Policy Provocations 2014: Is London too big and is it holding the UK back?

Professor Alan Harding is Director of the University of Liverpool’s Heseltine Institute for Public Policy and Practice

“The  issue, in essence, is whether there is any feasible alternative, when it comes to creating a sustainable and resilient UK economy, to feeding the London super-regional growth machine with the bulk of food supplies we can muster.

Our forefathers and mothers would have been aghast at the idea of such a debate being needed, of course. Back in its heyday, Liverpool was the second city of the Empire, linking the industrial might of the north of England to the rest of the world. The relative, and then absolute, decline of the UK as an industrial trading nation and the shift to a service-dominated, knowledge-driven economy, however, has seen the country’s economic gravity shift inexorably towards the south.

Magnet for talent

London acts as a magnet for talent, nationally and globally. It offers a conveyor belt of career advancement for those who can stand the heat of its labour and property markets, and when those who benefit from the opportunities the capital can offer seek a quieter, greener life, better schools for their children or retirement homes, they typically move somewhere within an 80 mile radius of London. I am only being a little ironic, when offering career advice to young students, when I ask them ‘do you have friends or relations in London with a floor you can sleep on’.

When we first planned the event, we were confident that it would prove topical. We were aware, for example, that:

• A high profile foresight programme on ‘the Future of Cities’, sponsored by the Government Office for Science (GOS) within the Department for Business, Innovation and Science (BIS), would be well underway,
• The Royal Society for the Arts’ City Growth Commission, chaired by former investment banker Jim O’Neill, would be moving towards the completion of its work, and
• The House of Commons Select Committee for Communities and Local Government would have launched the report of its inquiry into ‘fiscal devolution to cities and city-regions’.

The last few weeks, however, have seen the temperature of debate rise as both the Chancellor, on behalf of the Coalition government (or at least the Conservative element within it), and Lord Adonis, on behalf of the Labour party, have called for more determined plans for the geographical rebalancing of the national economy. George Osborne, attending the city’s International Festival of Business a couple of weeks ago, even found time to announce a package of investment in science and infrastructure in the Liverpool city-region as part of his new-found enthusiasm to create a ‘Northern Powerhouse’, linking the major urban centres in the north of England.

They should not underestimate the difficulty of reversing trends that are now of several decades standing. The gap in regional economic performance between the London super-region and the rest has been growing since the mid-1970s. Neither, however, should they deny their own role in making the gap bigger. For the last fifteen years at least, it is this corner of the UK that has benefited far more than any other in terms of productive public investment, in infrastructure, scientific research, cultural and media industries.

Seasoned policy-watchers will note, of course, that a general election is due in less than a year. Political antennae, inevitably, are becoming trained on potential votes, wherever they can be unearthed. So is there any more to the idea that national economic, environmental and social well-being could be served better if the North punched its weight more effectively than crude electoral calculation? Is what we are hearing from national politicians anything more than the time-honoured messaging, adopted by all major political parties, that sees economic ‘rebalancing’ as the answer to the environment-rich North’s need for jobs, and the job-rich South’s wish to protect its environment?

The answer, with thanks to Oasis, is ‘definitely maybe’. Definitely, because there is a growing realisation, the world over, that big, dense, diverse and well-connected mega-cities are the economic hot-houses of the future. Definitely, because there are so many interconnected issues that need to be dealt with by the next set of party manifestos – everything from the future of local government, through the devolution and decentralisation of power, to innovation in public service delivery and the role of public investment in sustaining growth – that four years of austerity budgeting have not begun to address.

Maybe, because we have heard all this before. Every government in living memory has played the ‘rebalancing’ card in one form or other, and none have ever delivered on it. But maybe, too, because crisis really can bring about radical re-evaluation.

Two years ago, Lord Heseltine’s ‘No Stone Unturned’ report mapped out much of the territory that would need to be covered if political rhetoric about rebalancing were ever to become a reality. The Government response was fulsome, in terms of formal acknowledgement of the issues it raised, but disappointing when it came to putting its money where its mouth was.

What has been missing from national debate on a better balanced economy has been any recognition that the UK has a poor record of productive investment, overall, and has managed, more by accident than design, to deliver an investment programme that does little more than try to keep pace with growth in London and its hinterland. Seen this way, London is not ‘too big’. Neither is it in anyone’s interest not to support its continued economic success.

Regional cities too small

Rather, it is the principal cities of the regions that are too small and need help to deliver the sort of ‘escalator’ and ‘fountain’ effects that makes London the magnet it is. The cities that make up Mr Osborne’s potential Northern Powerhouse – Liverpool, Manchester, Leeds, Sheffield – already perfrom these roles within their respective areas. Collectively, they represent the biggest centre of population and economic activity outside the south east. The question that needs debate is how they can do that better, to the benefit of the whole country, not just the North.

If the next election were to become a contest, at least in part, between parties competing for the right to start delivering the Northern Powerhouse, you never know; it may become more exciting than many of us dared hope.”

The second Policy Provocations debate of the 2014 series features Aditya Chakrabortty, Senior Economics Commentator, The Guardian; London School of Economics’ Professor Henry Overman and Professor Michael Parkinson University of Liverpool & Heseltine Institute Advisory Board. The event takes place at the Maritime Museum, Albert Dock from 6pm on Thursday July 17. To find out more, and book your free ticket, visit: http://www.liv.ac.uk/heseltine-institute/policy-provocations/capital-punishment/

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