Why the failure to elect regional mayors is bad for business.

The coalition's regional policies have been quietly disastrous.

Amidst the headlines reporting the Coalition’s trouncing in the local elections, a significant policy aspect has gone less commented upon: the almost total failure of the introduction of directly elected mayors. On Thursday nine out of ten councils voted against the plan to install mayors in major cities, with just Bristol agreeing to the idea.

For David Cameron, who talked about constituting a “cabinet of mayors”, it is a personal failure, reminiscent of John Prescott’s ill-fated (and much-mocked by the Tories) experiment with regional government. But this is also a failure for the business community.

The introduction of powerful mayors was supposed to be a stimulus for economic development outside London. The mandate from a popular mayor, it was argued, would be able to aggregate powers and responsibilities in the same way that the London mayor has since 2000. When Livingstone was first elected in the capital, the role was little more than a figurehead. However assiduous lobbying by him and his successor Boris Johnson means the role, contrary to popular opinion, now controls multi-billion-pound budgets and huge responsibilities for transport, policing, housing, skills training and planning.

The idea of similarly powerful figures for major cities like Birmingham, Manchester and Leeds is one that had the potential to be a significant boost for economic growth in those areas. The force of a personal mandate batting solely for those areas raised the prospect of smarter leadership able to respond more directly to the problems of the regional economies.

And let’s be honest, any and all help is required, because it is undeniably bleak out there. The three per cent fall in construction output recorded in the first quarter of this year will have come largely from continuing declines in the regional economies. The Olympics, Crossrail, Thameslink and construction of new office towers like the Shard in the City have been keeping the London construction economy reasonably buoyant throughout the recession, notwithstanding a few wobbles. But other than a few bright spots, construction has largely shut down outside the south east, with house prices still falling. (Prices in the North-east are still 13 per cent lower than they were before the credit crunch four years ago, in Northern Ireland they are still a staggering 40 per cent lower than they were).

The Coalition’s policies designed to rebalance the economy between London and the rest have been, so far, quietly disastrous. Scrapping the Regional Development Agencies that had supported job creation schemes across the country for a decade, and a raft of other regeneration funds, took £7bn out of the regional economies. The much touted Regional Growth Fund that replaced this money is worth just £2bn, and as of September last year hadn’t actually handed out any money. If you add to this the limited impact of the (unfunded) Local Economic Partnerships supposed to replace the RDAs, and the fact that direct government construction spend is hugely weighted toward London and the South East, and its not hard to see why the regions are struggling.

The setting up of directly elected mayors was supposed to be one positive move to turn this depressing picture around. It now looks like that spark of light has been extinguished. Expectations for this afternoon’s Coalition re-launch are very limited.

Joey Gardiner is assistant editor at Building magazine.

Photograph: Getty Images

Joey Gardiner is assistant editor at Building magazine

Photo: Getty
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How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.