Ministers are falling over themselves to talk about the north. First up on Monday was Nick Clegg, who was in Leeds to announce Northern Futures, a call for ideas to create a northern hub. On Tuesday George Osborne was in Manchester, vowing to help create a ‘northern powerhouse’.
Missing from both speeches, however, was any acknowledgement that the gap between the north and the rest of the United Kingdom has widened under the coalition. To take just one measure, unemployment in the north was just under five per cent in early 2005, in line with the UK average. Today it is 8.3 per cent, considerably higher than the UK average of 6.5 per cent. The government’s new focus on the north, while welcome, looks like a pre-election pitch for northern votes and is unlikely to result in progress before May 2015.
Hopes are therefore high that a future Labour government will address the growing gap between the north and the rest of the UK. The priority should be to support northern businesses to start up and grow. Business activity and confidence in the north nosedived in the first few years of the coalition; business activity in the north-east declined by 11 per cent in just five months between November 2012 and February 2013. There is a strong case for targeted measures to support the private sector recovery in the north. Here are three proposals.
First, trade further cuts in corporation tax for increased investment allowances. The coalition’s decision to reduce corporation tax from 28 per cent in May 2010 to 21 per cent today, and to 20 per cent by May 2015, sends a positive signal that the UK is open for business. However, this has done little to encourage businesses already here to invest. George Osborne has made some tweaks to the tax system to encourage business investment, including the temporary increase in the investment allowance for plant and machinery in the 2012 autumn statement. Labour should go much further, for example by introducing 100 per cent capital allowances for a fixed period of two years. (A cheaper alternative would be to limit this to new infrastructure investment, which the CBI estimates would cost £200m). This could be paid for by reversing further reductions in corporation tax, something Labour has already signalled it intends to do.
Second, encourage northern graduates to stay in the north. Like other parts of the UK, the north has complex skills challenges on both the demand and supply side. One challenge which receives little attention is the graduate brain drain. The north-east and Yorkshire and the Humber both lost a quarter of their graduates in 2006/7. Yet every region in the north cites professionals or associate professionals as one of the top three occupations facing skills shortages, suggesting northern businesses are suffering from the shortage of graduates.
There are complex reasons why so many graduates of northern universities choose not to remain in the north, starting with the large number of graduate careers only available in London. (Full disclosure: I am a graduate of the University of Hull living in London). But Labour could demonstrate that it wants to encourage graduate retention by offering a modest financial incentive to graduates of northern universities who accept a job locally. I suggest a 10 per cent reduction in tuition fees or a repayment holiday, on the condition that the individual commits to a job locally for at least 12 months.
Third, the next Labour government should make government less London-centric. The north will never reach its full potential while London remains the centre of political, financial and cultural life in the UK. The BBC has made a start with Media City in Salford; it is time for government to lead by example. Andrew Adonis’ proposal to move the House of Lords is a good start. This would create another political centre in the UK and would, I imagine, have the added benefit of reducing the size of the second chamber.
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Robert Allen is a member of Progress and a senior manager at consultancy firm EY
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Photo: Smallbrainfield
The Scots saw the unfair division of wealth between London/South East and the rUK 50 years ago. That is why we are holding an independence referendum next month.
Labour’s had its chance and missed it.
With regard to the proposal to move the House of Lord’s; please, stop, your hurting me.
The unfair division of wealth shouldn’t be a worry in Scotland even when Alex [loses] next month the Scots still have devo-max and all sorts of tax-incentive-goodies from the hated Sassenachs – its win-win even when you lose! Pity us poor English who have to pay for its uni’ fees, medical prescriptions etc and a dozen other freebies and boons which the Scots get and Wales and England are deprived. Better staying in than out, Jock, believe me.
PS: More than half the House of Lords [and the other chamber] have family connections directly with bonnie Scotland through parentage or some or other Royal Title. Will 007 give his Knighthood back I wonder? 🙂
London is a win-win top location and attracts top companies and people for the last 1000 years – ask any Ernst & Young’s 200 000 employees where they would like to work? And how many EY employees are on a work permit? To be fair, its not the North, and its really crap weather, which is to blame for brain-drain to London, any mass exodus is due to the fact that there are no jobs/careers to be had in Stoke or Hull[wtmb] and no [Cadbury’s/HP etc] companies left to offer apprenticeships let alone scholarships to a uni’ or tech’ college.
More to the point is job creation: no amount of theorising from punters and mega-sized multi-national outside agencies with head offices in the Cayman Islands will ‘magic-up’ jobs.
To tell [me] I can’t move down South [or any place else, incentives notwithstanding] to gain betterment for my family and an acceptable standard of living [as you did] smacks a bit of Fascism or is it Communism, I can never get the nuanced difference: witholding my freedom of movement by issuing ‘passcard’ used in southern Africa under the Herzogs and Vorster regimes for half a century to regulate the population moving around without the proper permisso’s and/or documantation from, eg, State Redtape Office Sentraal in Pretoria. A Nanny-run Govt telling the voters and citizens/proles/plebs/jobseekers what to do and when and how high to jump is anathema to most voters in the UK [not that the current lot@DWP@Tories maynt yet do it]. A perceived Nanny-State – which is being being advised and nannied by another Nanny-Mega Corporation may just be the final straw for the ‘swing/undecided’ voters to chuck their membership. Chilling thought another 5 years of Tory rule.
labour is not interested in northern heartland voters over 35 at all.the liberal elite of westminster
bubble,the talking heads,don’t want to do anything about the lifelong labour voters who switched to ukip in may.well they should look at all the london,and south east born labour mp’s in the northern heartlands who were parachuted into safe labour seats.never mind moving the lords,trying having them elected.how many actually know where ‘The North’ is?