The Northern Powerhouse is a smoke-and-mirrors sales pitch to sell the North and it's assets. The North needs something real.

Photograph: Northern Rail train at Manchester Oxford Road by Mikey. (License) (Cropped)

The chaos caused by the mess Northern Rail has made of it's timetables, has led to commentators calling into question how committed the government really is to the vaunted Northern Powerhouse - it's plan to rejuvenate the North.

Perhaps this mess would have been containable for the government, if it wasn't for the fact that the collapse of the rail network in the North comes not in isolation, but on the back of big promises that been ever further downgraded until they have been all but scrapped.

Tory ministers had pledged major upgrades and major new links. But the big pledges were watered down. Last summer, the transport minister announced that Electrification for the North were cancelled, even as he confirmed more investment in London.

And the ambitions of the TransPennine railway upgrades have been severely contracted - originally pitched as work from Liverpool to Newcastle, the latest focus is just on speeding up links between Bradford, Leeds and Manchester.

Even in the face of the current crisis, the Transport Secretary has been reluctant to talk punitively of how the rail services are being run - even as they are effectively curtailed, cut down to something approximate to an emergency schedule.

It isn't hard to see why the Northern Powerhouse now looks to have been all smoke and mirrors.

Part of the problem is that it was. In essence, the government plan for devolution was constructed around a branding exercise - the "Northern Powerhouse", the "Midland's Engine" - the semantics of which give away the broader aim of gearing the regions towards serving the corporate interests of UK PLC.

In practice, devolution reflected Conservative interests. It cut money from local services, only to return it, in part, through the Metro Mayors - executive figures, alienated from local government and accountability - whose role seems mostly intended to spend the funds on easing the way for business.

The focus was on building a framework, an infrastructure, that will encourage inward investment into a transport hub that would have most Northerners at most an hour away from most major Northern cities and their employment opportunities.

But the plan has also effectively cut local people out of the loop - developing plans for them, to impose on them. And the focus is still on the cities, and not post-industrial towns, where people have been left feeling abandoned.

Recently speaking at a Manchester Business School event on the Northern Powerhouse, Vince Cable delved into how the Powerhouse plans that he and George Osborne developed unfolded.

Cable said that the Northern Powerhouse was supposed to achieve two things: balance out the lure of London and address previous failures to get people and jobs in the same place - which he referred to as the "work to the workers, or workers to the work" dilemma. Transport would be key to Powerhouse's "workers to the work" approach.

Cable argued that efforts were however undermined by budget cuts - the Liberal Democrat said that he protested cuts to capital spending, and that the local government minister failed to protect local government budgets.

The result was a collection of cities, still poorly connected, that have become more vibrant and dynamic, but are still surrounded by impoverished suburbs - already stripped of opportunities, now cut off and drowning amid cuts.

In these conditions, of course, any investment for the North is welcome. And needed. But is tailoring the whole region purely for business the right way to go about it?

The Conservatives have sought to rebrand the North and prepare it's assets - including Northerners themselves, presented as a pool of workers and customers within easy reach and ready to scramble - for sale. Regional devolution becomes a sales pitch, all show and no substance.

But where are Northerners themselves fitting into this? People in the North are struggling to make ordinary journey's to work, that they really can't afford to lose. With competition for jobs so overwhelming, expensive journeys and cancellations are a direct threat to the ability of the lowest earners to get by.

There's only so much that an influx of business investors and new jobs could fix - even job security would unlikely be improved if the amount of work available better matched the demand for employment, such is the direction working conditions are headed in.

The North need more that is rooted there. Affordable housing. Affordable and reliable public transport. Career opportunities for the least well off, and least skilled, with the longevity and security around which to build a life.

Was any of this ever on the cards with the Northern Powerhouse?

The North needs public investment in public infrastructure and work deeply rooted in it's own communities - the means to make use of it's own resources. Achieving that from the outside, from distant Westminster, would be hard.

But from well organised and funded local government, taking seriously civic engagement, giving people a real voice and involvement? In that there is hope.

Industrial Strategy: May government needs to match it's words with public investment if it wants to unlock missions potential

When Theresa May took over the leadership of the Conservative Party, she heralded a change of approach. There has been a lot of talk of government being willing to get more involved - on May's part, expressed in her insistence on restoring the Unionist part of the party's legacy, including invoking Joseph Chamberlain and a more activist government.

The issuing of an industrial strategy was seen as a statement of intent - an act of intervention that broke with the pro-business, laissez faire brand of 'liberal conservatism' of her predecessors David Cameron and George Osborne.

However, follow through has been limited. So too has money. Once published, the government's strategy looked less about shaping markets and supporting innovators, and more about propping up Britain's failing industries with deals and deregulation.

Theresa May's latest step was to reference the UCL Institute for Innovation and Public Purpose (IPPR), who along with it's director Mariana Mazzucato have been pressing hard for a reshaping of how we understand the role of government in innovation. But her warm words toward the potential of strategic missions will mean nothing without the funding to match.

Mazzucato's work has argued, the state can be the risk taking pioneer - a role expected of the private sector, but which it is never willing to fulfil. By funding R&D, by offering long term, stable public investment, government can open up and shape entirely new markets.

But it can't do this without money - at either end. Projects need investment and support to be there from the start and need the private sector not be able to simply walk away with unlimited potential earnings at the end, with no restitution for the public role. Big ideas should fund new big ideas.

Theresa May's government, however, has yet to be willing to match big words with big funding. Today's speech was no different. There was a lot of praise for public institutions that engage in research, but little mention for how they have been strangled of funding.

May set out her four missions - within four 'grand challenges' facing Britain taken from the Industrial Strategy - and praised the potential of missions to drive innovation forward. But that was the extent of it.

Both the IPPR and the thinktank OECD have argued that increased public investment, and the infrastructure to implement it like a National Investment Bank, is a golden opportunity that the UK is not taking advantage of - despite Britain investing well below 3% of GDP.

Without funding, potential will remain unexplored. Mission statements represent step one in a coordinated approach. The Prime Minister herself acknowledged that progress is born from collaboration and cooperation. There needs to be a lot more of it, and something more: coordination.

Theresa May is committing to the big visions/big speeches aspect of the call for strategic thinking. Will the government wake up and start to put in place the rest of the infrastructure needed to maximise the potential that can be unlocked by long term strategic thinking?

Transport Funding: The government created it's own problems and now they're getting in the way of the real debate

Photograph: 43207 Departs Leeds by Joshua Brown (License)

The government's homemade problems on transport rumbled on this weekend, with blowback from their cancellation of funding for infrastructure in the North. This can at best be described as falling at first hurdle.

Having a debate about funding at all ignores the guarantee of huge benefits that any investment produces and obscures the real, and much deeper, debate that comes after: how that funding is structured to best serve communities.

The current distraction began when the government cancelled the full electrification of the Manchester to Leeds rail links, which had been at the heart of plans for George Osborne's so-called 'Northern Powerhouse'.

In response Andy Burnham, Mayor of Greater Manchester, gathered the political and business leaders of the North to a summit. It's purpose was to call for long overdue investment in the transport infrastructure of the North.

Only together, argued Burnham, could Northern leaders achieve greater parity of funding and overturn a situation that has London receiving eight times more in investment than the North - recently expressed in the cancellation of Northern electrification plans prior to the approval of further investment in London.

Chris Grayling, the government transport secretary, responded to the anger at the government by following the Tories' longstanding approach: shifting responsibility. Grayling and transport ministers announced that it is on the North to develop plans for the government to fund - as if Burnham's summit was what it wanted all along.

The government also took time out to complain that it wasn't invited to the Northern summit. But the summit was clearly the first step in building the solidarity necessary to construct a collective negotiating platform. Burnham himself adopted a stern stance, saying patience has run out, that London cannot continue to be developed at the expense of the North.

George Osborne, the former Chancellor and now Evening Standard editor,  couldn't help but wade in. In what was seen as an attack on his successors for not following through on his own policies, Osborne called for Theresa May to relaunch her premiership on investment in the Northern railways that could help geographically rebalance the national economy.

There are plenty of reasons for the North to be disgruntled at the government for it's failure to deliver and not least is that infrastructure spending alone is a boost to a local economy.

In the long term it is an unflinching in it's positive affect on economic growth. But in the shorter term it also creates a lot of jobs and a lot of contracts from which local businesses can benefit.

The rail links themselves reduce the time and distance between key locations. That is a boost for business, widening their customer base and giving them access to the benefits of operating at scale. It's also a boost for workers, widening opportunities while reducing the time spent on a commute.

But there is a downside - and it is this that the questions, of whether to provide funds at all, delays and distracts from. The better connections, the widening of opportunity can also encourage centralisation.

As a business pursues cheaper ways to work and greater efficiency, they have a tendency to gather in key locations, close to important suppliers, partners and customers. That raises big questions about how this will all impact the local business environment.

It cannot be taken for granted that plans for transport links will be a good in themselves. We must ask how they will serve each area. The answers we come up with must empower people, and empower them where they are.

Getting to the roots of that is tackling a microcosm of the bigger problem with globalisation, which has left behind entire communities, concentrated growing wealth and opportunity, and excluded the welfare of ordinary people from it's expansion.

Averting those outcomes means services must be tied to and benefit local people. Whether that means local cooperative or municipal rail companies, or some sort of statutory reinvestment, or some other solution, communities must profit from their local services, not be drained by them.

It is in many ways the same as for the energy sector, where action is needed to counter the impact of operating at scale and centralisation that leaves communities disinherited from the product of their own regional resources - exploited instead for private gain.

But first, we must start that debate. That means first getting passed the Conservative austere reluctance to invest in the future. Public investment is beneficial. So let's get beyond that point, and get down to how to get services working for communities, not rendering them little more than glorified or abandoned suburbs.

General Election 2017 - Plaid Cymru and Wales: Poor, fractured and ignored, Wales needs a new and radical alternative

Plaid Cymru want to pick up the baton from Labour, but Wales needs a much more radical revival.

Wales is poor, fractured and ignored. To get to the bottom of the needs of the country, it's necessary to start by accepting that. The next step is to accept that very little has been done to address the first step.

The fault for that doesn't fall only on Labour. Since the party spent thirteen years in government at Westminster, and in office as the government of Wales for the last eighteen, it is unsurprising that Tories see Wales as Labour's weak(est) spot.

But the Conservatives have little to offer now and have done little for Wales in the past - other than shut down the last primary industry upon which the country had depended, when they closed the coal mines.

Through three eras of Westminster centralisation - one Labour, two Conservative - Wales has been left with an economy painfully dependent upon public sector employment and its remaining industries are in a perilous state.

Steel in South Wales is struggling to stay afloat against the sudden flood caused by China's mass dumping of its huge stocks of steel onto markets. The scrambling efforts of Conservative ministers and Labour MPs to find a way to secure jobs bought time for Welsh steel.

This desperate scramble shouldn't be necessary. But so little attention has been paid to Wales that it has fallen into dependence: on a narrow few industries, on public funding, on EU funding - it was in fact among the larger recipients of Europe's Regional Development Funds.

Yet even these few things are at risk. The established parties just keep papering over the cracks. The reality is that Wales needs a new party.

Plaid Cymru

Plaid Cymru would very much like voters to see them as just that. But the trouble is, that they're not.

At the core of their manifesto is a commitment to protecting funding and increasing investment, to be issued from Cardiff rather than Westminster, within the context of defending Welsh sovereignty. It's a vaguely nationalist, but otherwise ordinary, pitch for twentieth century social democracy.

Now. Properly implemented, there is plenty that social democrats could achieve for Wales. From fresh funding, to supporting new industries, these are essential projects that only the public body capable of providing.

Investment in infrastructure, in rail and road, in telecomms and broadband, and in new homes; supporting small businesses with public contracts, reformed business rates and a Welsh Development Bank; caring for people with more compassionate welfare and better funded healthcare.

These policies are all progressive priorities and all necessary to boosting Britain's economy out of its doldrums. But they're all just focused on making the best of the status quo - even with a little more devolution.

The problem for Plaid Cymru are that they're caught between fighting their long battle to pull Wales out of Labour's grip and fending off Tory efforts to to take advantage of Labour's, seemingly, ebbing strength.

The party are also affected by being close enough to power in Wales to play it safe. Its an outcome for the party's internal historical struggle, between nationalism and conservatism on the one hand, and a Left-wing community socialism upon the other.

The outcome of the struggle was a Centre/Centre-Left party of social democrats, comfortable with public intervention - much the same as Labour, just with its policies filtered through the lens of national identity.

The party matches the progressive parties at Westminster in their commitments. But where is the rebirth that Wales sorely needs?

Rebalancing Wales

Wales is a country whose political bonds are breaking It is split geographically and economically between South and North, between just two concentrations of people with a dearth of infrastructure and wealth lying between them.

In important ways, the situation of Wales reflect that of Western Europe, Europe and the West as a whole - rural versus urban, towns versus cities, richer versus poorer, migration & concentration, the centres becoming intolerable and the fringes being abandoned.

Politics in Wales hasn't helped. How deeply Labour has embedded itself in communities is a huge impediment to progress. At the local elections, there were many independents that made life difficult for Corbyn's Labour. But beneath that simpler narrative was a more complicated one, of Labour versus unofficial Labour.

That situation is a problem, because Wales right now needs less Westminster and more grassroots. It needs an Ada Colau more than it needs a Jeremy Corbyn.

Plaid Cymru should be better positioned that any other party in Wales to offer some truly radical alternatives. Among the party's founders was DJ Davies, also a founding member of Welsh Labour, an industrialist and economist who believed in the economics of co-operation and putting control in the hands of workers.

In their current manifesto, the part that comes closest to a project for rebirth is "Putting energy into our environment". Their plans, to support a national electric car infrastructure, green energy tidal lagoons and decentralised public energy, strike a theme of industry reborn under community ownership that thrusts towards the heart of what Wales needs. But it gets too little focus.

A New Mentality

Wales needs a new mentality, based on a radical devolution to the local level - to reengage people with the power and funds to rebuild their communities. But it can't be just urban municipalism.

It needs a movement that can give towns, both urban and rural, back into the hands of their communities and reinvigorate civic life - a locally focused, municipal-agrarian movement that can be brave and rethink how we approach rural life and make it sustainable in the future.

A movement that is prepared to imagine new ways to build the bonds between communities. That builds a sense of common identity by building the bonds between communities, that builds a sense of country by building a country.

Wales needs a brave new vision. A revival. Yet nobody is truly offering one. As it stands, fresh polls suggest Corbyn's Labour may make it through it's dark Welsh night. It doesn't deserve to, but New Labour's cynical adage remains true: there still isn't really an alternative.

General Election 2017 - The Budget: Progressive optimism vs Tory pessimism

In the general election campaign so far, there's a determination on the Right to spread the idea that their own plans are sensible and that their opponent's are chaotic and don't add up. But that's a crudely simplistic narrative and it comes with a couple of main assumptions that need to be broken through.

On the first assumption: none of the six main parties in England, Wales and Scotland are calling for a drastic overhaul to Britain's economic system. On the second: most economic systems work on their own terms. The sums will add up, whoever is in government. The biggest difference between progressive and conservative versions is their contrasting optimism and pessimism.

While conservatives, and progressives, will try to make the management of the budget a question of competence, or a question of right and wrong answers, those are not the primary questions facing voters. The real question to consider first, is: what are you trying to achieve?

How Ideology affects Economics

All approaches to the economy are ideological: they propose a set of steps to follow, with an intended outcome - an intentional attempt at shaping society to maximise certain behaviours and to minimise others.

When looking at the pitches made by progressives and conservatives, there are two elements you should consider, one for each of the two main categories of public spending - Current and Capital.

For clarity: Current spending is the day-to-day spending on the departmental budgets, historically offset against government revenue. Capital spending is long term infrastructure investment, usually funded by government borrowing.

On Current spending, you need to consider the question of intervention vs laissez faire: do you consider government action in any given policy area to be helping or interfering?

On Capital spending, you need to consider whether to invest in the future or tackle public debt: do you consider public debt or out-of-date technology and buildings for schools, hospitals, or roads and rails for businesses, the bigger burden on the future?

These two questions are deeply connected.

How entwined they are can be illustrated by the long term plan pursued by the Tories. Planning to 'balance' the budget by having both Current and Capital spending offset by revenue, severely limits how much the government can do in the present and for the future. Even more so as they pursue a huge reduction in the proportion of Britain's GDP, the country's gross wealth, the government is spending.

Now, borrowing to fund Current spending, on the day to day department costs, would theoretically be adding to the public debt at the expense of the future (hence the Tories popular refrain about not burdening our children). But Labour - whether you take the vision for the treasury as assembled by Brown, Balls or McDonnell - has not and does not intend to do that.

Under Labour and the Liberal Democrats, the intention has been - from at least the leaderships of John Smith and Paddy Ashdown - to follow a Keynesian approach: to balance just Current spending against tax revenues, thereby not accumulating public debt to pay for the needs of the present.

This approach does, however, leave Capital spending to be funded by borrowing.

The reasoning behind this is that the longer term Capital spending behaves much differently to Current spending. For a government, borrowing is cheap and the added value created by using it for long term investment is huge - so much so that the actual cost of borrowing is ultimately offset by the increased economic growth that results, and the rise in tax revenue that follows.

How to fund investment

The progressive view of these budget questions has a particular focus on Capital spending, refusing the simplistic calculation that public debt equals a burden on the future. Public debts, within reason and where they result from investment in the future, are largely harmless.

But the negative impact of poor infrastructure, on every area of society, could be disastrous. Just look at the mess that resulted from outdated operating systems on NHS computers. But the same point extends to more mundane situations: old and crumbling school buildings, potholed and traffic strewn roads, ports with insufficient capacity, a telecommunications network that doesn't keep up with the needs of people and businesses.

There are, of course, always attempts at being clever in order to reduce borrowing for Capital projects, even when they aren't covered by tax revenues. New Labour tried something new, expanding on plans they inherited to seek out private investors for its controversial and now infamous 'Private Finance Initiatives', as a way to fund Capital spending without adding to the public debt.

The New Labour plan for private-funded public investment built hospitals - but the private sector expects returns. The PFIs left those institutions with the expectation to deliver astronomical returns on those investments - some £300bn all told - and private benefactors continue to receive interest payments from hospital trusts in the hundreds of millions.

In a way, New Labour's approach resembles the Coalition plan for funding higher education - shifting a public debt, weighing on the Current budget, onto citizens as private debt. In a stroke, a chunk of Current spending and public debt was privatised.

But like the burdens that were shifted onto the backs of hospital trusts, the treasury saw a clever accounting trick,  not the social impact of burdensome debt - though at least more limitations were put in place to protect students than the hospital trusts received with PFIs. In either case, the financial burden ends up on the public books anyway.

The Conservatives plan was to oppose borrowing and fund both Current and Capital only with tax revenues. From a progressive view this was reckless, as it would result in one of two outcomes: it would mean slashing spending on people's wellbeing in the present, while still having them pay tax to fund Capital projects that will never bear fruit for them, or it would mean slashing both to endlessly pay off mostly harmless debt.

The underlying motivations for conservatives to pursue this path is as simple as 'faith' in the market. A belief that private schemes are better than public action - seeing public action as interference that just distorts outcomes. Instead of taking the advantage of scale provided by the collective public option, where resources are pooled to maximise their use, conservatives prefer personal private schemes of insurance to pay for services.

How the government finances stand

The overriding aim of this privatising conservative mentality is to fight against 'dependence'. But to pursue that low tax, low interference, approach, that promotes private action, is not compatible with maintaining well funded public services. At some point, something will have to give. To emphasise the point, consider how the public finances stand after seven years of Tory government.

Current spending stands this past year at around £720 billion to £740 billion in revenue, while Capital spending sits at around £80 billion. As the Tories combine Current and Capital spending to calculate the deficit, the public debt increased by about £59 billion.

That will mean, in the coming years - helped perhaps if revenues rise due to economic recovery or growth - 'balancing' the budget will still require a combination of tax rises and budget cuts, to both Capital and Current spending, amounting to over £60 billion a year - and perhaps more, if the aim is to produce a surplus with which to pay down the public debt.

We know that some £22 billion is to come from the NHS, through the finding of 'savings'. Another £3 billion is coming from schools, thanks to recent funding changes. More will come from the welfare freeze. There is clearly an intention to clear some of the cost of social care off the public books by making middle class homeowners pay with their assets. But that still leaves a lot of cuts.

As for the Liberal Democrat and Labour plans, both are actually fairly similar and neither are that tremendously radical. In fact, they're downright sensibly Keynesian. Both intend to balance the Current, day-to-day departmental, spending against tax revenues - with modest tax rises, mostly on the rich, making more room for manoeuvre.

And here is something interesting. On the measure of balancing the Current budget: it's already balanced. In fact it's in surplus. By some £20 billion. It is projected to be in surplus by about the same amount next year. The previous year the Current budget was only £3 billion in deficit. If the job was to rebalance government spending and revenue, the job is nearly three years done.

With their commitments fully costed, either Labour or the Lib Dems would come into government with a very positive outlook on the public finances - seeing the public books as being in a healthy state. The positivity of either of these parties would alone be a drastic turn around from the doomsaying Tories, who promise nothing but ever more cuts.

It is remarkable the affect that optimism and positivity alone can have in economics, particularly in contrast to the Tories doom and gloom and neverending warnings. But the renewed public investment, called for by all progressive parties, could provide a huge long term boost to Britain. From the mass building of new homes to long term support for innovative new industries - particularly in green energy - there would be a lot to be optimistic about.

How we frame debt matters

As for the deficit and debt? Well, how these are drawn up may have to change when the Tories are eventually ousted, because the way we frame these matters. Conservatives have been very successful at getting into circulation the idea that fiscal credibility means opposing public debt. Progressives must counter that narrative by reframing the ideas.

If the value added by Capital spending vastly outweighs its cost - thus removing it as a factor in balancing a budget - it might well be worth starting to calculate it separately from the deficit and debt which results from the Current budget. That means separating out public debt into two categories: productive Capital debt and unproductive deficit debt.

The progressive aim will be responsibility with productive Capital debt and credibility in tackling and avoiding the unproductive Current deficits and debt. Consider: In the three years between 2015 and 2018, there will have been a Current budget surplus of £47bn. The deficit in that period, that Tories use to justify austerity, is the result of £233bn in Capital spending - investment in long term projects.

That means, at the end of that three year period, around 12% of our total public debt is just from that productive long term investment. When you consider the long term, positive impact of that Capital spending, it makes the public debt a lot less intimidating. It also resets priorities.

How we move forward

To be a progressive is to be an optimist - to be believe that people have the power to change things for the better. While government spending is not the be-all-end-all mechanism for that, progressives argue that it has an important role to play and is currently being poorly utilised.

There are huge challenges to face and most them require sturdy long term commitment. Poverty needs to be addressed with affordable housing and energy, and with compassionate welfare that gets people back on their own feet.

Britain's imbalanced economy needs restructuring around innovative new industries and businesses, spread out across the regions, with green energy power them and the technical skills to run them.

The public sector is able to deliver that long term investment in a way private finance has not yet been able to match. It is part of the solution. The next step is to grasp that idea and to pursue it with positivity and energy. Progress is possible and austerity not inevitable.

Theresa May in Birmingham to set out her Conservative & Unionist agenda

Theresa May is setting out her agenda at the Conservative Party Conference at The ICC in Birmingham, city where her Unionist hero Joseph Chamberlain made his name. Image: ICC Birmingham by Bob Hall (License) (Cropped)

This weekend's Conservative Party conference in Birmingham became Theresa May's first attempt to set out a distinct policy platform. A chance to define her own approach to being head of the Conservative Party and Prime Minister, separate from that of the Cameron Government that she inherited.

At the conference some major policies positions were announcement, including setting of a date for the triggering of Article 50, that begins the two-year long process of the UK exiting the EU - for which the government's negotiating position was leaked - and the prioritising, by the Chancellor Phillip Hammond, of spending on housing over the budget deficit.

These policies together produce an image of Britain as the new Prime Minister wishes to see it. But before the larger picture can be assembled, let's look at the pieces themselves.

First, there is the Government's position on Article 50 negotiations. The main thrust of the official announcement was only to establish that the two-year Brexit process will be triggered by the end of March 2017 and that the government was set upon the course to make the UK no longer be part of a supranational institution (BBC, 2016).

From the Prime Minister's own statements, it was clear that she intended to pursue particular priorities, getting UK out of European Court of Justice jurisdiction and establishing new migration controls, that made Britain's continued membership of the Single Market no longer a red line in negotiations (Kuenssberg, 2016) - a huge deviation from the position of the Cameron Ministry and the Conservative Manifesto.

Second, but by no means of less importance, is the decision by the Chancellor to give priority to infrastructure spending over paying down the deficit (BBC, 2016{2}). Few shifts could more dramatically demonstrate that the Cameron-Osborne era is over than to decrease the priority of tackling the deficit, which has been held over all government spending decisions for six years.

Compared to the leanness of Chancellor Osborne's approach, the dropping of the 2019-2020 target for eliminating the deficit and now a plan to invest in the UK's housing and transport, and even new borrowing to do so, is a big leap. Chancellor Hammond has called the shift a pragmatic response to new circumstances (BBC, 2016{3}) - part of the more mundane, pragmatic attitude that has replaced the 'flash' of the Cameron-Osborne era (Kuenssberg, 2016).

Yet despite what the Chancellor says, expert opinion has for years now (Elliott, 2016) called on Osborne to change tack and reject austerity as damaging to economic prospects in the UK. For Labour, who have spent six years being crucified for its pro-spending attitude its hard to say whether they will feel vindicated or bitter at the change of direction in the Conservative Party.

So what kind of picture do these pieces make when assembled? What do these key policies add up to?

Earlier speeches from Theresa May's leadership mentioned her admiration for Joseph Chamberlain and expressed an intention to restore the place of Unionism in the Conservative & Unionist Party. Chamberlain's two most famous projects were to lead, as Mayor, the rebuilding and reordering of Birmingham and, as an MP, to lead the opposition to free trade and champion trade tariffs between the British Empire and the rest of the world.

Chamberlain's attitude made an us and them of the English-speaking British Empire and the rest of the world, putting 'British' priorities first. While the barriers he put up around Britain served to subsidise and protect domestic business, they did so mainly by hurting the poorest - as the Liberals of the day pointed out with cold facts (Marr, 2009). In its day Chamberlain's aggressively nationalist & imperial vision was ultimately defeated by the Liberal Party of Asquith, Lloyd George and Churchill.

That sense of national unity, in distinction between a British way and everyone else, seems present in May's vision - less individual and competitive than Cameron's, more social and corporate. So inspired by Chamberlain does Theresa May's own platform seem, that announcing her positions at a party conference in Birmingham seems not to be a coincidence but rather a purposeful statement. A symbol of the increased prominence of Unionism within the Conservative brand.

In her pursuing her independently British path, some sort of Chamberlain-esque increase in the will to use the proceeds to fund pragmatic interventions that improve the state in which workers live would be appreciated - especially compared to the austere whittling of front line services and civic spaces of her predecessors.

Yet May's own scepticism of 'supranational' institutions risks putting Britain behind a new set of barriers, with many of the same problems as those erected by her hero. Whatever her Government's slogan proclaims - "A Country That Works For Everyone" - Unionism, by its very nature, buys into the idea of exclusivity. The new Prime Minister will have to go a long way to convince progressives that those outside of the highest echelons will ultimately benefit from, and share in, the spoils of this British corporation.

Cameron & Osborne reached Easter Recess having survived another tough short term battle, but longer term dangers linger unaddressed from failure to invest

Approach of UK Conservative and Canada Liberal governments to their respective 2016 budgets were worlds apart. Photograph: Parliament of Canada in Ottawa from Pixabay (License) (Cropped)

As Parliament went into its Easter Recess on Friday, it appeared that the Cameron Government had weathered the political storm caused by the budget. Controversies had weakened the government's position, but had not toppled it. Yet Prime Minister Cameron and Chancellor Osborne have only won the week, as tends to be their criticised focus (Kuenssberg, 2016).

While they manage the short term, there are larger, longer term, dangers they're not addressing - not least of which is the long term danger of failing to invest. Cameron and Osborne like to talk of not leaving our debts to the next generation, yet there are debts other than fiscal to leave to the next generation. One deficit they are sure to leave behind is infrastructural (Yalnizyan, 2016).

It is interesting how different priorities can be on either side of the Atlantic. In Canada, their new Prime Minister Justin Trudeau unveiled his first budget. As promised during the election, it involved deliberately running deficits in order to fund public investment in rebuilding Canada and setting it up for the future (CBC News, 2015).

John McDonnell's focus as Shadow Chancellor has been to try and undermine the perception of the Conservatives as the economically competent party, that can be trusted with the national finances. In his response to the budget, he paid special attention to the Conservative habit of over-promising and under-delivering, especially when it comes to public investment (McDonnell & O'Connor, 2016).

McDonnell has expressed particular and repeated concern that the Conservatives keep sending out press releases launching projects and yet, as argues McDonnell, don't provide or secure adequate funding. Meanwhile, against the recommendations of the OECD and the IMF, Osborne has continued to let investment consistently fall as he pursues a budget surplus (McDonnell, 2016).

What is interesting this is not a trend that Osborne began, but is rather just fitting into. Public investment in the UK has been falling steadily for the better part of fifty years (Thornsby, 2016). At the last election, both Labour and the Lib Dems wanted to put aside money for public investment, exempt from the efforts to balance the budget, but their efforts were timid due to lingering doubts about ignoring the debt or deficit in the short term to pursue a longer view.

While these doubts are being harboured in the UK, in Canada the situation couldn't be more different. At the last election the Conservatives were defeated by the Liberals coming from third place into a sweeping majority while promising to run deficits in order to fund economy growing public investment (CBC News, 2015).

Now there were certainly other aspects of the Liberal approach that helped them over the finishing line - not the least the fact that none of the parties leaders were Stephen Harper. The Trudeau campaign was open, relaxed and friendly with the public and the offer of limited-deficit funded public investment in infrastructure cannot be discounted as a factor (The National, 2016).

Yet it would seem to have only been possible to propose those deficits because the Liberals did not have the weight of a reputation for fiscal irresponsibility on their shoulders. Pre-election polls suggested that the public not only trusted the Liberals the most on the economy, but also believed they would be the most likely to have a positive impact on the economy (CTV News, 2015) - and aligned more with their promise to invest in infrastructure rather than simply cut taxes and balance the books.

While tackling the Conservative reputation, Shadow Chancellor McDonnell has also been trying to rebuild one for Labour. Bringing on a team of advisors, he has taken them on tour where, speaking across the country, they have explained how negative austerity has been and what might be possible in its place.

No one has typified this more than economist Mariana Mazzucato. In her own work, and in her work advising Labour, Mazzucato has consistently argued that the private sector is too risk averse and too short term in its thinking to handle the kind of positive long term investment that the public sector excels at (Mazzucato, 2013{2}).

In fact, if anything, she suggests that the private sector leeches off of public investment - privatising the rewards (Mazzucato, 2013). For those wedded to the fear of progressives forever being labelled as high spending, controlling statists, Mazzucato's call if not for a bigger state, but for a much easier to stomach smarter state (Mazzucato, 2014). A state that promotes growth by making smart investments where the private sector only hinders or won't take the risk; a state that promotes justice by seeing more of the reward for public efforts returned to the public.

The second, and maybe harder, part that follows the building of a reputation, is maintaining it. In Canada, the Liberals have been smart, deliberately managing expectations (Evans, 2016). While every $1 of infrastructure spending can lead to much bigger revenue returns - what Willie Rennie, leader of the Scottish Liberal Democrats, refers to as a virtuous cycle of investment (Taylor, 2016; Gray, 2016) -  they have nonetheless managed their forecasts down, leaving themselves plenty of headroom for showing the positive impact of their policies.

Public investment is important. In infrastructure, in education, in housing, in healthcare. All of these materially benefit everyone, even tackle inequality. Yet despite the Chancellor's obvious pleasure at announcing investment projects, there has been little to back it up (Pidd, 2015; Boffey, 2015) - with announcements seemingly serving as publicity to encourage private investment instead of the making of public commitments.

Sooner or later, the public will have to face the reality of the Conservative failure to invest - in education; in affordable housing; in technology, science and research. Long term public investment will be missed when the reality of selfish, short term, private investment is grasped. In the meantime, progressives have to do what they can, building the credibility of the argument for a smarter state that invests in the common good.

Budget 2016 Preview: Will the Chancellor again produce an ace in the hole that lets him to put off unpopular cuts?

George Osborne's Autumn Budget Statement promised the UK a bright future. Osborne took the chance offered by predictions of an economy looking more healthy to be a little less conservative with the national finances and drop controversial cuts to the police budget and to tax credits (ITV, 2015).

This time around Osborne is warning of dark clouds and the need to prepare for the worst (BBC, 2016). The Chancellor has been at pains to stress that there will be cuts in order to meet his fiscal targets. There might be some sugar coatings, but the medicine is still predicted to be sour.

However, the Chancellor will surely be hoping to be able, once again, to defy all expectations and match his Autumn reprieves. Yet those reprieves were themselves only temporary. They could only be delays of self-imposed hard choices that Osborne had undertaken to make.

Theresa May stressed that the police would still be expected to find efficiency savings (Travis, 2015) and the dropping of Tax Credit cuts were a diversion, as they were still set to come in later with the Universal Credit (Kuenssberg, 2015). They were also a gamble.

Osborne's Autumn Statement took positive forecasts as an opportunity to not make the unpopular choices, while still working on closing the deficit - betting on the forecasts panning out and with slight tax increases, around the fringes. Attempts were also made to temporarily ease the way for the middle class with the Conservatives' colourfully branded array of saving and house buying assistance - that buys time for much delayed house building (Wright, 2016) by siphoning homes from housing associations, depended on by the least well off, to increase competition in the private markets.

Wednesday's budget might reasonably be expected, by the opposition, to be the overdue reality check for those who voted Conservative last May, with the implementation of all of the delayed austerity measures. All of Osborne's public comments certainly seem to be preparing the ground for the further cuts - 50p in every £100 of government spending as he put it to Andrew Marr on Sunday (BBC, 2016).

Yet its hard to ever be too sure what the Chancellor is planning. Osborne managed expectations in the Autumn towards his plans for cuts to tax credits (Kuenssberg et al, 2015). Yet when the time came, he still found a way to avoid what would have proven a deeply unpopular cut.

This time around, with so much riding on the EU referendum including his own chances of succeeding Cameron as Conservative leader, Osborne is again unlikely to go antagonising voters if it can be avoided. Yet time is undeniably running out to meet his own deadline for eliminating the deficit (Verity, 2016), and small shifts in forecasts could lead to the need for drastically larger cuts to meet those goals.

Hints being dropped about new policies, to be announced on Wednesday, at the least suggest a wish to dampen the impact of announcing cuts. Yet the proposed new savings top-up scheme for the least well off seems to be little but a thin veneer (Mason, 2016) - as it's only likely to help a sixth of those who are supposed to be eligible, with Labour criticising the policy for its unrealistic appraisal of what people can actually afford to save.

Across the floor, Labour's Shadow Chancellor John McDonnell has said he wants to see more investment (BBC, 2016{2}) - putting money into building up domestic industry as a way to rebalance the economy. McDonnell's advisors, like Mazzucato and Stiglitz, have certainly been making the argument that the state has a role to play in rebuilding the economy.

It is certainly hard to see a way forward without a lot of investment from somewhere. Osborne's own hope has been for investment in Britain to come from 'emerging markets', like India and particularly China (The Economist, 2015). For these private and foreign state investments to take the slack and pump money into sectors of the UK economy and infrastructure, according to market needs, so that the Chancellor can cut government spending.

Considering that, while defending the European Union, Osborne argued it was the UK, not the EU, that was responsible for the 'red tape' that puts off investment (Bloom, 2016) - and the Chancellor's desire to stimulate these private and foreign state investments - it might not be a long shot to suggest some sort of deregulation will be included in the budget. It would certainly offer some 'efficiency' cuts in terms of reduced bureaucracy.

If George Osborne has an ace up his sleeve, he has yet to let slip what it will be. The implementation of the National Living Wage (a higher minimum wage for over 25s), very limited savings assistance and the regular increase in the Personal Income Tax Allowance (introduced by the Liberal Democrats), do not amount to much of an offset to the expected large departmental cuts.

Will the Chancellor play some hidden card, or will the full weight of his targets finally begin to fall? He doesn't have much room for manoeuvre. His fiscal deadline is approaching, neither deficit nor debt are under control and his own outlook sees global economic struggles. And yet, after so many other sleights of hand, it would be foolish to rule out the possibility of one more gamble.