Sometimes a bald statement, born out of prejudice, misinformation or a scant reading of statistics and repeated frequently, becomes a ‘truth’, universally acknowledged and uncontestable.
So it was from the New Labour years, through to the Coalition: London, as the ‘engine’ of the British economy, must be treated as a special economic case, its big institutions and infrastructure largely protected from the full force of spending cuts. Or so it seemed. Implication: the rest of England, great cities and manufacturing regions, must suffer disproportinately because they’re deemed peripheral to the interests of UKplc.
On this prejudiced analysis, the less-favoured parts of Britain, former workshops of the Empire, have become havens for the workless and workshy – the undeserving poor, milking the taxpayer, whose benefits must be capped – in public-sector-driven economies built on state dependency. Nick Clegg, (MP for Sheffield Hallam), has expressed a variation of this line. Ditto the PM. So it’s a fact. Right?
Not quite. One problem lies in a government facing both ways; acknowledging, on the one hand, an unbalanced economy over-dependent on the City and financial services while, on the other, deconstructing the very institututions – eight regional development agencies (RDAs), with collective budgets of £1.2 billions – designed to iron out regional disparities.
Abolishing these agencies by 2012 is proving a messy business. Winding down costs, such as funding redundancies, are now put at £1.4 billion – roughly the same as a new ‘regional growth fund’, announced by Business Secretary Vince Cable – underlining just how costly the coalition’s plan to axe 200 quangoes will prove.
Whether this new fund, overseen by the former deputy prime minister Lord Heseltine, will lever sufficient private cash to invest in emerging new businesses and industries remains to be seen. It will have its work cut out. Rhetoric is one thing; hastily creating an industrial strategy in a laissez-fair, de-regulated economy, to match the giants of manufacturing in Europe and beyond, is quite another.
Changing the political language would be a start. Not long ago, the deputy prime was banging on about the unaffordable and unhealthy ‘dependency’ of the north east and – by implication, no doubt – the area surrounding his relatively well-heeled constituency in South Yorkshire. David Cameron (MP for Witney, Oxon) was of much the same mind, seemingly ignorant that on his own constituency doorstep - Oxford itself, and his old college of Brasenose - the university city is driven by the public sector.
This point is worth making, not to belittle one of the world’s great academic institutions but to add a touch of reality to a south-north debate getting out of hand. A report from the Centre for Cities think tank has shown that in the private sector job creation league, Newcastle upon Tyne, has been in the top ten – over 10 per cent growth from 1998-2008 – while, in the same period, Oxford saw a 10 per cent fall.
In short, as Newcastle’s growth underlines, simplistic north-south interpretations of the English economy – booming London and the south east, driven by entrepreneurship; flagging north, dependent on the state – can be over-simplistic.
Sure, the old coalfield areas of the north east, and former industrial towns from Stoke on Trent to Middlesbrough and beyond, beset by the contraction of manufacturing and mining on a huge scale, with generational ‘worklessness’, present one of the greatest social challenges facing any government – and these areas will assuredly suffer disproportionately from escalating public sector cuts and benefit caps driven by attacks on the ‘undeserving’ poor.
But let’s turn the debate around, and the country upside-down. For the sake of the argument, remove the City from the economic mix of London and – surprise – you could just as easily argue that the capital in part is a public-sector economy driven by a Whitehall civil service machine, employing tens of thousands, which could easily be dispersed up north.
Actually, part of that dispersal happened some time ago, which is one of the reasons why Newcastle, and its hinterland, has a high public sector ‘dependency’, as Clegg would put it. The UK pensions service, and much else besides in the national insurance machine, is based in the city. And why not? What’s more the city, like Oxford, has universities – two, actually - a medical school and leading-edge hospitals undertaking ground-breaking research.
In truth, this childish argument about dependency gets us nowhere. It’s time for a more mature debate about the state of England and, crucially, how to strengthen an economy throughout the country. That means challenging a few myths, which have become accepted wisdom: namely, that the London economy must be underpinned at all costs because it drives the UK. Not entirely true. On some, pre-credit crunch statistics, the manufacuring sector of north west England alone generates almost as much (in gross value added terms) as the City.
Add to that manufacturing in the north east, the Midlands and other parts of England, and industry remains more important to this country than the continuing casino banking culture characterising the Square Mile and Canary Wharf. And much of that industry lies north of Watford. It generates democratic wealth for the many, rather than elite wealth for the few.
Peter Hetherington writes on community affairs and regeneration
