The resignation of Lord O’Neill from the Treasury will be a “significant” loss to local government and the fulfilment of the Northern Powerhouse agenda, according to Greater Manchester’s interim mayor.
The announcement of Lord O’Neill’s decision to quit the government sent shockwaves through the sector this lunchtime.
Greater Manchester’s interim mayor Tony Lloyd (Lab), who heard of Lord O’Neill’s resignation from LGC, said: “I think Jim O’Neill has been very important to the Northern Powerhouse and was one of the originators of the concept.
“I am very sorry to see him go. He is from Manchester and both experientially and intellectually was able to devise the case of the Northern Powerhouse and advocate it, so his loss is significant.”
He later described Lord O’Neill’s departure as “concerning” for northern leaders.
“What is needed now is deeds, not words, from the prime minister and her cabinet that make clear their commitment to rebalancing the nation’s economy,” he said in a statement.
Nick Forbes, leader of the Labour group on the LGA and Newcastle City Council leader, described Lord O’Neill as “a friend of the north I could do business with” on Twitter.
Ranked second in the list of the most important people to local government in the LGC100 powerlist, Lord O’Neill was a key conduit between councils and central government in developing devolution deals.
Prime minister Theresa May said Lord O’Neill had made a “significant contribution to driving forward the government’s work on delivering growth beyond the south-east through the northern powerhouse”. She said he had had a similar impact on promoting “stronger economic links with emerging economies, including China and India”.
“You have laid important foundations in these areas, and the government will build on them,” she said. Their exchange of letters has been published by the government.
Former chancellor George Osborne, who appointed Lord O’Neill to the Treasury, tweeted: “Jim O’Neill was one of those rare things in British politics - an outside expert who made a big difference on the inside. He will be missed.”
Mr Osborne added Lord O’Neill’s work on devolution and the Northern Powerhouse would bring “lasting benefits”.
Jonathan Carr-West, chief executive of the Local Government Information Unit, said: “Lord O’Neill’s resignation letter states that the Northern Powerhouse ‘appears’ to be commanding the prime minister’s personal attention ‘despite speculation to the contrary’.
“However, his resignation from the government and the Conservative party is unlikely to dampen this speculation.
“Many will interpret this as another nail in the coffin of the [George] Osborne legacy.
“It would be a tragedy if the devolution agenda fell foul to political point scoring. We need to return power to our great cities and county regions in order to grow sustainable economies, deliver effective public services and give ordinary citizens a stake and a say in the future of their communities.
“That’s much bigger than one man’s political project. Indeed it should go beyond party politics. We should all hope that Lord O’Neill is right and that this agenda remains in safe and committed hands.”
Think-tank IPPR North’s director Ed Cox said: “It is a great shame that Jim O’Neill is standing down from this important role as he has been an important champion within government for the Northern Powerhouse.
“The prime minister has been very clear in her support for the Northern Powerhouse and IPPR North has always argued that the Northern Powerhouse is not so much a government programme as the sum total of economic activity that makes up our £300bn economy.”
Liam Booth-Smith, chief executive of Localis, said Lord O’Neill’s resignation would “undoubtedly raise questions about Theresa May’s commitment to the Northern Powerhouse agenda” but added he would “caution against over interpreting what this means”.
“Government has still made all the right noises about devolution, and Theresa May personally has committed to seeing the devolution agenda through,” said Mr Booth-Smith.
“Whilst it’s a shame to lose someone so committed to devolution, it provides an opportunity for the government to refresh its approach and send the message that it remains committed to devolving power and ensuring economic growth benefits communities across the UK.”
Mr Booth-Smith said Lord O’Neill, who has also quit the Conservative party and will sit as crossbencher in the House of Lords, would be able to “make the case for greater devolution, free of ministerial constraint” along with former chancellor George Osborne.
“The tendency will be to see the resignation as a setback for the Northern Powerhouse, but I think it could actually give it new lease of life,” he said.
Former housing minister Lord Young of Cookham has been named as the Treasury’s new minister in the House of Lords, but it is unclear whether he will take on all Lord O’Neill’s previous responsibilities.