As we head to the south coast for conference in Brighton, Labour knows that it has to speak for the every part of the nation when it sets out a vision for growth post-2015.
The coalition has failed to deliver a balanced and equitable recovery, and parts of London and the south-east are pulling away, while other regions are falling even further behind. The government’s recovery is exacerbating the disparity that has characterised post-industrial Britain and which New Labour tried to overcome with regional development agencies and other economic regeneration policy.
In their coalition agreement, which seems a political lifetime ago, Nick Clegg and David Cameron said: ‘We both want to build a new economy from the rubble of the old. We will support sustainable growth and enterprise, balanced across all regions and all industries.’
Three years on, it’s not clear that there is anything sustainable or balanced growing from the rubble that they created of our regional economic or industrial development policy. A scorched earth approach that saw government structures, funding streams, public sector jobs and levers of intervention across England’s regions torn down in reckless haste was meant to clear the way for the green shoots of private enterprise to flourish.
Yet this has only worsened the impact of recession and hampered our ability to recover. London’s recovery has been far better than our regions. Unemployment, particularly for young people remains frighteningly high in the regions, with the north-east almost double that of the south-east. Foreign direct investment in the north declined by a third between 2010 and 2011 – no coincidence since regional development agencies brought in 82 per cent of the inward investment that came into the north-east in 2009-10.
What sticking plasters the government has put in place such as the regional growth fund remain mired in incompetence. The local enterprise partnerships have been damned by one of their own architects, Vince Cable, as lacking in capacity, and therefore unable to reassure an ever-nervous Whitehall that they could cope with the devolution of major funding or policy levers such as the provision of skills. That’s why it is important that the north-east councils are forming a combined authority on the back of a review by Andrew Adonis to provide the democratic accountability and the heavy-lifting in terms of delivery that LEPs currently cannot.
The frustration is that many of our regions should not be struggling. There is no doubt as to the economic, social and natural resource that exists in so many parts of our country that are currently lagging behind London. In the north-east we have a higher trade surplus than the national average, faster growth in exports, world-class universities and we are leading the way globally from advanced manufacturing, chemicals, pharmaceuticals, automotives, renewables, and the low carbon economy in energy, particularly offshore wind. The north-east could be the engine for British economic revival. It needs a government that believes in it and is willing to invest in it.
This is the picture across the UK. As IPPR North’s Northern Economic Futures Commission report set out last year, the north as a whole could be contributing a further £41bn to our economy if it was enabled to fulfill its true potential.
This task of developing a One Nation vision for growth has been given to Andrew Adonis. At Labour conference this week he and I are speaking at a Progress seminar on Monday evening, together with Nick Forbes, leader of Newcastle city council. So I will be taking the opportunity to pitch my seven-point plan for his review that I believe will help drive regional economic development so every part of the country can play its part in our economic revival.
– More private sector and public sector jobs – investment in jobs and apprenticeships is vital, but too often we are hampered by the ideological misnomer that public sector jobs crowd out the private sector. I would like to see more public sector bodies operating from regions outside London.
– Strengthened LEPs that have more funding and responsibility from the centre, more delivery muscle, and a closer relationship to the local authorities they cover.
– Better transport – a rebalancing of the funding that sees Londoners receive £2,600 per head compared to £5 per head in the northeast. IPPR North research shows that of all planned capital investment, 89 per cent went to London and the southeast.
– A minister for the regions – while Westminster positions are not the whole solution, they can be a strong and focused voice for the region in government and an external focal point for international business.
– An active industrial policy – we must set out how Britain will support the advanced industries of the future and put them at the heart of our economy. Where there are major national procurement projects, British companies should have the ability to demonstrate the wider value they can provide through local jobs and supporting the regional supply chain.
– Skills and youth employment – long-term youth unemployment has trebled in the last year. There needs to be a more integrated approach to skills (led subregionally, potentially by a beefed up LEP). A subregional version of the Future Jobs Fund – that was so successful under the last government – could be initiated to get young people into work.
– Regional banks – establishing a network of regional banks will enable the crucial funding that small and medium enterprises need to help drive the economy. As our Northern Economic Futures Commission showed, the single biggest barrier for business growth is access to finance, particularly for SMEs, and the north has struggled comparatively for private sector-led investment in SMEs.
Labour has to work out a credible, determined vision for driving growth across the country – and it has to be one that looks forward rather than mourns for the structures or the funding streams of the past. One Nation Labour can find a real expression of its relevance as a vision for regional economic development if it can set out an ambitious plan for devolving power and funding to drive growth more fairly across the country.
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Anna Turley is Labour’s prospective parliamentary candidate for Redcar and senior research fellow at IPPR North. She tweets @AnnaTurley
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