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 .