The north can’t wait until Westminster wakes up

Given the wealth of half-baked think tank reports out there, it’s always a pleasure to read something by someone who knows what they’re talking about. On that basis Michael Ward’s new report for the Smith Institute, Rebalancing the Economy: Prospects for the North is an important milestone.

Admittedly I’m not unbiased here. I’ve worked with Michael on the board of the Centre for Local Economic Strategies and was one of the 150-odd people consulted about this report. That said, I might have pushed the logic and evidence a bit further if it was down to me.

What Michael Ward does is to examine the coalition government’s aspiration to rebalance the UK economy, present with forensic detail the experience of nearly 80 years of regional economic policies, and demonstrate conclusively that not only are the coalition’s policies extremely unlikely to change the balance between wealthy and poor parts of the UK, but they will probably have the opposite effect.

He doesn’t say it in so many words, but the underlying message is that politicians are living in cloud cuckoo land if they think the regional growth fund, local enterprise partnerships and a few new financial instruments are going to revive the north of England.

A couple of snippets from the report provide a flavour:

‘…the current economic climate the gap between and within regions is likely to widen, with serious economic and social consequences.The Coalition’s hope that private-sector growth will fully compensate looks unlikely.’

‘Those attending our Inquiry argued that the Coalition is not supporting its declared aim of rebalancing with adequate institutional arrangements or money. Rebalancing without adequate resources in support is, in the views of those consulted, a recipe for failure.’

‘Without a fairer allocation of resources, stronger delivery structures, and a lasting commitment to tackling interregional disparities, the prospects for the North look worryingly bleak.’

You get the gist. A focus on city-regions as motors for local growth won’t address the deep-rooted problems of isolated industrial communities, it argues. The report makes a number of important recommendations, including locating the Big Society Bank and Green Investment Bank in the north, new grants for business investment, and a job creation programme aimed at incapacity benefit claimants.

Interestingly, it also urges a reexamination of local government finance formulas and calls for a ‘Council of the North’ to give the north of England a strong voice at Westminster and Brussels.

Finally, it makes the case for ensuring that any future growth is sustainable:

‘All governments talk about growth. They also talk about sustainability, but rarely in the same breath. New arrangements for economic recovery in the north will need to ensure that local growth and local sustainability are properly reconciled.’

This, to me, is the most important part of the report but possibly the area where it is weakest. It seems to me to be asking a lot to shoehorn radical thinking about sustainability into a Treasury-led economic development paradigm that remains, despite the rhetoric to the contrary, largely unchanged.

And yet a paradigm shift is exactly what we need. The recent report of the Royal Commission on Environmental Pollution on demographic change and the environment makes the point that the continued concentration of development in southeast England is unsustainable – the infrastructure is unlikely to cope.

So what will happen to the Smith Institute’s carefully crafted work? Sadly, I don’t expect George Osborne’s advisers to tear up next week’s budget and start again, desirable as this would be. By the time it influences longer term thinking much damage will have already been done.

So I think we’ll hear a lot more about how important the government considers rebalancing the economy to be, but we will see very little investment. Any initiatives or announcements will almost certainly be palliatives of the ‘now please stop bothering us’ variety.

Furthermore, the government will refuse to countenance any serious regional policy because the voices lobbying for already successful areas will be stronger and much closer to home. Once ensconced in Westminster, even northern politicians tend to look at the world through a different lens. Instead ministers will argue that local enterprise partnerships should be given time to work, and if they don’t they will be blamed for failing to sell a vision of their area to investors.

So I suspect the Smith Institute’s worst case scenarios will be fulfilled. If so, what should we do?

The north cannot afford to wait until Westminster wakes up. It needs to put the structures in place now that it needs for the future. We’ve already seen collaboration happening at a city-regional level, but it needs to happen across the north of England. So we need a Council of the North, but not just to lobby Westminster or Brussels. It needs tell a story of the north for the 14.7m people of the north – a population twice that of London, and nearly twice Scotland and Wales together.

But if that’s a story of how we need a better deal, it won’t work. It needs to be a story of what we can create ourselves in difficult conditions with an unhelpful government.

What can we offer that others can’t? I’d suggest quite a lot, if we have the confidence to do things differently.

First, we can offer a quality of life that much of the south of England has abandoned. Second, we can take sustainability seriously in a way that the growth-fixated south might struggle to do, and pursue approaches that build in long term capacity, food and energy security and technologies that make a good quality of life better. Third, we can build on the great social economy we have in the north – the community spirit that creates organisations, campaigns, ideas and a determination to keep going.

But we need to be ready to be unorthodox. The north of England has a long history of being a crucible for alternative approaches. If we’re to have a Council of the North, it needs to be one that welcomes different and challenging voices. We need licensed dissenters, and encouragement for creative and divergent thinkers. Are we up for it – or will we put our faith in government?