Saturday, December 4

As long as the agenda is set in London, ‘leveling up’ will never succeed | Neil McInroy

BGreat Britain is one of the richest countries with the greatest geographic inequality in the world. In the decade before 2018, while wealth in London increased by 150%, it grew by only 20% in the Midlands and the North of England. Full-time weekly earnings in the capital can be more than double those in poorer areas. These vast economic disparities are not new, but long-standing features of the UK economy. And despite recent government promises to “level” the country with a £ 4.8bn fund, no government in the past 80 years has made significant progress in truly addressing these issues. Without reflecting on history, ministers are obliged to repeat the same mistakes.

Efforts to restore balance to the UK economy began in the 1930s, when massive unemployment drove workers increasingly southward. The Barlow Commission in 1940 highlighted the concentration of economic growth in the southeast; At the time, five of the six factories employing more than 25 people were located in Greater London. Unemployment and population drift decreased during World War II, and the commission’s proposals were put on hold until the war ended. During the period from the end of the war to the mid-1960s, both Labor and Conservative governments were committed to balanced industrial development. But the problems identified in the Barlow commission persisted. As Bill Rodgers, Under Secretary of State for Economic Affairs, put it in 1964: “We are still coming to terms with the same issues we faced … 25 years ago.”

Throughout the 1980s and 1990s, Conservative governments took a different approach to tackling the uneven UK economy. In a context of deindustrialization, privatization and deregulation of the financial sector, the Conservatives favored the adoption of corrective measures to address the real estate and land markets. Urban development corporations, Margaret Thatcher’s environment secretary Michael Heseltine’s flagship policy, were established to reclaim and reunite abandoned land, while regeneration policies removed the hard edge of urban blight and inequalities. However, neither comprehensively addressed the underlying causes of Britain’s economic imbalances.

In the late 1990s, the effects of deindustrialization were still being felt in parts of the country. While retail and service sector jobs experienced significant growth, the increase in the size and power of the financial sector continued to drain wealth and economic power from the England region. New Labor attempted to address these problems by giving more direct power and resources to the regions. The Tony Blair government established the National Strategy for Neighborhood Renewal, together with regional government offices and regional development agencies (RDAs) in nine English regions. These had budgets of around £ 2bn a year for 12 years (a total that is significantly higher than the current government equalization fund), and made some progress in closing the economic gap between London, the South East and the rest of the world. England.

But this turned out to be a false dawn. Plans to build a truly regional government through directly elected regional assemblies collapsed. Without regional democratic power, the GDRs were hastily abolished by the coalition government, which considered them wasteful and anti “free market.” They were replaced by business-friendly local business associations (LEPs), the “Northern Powerhouse” nebula, and a weak payback process, announced by George Osborne, as a “return revolution”.

The problem with all of these policies is that none have broken Whitehall’s power. The return has been “ad hoc, incremental and piecemeal”, Operating within the limits of austerity. In other words, what has been transferred is not the power to address regional imbalances, but the responsibility to fulfill the priorities of the central government in accordance with an economic and financial agenda set by Whitehall.

Resolving the country’s vast regional inequalities will require more than top-down tinkering. A significant constitutional change is needed, and English federalism must be on the table. We need to end any hint of resource allocation “in a hog barrel” according to short-term political gain, and instead redistribute wealth according to strong and democratically transparent local needs assessments that direct resources to local governments. poorer areas. We also need funding for universal public services and new tax powers for local areas, including business rate reform, municipal tax reform, a local land value tax, and even a hotel or tourist tax.

Basically, tackling these problems would mean tackling the economic model that drives geographic inequality. Investment is currently flowing into the parts of the country where returns are highest: London, the South East, and regional urban centers. These investments represent sure bets that accumulate financial returns. The wealth within these places is often extracted by remote companies and distant shareholders. The winners of this model, such as London, continue to win, while the regions and the north lose.

To resolve this imbalance, we must take greater control of investments, making sure that they really benefit local communities and are not disproportionately concentrated in particular areas. One way to achieve this is through public investment banks, which would ensure that investment decisions were driven by long-term economic planning and environmental goals, rather than short-term capital gains from land ownership and speculation. Another way is through community wealth creation, which uses policies like internal hiring and employee ownership to keep wealth flowing in an area and prevent it from being diverted into the ether of the global economy.

Governments can have poor institutional memory and be limited by electoral cycles. There is a tendency for politicians to forget what has worked in the past and what has not. Truly “leveling” the country’s distorted economy will mean learning from past mistakes, breaking with approaches that simply manipulate the edges, and tackling the uneven distribution of wealth and power in the UK.

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