To solve Britain’s problems, we must solve the north’s problems

The same narrow economic focus that created our over-dependence on finance and the property bubble is also responsible for the north/south divide. We need a new strategy for regeneration.

Jubilant jeers from the government benches and bold growth forecasts thinly disguised an inconvenient truth in last week's Autumn Statement: this apparent recovery too often isn’t being felt far beyond the Square Mile of the City.

In places like Hull, which I represent, there isn’t any recovery at all for families seeing their budgets being squeezed ever tighter. For them, prices are rising faster than wages month after month, leaving people an average of £1,600 a year worse off in real terms. Unemployment is still higher now than it was in March 2010. People forget that by 2005, under Labour, unemployment in the north was the same as the national average of 5% - it’s now 9.6%, set against a national average of 8%.

These are headline statistics for a much broader regional disparity: there is a bias in favour of the south when it comes to council funding cuts, transport and infrastructure spending and even – in spite of Hull’s recent winning bid for City of Culture – arts funding. Cities like Hull still haven’t recovered from abandonment under Thatcher: fewer northerners go to university; more are in low-skilled, lower-paid jobs; and northern graduates, unable to find work at home, move south in vast numbers. Others have to work in part-time or temporary work despite longing for full-time, permanent labour – Yorkshire and Humber, where nearly half the workforce reports this problem, is the worst region in the country for this.  

But this is more than just a parochial, regional issue. The north’s problems are Britain’s problems: the same narrow economic focus that created our over-dependence on city finance and the property bubble is also responsible for the north/south divide, and we all lose out from leaving one vast swathe of the country behind like this. Last year, a study of over 150 European cities of various sizes found that continued over-investment in capital cities, coupled with under-investment in second tier cities, was linked with broader economic underperformance on a national scale. Common sense tells us why: a recent Observer article reported that London, too expensive for young interns to live in, was losing the race to become Europe’s digital hub. It is to Germany – all 14 of her second-tier cities recording higher productivity growth rates than Berlin – that these new opportunities risk going if Britain doesn’t wean herself off the noxious toxin of a southern-focused strategy for growth.

Britain’s salvation won’t lie in following the Economist’s recently-stated mantra and pushing further migration into a capital city whose quality of life satisfaction, as the IPPR noted, is already "significantly and consistently lower than anywhere else in the country" thanks to years of large scale internal migration. A broad-based strategy for growth, building the institutions for northern regeneration and giving localities the breathing space to build on their own natural economic advantages, is the surer route to success. Below are just three policies that could help make this happen.

First, we need a skills and education policy that works for northerners. The north’s competitive advantage compared to other regions of the UK still, to some extent, lies in manufacturing and exports, with northerners 70% more likely to take apprenticeships than the rest of the UK. But Britain’s skills policy, often decided from the centre, fails to leave room for local flexibility in gearing their populations to meet local labour market needs, and only 7% of year ten pupils name apprenticeships as a post-GCSE option. A broad devolution of skills policy away from the centre is needed that gives employers more control over apprenticeships funding, but also more responsibility to drive up the numbers of high quality apprenticeships. That is the idea at the heart of Labour’s forgotten 50% agenda. It’s about bringing employers, educationalists and job centres together in drawing up plans to meet local needs.  We need greater local involvement in getting the right back to work schemes delivered in each area and to ensure increased linking of schools with the employment options available. It’s an approach that has worked on the continent and would pay dividends here.

Second, we need to address the north’s transport divide. Just four of the 50 best-connected local authorities in England are in the north, with 35 in London and the south east. HS2 is the exception that proves the rule, with 84% of the government’s £5bn infrastructure spending going south. The Treasury’s decision process for infrastructure projects inherently benefits richer areas and, indeed, the whole planning system is biased in favour of south-eastern over-development rather than regional rebalancing. This needs to change. We also need to explore the greater devolution of transport spending, so northerners can decide what spending would best drive forward their own areas development.  

Finally, it’s time to end northerners’ deficit in access to finance. The south east, where 32% of Britain’s businesses reside, takes up to 41% of all business investment. Northern firms are suffering hugely now the coalition has pulled the plug on projects like Sheffield Forgemasters. A British Investment Bank would help redress this imbalance, but we need to consider bolder measures. That’s why Labour is developing plans for a regional network of banks, each with a clear remit to serve their local businesses rather than the City. In Germany, regional and local banks or Sparkassen, provide 70% of all bank lending and are legally obliged to concentrate their investments in the local economy. By default, the German banking system is thus built to redress regional imbalances. In Britain, where 80% of our lending comes from the big six London banks, this just isn’t possible. Improving access to finance for northern individuals and firms is thus a vital tool for addressing the north/south divide.

Britain wasn’t always this divided. International comparisons with other OECD countries show the UK has had the worst rate of regional divergence since 1985. But turn the timescale around and a different picture emerges: Britain had the highest rate of regional convergence from 1950-1985. In the nineteenth century, the whole country – north and south – fired on all cylinders as Britain enjoyed unprecedented economic success. All that’s needed to revive this lost diversity is an alternative, One Nation approach to tackling the cost of living crisis. Rather than hoping for growth to trickle down from the top, that approach understands that sustainable growth for the many comes from all levels. Labour is the party to deliver it.

The Humber Bridge is seen after the City of Hull was announced as the 2017 UK City of Culture on November 21, 2013. Photograph: Getty Images.

Diana Johnson is the Labour MP for Hull North.

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Inside the progressive alliance that beat Zac Goldsmith in Richmond

Frantic phone calls, hundreds of volunteers, and Labour MPs constrained by their party. 

Politics for a progressive has been gloomy for a long time. On Thursday, in Richmond Park of all places, there was a ray of light. Progressive parties (at least some of them) and ordinary voters combined to beat Ukip, the Tories and their "hard Brexit, soft racist" candidate.

It didn’t happen by accident. Let's be clear, the Liberal Democrats do by-elections really well. Their activists flood in, and good luck to them. But Richmond Park was too big a mountain for even their focused efforts. No, the narrow win was also down to the fast growing idea of a progressive alliance. 

The progressive alliance is both a defensive and offensive move. It recognises the tactical weakness of progressives under first past the post – a system the Tories and their press know how to game. With progressive forces spilt between Labour, Liberal Democrats, Greens, the SNP, Plaid Cymru, the Women’s Equality Party and more – there is no choice but to co-operate, bring in proportional representation and then a whole new political world begins.

This move opens up the wider strategy – to end the domination of the City, and right-wing newspapers like the Mail, so Britain can have a real debate and make real choices about what sort of economy and society it wants. A pipedream? Well, maybe. But last night the fuse was lit in Richmond Park. The progressive alliance can work.

Months before the by-election, the pressure group for a progressive alliance that I chair, Compass, the Greens, and some Labour, Liberal Democrat and SNP MPs and activists, began considering this. The alternative after Brexit was staring into the void.

Then the Tory MP Zac Goldsmith stepped down over Heathrow. To be fair, he had pledged to do this, and we should have been better prepared. In the event, urgent behind-the-scenes calls were made between the Greens and the Liberal Democrats. Compass acted as the safe house. The Greens, wonderfully, clung onto democracy – the local party had to decide. And they decided to stand up for a new politics. Andree Frieze would have been the Green candidate, and enjoyed her moment in the autumn sun. She and her party turned it down for a greater good. So did the Women’s Equality Party.

Meanwhile, what about Labour? Last time, they came a distant third. Again the phones were hit and meetings held. There was growing support not to stand. But what would they get back from the Liberal Democrats, and what did the rules say about not standing? It was getting close to the wire. I spent an hour after midnight, in the freezing cold of Aberdeen, on the phone to a sympathetic Labour MP trying to work out what the party rule book said before the selection meeting.

At the meeting, I am told, a move was made from the floor not to select. The London regional official ruled it out of order and said a candidate would be imposed if they didn’t select. Some members walked out at this point. Where was the new kinder, gentler politics? Where was membership democracy? Fast forward to last night, and the Labour candidate got less votes than the party has members.

The idea of a progressive alliance in Richmond was then cemented in a draughty church hall on the first Tuesday of the campaign – the Unitarian Church of course. Within 48 hours notice, 200 local activist of all parties and none had come together to hear the case for a progressive alliance. Both the Greens and Compass produced literature to make the case for voting for the best-placed progressive candidate. The Liberal Democrats wove their by-election magic. And together we won.

It’s a small victory – but it shows what is possible. Labour is going to have to think very hard whether it wants to stay outside of this, when so many MPs and members see it as common sense. The lurch to the right has to be stopped – a progressive alliance, in which Labour is the biggest tent in the campsite, is the only hope.

In the New Year, the Progressive Alliance will be officially launched with a steering committee, website and activists tool-kit. There will also be a trained by-election hit squad, manifestos of ideas and alliances build locally and across civil society.

There are lots of problems that lie ahead - Labour tribalism, the 52 per cent versus the 48 per cent, Scottish independence and the rest. But there were lots of problems in Richmond Park, and we overcame them. And you know, working together felt good – it felt like the future. The Tories, Ukip and Arron Banks want a different future – a regressive alliance. We have to do better than them. On Thursday, we showed we could.

Could the progressive alliance be the start of the new politics we have all hoped for?

Neal Lawson is the Chair of Compass, the pressure group for the progressive alliance.

Neal Lawson is chair of the pressure group Compass, which brings together progressives from all parties and none. His views on internal Labour matters are personal ones.