Key minister with Northern Powerhouse responsibilities quits government

The government’s devolution agenda has been placed under even sharper focus following the news that Theresa May has suffered her first ministerial resignation after Jim O'Neill quit today as Treasury minister in the Lords amid speculation he was unhappy at the new PM’s policies on China, the Northern Powerhouse project and grammar schools.  

A close ally of former chancellor George Osborne, Lord O'Neill was brought into the government to help develop better relations with China and was a vocal advocate of the Northern Powerhouse project. In his resignation letter to Theresa May he reiterated his support for devolution and the Northern Powerhouse and also announced that he is quitting the Tory benches to become a crossbencher in the House of Lords.

Lord O’Neill was rumoured to be considering his position as Treasury minister earlier this year after the prime minister announced a review into the £18bn Hinkley Point C project. Although that project has since been given the go ahead, O’Neill is still believed to be unhappy about the government’s approach to Chinese investment and also the Northern Powerhouse.

In his resignation letter, Lord O’Neill gave only lukewarm support to the PM saying that she “appears” to be giving Chinese relations and the Northern Powerhouse project her “attention”. “I primarily joined (the government) however for the specific purpose of helping deliver the Northern Powerhouse, and to help boost our economic ties with key growing economies around the world, especially China and India and other rapidly emerging economies,” O’Neill wrote.

“The case for both to be at the heart of British economic policy is even stronger following the referendum, and I am pleased that, despite speculation to the contrary, both appear to be commanding your personal attention. I am leaving knowing that I can play some role supporting these critical initiatives as a non-governmental person,” O’Neill said.

Commenting on Lord O’Neill’s resignation, Ed Cox, director of IPPR North, 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.”

It remains to be seen what role, if any, Lord O’Neill might play in George Osborne’s new think tank for the Northern Powerhouse. His resignation is sure to raise further questions about the government’s commitment to devolution as well as its attitude to Chinese investment for major infrastructure projects.

Downing Street has announced that Lord Young of Cookham will become the new Treasury spokesman in the House of Lords.