Growth and rebalancing the UK economy

 

Successive parties in government in recent decades have wanted to see more growth and development in the west, the Midlands and the north, and less in London, the south and the east. They have tried similar policies to promote this – regional subsidies, strong state intervention, development agencies and Boards, restrictions on planning and development in many parts of London and the south east – and some different emphases with Enterprise Zones, Development Corporations and local government led plans vying for political attention. Nothing has worked overall. Under successive governments London in particular, and the areas around London as well, have outgrown the rest very consistently. Today London is 22% of the UK economy, and the rest of the South East and eastern region double this percentage to make the south eastern corner of our country more than 40% of the income and output. .

This poses any government with a dilemma. Should it reinforce success, stop fighting the market, and allow more and more people to live and work in the crowded south and  east? Should it spend more on infrastructure in London to support the fast growing population and output? Or does it have to restrain these fast growing areas, to try to direct more people and business elsewhere? In practice the Coalition government, like the Labour government before it, does a bit of both.

Current policy contains a strange ambiguity. Coalition Minsters are desperate to build more  homes in London and the south east. After all, they reason, demand is strong, house prices too high, so more should  be built. At the same time the official economic policy is to build and grow many new  industries outside London and the south east, which if successful would mean people buying up the empty and cheaper homes in the rest of the country and then needing more new homes there.

The tensions in the policy under market pressures are obvious. The government supports the idea of a pharmaceutical technology cluster around Cambridge, and supports Astra moving its facilities to Cambridge from the Manchester region, the very opposite to the preferred policy of building up higher value added industries in the north. The government is not trying to get Pfizer to reverse this decision in their bid approach,  but to endorse it. These types of decisions mean continuing house price and availability pressures on southern property, and surplus capacity in the  north.

Do you broadly favour removing restrictions in the way of more south and east development, or do you think there are government policies which could ensure that future growth was faster in all the other parts of the UK than in the London  centred south east? I invite your thoughts on how the economy can be rebalanced, and how the cheaper and often better housing of the  north can be used more .

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95 Comments

  1. Lifelogic
    Posted May 20, 2014 at 5:48 am | Permalink

    In the main you should let the market decide. Do you want a higher salary in London but a smaller more expensive flat or house or do you want to live “up north” and have a cheap property, more fresh air, Bury black puddings & tripe and say yer ays correctly. You pays yer money and takes yer choice.

    But of course the government as usual distorts the market badly and most unhelpfully, They have a daft “national” minimum wage, national social benefits and in work benefits, they “create” government parasitic “non jobs” in these regions (that are far better paid/pensioned than the private sector ones). The EU have killed the fishing industry. In short they kill so much entrepreneurial activity and finance fecklessness and silly wind farms and PV nonsense. Net effect is a poorer north of England. Also it has less political power than Scotland and even Wales, so it suffers again in relative terms.

    Get taxes and benefits and state employment down easier planning, fewer regulations and leave it alone to grow.

    • Lifelogic
      Posted May 20, 2014 at 5:54 am | Permalink

      I read somewhere that Lytham, Lancs comes second after London for density of Millionaires. Cheshire and much of Yorkshire do not look that poor to me either, just get the state, taxes and councils out of the way and they will do just fine. I will go and buy some fishermen’s friends to help them along.

      • Hope
        Posted May 20, 2014 at 4:11 pm | Permalink

        The government is hell bent on building, which will create a housing bubble, to help skew the economy and to win votes. The problem is there is no money for infrastructure.

        This is an immigration problem not a housing problem. If the government artificially increases its population and subsequent birth rate then of course overcrowding will occur.

        • Lifelogic
          Posted May 20, 2014 at 7:31 pm | Permalink

          Indeed we need a non racists UKIP points based immigration system.

          • Iain Gill
            Posted May 21, 2014 at 8:32 am | Permalink

            I hope UKIP propose some fixes to the points based approach too. For example qualifications taken in countries where fraud and cheating in the exam system is routine should not be treated equally to those gained in countries where it is not. Points should not be awarded for sums of money in the bank, which can easily be loaned for a few days simply to convince the authorities that you have enough funds to qualify as an investor or entrepreneur. Points should not be awarded for having skills needed here, when the organisation claiming to need those skills is an outsourcer skilled at importing large workforces under false pretences.
            And of course the mass abuse of intra company transfer visas needs fixing.

    • uanime5
      Posted May 21, 2014 at 1:05 am | Permalink

      In the main you should let the market decide.

      The problem is that the markets decide to what is the most profitable, such as raising house prices, rather than what’s best for the country.

      They have a daft “national” minimum wage, national social benefits and in work benefits

      All of which exist because companies refuse to pay a living wage and instead try to pay their employees as little as possible.

      The EU have killed the fishing industry.

      No, overfishing killed the fishing industry.

      Net effect is a poorer north of England.

      Care to explain how exactly how giving people in the north good working conditions and pay makes them poorer.

      Get taxes and benefits and state employment down easier planning, fewer regulations and leave it alone to grow.

      They tried this in the USA and it failed. By contrast states with higher minimum wage had higher levels of growth.

      • Hope
        Posted May 22, 2014 at 9:38 am | Permalink

        Drivel Uni. Are you being paid as an EU twitter troll? The government thought it was a price worth paying to give away the fishing industry to the EU. Now fish stocks have dwindled and are still being landed in EU countries.

  2. Mike Stallard
    Posted May 20, 2014 at 6:11 am | Permalink

    Living in Wisbech, at the very edge of London in North Cambs, we are getting several Londoners moving in and we are facing infill as people build in their gardens. What was, twenty years ago, a tiny rural hamlet is now a suburb. Our market town is rapidly becoming a large conurbation with huge brand new Tescos, Morrisons, multiplex cinema and so on. New builds are springing up all over the place. If you go on a (free!) bus to Lynn you see that the 20 or so miles are pretty well built up all the way in what was once fen.

    Cynics talk about “white flight”. Our little town is almost entirely European – Lithuanian, Pole(a bit), Russian – and the natives live on the outside of the doughnut in what was once the best farmland in the world.

    London (I listen to LBC) is rapidly becoming very distant in its thoughts and ideas and taboos. It is like a different country now. Peterborough (a lot less than one hour away from central London) is like London: polyglot, multicultural, teeming. The Mall reminds me a lot of Dubai.

    • oldtimer
      Posted May 20, 2014 at 7:45 pm | Permalink

      You should visit Slough to experience a polyglot community.

    • Tad Davison
      Posted May 21, 2014 at 5:55 pm | Permalink

      It’s the same all over Mike. Best we all vote UKIP then, as the rest of the Westminster three are the ones who have given us this mess. The Tories keep saying they are the only ones who can give us a referendum – not if people vote for a proper non-federalist party in sufficient quantities they aint! And support for UKIP seems to be growing despite one of the nastiest, most underhanded campaigns I can ever recall.

      And we who criticise the Tories keep getting called bitter. I’m bitter alright, bitter at being conned by them. They got my vote under false pretences because I never thought they would be so useless. But the words I use here are far more moderate and temperate than those I use elsewhere. I remain loyal to my principles and values. It’s a pity the Tories didn’t do the same. But unlike some, nobody’s paying me to spout the party line, even when it goes against what they say they believe in.

      ‘Vote for me, I’ll deliver’ says Cameron. Yeah, right! It’s the same old Tories, with the same old con. They should get a new leader who isn’t tainted and then we might just listen! When are the Tories going to get the message that Cameron is a loser?

      Tad

  3. oldtimer
    Posted May 20, 2014 at 6:14 am | Permalink

    State direction has not worked very well in the past. It was tried in the motor industry and failed. Subsidies clearly work if they are big enough as the boom in wind and solar power farms demonstrate. But that leads to inefficient investment. Local tax breaks, as in enterprise zones or regions, are probably the simplest to understand. At the national level it is clear that they work but working out which regions or zones should get such tax breaks below the national level is fraught with problems.

    The best solution is probably to let the market work it out. If demand in London gets so high that pay levels go through the roof, then some businesses will migrate elsewhere to more affordable areas. Internationally this happens all the the time. Let it happen within the UK.

    • uanime5
      Posted May 21, 2014 at 1:17 am | Permalink

      The best solution is probably to let the market work it out. If demand in London gets so high that pay levels go through the roof, then some businesses will migrate elsewhere to more affordable areas.

      Your comments show a lack of understanding regarding the markets.

      Firstly the markets don’t result in people getting more pay when the cost of living increases, it results in people living in worse conditions.

      Secondly as long as London companies can get enough staff they won’t move anywhere or pay more. As the British can’t afford to live in London on low wages many new jobs are going to immigrants who are prepared to live 14 to a house for several years before retiring in another country.

      As a result of blindly trust the markets salaries have fallen to such a degree many people in the UK can no longer find a job that will pay them a decent income, resulting in higher levels of unemployment. This problem is only going to get worse unless the government forces these companies to pay wage that can support a family in the UK.

      • Richard1
        Posted May 21, 2014 at 1:53 pm | Permalink

        That will be why standards of living were so great in the Soviet union and in China under Mao, when there were no markets

  4. Gary
    Posted May 20, 2014 at 6:21 am | Permalink

    “This poses any government with a
    dilemma. Should it reinforce success,
    stop fighting the market, and allow
    more and more people to live and
    work in the crowded south and east?”

    what nonsense. The reason we have this distortion is because the govt refuses to allow the free market to operate. Not because the govt is bowing to the free market. Stop bailing out banks, stop HTB, repeal legal tender laws , stop the central bank rigging artificially low rates and London will empty out and house prices will collapse.

    House prices fell 65% and 50% in two crashes in the most crowded, short supplied real estate market in the world, Hong Kong. The govt here is stimulating demand with funny money and blaming lack of supply.

    The govt is the problem. Not the market.

  5. Lifelogic
    Posted May 20, 2014 at 6:27 am | Permalink

    It should fire the anti business secretary and nearly his whole department, get rid of expensive Ed Davey religion energy nonsense, cut taxes, cut regulations, abolish national pay rates in the state sector, abolish most employment regulations and national benefits. In short get out of the way. Perhaps abolish IHT north of Luton or better still just abolish it. Build more flats in London too there is plenty of space just go up or down.

  6. Andyvan
    Posted May 20, 2014 at 6:35 am | Permalink

    So government policy is a failure. Absolutely no success at all in “re balancing” or whatever phony phrase they can dream up. What on earth makes anyone believe that any new attempt to interfere with the economy or house prices or anything else will succeed? The best thing that government can do is stop interfering. Cut taxes, cut regulation and let the free market, controlled by peoples needs, take over. Any attempt to fix problems with government coercion is doomed to fail at vast cost to us. Leave us alone Westminster.

    • uanime5
      Posted May 21, 2014 at 1:20 am | Permalink

      let the free market, controlled by peoples needs, take over

      Just one problem with that logic; the free market is controlled by large companies who are trying to make as much profit as possible, so they’re make things much worse for everyone as long as its more profitable.

      Any attempt to fix problems with government coercion is doomed to fail at vast cost to us.

      What about all the employment legislation? That reduced many of the problems caused by employers abusing their staff, resulting in the economy improving.

      • Hope
        Posted May 22, 2014 at 9:39 am | Permalink

        Drivel once more Uni.

  7. Robert K
    Posted May 20, 2014 at 6:53 am | Permalink

    The south is doing well economically because of London’s global status, its appeal as a location for businesses and senior executives and its large pool of talented people, many from an international background. Cambridge, and I daresay my local city Oxford, are highly desirable for similar reasons, plus their academic charisma and exquisite townscapes. The reasons that the great northern cities such as Liverpool have declined is because the reasons they expanded in the first place have evaporated. The natural resources have been exhausted and sea trade has relocated.
    If the population concentrates in London, why is this a problem? All the government has to do is get out of the way and permit development to take place and to facilitate the infrastructure needed to allow successful economic development to take place. If the population in northern cities declines, then land that was used for factories and housing can be converted back to agricultural or leisure uses.

    • uanime5
      Posted May 21, 2014 at 1:30 am | Permalink

      If the population concentrates in London, why is this a problem? All the government has to do is get out of the way and permit development to take place and to facilitate the infrastructure needed to allow successful economic development to take place.

      Unless you can build enough housing, schools, hospitals, sewers, and roads for everyone in London there’s going to be a major problem if the percentage of the population of people living in London keeps increasing.

      If the population in northern cities declines, then land that was used for factories and housing can be converted back to agricultural or leisure uses.

      Most of this land was converted into cities because it wasn’t suitable for agriculture. Also who is going to use these leisure facilities if most of the people leave these cities?

      • Hope
        Posted May 22, 2014 at 9:42 am | Permalink

        Uni, you clearly are talking rot. The forced building programme by the Coalition, the aggressive thoughtless Boles, is very ill considered. There is no money to provide the requisite infrastructure for the builds or to cope with the mass immigration programme. Despite figures plucked out the air by the government look at numbers at GP surgeries to give you an idea how many immigrants live here. The percentages do not tally with the ONS guesstimates.

  8. ian wragg
    Posted May 20, 2014 at 7:00 am | Permalink

    What about controlling the population explosion rather than concreting all over the South East.
    Just when will this relentless onslaught of half a million immigrants coming here cease?
    Wages are still about 10% down on 2008 levels and although GDP will grow due to a larger population, per capita will continue to stagnate.
    The next generation will

  9. ian wragg
    Posted May 20, 2014 at 7:02 am | Permalink

    be unable to afford to purchase there own property due to the stupid immigration policies of the LibLabCON.
    I see CMD has backtracked on his immigration down to 10’s of thousands and you expect us to believe there will be a referendum.

  10. JoeSoap
    Posted May 20, 2014 at 7:06 am | Permalink

    “Nothing has worked overall”.

    That pretty well sums up this government, actually. So when your leader has another slag-off at UKIP, which comprises the natural Conservative base:

    “I understand there are lots of very hardworking, decent people in this country who are tempted by a vote for Ukip. They want to see the economy recover faster, they want to see action on immigration, they want a welfare system that encourages work properly and they want a say on Europe”, and that voting Tory achieves these things, I would counter with the same

    “Nothing has worked overall”.

    Enterprise Zones save a certain level of business rates, when many of our competitors don’t levy business rates anyway.

    Young people flock to London because the jobs market is buoyant-if they lose one job another is easier to find without moving away from friends. Probably this trend has to take its natural course until the market eventually corrects itself by London pricing itself out of the market. In the meantime, yes, the tax and regulatory burden on the type of manufacturing and R and D business could be reduced by taking the steps which only UKIP is suggesting – removing ourselves from the EU regulatory burden, reducing welfare dependency, reducing business rates across the board, allowing a level playing field for importing skills rather than ( word left out ed) tilting in favour of non-English speaking, EU immigrants, as proposed by LIBLABCON alike.

    • Hope
      Posted May 20, 2014 at 4:16 pm | Permalink

      Is Cameron going to condemn Dominic Grieve for his views about ethnic minorities and Pakistanis? Will Miliband condemn Straw for his views on Pakistanis? How about Blankets’ views on Romanians? There is a lot of hysteria being created by the cartel when the respective amino and and Cameron did not blink an eye and the MSM were happy to report their words.

      I have never witnessed such desperate behaviour to change public opinion on the EU.

    • Horatio McSherry
      Posted May 20, 2014 at 6:26 pm | Permalink

      Enterprize Zones makes me laugh. How about making the entire place an Enterprize Zone? *cue members reeling back in horror en-masse* “Get back! Get back! The man’s mad!”

      • Lifelogic
        Posted May 20, 2014 at 8:16 pm | Permalink

        Enterprise zones are a very good way of making sure businesses locate in the wrong place just for tax reasons, so they then have to move again later, when the tax benefits expire. The taxes extracted being usually extracted from other businesses, who could almost certainly use it rather better themselves.

  11. Denis Cooper
    Posted May 20, 2014 at 7:06 am | Permalink

    I favour reductions in business taxes in the less developed areas of the country to create an incentive for private businesses to locate to those parts. It could be done on quite a fine scale, for example local authority areas, according to parameters such as the local per capita GDP and the local unemployment rate.

  12. JA
    Posted May 20, 2014 at 7:17 am | Permalink

    Well obviously a major part of rebalancing the economy is to stabilise population levels.

    Yet again another Dr Redwood post on housing, jobs and infrastructure without mention of the taboo subject of uncontrolled immigration.

    Mr Cameron accuses UKIP of being the party of anger.

    It is Mr Cameron who is making us angry. By ignoring our very reasonable concerns.

    Worse. He is condescending, haughty and will smear us all once we’ve voted UKIP. He will not credit us for not taking the BNP option which has been available to us for decades but which we kind and calm people have found too unpalatable to opt for.

    Cleverly the Tories have taken the ‘racist’ tactic against UKIP because he knows how kindly natured English people are and that they do not like racists.

    Even if Mr Farage falls flat on his face. We are witnessing the full Lib/Lab/Con cartel in unison – we have seen the Tory party in bed with The Guardian lined up against a party which voices the deepest concerns of its (Conservative) supporters and which it refuses to address itself.

    It is a toxic mix. Top tories who love the continual influx of ‘cheap’ (in reality taxpayer funded) cheap labour – and a Labour party which thrives on an imported victim/underclass.

    I can see why a career politician might avoid the subject of unprecedented mass immigration despite know how upset voters are about it.

    Doubtless their children are safe from its worst effects.

    Reply I have posted several pieces about immigration and the need to control it! I have never sought to conceal it or deny the changes it brings.

    • JA
      Posted May 20, 2014 at 7:21 am | Permalink

      Let’s admit it. We are a one party nation – people are fed up with the charade of pretending that we aren’t.

      • Horatio McSherry
        Posted May 20, 2014 at 6:29 pm | Permalink

        My party would be the We’ll Leave You Alone And Take Our Sticky Fingers Out Of Your Wallet Party

    • JA
      Posted May 20, 2014 at 6:04 pm | Permalink

      Reply to reply:

      Thank you. We’ll agree that you have posted ‘several’ times on migration. From your daily postings over the years your mention of the subject (the odd allusion apart) does indeed number a mere several.

      Mass immigration ought to feature in every post concerning domestic issues. Why ? Because pay, housing, health, education, transport … nearly everything is affected at the most fundamental level by it.

      Instead of praising the English people for their fortitude in the face of dramatic changes and then choosing peaceful and democratic means (unlike some minorities) to object what do we get ?

      Cameron smears our party of choice with the Labourite insult of ‘racist’.

      In recent days we have the proof. The Tory party jumping into bed with the Guardian rather than address the reasonable concerns raised by UKIP. I (and many others) are shocked by the collusions – especially the Daily Mail.

      Clearly there are unseen forces at work here. Pressures which render even the most Tory of Tories mute.

      I am scared to use my real name to voice such common opinion. I fear for my livelihood such is my belief that our country has become corrupted and that none of the mainstream politicians can be trusted.

      • Brian Tomkinson
        Posted May 20, 2014 at 7:37 pm | Permalink

        JA,
        You have highlighted an important and disturbing feature of the current election campaign. There have been non-stop co-ordinated vitriolic attacks by the media against UKIP orchestrated by the three main Westminster parties. Indeed there is so little between them that we have become a virtual one party state. The MSM is in hock to those parties and has become just a shabby source of propaganda for them. Millions of us have seen through the charade and fortunately there are other methods of communication and assimilation of information other than the MSM.
        On Thursday we can show them just what we think of them; that we have had enough of their lies and deceit – we want cotrol of our country back.

      • bluedog
        Posted May 21, 2014 at 5:22 am | Permalink

        An excellent series of posts, JA.

        The Lib/lab/con consensus can sense an electoral upheaval in which their united message is completely ignored. The people have stopped listening.

        Ukip is a truly fascinating political development. Unlike so much in the UK, it shows signs of transcending class and regional allegiances, and that in itself must be a paramount concern to the political elite. Each of Lib/lab/con is carefully constructed to appeal to its own favoured demographic. From time to time this trio make attempts to poach each other’s voters but lack the confidence to stray far from their own comfort zones. For example, the social conservatives of the working class, particular the Catholics of the North-West, were there for the taking after the McBroon horror. And what does Cameron do? Blow every chance he ever had by ramming through SSM. Outside the M25, with the exception of Brighton, SSM is a vote loser.

        There are now so many interest groups that have been alienated by various initiatives of Lib/lab/con that Farage hardly needs to open his mouth to win their votes. The British people are desperate for political leadership they can trust to act in their interest and to do what they want.

        Enter Ukip, and they never saw it coming in Lib/lab/con.

    • Brian Tomkinson
      Posted May 20, 2014 at 7:25 pm | Permalink

      Reply to reply,
      You may have posted “several pieces about immigration and the need to control it” but you support a party determined to keep us in the EU which means immigration can never be controlled. As in so many things you put party before country and even your own opinions.

      Reply I put an In Out referendum first, and will vote for Out of the current Treaty based arrangements

      • Brian Tomkinson
        Posted May 21, 2014 at 7:58 am | Permalink

        Reply to reply,
        Thank you for confirming that you are ready to vote Yes to stay in the EU when Cameron comes back with his “renegotiations” claims. It will make no difference to me, I will never vote Yes to stay in the anti-democratic EU.

        Reply I confirmed no such thing, and voted for Out last time we had a vote. I am against our current Treaty based relationship and voted against Nice, Amsterdam, Lisbon, and against the original treaty of Rome.

  13. Richard1
    Posted May 20, 2014 at 7:21 am | Permalink

    Probably the best way to stimulate activity in a particular area would be radical tax cuts. Low CGT and low income tax if you live and invest in a particular area. People and businesses will then flock to such areas. Then we can draw the more general conclusion – let’s have a boom everywhere by cutting taxes for the whole of the UK.

    • uanime5
      Posted May 21, 2014 at 1:33 am | Permalink

      Low CGT and low income tax if you live and invest in a particular area. People and businesses will then flock to such areas. Then we can draw the more general conclusion – let’s have a boom everywhere by cutting taxes for the whole of the UK.

      If lower corporation tax didn’t result in more companies coming to the UK then lowering CGT is unlikely to encourage companies to create jobs in the UK.

      • Edward2
        Posted May 21, 2014 at 9:09 pm | Permalink

        Check your figures, lower taxes has increased the number of overseas companies coming to the UK Uni.
        Do you not have access to Google?

  14. Alan Wheatley
    Posted May 20, 2014 at 7:26 am | Permalink

    We are become ever more a nation of two, different parts which can be broadly identified as London and its environs, and the rest. This is not a good trend for the long term health of the nation.

    London, being the capital, has an inherent advantage over the rest of the country. There are many things that can only be done in London, which means people have to travel into London, and there by spend money there. All the historic transport links radiate from London, so journeys have to be in and out of London, or across. A trend reinforced by government policy on HS2, for instance.

    Strategic plans tend to be London focused. Thus in the desire for the UK to have a world leading hub airport only development solution in the vicinity of London are considered, and Glasgow, which is ideally placed on the North Atlantic route to the USA, does not even get a thought.

    The every increasing London sprawl is a major transport problem for East/West and North/South journeys where London is the nightmare hazard to be negotiate somehow with minimum pain.

    National policy tends to be written from a London perspective. So, for instance, land fill regulations designed to suite the capital, which has lost of rubbish and little space, are entirely inappropriate for North Yorkshire, which has suitable holes in the ground that can swallow all its rubbish into the foreseeable future and wants a land-fill tax like it wants a hole in the head.

    And the National Parks may seem a great idea. But their primary responsibility under statute is to the the national interest and the local people who live there come second; which provides a dampener on local enterprise and development.

    There is also a growing trend where by local authorities are having their responsibilities replace by direct government from London. Or they are increasingly forced to act as the local agents of government policy set in London. How much local government is there?

    So, if you really want the rest of the UK to do better, then you have to enable them to do so.

  15. Iain Gill
    Posted May 20, 2014 at 7:28 am | Permalink

    As much as possible it should be left to individual citizens making decisions to shape the outcome. Layered with decision making by patriotic pro British businesses.
    The government and public sector should get out of top down planning, market manipulation, complex rule making, and so on. Much of this adds to the UK’s admin costs for little productive gain, or improvement in the peoples quality of life.
    Some of the wilder multi national abuses need to be curbed, Health and safety needs to be enforced, sensible (not over the top) anti pollution needs to be enforced, proper equality based on merit should be enforced, protection of the vulnerable should be enforced, the defence and emergency services of the country needs to be in place, protection of intellectual property should be enforced, immigration and border controls need to be in place, and apart from these the government should get out of peoples life.
    So stop manipulating the markets, subsidising housing in areas folk don’t want to live, manipulating interest rates to take from savers and subsidise mortgage holders, prop up places where the biggest employer has left town and no big new employers want to come, preventing sensible sized houses being built in the parts of the country where there is demand, taxing poor people to give to the rich in the form of “help to buy” and the like.
    Simplify the system, don’t make it more complex. And allow the will of the people to force organisations to change, by making their individual buying decisions count.

  16. David Hope
    Posted May 20, 2014 at 7:33 am | Permalink

    Total rebalancing is impossible. You must follow the money, and international finance is in London.

    That said there is a lot that can be done and I’d start with a change in monetary policy and banking. We need much tighter policy with higher rates and a more competitive banking sector – it seems now that banks only interact with each other and the BoE and are totally disconnected from ordinary people and business. Look at funding for lending and how it all found its way into housing not business. A balanced economy needs money available for small business and manufacturing.

    We also need less regulation, simpler tax. Alongside finance a large part of London’s growth has been in associated large law and accountancy firms. Many bright people from the North leave to join these in London. Rendering a lot of these unnecessary would be a great thing.

    Reforming business rates (and regulation) would reduce the advantage given to large chains who can absorb high fixed costs far more easily. Where the system promotes fewer larger companies the capital city will benefit as obviously many large firms have their base in the capital.

    It’d help if the public sector didn’t pay more than the private sector in many northern towns.

    Better transport links between northern towns might help – as opposed to lines to get people in and out of London faster.

    Above all we need to move all the government and central bank created incentives that lead to there being so much concentration in law, accounting and finance – these will always have a London focus.

  17. The PrangWizard
    Posted May 20, 2014 at 7:55 am | Permalink

    in the west, the Midlands and the north, and less in London, the south and the east.

    Do we assume you are writing about England only? Maybe not. Are we to take that for granted – that there’s no need for any such identification. Is this how you think, as a UK/British MP, that England doesn’t need to be mentioned because that is where you are and everyone will know it – the invisible centre of your British universe, a kind of limitless resource requiring no identification, merely assumption. You would not write about Scotland Wales or Northern Ireland without mentioning them I presume. And which country is ‘our country’ You write like the Prime Minister speaks. Surely Scotland is not ‘the north’ and Wales not ‘the west’.

    It’s all very unclear.

    I was born in the north of England, in north Yorkshire, I moved away from the place I was brought up, for work. I have worked and lived in Manchester, Nottingham, Bristol and London and I took my family with me. It wasn’t easy for me or them. I am not wealthy but I am not struggling. I could possibly buy a much bigger house in ‘the north’ with the money I have, but I like my village and I prefer southern England. People must move to where the best work is, the best pay and the best opportunities without subsidy, but we need long-term economic stability – a dream I know – but in the end each town and city must make the best of what it has got.

    When I lived in Yorkshire the Councils in and around Newcastle upon Tyne were forever whining on about how badly they were treated by London, they probably still do – it’s a depressing mind-set which demoralises the ordinary people who end up thinking they are victims of some kind of conspiracy and expect help – fostered by socialist politics. But it can be done. I don’t know whether Manchester for example was in receipt of massive subsidies but it has grown over the last 30 years from something like a wasteland to a much wealthier place now. It takes time to gain ‘critical mass’. I think we should avoid furthering the perception that it is still grim ‘up north’. There are many happy people there living a better lifestyle than people in the south. But, when the tens of thousands of houses are built in Oxfordshire and around me in the next ten years and are filed with hundreds of thousands of people from God knows where, forced there in a government distorted market and with subsidised properties, it may be pretty grim ‘down south’.

    Reply Yes, I am writing about England, as many of the matters I am writing about are settled for Scotland under devolved powers.

  18. Horatio McSherry
    Posted May 20, 2014 at 8:08 am | Permalink

    John, while there will be some people who may choose to move further away from London as a concequence, I am – on a general level – for letting London expand, letting the business flock to where they want to, and the people needed to staff those buiness flock there too. You of course have to make sure the housing and infrastructure is increased at a sensible level (housing probably at a faster level to keep prices down) and also make sure that just because businesses are moving to the outskirts of London to reap the benefits, that national and local government don’t lose sight of the growing metropolis being a pleasant place to live; both from a health point of view and from an aesthetic and human level too. What’s the point of growing the economy if people still live in really expensive yet really grim surroundings like they do now and have done for hundreds of years?

  19. Posted May 20, 2014 at 8:13 am | Permalink

    As this is essentially about housing my proposal is that the UK Government get of the bandwagon of obsessing about owner-occupation and ensure that all its policies are tenure-neutral. ‘the North’ (and the rest of the UK please?) cannot possibly compete on anything approaching level terms with London and the South East whilst obsessing about owner-occupation is so central to UK economic activity ( the disastrous housing market renewal pathfinder programme demonstrated that)

    More broadly, why fix this debate in terms of somehow having to restrain or somehow ‘punish’ growth and success in London and the South East in order that there is growth elsewhere? IMO much thinking, and unfortunately actual policy-making, on rebalancing is a case of ‘looking through the wrong end of the telescope’. This is a consequence of the dysfunctional position of preminence and preferment that Metro London and its elites have come to enjoy over almost all the economic, social and cultural domains of UK.

    The recent risible BBC programmes ‘Mind the Gap, London and the rest;, was a glaring example of patronsing and faulted Londion-centric thinking along the lines of how doe we extend or share London’s success with those ‘regional’ cities? Incidentally, it’s debatable just what kind of ‘success’ that London enjoys – a city with one of the highest levels of ummerited and worsening levels of inequality among similar cities across the globe.

    A costly example of this thinking is the High Speed Rail (HS2) project. This was fatally flawed ion concept from the outset. It will in effect become a greatly enhanced business commuting channel in the service of the burgeoning London economy – to the damage of the ‘regional’ cities local economic and cultural base – and to the direct deterioration of the competitive capacity of all the cities and towns not in the HS2 link. If we are to have HS2 at all (highly debatable) that it ought start in ‘the North’, ideally with a rejuvenated national transport hub somewhere there that would be a counter-balance to the gravity of London and the South East.

    Lots more to say (develop ‘the North’ as clusters of generators of high-end skills) and thanks for giving this topic some attention.

  20. John E
    Posted May 20, 2014 at 8:35 am | Permalink

    We have to make the most of what advantages we have. It’s pointless throwing government money at developing things that have no market demand. Investment needs to run with the demand, not against it.
    So we have to invest in keeping London world class, which means transport systems that match Hong Kong and Singapore. And internet connectivity that isn’t a total embarrassment as in the Old Street / Silicon Roundabout area where the much vaunted high tech centre can’t even supply a broadband connection inside three months! We are losing companies there to saner cities such as Berlin. They sell themselves as having their infrastructure sorted with the usual German efficiency so that they can support the creative and new wave industries.

    The emerging “research triangle” of Oxford – Cambridge – London also needs support and investment. These are our world class competitive assets.

    For the rest of the country the best hope must surely be a re-growth of manufacturing, which means reduced energy costs and reduced property overheads together with investment in appropriate skills training. Again we would do well to copy the German approach here.

    Obviously sending all our manufacturing abroad tin the name of CO2 “footprint reduction” is a lunacy that government has to stop. Easier said than done I know, but until it is done don’t expect things to change.

  21. JimS
    Posted May 20, 2014 at 8:41 am | Permalink

    London has always had a lot of indirect subsidy and government support.
    North Sea gas was landed in Scotland yet arrived in London with no transport premium. Electricity was produced in bulk in the east Midlands and south Yorkshire yet again arrives in London with no premium.
    Transport policy has always tried to keep Heathrow the ‘busiest airport in the world’, regardless of the fact that half the passengers are in transit and a quarter don’t want to be anywhere near there! Add to that crazy prices that meant it was cheaper to board a flight in London than from its next stop at Prestwick.
    An economist once said “it is just the market, if gold was discovered in Yorkshire the wealth would move there”. But we know that isn’t so, the profits would be fed back to London, the wages to contract immigrant miners and the infrastructure costs would fall within the county!

    • A different Simon
      Posted May 20, 2014 at 3:44 pm | Permalink

      JimS ,

      Look at the recent decision to sacrifice areas upstream of Weybridge-Upon-Thames in order to save Kingston down to Central London from flooding .

      The decision itself was understandable but why isn’t some sort of transfer payment required from those who have been favoured by Govt policy to those who have been flooded by Govt policy ?

      There can be no clearer indication of who Government is for the benefit of .

      Time to move Govt out of London into England .

      The palace of westminster can be turned into a nuclear powerstation .

  22. oldtimer
    Posted May 20, 2014 at 8:45 am | Permalink

    A supplement to my earlier comment suggesting you leave it to the market to sort out. A real impediment to change is the burden of specific taxation and regulation which affects the housing market. It is now extremely expensive to move house because of stamp duty. This is clogging movement in the housing market. Planning regulations are said to be a major impediment to the building of new houses. I do not know enough about this to suggest specific changes. A better, freer housing market would materially assist economic development.

    • Horatio McSherry
      Posted May 20, 2014 at 7:37 pm | Permalink

      Planning restrictions have indeed been eased, however, in practise the Planning Departments won’t even talk to you on the phone unless you’ve already submitted a proposal (for the most minor of changes). So in reality, for small proposals by relatively poor people, there’s not alot of difference because you have to spend the money getting a proposal drawn up when you could be told within minutes it won’t be permitted in your location anyway.

  23. Bert Young
    Posted May 20, 2014 at 9:07 am | Permalink

    After two days of global warming blogs part of the attraction of the South East is explained ; study the weather charts and the reason is clear – there is a definitive link between the economy and the fact that people want to live where the sunshine prevails . On a sunny day the exchanges of pleasantries , gestures of goodwill and , above all , that feeling of being happy , probably have a lot to do with going to work in a positive prevailing frame of mind and making an extra effort . I well remember the time when my mother – who resided along the banks of the Solway , would phone and lament the fact that I was in the sunshine in London and she was cringing against the rain in the North West ( she gave up in the end and finished her very long life in Texas ! ). Seriously , there is a link .

    • uanime5
      Posted May 21, 2014 at 1:42 am | Permalink

      there is a definitive link between the economy and the fact that people want to live where the sunshine prevails .

      It’s always sunny in the Sahara desert but for some reason this hasn’t helped the economy of this region.

  24. Aatif Ahmad
    Posted May 20, 2014 at 9:09 am | Permalink

    Once shale gas is unleashed, manufacturing will move back from East Asia, as it is currently doing in the US, and manufacturing will naturally prefer the cheaper North. The key to industrial revival is cheap energy.

    • uanime5
      Posted May 21, 2014 at 1:40 am | Permalink

      Once shale gas is unleashed, manufacturing will move back from East Asia, as it is currently doing in the US, and manufacturing will naturally prefer the cheaper North. The key to industrial revival is cheap energy.

      Care to name some states where manufacturing has moved back from east Asia to the USA. Make sure you explain how its economically viable to pay people in the USA $7 per hour rather than pay someone in east Asia $1 dollar per day.

  25. Leslie Singleton
    Posted May 20, 2014 at 9:12 am | Permalink

    I thought it was a given when an HS2 was first mooted that it would go up the East Coast, joining HS1 somewhere like Ashford, and, absolutely of course, being the whole point, without a break along its entire length. I still think that and I do not see how it could fail to help the North. Upgrading the A1 as I have been saying or even a whole new Motorway up the Middle would seem a good idea too. Instead we are pandering to businessmen between London and Birmingham. I’m not even sure that HS2 as now planned will carry freight at all, for who would want to send freight to Euston and stop there?? I remember in particular the Goods Yard at Liverpool Street station closing down.

    • Leslie Singleton
      Posted May 20, 2014 at 8:09 pm | Permalink

      Postscript–I do not understand why it isn’t obvious that HS2 as planned with its effect of further centralisation on London, but not beyond to Europe, is the very last thing the North needs

  26. botogol
    Posted May 20, 2014 at 9:13 am | Permalink

    perhaps the government is spreading itself too thinkly and rather than trying to boost the north, the midlands, the regions – should pick ONE city and do everything it can to buld that one city into an alternative London.

    if that worked, the one city would create its own wealthy hinterland , just as London does.

    Manchester is probably the releastic choice.

  27. waramess
    Posted May 20, 2014 at 9:27 am | Permalink

    Well, neither really. Stop providing regional subsidies and let the regions find their own niche in the market or fail. All politicians rail against this idea for they will no doubt see some regions fail however, everything else has failed to stop the rot and now should be the time to provide for a little more flexibility.

    Why, for example, keep the old coall mining regions alive with subsidies and govermment offices? Rather like giving to the unemployed, the regions will find no reson to be resourceful if they are to be permanent recipients of regional redistribution and new areas will not be brought to life whilst the population is faced with the choice of either being tied to a failed region or moving to the South East.

    Sometimes it is better to take the difficult decisions rather than constantly trying to halt progress.

    • Iain Gill
      Posted May 20, 2014 at 9:21 pm | Permalink

      I worked for a while on a site in Wales given significant subsidy by the then Welsh Development Agency. There were a lot of unintended consequences… For a start 99 % of the people working on the site were English, of which almost all were commuting across the border every day. So it failed completely in its ambition to bring jobs to Wales, sure the jobs were there but they were in no shape or form helping the Welsh people. Also helped increase the traffic on some narrow roads way beyond common sense levels, hardly green really for the state to make people commute all that way when the site could just as easily have been in England and saved a whole bunch of commuting… just wasting fuel.
      And so on.
      State manipulation is a nonsense, it really should be restricted to the essentials

    • uanime5
      Posted May 21, 2014 at 1:51 am | Permalink

      Stop providing regional subsidies and let the regions find their own niche in the market or fail.

      So you’re saying that other regions shouldn’t keep providing food and electricity to London. Don’t expect this to be anything other an a disaster.

      All politicians rail against this idea for they will no doubt see some regions fail however

      How do you plan to judge failure? High unemployment? Lawlessness? Large scale rioting?

      How exactly is letting regions fail going to help the UK?

      Rather like giving to the unemployed, the regions will find no reson to be resourceful if they are to be permanent recipients of regional redistribution and new areas will not be brought to life whilst the population is faced with the choice of either being tied to a failed region or moving to the South East.

      What’s wrong with giving to the unemployed? Are you claiming that the unemployed should be given no help and be left to starve to death.

      These regions will never be useful if you abandon them without trying to make them viable.

      • Iain Gill
        Posted May 21, 2014 at 1:23 pm | Permalink

        There is nothing the state can do to make them viable. Its been tried countless times and failed. The best thing the state can do is reduce its administration costs, and pass those savings onto the population. Together with handing as many decisions over to the individual citizen as possible… so they get to decide where to take their housing subsidy, decide where to take their state medical insurance payout, decide where to live and make their own compromises re size, location, etc, decide which school their kids go to themselves.

        Lets individual folks personal decisions shape the landscape not top down planning.

  28. acorn
    Posted May 20, 2014 at 9:40 am | Permalink

    I got told off yesterday for making cheap throw-away comments. Apologies, I am in election mode; exciting isn’t it. You probably haven’t heard this one. Knock knock, how many current south east region MEPs can you name?

    Anyway JR, it is far too late for Westminster to start thinking of regenerating anything outside the London / South-East Regions. The seven remaining “Regions” of England, would probably get a better deal from the EU.

    It may have been different if the Maggie had not shut down the Metropolitan Counties in 1986, (fearing the rise of six strong Labour Party power bases, that would become as big a pain in the whatsit as the GLC had).

    As mentioned in a previous post, local government in England is a mess and IMHO is deliberately kept so by Westminster and Whitehall (see above). The UK is a Soviet style centrally planned economy. The various arbitrary administrative local government divisions, no longer reflect the socio-economic structure that has evolved. ONS currently maps 243 TTWAs (Travel To Work Areas). Imagine if they became 243 Unitary Councils; with an MP for each one. And; we don’t need the DCLG either to control them, shut it down. http://www.ons.gov.uk/ons/guide-method/geography/beginner-s-guide/maps/travel-to-work-areas-2001.pdf .

  29. sm
    Posted May 20, 2014 at 10:16 am | Permalink

    I am retired, and moved to a small commuter-belt town between London and Cambridge fairly recently to be near our children, all of whom rely on London for work. House prices are astronomic (it’s a lovely area), and at least 3000 new dwellings have planning permission for building within the next 4 years.

    Local schools are overwhelmed with applicants, and getting into a preferred school is considered almost unachievable.
    GP surgeries and the closest District General Hospital (including an A&E) are similarly overwhelmed and underfinanced.
    The heart of the town (where most of the shops are sited) is medieval and much is Listed, so increased road traffic and congestion is acknowledged to be a forthcoming major problem. The commuter trains are extremely expensive and crowded, while parking is very limited.

    The ‘Government’ – of whatever hue – should be encouraging growth in other parts of the country for the benefit of those areas and their communities, and firmly discouraging the overcrowding and despoliation of the South East.

  30. Chris
    Posted May 20, 2014 at 10:23 am | Permalink

    Less government, which spends less of our money, is the answer. You can’t have the government spending, what?, 40-50% of GDP. There simply isn’t enough money left to invest and grow the economy. So no interference would be my suggestion.

    • Lifelogic
      Posted May 20, 2014 at 3:43 pm | Permalink

      Exactly and much is spend actually doing real & direct harm, some spend doing very little good at at and some doing some good but at about twice the going rate.

  31. boffin
    Posted May 20, 2014 at 10:24 am | Permalink

    London has little to commend it to the great majority of those who work there, once the very well-heeled are excluded.

    Hypothesis: evolution has built into our genes a tendency to tribalism, a survival mechanism whence oi polloi seek to surround the rich and powerful. The latter likewise suffer from Machiavellian fear of losing control of the masses, should they lose sight of what the masses are doing.

    This is illustrated by the irrational behaviour of corporations where e.g. upper managers will seek to group hundreds of minions working on a given project within the same physical workspace, despite lack of need for interpersonal contact at minion-level. Even before electronic communication, this folly was demonstrably unnecessary and frequently counterproductive yet remains widespread, if not the norm.

    Although governments have sensibly tried to shift much routine ‘ministry’ work away from the capital, the great Ministerial Palaces of the powerful remain in Town. There is no good reason for keeping the legions of staff penned therein in London, only the bad ones mentioned above.

    The real business of administrative power need not, and should not, be kept in London … an exodus begins with a single step, let government set the example. The Palace of Westminster may of course remain …. when 452 MPs vote for a vastly expensive project for which no rational justification exists, it is seen to have become just a circus, and one in which the clowns predominate.

  32. Neil Craig
    Posted May 20, 2014 at 10:29 am | Permalink

    Certainly deliberately trying to slow growth in London is a bad idea – it might work but there is no reason to assume it would mean more growth elsewhere, indeed the reverse is likely.

    I believe that, except when war threatens the #1 priority of government should be allowing growth. The is a case for some redistribution but having something to redistribute is more important.

    However I do not believe the northern recession is simply the free market. The correlation between energy and gdp is most effective over manufacturing industries which (even in the current emasculated form is concentrated outside London). Governments of both shades have been unstinting in there efforts to increase energy prices for purely ideological reasons – that is why the whole country suffered recession and the north even moreso. That is nothing to do with free marketism.

  33. Kenneth R Moore
    Posted May 20, 2014 at 10:29 am | Permalink

    In many ways this is a pointless argument now that the Conservative party is so deeply entrenched in further EU integration. Rather than ‘pulling up the drawbridge’ we are ‘pulling up the white flag’ .

    We just need to ask what is the relevant EU regulation concerning this matter. If we don’t like the EU’s answer tough. The majority of John Redwood’s Conservative colleagues’ like it that way.

    http://www.brugesgroup.com/mpwatch/index.live

    Please look at this list of ranked MP’s according to how Europhile their voting intentions are. The list of Europhiles is dominated by the Conservatives and Lib Dems.

    Mr Redwood, why are you sticking with this party when so many of your colleagues do not and will not ever agree with you (and us) ?.

  34. Atlas
    Posted May 20, 2014 at 10:31 am | Permalink

    Trying to fight market forces is in the end futile. The reason we have big cities in the North was because of the businesses that grew there. The rationale for those businesses has now gone and so the rationale for the large housing stock there has gone as well.

    If this seems a bit hard then just look at all the ruined Roman cities in the Eastern part of the old Roman Empire. Those cities only grew there because of the economic drivers that applied in the Roman times. Now those reasons have long gone so have the cities, just leaving tumble-weed. As Thatcher once famously said “You cannot buck the market”.

  35. Posted May 20, 2014 at 10:45 am | Permalink

    There certainly is a lack of “joined-up” thinking in government policies.
    It is surely wrong to increase the amount of housing and business in the south of England whilst spending huge sums of money on HS2 in order to provide better transport connections with the north. If the housebuilding continues at its present rate, it will be the south east which will need improved transport connections, both rail and road.
    I have several friends, originally from the north of England, all would have preferred to stayed there “if only there had been work paying what I can earn down here”, but once they have settled here, rarely return, even when they retire.
    The government need to co-ordinate its business, employment, housing and transport policies, not run then as separate departments which appear not to speak to each other.

  36. lojolondon
    Posted May 20, 2014 at 11:06 am | Permalink

    Obviously there is no problem with the wealth. To some politicians it is the distribution of wealth. So –

    Cancel the HS2 – which is a £70Billion white elephant designed to get people into London. Then spend £100m delivering super fast broadband to every corner of the country, thus, NOT spending money on Victorian technology, instead spending money on technology from and for the 22nd Century.

    Result – people can work from home, wherever they are, sending files around, using Skype and telecommunications to work. People can earn London salaries while living in the NE.

  37. Posted May 20, 2014 at 12:05 pm | Permalink

    Having spent half a century effectively destroying the Mittelstand of the Midlands and North the damage is done. In our new global world it is unlikely to be recovered. If central direction is attempted the lessons of the past are that anything that might be left or possible will also be destroyed.

  38. Peter Davies
    Posted May 20, 2014 at 12:52 pm | Permalink

    In reality I don’t think you can fight market forces, you have to meet demand where it is needed – so in the case of the South East house building should be ramped up but focus on brown field sites – an easy win would be to remove the VAT element from Brown site development to encourage re development rather than digging up fields.

    For the rest of the UK govt need to focus on area strengths, be it geological or historical with regards to manufacturing, mining and whatever else they may be suited to.

    Where we want high manufacturing we need cheap energy as you have said many times on this site as without this we cant compete (we know the answer to that one).

    With regards to manufacturing we also have 3D print technology now so I would suggest that this type of factory production need not have intensive labour requirements thus removing the low wage advantage from many far eastern countries and opening the opportunity to bring more manufacturing back to the UK – definitely an area that needs looking at. Why ship freight half way across the world when you can build it from a CAD design and 3D printer?

    I know its been discussed in the media but far more emphasis and value needs to be placed on engineering and science in schools so we have the future workforce – less of the crappy media study type degrees that get you a job in Tesco stacking shelves etc.

    • uanime5
      Posted May 21, 2014 at 2:05 am | Permalink

      Why ship freight half way across the world when you can build it from a CAD design and 3D printer?

      Why hire anyone other than a CAD designer and someone to load the printouts onto a truck?

      The main problem with manufacturing that isn’t labour intensive is that it doesn’t create many jobs.

      I know its been discussed in the media but far more emphasis and value needs to be placed on engineering and science in schools so we have the future workforce

      More emphasis needs to be placed on creating well paid jobs for all these STEM graduates otherwise there won’t be any incentive to study these subjects.

      • Peter Davies
        Posted May 21, 2014 at 9:05 am | Permalink

        “The main problem with manufacturing that isn’t labour intensive is that it doesn’t create many jobs.”

        For once Uni you are correct to a degree, the reality is we will never go back to high labour intensity manufacturing because of the wage issue so if you use the assumption that most high value products need several small manufacturers (with highly skilled operators) in addition to the other parts of the supply chain – on aggregate this approach should create lots of jobs, the key is to have the conditions where large numbers of small manufactures will setup shop around the UK.

        Not will it give us the jobs but also helps the national balance of payments because money is not flowing out of the country.

        The needed links are therefore energy cost, planning, skills and transport infrastructure.

        More emphasis needs to be placed on creating well paid jobs for all these STEM graduates otherwise there won’t be any incentive to study these subjects. Given the leftist leaning nonsense you often spout you probably don’t read the Telegraph. This article talks about STEM businesses facing major shortages http://www.telegraph.co.uk/science/science-news/10696388/STEM-Awards-businesses-facing-major-skills-shortage.html need I say more?

        • Edward2
          Posted May 22, 2014 at 7:30 am | Permalink

          You are completely right Peter.
          Nearly 90% of people work in businesses that employ less than 50 staff.
          It is said that if each small business employed just one or two extra staff then unemployment would disappear.
          If Governments concentrated on encouraging SME’s instead of just listening to the needs of the few biggest businesses we would all be better off.

  39. Mark
    Posted May 20, 2014 at 1:07 pm | Permalink

    If you want professionals to move to the regions you need to ensure that they have advantages in doing so – a grammar school in every Northern town would be a good place to start. It’s also important not to have policies that result in job losses in industry: expensive energy results in whole supply chains moving outside the UK altogether. If you have to start by replacing jobs lost through bad policy, it will be difficult to see much increase. Infrastructure should be designed with enhancing local competitiveness in mind, not simply linking to London.

    It’s also necessary to ensure that London should not be subsidised – it is the English region with the highest per capita government spending. If local businesses actually had to pay for the consequences of their demand for commuter transport they might view their choice of location differently.

    • uanime5
      Posted May 21, 2014 at 2:07 am | Permalink

      If you want professionals to move to the regions you need to ensure that they have advantages in doing so – a grammar school in every Northern town would be a good place to start.

      How is this going to help the professionals? Surely they’d want people who’ve been educated to degree level, rather than A-level.

      • Peter Davies
        Posted May 21, 2014 at 9:06 am | Permalink

        you mean media studies?

  40. Posted May 20, 2014 at 1:56 pm | Permalink

    It is pointless uprooting people and companies and having policies about this issue until we can deal with immigration, which, according to most people I speak with, is the most urgent problem.

    I think the commons sense thing to do is to halt most immigration down to a trickle using a bond payment system and do this quickly (within 3 or 4 months from now at least).

    We would need to ditch “free movement of peoples” requirement from the eu, or if this was not possible we would need to exit the eu.

    Once we have immigration under control we can then have a sensible regional policy.

  41. Victor Meldrew
    Posted May 20, 2014 at 2:19 pm | Permalink

    Move central government out of London and the South East lock, stock and barrel. Put them all in the Midlands or the North.

    Reply A large number of the big employing departments have done just that.

  42. Stephen Berry
    Posted May 20, 2014 at 2:33 pm | Permalink

    1. Government benefits such as the dole should be reduced to reflect regional conditions. For instance, if the average wage in a particular region is 10 per cent lower than the national average, the unemployment benefit should be reduced accordingly. Also, if it is felt impossible to abolish the minimum wage, it should also be reduced by 10 per cent for that region. These measures would have a clearly beneficial effect on the labour market in that region.

    2. Wages for state employees in a particular region should also be reduced so that they are in line with the wages in the private sector in that region.

    3. Regional aid has the pernicious effect of politicising economic activity and should be ended. Economic projects such as the Humber Bridge, the Ravenscraig steel mill, and (perhaps) HS2, which would never see the light of day if funded by the market, are begun and then prove loss making or unsustainable. The late Lord Bauer criticised foreign aid on the ground that it transferred money from one group of politicians in the First World to another group of politicians in the Third World who then wasted it. Regional aid is no different in principle, other than it being wasted within the same country.

    4. Reduce the size of government in London. Yes, I know that some government functions have been moved out to the regions, but this is offset by the overall growth of government in the last fifty years. The size of government in central London is still huge.

    Living in both London and West Yorkshire, I have often felt that the economic gap between north and south is overdone. Prices for practically everything except eating out are cheaper in the north. £20,000 in Yorkshire will almost go as far as £30,000 in London. But the biggest difference is house prices which are 3-4 times more expensive in London. If we look at a person’s disposable income after he has paid his mortgage, one wonders if many people in the south-east on average wages are in fact better off than their equivalents in the north.

    So, John, if you want to make the north more attractive in the short run, keep the squeeze on house building in the south and maintain this price differential. If, like me however, you are glad the Victorians did not try to rebalance the economy away from Manchester in the first half of the 19th century, call for more property development in the south in the knowledge that this will eventually raise living standards for people throughout the UK.

    • boffin
      Posted May 20, 2014 at 4:27 pm | Permalink

      Mr. Berry, the quality of your insightful post is much appreciated by this reader – thank you, and top marks!

    • uanime5
      Posted May 21, 2014 at 2:14 am | Permalink

      Government benefits such as the dole should be reduced to reflect regional conditions. For instance, if the average wage in a particular region is 10 per cent lower than the national average, the unemployment benefit should be reduced accordingly.

      Unless the cost of living is also 10% lower this has no chance of working.

      Also, if it is felt impossible to abolish the minimum wage, it should also be reduced by 10 per cent for that region. These measures would have a clearly beneficial effect on the labour market in that region.

      How is making everyone poorer in this region going to improve it?

      2. Wages for state employees in a particular region should also be reduced so that they are in line with the wages in the private sector in that region.

      How are you going to calculate this? What’s the private sector equivalent of the police or judges?

      Regional aid is no different in principle, other than it being wasted within the same country.

      Got any evidence that the majority of this money is wasted?

      In conclusion trying to punish people in poorer regions for being poor just results in these regions voting for another party, so don’t expect any politicians to implement these half-baked ideas.

  43. margaret Brandre
    Posted May 20, 2014 at 2:45 pm | Permalink

    Better jobs in the NW would mean more people wanted to live in the areas.The problem with places like Manchester is that all jobs sound good on paper , but the catch is they are only P/T. Also organisations are closing down or being refashioned and getting rid of staff and making staff redundant.How can people afford to buy properties and build up the the North without a steady income?

    The empty houses in the North are probably due to the fact that mortgages are not affordable for even those in work.

    I was looking at the local development in Bury today and was quite impressed by the upgrading of properties on main roads. This does increase desirability and attract more to the area.

    • margaret brandreth-j
      Posted May 20, 2014 at 7:57 pm | Permalink

      I am conservative by nature, but that does not mean I always vote blue.I believe in what many would think impracticable, that is a societal type of hedonism.We need to enjoy, we need to build up communities of happiness, we need to show the beautiful , we need to stop pretending that we don’t need people ..Cameron’s big community was a good idea….Just look at the Chelsea flower show and the people it attracts.I am sitting here drinking a good champagne after a lovely day with my children and lunch out.This is special to me, but for many it is an everyday occurrence and loses its novelty.If I regard my community as an extended household, I would have to say everyone is welcome and lets make it a serene and attractive place to dwell in.

  44. forthurst
    Posted May 20, 2014 at 8:23 pm | Permalink

    Let’s compare London with Seoul: the Metropolitan area of Seoul is second only to Tokyo by population, housing 25.6m, being over half the population of South Korea, and generating 21% of its wealth with an economy which is fourth largest after Tokyo, New York and Los Angeles. The population density of the city is twice that of New York and the metroplitian area occupies 0.6% of South Korea. The overwhelming proportion of those living in Seoul are of Korean ancestry. All this fifty years after Seoul was left in ruins by the Korean war.

    Perhaps JR should take a fact-finding trip to Seoul to see if there are any sensible ideas our politicos could absorb since they seem pretty bereft left to their own devices.

  45. Peter Lewis
    Posted May 20, 2014 at 9:11 pm | Permalink

    You raise an interesting dilemma. I think the government should facilitate more development outside of London and the South East in order to effect some re-balancing. My reasons are (i) this would bring economic growth for those living in the provinces, (ii) would better utilise economically our full ‘land-mass’ which, in turn (iii) would also benefit the UK economy as a whole by making us more competitive in the export markets and (iv) would help rebalance housing (occupation and house-prices). I’m a Tory and live in London.

  46. Posted May 21, 2014 at 12:00 am | Permalink

    London is the capital city of England but it does not have to be the capital of the UK.

    It might be a radical proposal but maybe the UK should look for a different city to call its capital? The USA has Washington, Australia has Canberra so maybe the UK should follow suit?

    Alternatively move as much of government as possible to Cardiff, Belfast or Edinburgh (hopefully there will be no vote!) and have Parliament sit in the the UK’s other capital cities for a time in more than just a token way.

  47. Posted May 21, 2014 at 12:34 am | Permalink

    The phrase “rebalancing the economy” tends to have become somewhat of a cliche recently. It is used to mean different things like the North -South issue as Mr Redwood uses it here. Sometimes it is taken to mean having less dependence on imports or that manufacturing industry should be encouraged.

    A more sensible use would be to talk about re-balancing the level of demand in the economy with the productive capacity of the economy.

    If we consider everything which is produced by the UK economy, all goods and services, as being for sale in a giant department store we can see that for everything to clear, then everyone who has earned any money or made any profits or capital gains in that economy has to spend it. That’s just a matter of arithmetic.

    If some potential shoppers in the store choose to save part of their their money or spend it in Germany’s store , or China’s store then everything won’t clear and we will have recession and unemployment – as we do.

    In this case Government has a legitimate role to play by deficit spending. Just enough to take up the slack but not enough to cause inflation. If things were different and more overseas shoppers were coming into the UK store and/or UK shoppers were net de-saving then, to prevent inflation, the government would need to remove that extra money by running a budget surplus.

  48. uanime5
    Posted May 21, 2014 at 2:16 am | Permalink

    Given that London’s infrastructure problems will only get worse if a greater percentage of the UK’s population tries to live in London it’s vital that the government tries to improve other cities in the UK, so that everyone won’t have to live in one area.

    Also John it seems that despite writing 3 article on climate change over the past 3 days you missed some of the latest scientific information.

    Firstly the estimated rate by the Met Office of how fast the Arctic is warming was too low. When you use the correct rate of warming you find that the recent “pause” in global warming disappears.

    Secondly the latest evidence from the Antarctic shows that Antarctic ice isn’t growing.

    I guess that’s why more people in the Conservatives party have accepted that the scientific evidence showing that global warming is man made.

    http://www.independent.co.uk/environment/climate-change/tories-scepticism-about-climate-change-melts-after-winter-floods–in-their-constituencies-9406073.html

    • Edward2
      Posted May 21, 2014 at 8:43 am | Permalink

      Just unfortunate Uni, that temperature figures from the Met Office and the Hadley research centre and graphs available on the site,wood for trees, still show no rises since 2000 despite dire predictions for worsening warming by the IPCC and less than one degree rise in total since 1900.

      PS
      John Gummer has always been a warmist, so no change there.

  49. bluedog
    Posted May 21, 2014 at 6:51 am | Permalink

    ‘I invite your thoughts on how the economy can be rebalanced, and how the cheaper and often better housing of the north can be used more .’

    Easy.

    Relocate the capital of the United Kingdom to the garden city of Liverpool. Leave London as the capital of England and establish the English parliament in the Palace of Westminster once again.

    Liverpool is much closer to Edinburgh, Cardiff, Belfast and …. Dublin.

  50. BobE
    Posted May 21, 2014 at 1:48 pm | Permalink

    John, just a request.
    Tomorow, thursday, could your web admin put a poll into your blogs? We could indicate how we voted, I would find that interesting to see how the readers of your blog choose.
    There should be a column for “Did not vote” as well.
    Id like to see the voting trends of this blogs readers.
    Bob

  51. Robert Casey
    Posted June 2, 2014 at 6:33 pm | Permalink

    So by “success”, you are referring to the effects of decades of pro-London, pro-south east policies that successive governments have imposed on the country, whilst at the same time emasculating the big UK cities by concentrating more and more power in Whitehall, and now you are suggesting that the dirty deed is fulfilled completely by allowing free reign on building, expansion and on lavish infrastructure spending in the south.

    The fact that the success is also partly based on the hugely imbalanced subsidies that are directed to the capital also appears to be conveniently forgotten. Take the funding on arts, the lions share is directed to London and thus creates a vibrant arts scene which you now appear to want to reward by even more localised spending.

    The problems that the big regional capitals are experiencing are never going to be resolved simply by tinkering around with various taxation and spending mechanisms, it’s far too little far too late. What is needed is a bold step, something like relocating parliament to another big city like the Netherlands has done – Manchester appears to the most appropriate – and creating another heavyweight in the country to at least provide some balance to London.

    However we know this will never happen because there is no real appetite for major change by those in power, then there are those with vested interests in keeping the status quo, and those who despise the thought that London may lose something to ‘the provinces’, no matter how much it may benefit the country as a whole. It’s much easier to maintain the hand wringing “what’s to be done with the north” whilst carrying on as usual.

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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