Cities should be entitled to claim cashback from the Treasury when they take measures to boost jobs and economic growth, a new report suggests


The report, published by think tank IPPR North, also says the north of England needs a “Boris of the North” to tackle the north/south divide and urges leaders of regional cities to speak with a single voice on economic issues.

The report says public spending is skewed towards London and the south east, with the north being compensated with welfare payments and grants.

This vicious cycle needs to be reversed, according to the report, with investment and financial freedom in northern cities, including a system whereby city regions see cash returned to them from the Treasury when they take measures to boost economic growth.

The report says that the five combined authorities, which will exist in the North by 2015, (Manchester, Liverpool, the North East, South Yorkshire and West Yorkshire) would be best placed to be the first to take on these new powers and recommends that provisions are made to introduce them in the 2015 Spending Review.

But the report says a cashback scheme would be a two-way street, however: failing authorities would see control being “re-centralised” as part of an agreement to share the risk involved.

Ed Cox, director of IPPR North, said: “The Prime Minister used to talk about the public ‘sharing in the proceeds of growth’ and that’s the same logic he should apply to cities in the North of England. Cities which have the greatest potential for growth also have the worst poverty and unemployment.

“An ‘earnback deal’ would provide an even greater incentive to invest in employment schemes which will not only finance growth, but will also help relieve poverty. Boosting northern prosperity would in turn boost national prosperity.”

Other recommendations in the report include a call for research into key infrastructure priorities for the North, with projects on a similar scale to Crossrail and Thames Gateway identified, as well as reduced central government interference with business rates.