The real meaning of the battle between Manchester and Westminster

On the surface it was a bust-up over money. And not that much money in the scheme of things.

The mayor of Greater Manchester, Andy Burnham, and council leaders in the city region refused to voluntarily submit to the region being moved into tier 3 anti-coronavirus restrictions because they said the government was not offering sufficient compensation for the local hospitality businesses that will now be forced to close.

The mayor was asking for a minimum of £65m of assistance for firms from the government, or around £15m for each month of expected restrictions. These are not large sums, certainly not in the context of Greater Manchester’s estimated £71bn-a-year economy.

“£15m a month is basically a rounding error,” says Torsten Bell, the chief executive of the Resolution Foundation.  

“The amount of money in the context of the Greater Manchester economy is tiny,” agrees Paul Swinney of the Centre for Cities.

It seems the government refused to stump up, with reports that they would only offer £60m. And so the talks failed over a £5m gap and the central government will force Greater Manchester into tier 3 restrictions against the will of its leadership, which may well undermine their effectiveness. 

This evening, Boris Johnson announced that the region will receive just £22m. The prime minister added: “Over the last 10 days we tried to get an approach with local leaders in Greater Manchester. Unfortunately an agreement wasn't reached and I do regret this.”

He said that the government “made a generous and extensive offer to support Manchester business” but “the mayor didn’t accept this” and the region will now move into tier 3.

So why such a fuss about relatively small amounts of money? Doesn’t this feel a bit odd in the context of a resurgent pandemic in the North West? Is this a case of a grasping regional government, which hasn’t woken up to, or is in denial about, the scale of the health emergency on its doorstep? 

Or was it unreasonable and myopic penny pinching from Westminster, in a year when the government is forecast to borrow £372bn? What’s really going on?

It’s important to recognise this as part of a wider war about money and power between the centre and the regions in this crisis.

On the face of it, Andy Burnham’s resistance to tier 3 restrictions and call for a national circuit breaker lockdown, in line with the Labour leadership, seems contradictory, given that the latter would pose still greater economic harm on Manchester’s businesses.  

The argument from the city region’s political leaders is that the central government is trying to do local lockdowns on the cheap – not only is Westminster refusing to pay a sufficient amount to compensate local Manchester businesses, in their eyes, but ministers are not offering the same compensation for local furloughed workers as they did during the first lockdown earlier this year.

And they suspect the government thinks it can get away with this because the injustice will only be experienced in the northwest, far from London.

“The north stands on the brink of being back where we were in the 1980s, forgotten, pushed aside,” as Burnham told reporters in a passionate press conference last week.

Leaders in Manchester say another national lockdown would be more effective than a local lockdown in restricting the disease – and they can point to the advice from the government’s Scientific Advisory Group for Emergencies to justify this.

Yet the unspoken belief in Manchester also seems to be that another national lockdown would impose economic pain equally across the country and thus compel the government to offer more appropriate financial compensation packages for all affected businesses, including those in Manchester.

They also seem to believe a national circuit-breaker lockdown would compel the Treasury to revisit the terms of the new local furlough scheme announced earlier this month by the chancellor, Rishi Sunak, for areas affected by fresh restrictions.

This scheme, which kicks in this month, will be less generous than its predecessor, covering only 67 per cent of wages, rather than 80 per cent.

The furlough, of course, is national government policy, so by refusing to cooperate with Westminster on new local restrictions, regional leaders were, arguably, using the only leverage available to them to get this issue reopened.

Money is certainly relevant. The Treasury, ever conscious about its control of the purse strings, is unwilling to allow regions to influence national public spending decisions. While £65m might not seem a great deal of money, officials see it as potentially the thin end of the wedge if more local lockdowns follow and more regions demand the same consideration as Manchester. And they are determined not to change the terms of the new furlough.

Party politics is also clearly influencing this relationship. There seems to be an unwillingness by the Conservative government to cooperate with Labour city mayors. And the habit of ministers and those around them of leaking plans for local restrictions to national newspapers rather than informing and consulting local leaders first has certainly infuriated the north and demolished trust.

Yet the fundamental problem is that leaders in the northwest feel Westminster should automatically take their views into consideration where central policy specifically affects their area. Westminster seems to disagree, viewing this as a national crisis. 

There could be implications from this struggle for the government’s devolution and levelling up agenda, says the Centre for Cities’ Paul Swinney.

“The point of devolution is to have that alternative power base and have a politician in place who is very visible and able to stand up for the rights of that area,” he says.

“In principle, it’s a good thing that areas have got that voice and are able to articulate what they want and need. The issue is whether the government takes it in that spirit or whether they say this just is whole lot of grief that we don’t need. If they take that view that will make their levelling up agenda more difficult.”

The attempts by Manchester’s political leaders to extract more money from the Treasury appear to have failed on this occasion. 

Yet they have laid down a clear and significant marker for future battles over power between Westminster and English regions – battles which now seem overwhelming likely.