encouraging retail trade.
His continual promotion of the Northern Powerhouse gives it a status at Whitehall which makes it unstoppable. Two weeks ago he took with him on his China trip the leaders of the five core cities in the north of England. He clearly wants to work in partnership with the leading local politicians in the north.
Economists have always been spilt between those who advocate the Keynesian approach of boosting demand and those who emphasise a supply-side approach of improving productivity and competitiveness. The problem with the former is that an expansionary fiscal policy is off-limits during a period of austerity, and even if it wasn't it would suck in more imports.
Osborne is a supply side chancellor, hence the importance he attaches to transport connectivity and the way it can improve labour markets, boost agglomeration and drive down transport costs to business. Given that the north of England has productivity per capita levels 50% lower than London,
transport has much to do if it is to play its part in bridging the gap and rebalancing the economy.
The chancellor has brought Labour's top thinker, Lord Adonis, centre stage to chair the National Infrastructure Commission. Adonis had a clear decision to make: does he serve his country, or does he play the party political card and stay in the wilderness? He made the right choice by agreeing to the former. The big infrastructure decisions from HSR to new runway capacity need buy-in from across the political parties because their delivery period runs across two or three parliaments. What better person to ask to chair the new commission than Adonis: he is more constructive, less politically partisan and more inclusive than any politician I know.
On Lord Adonis's to do list from the chancellor are developing a strategy for HS3 across the Pennines and reporting back on the fundability of Crossrail 2. Expect him to work hand in glove with the Northern Powerhouse to improve connectivity across the north and with TfL on Crossrail 2. He is a passionate supporter of both projects.
The battle to win the debate on the importance of transport connectivity to the economy is being won. If there is one statistic which highlights the challenge it is that the number commuting between
Manchester and Leeds is 40% less than would be predicted, given the distance between the cities and the size of their economies. This is because the journey by rail and road is too slow, and in the case of road too unreliable. Transport Focus in its 2012 report said that passengers were being treated with a "lack of respect", given the dilapidated state of the Pacer trains which are prevalent on the Northern franchise.
Much of this is being tackled now, with new rolling stock to be delivered in the new Northern franchise which will be announced next month, a new promise on electrification from Sir Peter Hendy at Network Rail and line improvements which could halve the journey time between Manchester and Leeds to 30 minutes.
On the highways, active traffic management will continue to squeeze more capacity out of the congested network, with studies under way of an ambitious plan to tunnel in order to improve journey times across the Pennines.
How ambitious will Adonis be in recommending HS3 and Crossrail 2? In Sir Alex Ferguson's new book Leading, he says: "My job was to make everyone understand that the impossible was possible. That's the difference between leadership and management." My money is on Adonis doing precisely this when it comes to winning support for transport infrastructure.
